THE MARCUS TODAY MORNING MEETING - Thursday 26th May

Anyone who has been in broking will tell you that the Morning Meeting is how all brokers start the day.  The format is to have a quick look at the overnight markets, consider what's coming up in the day ahead, hear from the analysts, share ideas and get set up for the day's stock market activity

Why not sign up for a free trial? Get access to expert insights and independent research and become a better investor.

Transcript

DISCLAIMER:

Marcus Today offers information that is only general in nature. It does not take into account your personal financial situation, needs or objectives. Nor does it take into account the financial needs of any specific person. You should consider your own personal financial situation and needs or seek financial advice before making any decisions based on this information. For more information please see our Financial Services Guide.

*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.

SPEAKERS

Tom Wegner, Chris Conway, Ben O'Leary, Layton Membrey, Marcus Padley

Ben O'Leary  00:00

Good. Morning, everyone, it is Thursday, May the 26th Chris Conway, you're on overnight for us. What have you got?

Chris Conway  00:21

Thanks, Ben. Yeah, it was a fairly quiet session overnight. The Dow was up 192 points. It was actually the fourth consecutive winning session for the Dow overnight. So nice to see some of the volatility of like abating. And we saw the s&p 500. Up About 1% of tech stocks were the best up 1.5% For the NASDAQ the big moving part overnight, the Fed meeting minutes they showed support for the 50 basis point hikes that the Fed has been talking about the market had been worried that it was going to go harder and that they might go 75 basis points and they might hike more quickly than what they'd previously said. But those fears were placated overnight, and that's the reason why we saw an extension of the rally on the Dow not too much else going on. The ECB did warn that its financial stability conditions have deteriorated that was in a report that they put out overnight and China is seen by a lot of analysts to be missing its growth targets as it battles with the COVID lock downs in Beijing and Shanghai outside of that gold was down 1% oil was up half a percent and as I said not too much else major going on.

Ben O'Leary  01:23

Thank you, Christopher. Anything more happening our local market today Tom?

Tom Wegner  01:28

Thank you Ben. Look the ASX 200 is doing okay this morning, up 19 points with tech and property stocks leading the way miners and health care are the biggest weights on our market with BHP and Rio votes down about half percent action is the big news story of the morning up 28% They received a $9.50 cent cash offer from Canadian communications giant to loose I think I've pronounced that terribly. Westpac has inked a deal with Mercer to merge its super assets and it's also going to offload a unit involved with that and they expect to get about $220 million from the sale Virtus health has said they haven't heard anything from cat vest and they're expecting a response following BG H is upgraded offer yesterday cat fest as the other firm vying bought versus health catapult has widened net loss Fisher and Paykel down 1.5%. On an investor day they had four year results yesterday, and they were down on those as well. So not doing too well. Fisher and Paykel endeavour group sliding on an investor day as well. On the economic front, we have some business investment data from ABS and all eyes will be on the US and a second GDP reading for them. And that's likely to feel some more talk about a recession. The first reading there was a quite a big contraction from in the March quarter from the December quarter.

Ben O'Leary  02:51

Very nice. Thank you, Tom. Interesting that moving up and of 29% now still only takes it to $8.28, which is about 15% below the $9.50 offer. So there's obviously a bit of concern that that may or may not be able to progress to the end, but interesting nonetheless...

Chris Conway  03:10

Just on that end, so I could just dive in there up and have openly said or openly intimated to the market that they want to get a sweater deal. So when you push for a sweeter deal, obviously the probability or the possibility I should say is that the people wanting to buy you out say no, we're not giving you anything sweater and they walk away. So that's why like you've pointed out the stock is trading at a fairly significant discount to the offer price that is currently on the table. It's because Apple has said that they want more and the market obviously not convinced that they're going to get it. 

Ben O'Leary  03:36

Very good thank you Chris. Layton, what have you got from the brokers today?

Layton Membrey  03:40

Thank you Ben having a look this morning. UBS has some research out on the traditional media names so nine entertainment and News Corp. They've actually got buyer recommendations for all five under the sector coverage but the broker has said that a recent trading update from nine entertainment indicated continued strength in the metro free advertising market. They've got a target price of $3.90 for nine entertainment and that implies a 67% upside and they've got a target price of $38.50 for News Corp, which implies is 63% Upside also there's some commentary out for ALS the code for that one is a L q following their full year results. There are a slight beat on consensus brokers are a little mix between neutral and overweight. Morgan's has upgraded to an add an average target price that is $13.75 Which implies attempts and upside. Thank you, Ben.

Ben O'Leary  04:34

Good stuff. Thank you Layton no Henry this morning. He's off with equity mates doing a special little show there that will be available to our members on the website whenever it becomes available from equity night. So keep an eye out for that, Henry. I'm sure we'll be talking about it a little bit later on. Chris, are you got in trading today?

Chris Conway  04:51

Thanks, Ben. Just a quick thank you to everyone who attended the chart chat session yesterday. It was a great session. From my perspective. I've enjoyed it. And as always, thanks to everyone who submitted questions and made it vibrant as always am I charted the day to day is Transurban there was an article in Bloomberg a few weeks ago talking about how Australian toll road traffic is back to pre COVID levels. And then auditor net was out with some research at the start of the month, essentially saying that it would need to be too worried about the bond proxy narrative. And that's because they forecast a compound annual growth rate for Transurban of 10% per year for the next decade, basically, so they're quite bullish on it. And then it's come up on my scan this morning as a pretty good looking chart. nice uptrend had a strong day yesterday bouncing off the lows, it looks as though it's about to break higher and push up towards $15. So nice, fundamental slash technical opportunity there that forms my chart of the day.

Ben O'Leary  05:44

Good stuff. Thank you, Christopher. Marcus, are you writing in strategy today?

Marcus Padley  05:48

Are you playing vanilla stuff today talking about the FOMC minutes for want of anything else to talk about today? Because I don't think too much is changing. It's nice to see some stabilisation in the market, as Chris said four days of better days in the US, but there's still no technical sign of a bottoming and although some people will say well, we know we need more than charts. The truth of the matter is, is that this is a sentiment thing and you're spot it on the charts first, and whilst there's some stabilisation going on how to look at the charts in the strategy piece, the s&p 500 and NASDAQ still effectively in freefall, no technical bottoming going on our market looking a little bit better, though. And I could see people beginning to have a bit of a nibble just from the way our markets performing. And on the hopes, I think in particularly in resources that the Chinese COVID lock downs are going to ease rather than tighten from here, and our market is technically bottoming where it's bottomed a couple of times before, so our markets more relaxed, but has to be said reading everyone from Wilson asset management to other than newsletters, who are all talking about the bottom of bottom isn't here yet. But obviously a few good days builds a bit of a base. Let's see where it goes from here. And I think I will get on with finding stocks to buy when we get more convinced. But you know, we've got months ahead of worrying about what the economic releases are that are going to from inflation to interest rates to growth, and we're not going to have clarity on anything for a couple of months or so at least. And therefore the market is going to be slow to bounce back. So I don't think you're going to miss out on any major bull market not buying at the moment is the point. Also, there's an interesting chart of the s&p 500 in the strategy piece, just look how oversold. It's been it hasn't been this oversold since the pandemic prior to that since the taper tantrum in 2018. And prior to that you have to go back to 2011. But before you find it this oversold so there is a buying opportunity coming it's just not here yet just repeating what we've been saying for the last few days. Otherwise, the FOMC minutes pretty good US market initially dropped and then rallied pretty hard after the minutes I think the bit people took out of it was this unanimous confidence in the strength of the US economy which has dissipated some of the growth worries but otherwise it is clear they are going to aggressively raise rates in the next two meetings are going to see 250 basis point rises and then they're going to think about it from there as one newswire us there's they retain optionality, and therefore the market or interest rates. And what the Fed do really depends on economic releases from here on that front. As you mentioned, we do have the US GDP first revision tonight should be a little bit better than the preliminary number of minus 1.4%. Looking for minus 1.35%. But all eyes on growth and there's a GDP number to know and that's probably about it. I am going to do an idea of the day to day check the newsletter out a bit later for what that is. 

Ben O'Leary  08:54

Very good thank you, Marcus. All right, and we'll finish off with our question of the day which is simply today. What is your worst financial decision, Tom?

Tom Wegner  09:03

My worst financial decision was betting on the Melbourne Cup I feel it's my first experience betting and I got very swept up in all the emotion the excitement and I lost a lot of money for me back then was a couple $100 But maybe that is in a weird way a positive thing because now I don't have any appetite for betting...

Marcus Padley  09:22

I was gonna say Tom the worst financial decision would be betting on the Melbourne Cup for the first time and winning a fortune which would have turned you into a lifelong gambler. 

Tom Wegner  09:31

Yeah, SO maybe it was a good thing.

Ben O'Leary  09:32

That is the start of almost every gambling addicts speech and their road to recovery but it almost always starts with I went and place my first bet and at one and I walked out with $1,000 and I thought how could this 10 years later.

Tom Wegner  09:44

It's easy. 

Tom Wegner  09:45

Layton?

Layton Membrey  09:46

I reckon Marcus would love this one but putting money into crypto has been my worst investment decision so far. Pretty much lost at all. So...

Ben O'Leary  09:54

Yep, not much more needs to be said there. Chris?

Chris Conway  09:57

Thanks, guys. My worst financial decision was investing in the business that I worked for prior to Marcus today lost a fairly significant amount of money and the best decision soon follow that and that was investing in markets today. So swings and roundabouts previous employer was definitely the worst one.

Ben O'Leary  10:13

Thank you, Chris. I'll get mine before I throw Marcus because I think you're gonna have a little bit to say, I'll go a little bit different. It's not something I invested in, but something almost didn't spend my money on when I was in Italy in Venice, and there's 100 euros for a gondola ride, and I almost decided not to and then I called my mom and she said, You're not gonna remember that $100 Being in your pocket in 10 years time, but you will remember the gondola ride and so I did buy it. But that would have been a sliding door or something. I'd rude not spending that money. So bit of a flip side. Marcus?

Marcus Padley  10:43

Well, where do I start? There are many, many bad financial decisions over the years. One of them would be not educating myself early enough. I did a master's of Applied Finance. I could have done it 10 years earlier and wish I had and that was one of the best financial decisions it was to educate myself but there are a whole load of stocks and the biggest mistake has always been selling them only in hindsight, I can do this but I bought a million Paladin at 1.6 cents sold them at 3.2 cents doubled my money and they went to 10 bucks. Thank you very much.

Ben O'Leary  11:19

Good, short and sweet. That's about that. Thanks, guys. Thanks, guys. See ya.