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| On Wednesday, July 16, 2025, the ASX fell 69 points to finish at 8562. This is after the ASX 200 hit a new ALL-TIME CLOSING HIGH (ATH) of 8630.3 yesterday, which was just shy of the ATH intraday of 8639.10. The US markets saw new ATHs from the S&P 500 and NASDAQ overnight, with NVIDIA driving most of the gains. With an increase of 4% to a new high, the company was valued at US$4.16 trillion after CEO Jensen Huang visited the White House and gained approval to sell semiconductors (computer chips) to China. However, there were broader concerns from the US inflation figures, which gave a slight uptick from the tariffs. US banks started the US quarterly reporting season last night with mixed results, which might set the tone of the upcoming reporting season in the US and Australia, as the results may be inconsistent within sectors. We are now entering the profit confession season, where companies are signing off on their June 30 results, and they have to make sure the market is informed. Earlier this week, China announced its exports had increased 5.8% in June after allowing for a 16.1% drop in exports to the US. In short, China is still growing, as shown by its GDP result yesterday, which increased 5.2%, and it is looking for other trade opportunities. Just to let you know, as noted in the UBS note below, the US only represents 16% of global trade. We previously mentioned that China kept its powder dry to wait for Trump’s trade deal. This is causing growing global confidence that China could withstand a trade war with the US. This might also explain why iron ore has rebounded from near $90 to near $100. The bond markets are still reasonably calm, but did increase after the inflation numbers last night. We will likely see more volatility in the coming weeks. For the first time this year, the brokers have decreased the target prices for the CORE Watchlist (30 stocks) more than increased. We are happy for you to share our Not So Daily Bulletin with family and friends, and if we can help them, we are also happy to chat. |
| US Inflation US inflation released last night was slightly higher at 2.9% headline and 2.7% core. The markets have been expecting some inflation impact from the tariffs, which has also kept US Federal Reserve chair J. Powell from cutting rates. The results were OK, but could be read in many different ways. It shows that the tariffs haven’t had an impact on inflation over the last couple of months. The goods (green) inflation hasn’t been seen with a slight uptick in this month’s figures, but the inflation figure increased rather than continued the recent downtrend. This suggests a couple of things. 1) The exporters are absorbing tariffs. 2) The US supply chain businesses are absorbing the tariffs. 3) Retailers are selling pre-tariff goods from inventories and haven’t started passing on the higher prices yet to the consumers. Most economists suggest it will take 3 to 6 months for the tariffs to impact prices as goods work their way through the supply chain. The other observation from the inflation chart below is that services inflation (blue) has stalled at 2%. Tonight, the US releases the PPI (producer price index). This may give further signals about where the tariffs are impacting the supply chain. |
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| Global Equities UBS research summarised UBS expect consolidation near term in equities (until mid-September). Concerns being: i) UBS Risk Appetite is just above neutral. ii) Earnings downgrades are likely, UBS has EPS growth of 7% in ’25E. as US GDP growth slows from 1.8% YoY in Q2 to 0.9% YoY in Q4. iii) The US Fed doesn’t restart a cutting cycle until September 17th. Hence, weak economic data will likely be taken as bad news. iv) August and September are the worst two months of the year. UBS would be surprised if the consolidation phase brought more than 5% downside. UBS would buy into this and raise the year-end forecast to 960 MSCI World AC = c4% upside (from 940 MSCI AC World) and introduce a year-end target of 1000 MSCI World for end-2026 = 8% upside. What is supportive, outside of a tariff discussion? i) fiscal and monetary policy easing outside the US has resulted in a downgrade to global GDP of just 10bp since April 1st for 2025 and 2026, when taken together. ii) US wage growth is very well behaved. This not only helps profit margins but, more importantly, market expectations for inflation, allows the Fed to cut by 1% by year-end starting in September iii) some exceptionalism in the P/E is normal at this stage of the cycle. If the relationship between credit spreads and P/E stays in its post-’22 range, then the ‘fair value’ P/E is c23x (using 12-month forward) = c6,600 S&P 500. Perceived productivity improvements from Gen AI only add to this: iv) historically, if markets just avoid a bear market (as was the case in mid-April), then 1 year later they are up an average of 34%, cf to 25% so far. From here UBS are reasonably relaxed about the impact of tariffs because: i) as above, the policy response is offsetting much of the hit to global GDP; ii) the fiscal boost from the ‘BBB’ adds c0.45% to GDP over the next 6 quarters and offsets about around half the US GDP hit from tariffs – the CBO estimates that the revenue raised from tariffs covers 85% of the cost of the BBB; iii) the US is only 16% of global trade; iv) Some other regions are reducing trade barriers with each other. We think that there are good logical reasons to expect no major hike in tariffs from here. UBS up the probability of a Bubble scenario to 25% for end-2026 and acknowledge a risk that this is too low. UBS has 6 out of 7 preconditions for a bubble. The only major one missing is benign monetary conditions, but if UBS forecasts for the Fed are borne out, then UBS get all 7. Into bubbles, historically 30-43% of market cap has traded up to a P/E of 45x -72x on a 10-year bond yield of 5.5% to 6.4%. We are far removed from this with the Mag 6 (excl Tesla) on a P/E of 33.5x 12-month trailing. Into a bubble,MSCI AC World rises by c20%, at least. The ‘justification’ for a bubble would be either Gen AI being perceived to increase productivity by 2% from 2028 (which gives c 20% upside by end-’26 in the Equity Risk Premium model) or corporate balances being less risky than normal against government balance sheets. |
| Australian Banks Macquarie research updated Bank research. Offshore investors have taken over from Super in buying banks: Over the last 6-months the primary source of net-buying of banks has shifted from domestic institutions (largely superannuation funds) to offshore investors. Macquarie thinks this reflects a few factors including: (1) super funds already implementing bank ‘overlays’ to manage underweights, (2) super allocations to Australian equities peaking in Sep-24, (3) offshore investors looking for tariff safe-havens and betting on a weaker USD. Looking forward Macquarie see several key risks to these positioning trends which have supported banks including; (1) super funds turning negative on the bank sector, (2) a return of unlisted activity and increased preference for offshore investments seeing allocation to Australian equities fall, (3) US regulatory easing unlocking billions in capital returns, seeing global financial investors fund US bank buying with Australian banks, where capital returns have already played out. This combined with downside risk to FY25E/FY26E earnings should drive banks underperform. • Following the flows: Bank share registry data suggests offshore and domestic investors remain buyers of the banks in the Jun-25 quarter. With international institutions buying ~$2.7bn of bank shares, the highest since Mar-20, while domestic institutions bought ~$700m. International institutions largely bought CBA (~$2.2bn), while Domestic institutions bought NAB (~$600m) and WBC (~$300m). . • Macquarie proprietary flows data: Our proprietary data supports this with offshore investors continuing to buy financials since March, with strong flows into CBA and NAB in particularly. • US ADR volumes at record high: May saw record traded volume (and value) in US listed ADRs of ANZ, CBA and NAB, with a combined A$1.5bn traded. This saw ADR volumes a record 7-9% share of ASX volumes. While difficult to confirm, we think much of this flow was driven by currency views aiming to take advantage of a depreciating US Dollar and end of ‘American Exceptionalism’. • Who else has been buying? Retail investors continued to be net sellers of banks in the June quarter, with selling activity in CBA, NAB and WBC, but buying of ANZ. Domestic investors remain overweight NAB, and increased their positions for the first time since Jun-24, they remain neutral WBC. International investors remain underweight CBA, but their underweight position is now at a record low. Short interest decreased across all banks, except BEN and JDO, with CBA’s short interest now broadly in-line with major bank peers |
| Resources Morgans research updated on resources BHP We have a BUY recommendation on BHP, with a A$43.90 target price (SOTP DCF). The group pairs sector-leading balance sheet strength with exposure to copper and potash growth that is not fully captured in consensus numbers. A 5%+ forward dividend yield, underpinned by robust earnings strength, supports total shareholder return. That said, softer near-term iron ore pricing and a healthy valuation cap immediate upside, so we favour building positions on market pullbacks. Longer term, sustained free cash flow, rising copper output and further potash expansion should unlock further value. Key risk to our call is primarily global/regional macro driven (metal prices), and secondly execution on potash and copper growth. Rio Tinto RIO is under a HOLD recommendation, with a A$109ps target price (SOTP DCF). The miner’s strong balance sheet and diversified earnings base support an abovemarket forward dividend yield that we see as underpinned for the next 12 months. However, Pilbara execution risks around volumes, PB fines quality and unit costs, plus geopolitical overhangs in Mongolia, Guinea and Canada, weigh on near-term sentiment. In addition, non-growth capex looks to have peaked at a high watermark, yet its elevated run-rate threatens medium-term free cash flow and dividend capacity, particularly as RIO ramps up investment in lithium. With a share price near fair value we await clearer operational delivery before turning more constructive. Key risk to our call remains sensitive to execution performance on critical mine replacement projects in the Pilbara; political/country risk in Mongolia, Guinea and Canada (US tariffs); and global macro growth risk (metal demand drivers). South 32 We have S32 on a BUY, with a A$4.10 target price (DCF SOTP). The company offers true commodity diversity, with a high weighting to base metals, without the iron ore cyclicality that dominates its larger diversified mining peers. S32 trades at a clear discount to NAV and historical EV/EBITDA multiples, presenting compelling value upside. While near-term catalysts are thin, and next month’s Mozal impairment could weigh on sentiment, we see this as an incremental negative rather than thesis-changing. We expect patient investors will be paid to wait via a sturdy balance sheet and sustainable dividends. Key risks to our call are global/regional growth (base metal demand drivers), and execution on Hermosa project developments. Woodside We have WDS on a BUY recommendation. Operational discipline continues to shine, with unit costs consistently beating guidance and peers in recent periods, underpinning a robust 6-7% forward dividend yield. The planned partial selldown of Louisiana LNG in 2H25 should crystallise value, further delever the balance sheet and fund organic growth, providing a clear near-term catalyst path. Trading on a healthy discount to smaller-peer STO in P/NAV and EV/EBITDAX, the stock offers compelling upside to our A$31.00 target price (SOTP DCF). While oil price volatility remains a risk, WDS’s tier-one assets and proven capital discipline leave us high-conviction buyers. Key risks to our call are execution risk on LALNG development, Scarborough construction and oil/LNG market outlook. |
| Lend Lease (LLC) Citigroup note today summarised We note the announcement from LLC this morning around the win of a >A$2.5bn gross end value development project at 175 Liverpool Street in Sydney. LLC plans to build 300 luxury apartments and 2,000sqm of retail space. We have previously highlighted new project wins as catalysts for LLC, and therefore see today’s announcement as a positive, as it helps provide visibility for future development earnings. The project is targeted to start in FY27 and complete in CY30, and LLC expects to announce a 50% selldown in the coming weeks to a capital partner. Below, we also highlight a range of other projects that LLC is working on that could possibly provide future earnings visibility, and a win of any of these could be a potential catalyst, in our view. We retain Buy on LLC. Based on our research of various articles, we highlight a range of potential future projects that could contribute to LLC’s development pipeline and earnings into the future. • Hunter Street Overstation development – LLC, MGR and Justin Hemmes backed a hospitality group (Merivale), which have formed the Metropolis consortium together, are close to winning the project as one of the rival bidders, Brookfield, has pulled itself out of the process. • Athletes Village development – LLC’s Brisbane Showgrounds had been announced as the location for the 2032 Brisbane Olympics Athletes Village, which is expected to accommodate more than 10,000 athletes, and will become residential post the Olympics. • Blackwattle Bay development – LLC and 2 competitors were shortlisted last year for the Blackwattle Bay redevelopment in Sydney, which is expected to have 1,100 homes. • Arden Central Precinct in Victoria – LLC and 3 competitors have been shortlisted by Development Victoria in a multi-stage process to select a development partner for the Arden Central precinct. |
| Exchange Traded Funds (ETF) ETFs are a collection of investments. They usually pay an income payment either half-yearly or yearly. Today, most ETFs trade ex-dividend, which means they trade without the expected dividend, which is paid later in the month. Payment dates are as follows; Blackrock I Shares 11 July 2025 Betashares 16 July 2025 Global X 16 July 2025 Vanguard 16 July 2025 Fidelity 18 July 2025 Magellan 21 July 2025 Van Eck 25 July 2025 The distribution can vary each year (more than a dividend from shares) as it can include any realised capital gain sold within the ETF over the period. This year, we are seeing some ETFs pay a higher-than-normal distribution. These include; IAA (Asia) distribution yield is 4.1%. RBTZ (Global Robotics) distribution yield is 4.01% SEMI (Global Semiconductors) distribution yield is 7.09%. |
| Financial Planning Snippets PLEASE BE VIGILANT regarding financial scamming. If anyone is requesting financial information from you (via phone, email, text, or social media), please contact us first or ask them for their ABN. Super Guarantee (SGC) for employees increases to 12% from 1/7/25 Concessional super contributions maximum of $30k Commonwealth Seniors Health Care card has seen the income limit increase to $158,440 (couple) $99,025 (single). If you are of Age Pension age and don’t have the card, please let us know. |
| Other Stories RBA are recommending the removal of surcharge fees, which will be a good saving; however, it might remove the benefits from the reward points programs. Therefore may be better to use your points (if you have them) sooner rather than later. |
| Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett South 32 (S32) decreased from $4.10 to $3.90 Morgans BHP increased from $43.70 (highest broker) to $43.90 (still highest broker) Santos (STO) decreased from $6.90 (lowest broker) to $6.80 (still lowest broker) S32 decreased from $4.30 (highest broker) to $4.10 (still highest broker) Telstra (TLS) increased from $4 (lowest broker) to $4.70 Woodside (WDS) increased from $30.10 (highest broker) to $31 (still highest broker) Morgan Stanley Computershare (CPU) decreased from $34.60 (lowest broker) to $33.70 (still lowest broker) Macquarie Goodman Group (GMG) decreased from $36.06 to $35.24 Lend Lease (LLC) decreased from $7.79 (highest broker) to $7.23 (still highest broker) S32 decreased from $3.60 to $3.40 Orora (ORA) decreased from $2.39 to $2.36 Bell Potter/Citigroup NextDC (NXT) decreased from $18.70 to $18.35 UBS Tracking changes for 2025 Upgrades 168 Downgrades 170 |
| Core Watchlist Index (changes since last Not So) The CORE Watchlist is a collection of 30 Australian shares, predominantly “Blue Chip”. We obtain research from up to 6 brokers on each share. Each broker provides a Target Price (value in 12 months) which then provides us with an average for each stock. We then compare that average to the current price as a percentage. IE Macquarie price $176.95 Av. Target Price $205.96= 85.9% (meaning 14.1% upside over next 12 months) + income 4.35% (including franking). To get the CORE Index we take the average across the 30 stocks. This provides us with a market average as there are up to 80 teams of analysts providing the research and target prices. The CORE Watchlist stocks represent more than 55% of the ASX 200 and so provide us with a good indicator of the market value. When it’s at 100% then the market is fully priced. We have seen that when the index is below 90%, then it’s good buying, but that doesn’t happen very often. Should you have any questions, please let me know. The Core index decreased from 98.41% to 97.78%. If we removed the 4 banks, the index falls to 93.37% Overall Earnings Per Share (EPS) FY25 decreased from 1.13% to 1.06% new low of 0.85% last week. FY26 increased from 8.17% to 8.19% Most expensive – CBA 162.5% (176.5% highest ever). Least expensive – NextDC (NXT) 71.9% The CORE Watchlist has 10 (10) stocks trading above 100%; they are; ANZ BXB CBA CPU JBH MQG NAB TLS WBC WES, lowest number ever is 0, highest is 14. While 7 (5) is trading below 85% (the highest is 18, and the lowest is one). AMC CSL LLC NXT RMD S32 SEK (Figures in brackets are last Not So). STOCKS TRADING BELOW ALL BROKER FORECASTS ARE AS FOLLOWS; (it has been a handy indicator in the past). 10 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $66.60 Broker range $70 to $76 AMC current price $14.48 Broker range $14.50 to $20.31 BHP current price $39.11 Broker range $39.50 to $48.70 COL current price $20.39 Broker range $20.95 to 23.50 CSL current price $247.45 Broker range $310 to $360.30 LLC current price $5.09 Broker range $5.85 to $7.79 NXT current price $14.08 Broker range $18.00 to $21.20 RMD current price $38.90 Broker range $44.07 to $48 SEK current price $24.00 Broker range $25.80 to $30.10 WOW current price $31.11 Broker range $31.80 to $36 Added AMC COL RMD Removed ORI |
| Banking Index (changes since last Not So) Like the CORE Watchlist index, the Banking index is the four major banks’ average target price based on research from up to 6 brokers. The percentage below 100% is the potential upside over the next 12 months (not including income). If at or over 100%, then this indicates the Banks are fully priced. The banking index increased from 127.8% to 128.8%. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. PLUS FRANKING. FY 25 % FY 26 % FY27 % ANZ 164.00 5.44% 162.00 5.38% 162.2 5.39% CBA 484.20 2.73% 499.60 2.73% 515.4 2.90% NAB 170.00 4.44% 170.20 4.45% 165.4 4.32% WBC 152.00 4.56% 155.20 4.66% 148.6 4.46% MQG 650.00 2.92% 739.50 3.32% 801.25 3.60% CBA yield is below all the others. Dividend expectations for BHP and RIO. The forecasts below are for the full year. Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). FY25 % FY26 % FY27 % BHP 153.83 3.93% 155.50 3.98% 167.00 4.27% RIO 581.17 5.26% 582.83 5.27% 606.17 5.48% |
| Other Indicators (changes since last Not So) US VIX (Fear) Index increased from 16.17 to 17.59. Just above normal levels. Normal is 10-17. Iron Ore increased from $95.85 to $98.95. The average expectation for 2025 is $99.1. Copper decreased from $5.64 to $5.52. New ALL TIME HIGH of $5.8955 on July 8, blowing past the previous high of $5.26. The 50% Copper tariffs were the cause Gold increased from $3335 to $3344. ATH $3509.90. AUD/USD decreased from 65.58c to 65.26c. Asian markets – MIXED. US 10-year Bonds increased from 4.35% to 4.48%. 2-year rate 3.95%. 30 year rate back above 5% at 5.02%. German 10 year Bonds increased from 2.63% to 2.72%. Japanese 10 year Bonds increased from 1.50% to 1.57%. Highest for 16 years was 1.59%. Aussie Bonds 10 year Bonds increased from 4.29% to 4.41%. Recent high 4.95%. Oil prices decreased from $68.46 to $66.74. Tungsten—China price remained at $433mtu. The European price range increased from $440-$485 to $450-$485mtu (highest price for 12 years). |
| This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), 6 US states (California, Massachusetts, New Jersey Colorado, South Carolina, Virginia), Bulgaria, Sweden, NZ, India, Chile and Israel. This week – In Office – July reviews Next week – In Office- July reviews (except Friday) PO BOX 149 Deniliquin NSW 2710 125 End St Deniliquin NSW 2710 Ph. 03 58950100 Fax 03 58950101 Mobile 0412113524 scottm@provincialwealth.com.au kevinh@provincialwealth.com.au chrisp@provincialwealth.com.au maddyl@provincialwealth.com.au |
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| On Monday, June 30, 2025, the ASX gained 28 points to finish at 8542. The market was positive after the US S&P500 hit a new ALL-TIME HIGH on Friday, even though tariff talks are about to take centre stage alongside the One Big Beautiful Bill, which passed the Senate 51-49 over the weekend. Today, the ASX gains were towards recent laggards CSL, up 2.2%, MQG, up 3.9%, and NXT, up 2.2%. There may have been some switching out of CBA, which was down at $184.75, down from its ATH of $192 set last week. The Coppo report says July is usually quiet but we will see with the tariffs coming back. The ASX finished the year up 10% which was a good result considering the headwinds. Most ETF’s trade ex-dividend tomorrow with the dividends paid in July. This is an interesting story about driverless ride-sharing technology. It’s coming in the next few years. Compared to human drivers, the accident rate is down 78% (I’m not sure I’m game just yet). The bond markets are still reasonably calm, so there are no concerns about the potentially rising US debt. We will likely see more volatility in the coming weeks. We are happy for you to share our Not So Daily Bulletin with family and friends, and if we can help them, we are also happy to chat. |
| July tends to be quiet According to the Bell Potter Coppo report, Richard Copplestone made the following observations about the market in July. 1. It’s a 4 day week in US as Friday US markets are closed for their 4th July “Independence Day” national holiday 2. End of Financial year today – so rest of this week & all next week – instos will be squirrelled away from the market preparing their end of EOFY reports as to why they outperformed (due to excellent understanding of the mkt by themselves) or why they underperformed (due to “external shocks – like Trump’ unpredictability or the Tariff selloff or Iran (if they were long Oil/ oil stocks for that one). 3. Also many fund managers have jetted off on holidays, with schools breaking up for the next 3 weeks – so many will be away for much of July. 4. Then as they get back from holidays, those who worked in the first half of July, then take their holidays over the 2nd half of July. 5. It’s US & European summer – so they are all off on their summer breaks (like we do in “our summer holidays” in December & January) as well – that lowers trading volumes across the globe. 6. No Transition Portfolios are seen in early July – if they were going to do one – it’d be done in June. 7. I said to this guy over the last 30 years the one time I particularly dislike to be at work – is in the first 3 weeks of July – as everyone is way, trading is crap & it’s usually quite boring. 8. BUT we do tend to see profit warnings come through from companies that have just seen their end of June 30 numbers & need to advise – that adds to some volatile moves. 9. Also with reporting season starting in August – we tend to start seeing a number of stocks that are expected top, do well – or poorly – start to move up or down as buyers or shortener’s start to get their trading positions set. 10. So often as we see a number of stocks report – they may have already moved say 10% before their result & if it’s a good result they’ll add +10% more & if it’s a shocker they’ll drop -15% to -20% or even more if it’s a real shocker. 11. So July tends to thin, strong but overall quiet boring, but a lot of stocks do start to move from 21st July on– thin trading sees large moves in many stocks in the last few weeks of July.. |
| Aussie Equity strategy Morgans updated their Aussie equity view. The Australian economy continues to defy expectations of a sharper slowdown. A resilient labour market and better-than-feared retail spending are helping to support the earnings outlook for listed companies. However high prices at the large end of the market (ASX 20) may limit large cap returns. As such, we think the potential broadening-out of performance to mid-small caps provides a better risk/reward balance for returns. Equity sector preferences: Absent a sustained rebound in commodity prices given the ongoing disruption in global trade, above-average earnings growth will be difficult to achieve in a slower economy. Accordingly, we prefer a targeted portfolio approach, tilting what we believe are the best relative opportunities and the best risk/return profile. We prefer tilting exposure toward mid/small caps and quality cyclicals while monitoring/ reducing exposure to those caught in the expensive flight-to-defensive sectors (banks, staples, telcos). Review and re-balance: Defensive, and domestic facing segments broadly continue to outperform growth amid the increasingly uncertain geopolitical and macro-economic environments triggered by overseas events including a volatile policy agenda from the White House. There appears to be little room for error in stretched equity valuations. Equity risk appetite looks set for a bumpy end to 2025, requiring investors to review and re-balance portfolios more frequently. Sector ratings: Morgans sector analysts have moved to Neutral ratings on both the Telco (upgraded from Underweight) and Consumer Staples sectors (downgraded from Overweight). |
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| Core & ETF June 2025 review As always, performances were mixed throughout the month. The ASX gained 1.27% for the month, the calendar year ASX was up 4.7% (6 months), and the financial year ASX was up 9.96% (12 months). CORE Watchlist 30 ASX-listed stocks from our CORE Watchlist. The best performers for the month were Santos (STO), which was up 16.2% after receiving a takeover offer from Abu Dhabi energy company. NextDC (NXT) is up 10.6% after a rebound in the demand for data centres, and Macquarie (MQG) is up 6.8% after a sell down in April. Other notable gainers for the month were Woodside (WDS) up 6.2% and CBA 5%. The worst performers for the month were Lend Lease (LLC) down 7.8%, after gaining 10% last month. Rio Tinto (RIO), down 4.9%, as iron ore was weaker and South 32 (S32) down 4.6%, due to commodity weakness. Over the calendar year (6 months), the best performers were the same as last month, Nine Entertainment (NEC), up 31.6% after Domain was sold (Nine is the majority owner), Brambles (BXB), up 21.7% on positive profit result and Telstra (TLS), up 20.7% after finally being recognised as having technology exposure. Other notable gainers for six months were CBA up 20.6%, JB Hi-Fi up 19.1% Wesfarmers (WES) up 18.5% and Computershare (CPU), up 17.5%, The worst performers were Orora (ORA), down 23.2%, as concerns about the French bottle acquisition and the impact of a trade war on the global liquor trade. CSL down 15% as healthcare out of favour. South 32 (S32) is down 14.4% as resources have struggled. Over the financial year (12 months), the best performers were JB Hi-Fi (JBH), up 80.3% as technology sales continue to deliver, Brambles (BXB), up 61.2% and Computershare (CPU), up 51.4% as share registry outlook improves. Other notable gainers for 12 months were CBA up 45%, Telstra (TLS) up 33.7%, ResMed (RMD) up 35.2%, Wesfarmers (WES) up 30%, Aristocrat Leisure (ALL) up 31%, Westpac (WBC) up 24.4% & Coles (COL) up 22%.4% The worst three were S32 down 20.5%, CSL down 18.9% and NXT down 17.8% after a selloff due to concerns about data centre demand, which has started to reverse. EXCHANGE-TRADED FUNDS (ETF) As part of our research, we cover approximately 80 ETFs. The best and worst performers for the period(s) were as follows. The best performers for the month are Korea (IKO), up 15.7%, as a change in political leader is a positive for the country and investors. Global Semiconductors (SEMI), up 6.7%, continued to rebound after a selloff due to data centre demand and trade issues regarding tariffs. The result would have been better but it went ex-dividend today 7% (giving a 13.7% gain for the month) and Asia (IAA) up 8.1% as the recovery in the Asian economies continues. Other notable gainer for the month was Emerging Markets (EMKT), up 5.7% The worst three were Global Property (RCAP), down 1.5% as US interest rate cuts have been delayed. Japan (IJP) down 0.7% on inflation, higher expected. Global Health (IXJ), down 0.3%, as concerns about Trump tariffs remain for pharmaceuticals and changes to US health policy from RFK Jr. The best for the calendar year (6 months) were IKO, up 32.6%, and Europe (IEU), up 16.8% due to expected stimulus and cheap valuations. Asia (IAA) up 14.2%. Other notable gainers China (IZZ) up 14.2% Global Cybersecurity (HACK) up 11.8%, EMKT up 11.4% & Global Value (VLUE) up 11.1% The worst performers were Global Biotech (CURE), down 12.4%, and Global Cloud Computing (CLDD), down 8.9%, after concerns about data centre demand. Global Health (IXJ) down 4% The best performers for the financial year (12 months) were IZZ, up 40.9%; Global Cybersecurity (HACK), up 34.6% due to the growing need to protect data; and IAA, up 24%. Other notable gainers for the 12 months, Global AI (GXAI) up 21.8% China New Economy (CNEW) up 20.7%, Australian Property (MVA) up 19.3% Europe (IEU) up 18.3%, Global Value (VLUE) up 18.6%, EMKT up 16.9%. The worst performers were CURE, which was down 9%, IXJ, which was down 5.7%, and Australian Resources (MVR), which was down 2.6%. |
| A significant technology change – driverless ride sharing. Last week, with great fanfare, Tesla launched its ride-sharing taxis in Austin, Texas. However, another company, Waymo (owned by Alphabet—Google’s parent company), has been delivering ride-sharing technology over the last year. To date, Waymo has driven 7 million autonomous miles and is conducting 200,000 paid trips per week, while Telsa has accumulated 50,000 miles between its Texas and California factories. I asked Microsoft’s Co-pilot to provide the advantages and disadvantages of each Waymo Waymo is a subsidiary of Alphabet Inc. (Google’s parent company) and focuses on developing autonomous driving technology. Waymo’s self-driving cars, known as Waymo One, are used for ride-hailing services in several U.S. cities. They utilise advanced sensors, machine learning, and artificial intelligence to navigate roads without human intervention. Advantages: Safety: Waymo’s autonomous vehicles are designed to reduce human error, which is a major cause of accidents (see chart below). Cost Efficiency: Operating costs are lower compared to traditional ride-hailing services since there are no driver salaries Environmental Benefits: Waymo’s fleet includes electric vehicles, contributing to reduced emissions. Technological Innovation: Waymo continuously improves its sensor suite and driving algorithms. Disadvantages: Regulatory Challenges: There is still significant pushback and concern over regulation, as no federal law oversees self-driving cars. Weather Limitations: Waymo’s technology can struggle in adverse weather conditions like heavy snow. High Initial Investment: Developing and deploying autonomous vehicles requires substantial capital. Tesla Tesla is an American electric vehicle (EV) manufacturer founded by Elon Musk. Tesla is known for its innovative electric cars, energy products, and advanced driver-assistance systems like Autopilot and Full Self-Driving (FSD). Advantages: Performance: Tesla vehicles offer impressive acceleration, handling, and overall performance. Autopilot and FSD: Tesla’s advanced driver-assistance features are continually improving and moving closer to full autonomy. Supercharger Network: Tesla has established a global network of fast-charging stations, making long-distance travel more convenient. Environmental Benefits: Tesla’s commitment to sustainable energy helps reduce greenhouse gas emissions. Innovation: Tesla is known for its continuous introduction of new features and products. Disadvantages: High Initial Cost: Tesla vehicles can be relatively expensive compared to traditional gasoline-powered cars. Quality Control Issues: Some owners have reported issues related to build quality and reliability. Dependence on Software Updates: Frequent software updates can change vehicle functionality and performance over time. Charging Infrastructure: While Tesla’s Supercharger network is extensive, it is limited to Tesla vehicles. Both Waymo and Tesla are pioneering the future of transportation, each with its unique strengths and challenges. Morgan Stanley (MS) provided an update on Waymo’s safety LA Safety Data Indicate Waymo’s Safety Advantage vs. Humans Scaling to New Cities. Waymo is now including LA data in its comparison of accident rates relative to human drivers, and the data suggests Waymo still maintains a healthy safety advantage vs. human drivers, with ~79% fewer airbag deployment crashes and 78% fewer injury-causing crashes. This safety advantage has largely remained stable vs. historical data releases which only included SF and Phoenix ( Exhibit 2 ). MS thinks this speaks to the ability of Waymo to generalize in new regions without sacrificing safety. We have written about Waymo’s work to build a generalizable and scalable self-driving system (see here). It will be important to track how Waymo’s safety performance compares to other autonomous players as they begin to ramp up their operations. |
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| Financial Planning Snippets PLEASE BE VIGILANT regarding financial scamming. If anyone is requesting financial information from you (via phone, email, text, or social media), please contact us first or ask them for their ABN. Super Guarantee (SGC) for employees increases to 12% from 1/7/25 Concessional super contributions maximum of $30k Commonwealth Seniors Health Care card has seen the income limit increase to $158,440 (couple) $99,025 (single). If you are of Age Pension age and don’t have the card, please let us know. |
| Other Stories – Nine Entertainment (NEC) via Stan has bought the local rights to English Premiership League (EPL) – soccer. |
| Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Morgans Morgan Stanley Macquarie BHP decreased from $42 to $40 Rio Tinto (RIO) decreased from $115 to $105 (lowest broker) South 32 (S32) decreased from $4.50 (highest broker) to $3.60 Bell Potter/Citigroup UBS Tracking changes for 2025 Upgrades 164 Downgrades 160 |
| Core Watchlist Index (changes since last Not So) The CORE Watchlist is a collection of 30 Australian shares, predominantly “Blue Chip”. We obtain research from up to 6 brokers on each share. Each broker provides a Target Price (value in 12 months) which then provides us with an average for each stock. We then compare that average to the current price as a percentage. IE Macquarie price $176.95 Av. Target Price $205.96= 85.9% (meaning 14.1% upside over next 12 months) + income 4.35% (including franking). To get the CORE Index we take the average across the 30 stocks. This provides us with a market average as there are up to 80 teams of analysts providing the research and target prices. The CORE Watchlist stocks represent more than 55% of the ASX 200 and so provide us with a good indicator of the market value. When it’s at 100% then the market is fully priced. We have seen that when the index is below 90%, then it’s good buying, but that doesn’t happen very often. Should you have any questions, please let me know. The Core index increased from 97.37% to 97.70%. If we removed the 4 banks, the index falls to 92.96% Overall Earnings Per Share (EPS) FY25 decreased from 0.96% to 0.92% new low. FY26 increased from 7.96% to 8.13% Most expensive – CBA 169.1% (176.5% highest ever) Least expensive – NextDC (NXT) & CSL at 73.8%. Both jumped 2% today. We might see a rally in both these in the new FY. The CORE Watchlist has 11 (11) stocks trading above 100%; they are; ANZ BXB CBA CPU JBH MQG NAB TCL TLS WBC WES, lowest number ever is 0, highest is 14. While 6 (7) is trading below 85% (the highest is 18, and the lowest is one). AMC CSL LLC NXT ORA ORI SEK (Figures in brackets are last Not So). STOCKS TRADING BELOW ALL BROKER FORECASTS ARE AS FOLLOWS; (it has been a handy indicator in the past). 11 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $65.17 Broker range $70 to $76 BHP current price $36.75 Broker range $39.50 to $48.70 CSL current price $239.48 Broker range $310 to $360.30 LLC current price $5.38 Broker range $6.30 to $7.50 NEC current price $1.63 Broker range $1.65 to $2 NXT current price $14.50 Broker range $18.00 to $21.20 ORA current price $1.89 Broker range $2.03 to $2.50 ORI current price $19.49 Broker range $20.65 to $23 SEK current price $24.05 Broker range $25.80 to $30.10 S32 current price $2.91 Broker range $3.05 to $4.30 WOW current price $31.11 Broker range $31.80 to $36 Added Removed SHL |
| Banking Index (changes since last Not So) Like the CORE Watchlist index, the Banking index is the four major banks’ average target price based on research from up to 6 brokers. The percentage below 100% is the potential upside over the next 12 months (not including income). If at or over 100%, then this indicates the Banks are fully priced. The Banking index increased from 126.1% to 131.2% record high. CBA is still dominating. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.00 5.69% 164.00 5.62% 162 5.56% CBA 475.00 2.57% 484.20 2.62% 499.6 2.70% NAB 169.00 4.29% 170.00 4.32% 170.2 4.32% WBC 166.00 4.90% 152.00 4.49% 155.2 4.58% MQG 645.00 2.82% 650.00 2.84% 735.75 3.22% CBA yield is below all the others. Dividend expectations for BHP and RIO. The forecasts below are for the full year. Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). FY24 % FY25 % FY26 % BHP 219.00 5.96% 155.00 4.22% 160.17 4.36% RIO 615.00 5.90% 616.17 5.91% 615.17 5.90% |
| Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 17.48 to 16.32. Back below normal level for first time in many weeks. Not sure how long it will last with tariffs taking centre stage again. This time last year it was at 12.69. Normal is 10-17. Iron Ore increased from $92.85 $94.75. The average expectation for 2025 is $99.1. This time last year it was $106.90, a drop of 11.3% Copper increased from $4.91 to $5.08. ALL TIME HIGH of $5.26. This time last year it was $4.41. An increase of 15.1% Gold decreased from $3344 to $3303. ATH $3509.90. This time last year it was $2,337. An increase of 41.3% AUD/USD increased from 65c to 65.39c. This time last year it was $66.47c A decrease of 1.6%. Asian markets – UP. US 10-year Bonds decreased from 4.29% to 4.27%. This time last year it was 4.45%. A drop of 0.18%. 2-year rate 3.74%. 30 year rate was above 5% now 4.83%. German 10 year Bonds increased from 2.53% to 2.59%. This time last year it was the same. Japanese 10 year Bonds increased from 1.40% to 1.43%. Highest for 16 years was 1.59%. This time last year it was 1.10%. An increase of 0.33% Aussie Bonds 10 year Bonds increased from 4.12% to 4.17%. Recent high 4.95%. This time last year it was 4.43%. A decrease of 0.26% Oil prices decreased from $65.28 to $65.17. Ceasefire holding between Israel and Iran. This time last year it was $83.64 or a drop of 22% Tungsten—China price increased from $418mtu to $428mtu. The European price range increased from $437-$475mtu to $440-$485 (highest price for 12 years). This time last year, it was China $350 mtu and Europe $335-$360mtu mtu. The price has increased over the year by 22.2% in China and 33% in Europe. |
| This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), 3 US states (California, Massachusetts & Colorado), Bulgaria, Sweden UK France, Israel and Italy This week – In Office – Starting new financial year. Next week – In Office- Starting new financial year. Contact Details PO BOX 149 Deniliquin NSW 2710 125 End St Deniliquin NSW 2710 Ph. 03 58950100 Fax 03 58950101 Mobile 0412113524 scottm@provincialwealth.com.au kevinh@provincialwealth.com.au chrisp@provincialwealth.com.au maddyl@provincialwealth.com.au |
| Top Stories |
| On Wednesday, June 4, 2025, the ASX gained another 75 points to finish at 8542. This is the highest point since 14 February when the market hit an ALL-TIME CLOSING HIGH of 8556 and an INTRA-DAY HIGH of 8615.2. This occurred on a day when GDP was below expected at 0.2% for the quarter, and iron ore was well below $100. We maybe watching a melt-up (see below). CBA hit a new ALL-TIME HIGH of $181.39 and accounted for 14 points of the 75. It’s now worth $300bn and valued at more than all the German Banks. it has a forward PE of 29. It’s not the only stock running higher; Wesfarmers (WES) hit an ATH of $84.67. JB HiFi (JBH) hit ATH of $112.98 and Telstra hit a 8 year high of $4.89. Additionally, we are seeing the US technology stocks running as they have rebounded strongly after the April tariff sell-off. Last week, NVIDIA provided its quarterly profits, which saw revenue of $43bn up from $22bn a year earlier. This has seen NVIDIA, valued at $3.446 trillion and with a forward PE of 29.1, retake the world’s most valuable company title from Microsoft, valued at $3.441 trillion and with a forward PE of 32. The TACO trade (Trump Always Chickens Out) continues to dominate market sentiment. However, this afternoon, President Trump posted that President Xi of China was very tough and extremely hard to make a deal with. This may suggest the trade war is about to heat up, or the TACO might be right! The bond markets are still reasonably calm, so there are no concerns about the potentially rising US debt. The US tariff revenue for May was $23bn, which is well up from last year, but short of President Trump’s claims of them being paid $2bn to $3bn per day. We will likely see more volatility in the coming weeks. We are happy for you to share our Not So Daily Bulletin with family and friends, and if we can help them, we are also happy to chat. |
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| Are we watching a melt-up? The markets are nearing all-time highs, but the fundamental picture seems to be worsening. Today, our GDP was 0.2% for the quarter and 1.3% for the year. The OECD lowered its forecasts for global growth due to the tariffs and potential trade war, including lower estimates for the US, China, and Australia than it forecast at the end of the year. The broker research continues to downgrade profit expectations, with the CORE watchlist growth for FY25 down at a meagre 1.25% while PEs for the Watchlist are hitting new highs (usually not a good recipe). CBA is now worth more than $300bn (more than any Australian company ever) with a PE of 29.6, trading 67% above the broker targets, and dividends of 2.62% or 3.75% with franking. We have all heard of markets having melt-down, but there is an investment term call a melt-up. Maybe we are witnessing a rare melt up. I asked Co-pilot what a melt up was. In investment terms, a melt-up refers to a sudden and dramatic increase in the price of an asset or market, driven primarily by investor sentiment rather than fundamental improvements in the economy. This phenomenon often occurs when investors rush to buy assets out of fear of missing out on potential gains, leading to rapid and unsustainable price increases. Melt-ups can be triggered by factors such as low interest rates, excessive optimism, or a lack of better investment alternatives. While they can result in significant short-term gains, melt-ups are often followed by sharp declines or market corrections, as the inflated prices eventually revert to more realistic levels. Investors should be cautious during melt-ups, focusing on economic indicators and fundamentals to avoid getting caught in the subsequent downturn. |
| Technology and Nuclear Energy Overnight, Meta (Facebook) signed a new nuclear energy deal, which means it joins NVIDIA, Microsoft, Google, and Amazon, which have signed nuclear energy deals in the last eight months as their solution to rising power needs. I asked Co-pilot to provide a summary. Meta signed a significant 20-year nuclear power deal with Constellation Energy. This agreement involves Meta purchasing approximately 1.1 gigawatts of power from Constellation’s Clinton Clean Energy Center in Illinois, starting in June 2027. The deal will support the continued operation and relicensing of the plant, which was at risk of closure. This partnership is part of Meta’s strategy to secure clean, reliable energy to power its AI and computing needs. The Clinton plant will continue to provide power to the regional grid, contributing to Meta’s goal of achieving 100% clean electricity. This move also aligns with broader efforts by tech companies to support nuclear energy as a sustainable power source. The relationship between technology companies and nuclear energy has been evolving rapidly, driven by the increasing energy demands of data centers and the need for sustainable power sources. Tech giants like Amazon, Microsoft, and Google have been exploring nuclear energy as a reliable and low-emission option to meet their growing power needs. For instance, Amazon Web Services (AWS) acquired a data center campus powered by the Susquehanna nuclear power station Similarly, Microsoft signed a power purchase agreement with Helion Energy, a nuclear fusion company, aiming to secure fusion energy within the next five years. These partnerships highlight the tech industry’s commitment to reducing carbon footprints while ensuring a stable energy supply. The need for nuclear energy in the tech sector is primarily driven by the massive energy consumption of AI and data centers. AI’s rapid growth has led to a significant increase in power demand, with projections suggesting a 165% rise in global data center power consumption by 2030. Nuclear energy offers a solution by providing clean, firm, and carbon-free power that can be generated consistently. However, the timing of nuclear projects remains a challenge, as building new reactors can take close to a decade. Despite this, the financial support from tech companies can help advance nuclear technologies, including small modular reactors, which promise quicker deployment. This symbiotic relationship between tech companies and the nuclear industry is crucial for achieving sustainable energy goals and supporting the future growth of AI and other technology-driven innovations. Below are two graphs I have published in the Not So before about nuclear energy and data power requirements that are still relevant. |
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| Financial Planning Snippets PLEASE BE VIGILANT regarding financial scamming. If anyone is requesting financial information from you (via phone, email, text, or social media), please contact us first or ask them for their ABN. Super Guarantee (SGC) for employees increases to 11.5% from 1/7/24 Concessional super contributions maximum of $30k Commonwealth Seniors Health Care card has seen the income limit increase to $152k(couple) $95.4k (single). If you are of Age Pension age and don’t have the card, please let us know. |
| Other Stories Macquarie cut cash rates after the RBA interest rate cut last week. Cash Management Account (CMA) moves from 2.50% to 2.25% and Accelerator Account moves from 4.4% to 4.15%. |
| Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Morgans Rio Tinto (RIO) decreased from $123 to $119 Morgan Stanley Macquarie Bell Potter/Citigroup Coles (COL) decreased from $22.10 to $21 Resmed (RMD) increased from $44 to $45 UBS Tracking changes for 2025 Upgrades 158 Downgrades 146 |
| Core Watchlist Index (changes since last Not So) The CORE Watchlist is a collection of 30 Australian shares, predominantly “Blue Chip”. We obtain research from up to 6 brokers on each share. Each broker provides a Target Price (value in 12 months) which then provides us with an average for each stock. We then compare that average to the current price as a percentage. IE Macquarie price $176.95 Av. Target Price $205.96= 85.9% (meaning 14.1% upside over next 12 months) + income 4.35% (including franking). To get the CORE Index we take the average across the 30 stocks. This provides us with a market average as there are up to 80 teams of analysts providing the research and target prices. The CORE Watchlist stocks represent more than 55% of the ASX 200 and so provide us with a good indicator of the market value. When it’s at 100% then the market is fully priced. We have seen that when the index is below 90%, then it’s good buying, but that doesn’t happen very often. Should you have any questions, please let me know. The Core index increased from 96.09% to 96.96%. If we removed the 4 banks, the index falls to 92.35% Overall Earnings Per Share (EPS) FY25 decreased from 1.68% to 1.25%. New lows, not a positive sign for the market. FY26 increased from 7.4% to 8.43% Most expensive – CBA 167% (highest ever) Least expensive – NextDC (NXT) 68.2%. The CORE Watchlist has 11 (10) stocks trading above 100%; they are; ANZ BXB CBA CPU JBH MQG NAB TCL TLS WBC WES, lowest number ever is 0, highest is 14. While 7 (7) is trading below 85% (the highest is 18, and the lowest is one). AMC CSL LLC NXT ORA RMD S32 (Figures in brackets are last Not So). STOCKS TRADING BELOW ALL BROKER FORECASTS ARE AS FOLLOWS; (it has been a handy indicator in the past). 11 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $63.25 Broker range $70 to $76 BHP current price $37.95 Broker range $39.50 to $48.70 CSL current price $246.22 Broker range $310 to $360.30 GMG current price $33.23 Broker range $33.50 to $42.40 LLC current price $5.79 Broker range $6.30 to $7.50 NEC current price $1.61 Broker range $1.65 to $2 NXT current price $13.25 Broker range $18.70 to $21.20 ORA current price $1.88 Broker range $2.03 to $2.50 ORI current price $18.93 Broker range $20.65 to $23 SEK current price $23.92 Broker range $25.80 to $30.10 S32 current price $3.02 Broker range $3.05 to $4.50 Added Removed STO |
| Banking Index (changes since last Not So) Like the CORE Watchlist index, the Banking index is the four major banks’ average target price based on research from up to 6 brokers. The percentage below 100% is the potential upside over the next 12 months (not including income). If at or over 100%, then this indicates the Banks are fully priced. The Banking index increased from 123.9% to 126.6%. CBA hitting another all time high and sitting at 167% of the target price (average of six brokers). Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.00 5.60% 164.00 5.53% 162 5.47% CBA 475.00 2.62% 482.00 2.66% 494.4 2.73% NAB 169.00 4.38% 170.00 4.40% 170.2 4.41% WBC 166.00 5.02% 152.00 4.59% 153 4.62% MQG 645.00 2.97% 650.00 2.99% 735.75 3.39% CBA yield is below all the others. Dividend expectations for BHP and RIO. The forecasts below are for the full year. Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). FY24 % FY25 % FY26 % cps cps cps BHP 219.00 5.77% 155.00 4.08% 160.17 4.22% RIO 615.00 5.61% 616.17 5.62% 615.17 5.61% |
| Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 18.57 to 17.69. Nearing normal. Normal is 10-17. Iron Ore decreased from $99.45 to $94.40. Impact from trade war and increased tariffs on steel to 50%. The average expectation for 2025 is $99.1 Copper increased from $4.70 to $4.86. ALL TIME HIGH of $5.26. Gold increased from $3289 to $3375. The VIX is down but gold up. There is still market fear around. ATH $3509.90. AUD/USD increased from 64.31c to 64.55c. USD weakened over the month CHN/USD Yuan increased from $7.19 to $7.22. Asian markets – UP US 10-year Bonds increased from 4.40% to 4.46%. It hit 4.6% on growing concerns about US debt from the new tax bill 2-year rate 3.96%. 30 year rate was above 5% now 4.98%. German 10 year Bonds increased from 2.50% to 2.52%. Japanese 10 year Bonds decreased from 1.53% to 1.50%. Highest for 16 years was 1.59%. Aussie Bonds 10 year Bonds decreased from 4.29% to 4.26%. Recent high 4.95% Oil prices decreased from $60.79 to $63.13. Tungsten—China price increased from $398mtu to $408mtu. The European price range remained at $410mtu-$445mtu (highest price for 12 years). |
| This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), 8 US states (California, Massachusetts, Colorado, Connecticut, Ohio, South Carolina, Virginia and New Jersey), Bulgaria, Sweden & Israel This week – In Office – June reviews – out of office Hay, Griffith Hillston Thursday- Friday. Next week – In Office- June reviews Contact Details PO BOX 149 Deniliquin NSW 2710 125 End St Deniliquin NSW 2710 Ph. 03 58950100 Mobile 0412113524 scottm@provincialwealth.com.au kevinh@provincialwealth.com.au chrisp@provincialwealth.com.au maddyl@provincialwealth.com.au |
| Top Stories |
| It’s pleasing to write number 700 on a day when the ASX jumped more in five years & the S&P500 had its best day since 2008. On Thursday, April 10, 2025, the ASX jumped 335 points to finish at 7710, up 4.5% for the day. However, for all the volatility, the market is only up 42 points or 0.5% for the week. (What’s all the fuss about). The S&P500 jumped 9.5%, its best day since 2008 and its ninth-highest day ever. The NASDAQ was even better, up 12%. Here are some individual stock gains from today from our preferred stable: HNDQ +13%, SEMI 12%, QHAL 11%, NXT 9%, S32 9%, NDQ 8%, GXAI 8%, RBTZ 8%, GMG 7%, and HACK 7%. US Markets initially opened down as the tariff pressure was building. At 1 pm US time, Goldman Sachs issued a research note saying the US was going into a recession. This, plus the 10-year Bond rate had pushed higher than 4.5%, were seen as the catalysts for President Trump to state at 2.10 pm saying tariffs would be reduced to 10% for all countries and paused for 90 days while negotiations could be held with individual countries. However, China’s tariffs would increase to 125% from 104% and remain in place. Thankfully, President Trump has been persuaded to change the tack, as it was leading to a US and probably a global recession. HOWEVER, the tariffs are only paused, and the other tariffs remain in place: China 125%, everybody 10%, Canada and Mexico 25%, and Steel and Aluminium 25%. So, these will still impact the US and, to a lesser extent, the global economy. It doesn’t remove the uncertainty, but it gives all parties some wriggle room, which wasn’t apparent earlier in the week. This change has shown the market’s bottom unless President Trump U-turns back to the same policy, which is unlikely as it was universally condemned. I think the tariffs will be reduced from here. Seventy-plus countries have contacted the US to address the trade issues. Unfortunately, this event will impact consumer and business confidence. It’s likely to delay some business investment decisions and change buying habits. All of these will impact companies’ value and profitability. The question is, for how long and by how much? The US quarterly reporting season starts at the end of this week, so this will give the first insight into any impact. We will likely see some volatility but smaller % moves in the coming weeks. I have updated the CORE and Banking graph below to reflect today’s movements in the ASX 200. Core is still trading below 90%. I’m on the road next week. This will be the last Not So until after Easter. Wishing everyone a safe and Happy Easter We are happy for you to share our Not So Daily Bulletin with family and friends, and if we can help them, we are also happy to chat. |
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| Staying Invested I thought I would leave this story in from yesterday as today was one of the best days that, if missed, can have an impact on your overall return, as can be seen in the table below. Our approach is to have a long-term strategy and stick to it. There is an old saying: “Time in the market is better than trying to time the market.” This means staying invested and not trying to trade the market. It helps cope with market volatility in uncertain times (like now). As mentioned, things could get a lot worse the longer President Trump sticks with his tariff policy. There is potential for the markets to fall further. HOWEVER, if a change in policy occurs, markets could rally strongly, and if you are trying to trade the market, you may miss out. The biggest days up and down in percentage turns usually occur during these periods (GFC, COVID, Euro debt crisis). The chart below from Blackrock emphasises the approach of staying invested. If $100,000 were invested in the S&P 500 in 2005, it would have grown to $717,000. If the investor tried to trade the market but missed the best 5 UP days, the value would be $452,000. If the best 10 UP days were missed, the value is $328,000. So, the story’s moral is to stick to the long-term strategy as it works over time. And, as one client said today, don’t read the financial section; stick to the sports section of the news. |
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| Financial Planning Snippets PLEASE BE VIGILANT regarding financial scamming. If anyone is requesting financial information from you (via phone, email, text, or social media), please contact us first or ask them for their ABN. Super Guarantee (SGC) for employees increases to 11.5% from 1/7/24 Concessional super contributions increases from $27.5k to $30k from 1/7/24 Commonwealth Seniors Health Care card has seen the income limit increase to $152k(couple) $95.4k (single). If you are of Age Pension age and don’t have the card, please let us know. |
| Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Morgans Morgan Stanley Santos (STO) decreased from $7.46 to $6.95 Macquarie Bell Potter/Citigroup UBS Tracking changes for 2025 Upgrades 103 Downgrades 90 |
| Core Watchlist Index (changes since last Not So) The CORE Watchlist is a collection of 30 Australian shares, predominantly “Blue Chip”. We obtain research from up to 6 brokers on each share. Each broker provides a Target Price (value in 12 months) which then provides us with an average for each stock. We then compare that average to the current price as a percentage. IE Macquarie price $176.95 Av. Target Price $205.96= 85.9% (meaning 14.1% upside over next 12 months) + income 4.35% (including franking). To get the CORE Index we take the average across the 30 stocks. This provides us with a market average as there are up to 80 teams of analysts providing the research and target prices. The CORE Watchlist stocks represent more than 55% of the ASX 200 and so provide us with a good indicator of the market value. When it’s at 100% then the market is fully priced. We have seen that when the index is below 90%, then it’s good buying, but that doesn’t happen very often. Should you have any questions, please let me know. The Core index decreased from 84.16% to 88.14% (under 90%). This is usually a good entry point. Overall Earnings Per Share (EPS) FY25 decreased from 3.28% to 3.05% lowest and likely to go lower in the coming weeks. FY26 decreased from 9.09% to 8.86% Most expensive – CBA 143.8% Least expensive – NextDC (NXT) 55.9% The CORE Watchlist has 7 (2) stocks trading above 100%; they are; CBA JBH NAB TCL TLS WBC WES, lowest number ever is 0, highest is 14. While 15 (17) is trading below 85% (the highest is 18, and the lowest is one). ALL BHP CSL GMG LLC MQG NEC NXT ORA ORI RMD S32 SEK STO WDS (Figures in brackets are last Not So). STOCKS TRADING BELOW ALL BROKER FORECASTS ARE AS FOLLOWS; (it has been a handy indicator in the past). 18 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $63.13 Broker range $73 to $84 AMC current price $14.72 Broker range $15.25 to $19 BHP current price $36.00 Broker range $39.50 to $48.10 COL current price $20.84 Broker range $20.90 to $22.35 CSL current price $241.78 Broker range $310 to $360.30 GMG current price $27.80 Broker range $33.50 to $42.40 LLC current price $5.38 Broker range $6.30 to $7.50 NEC current price $1.40 Broker range $1.65 to $2 NXT current price $11.03 Broker range $18.70 to $21.20 ORA current price $1.76 Broker range $2.15 to $2.57 ORI current price $15.91 Broker range $18.85 to $21.50 RIO current price $110.59 Broker range $116 tom $130 S32 current price $2.76 Broker range $3.90 to $4.50 SEK current price $21.04 Broker range $26.75 to $30.10 SHL current price $25.20 Broker range $26.50 to $32.80 STO current price $5.56 Broker range $7.10 to $8.95 WDS current price $20.05 Broker range $20.50 to $30.25 |
| Banking Index (changes since last Not So) Like the CORE Watchlist index, the Banking index is the four major banks’ average target price based on research from up to 6 brokers. The percentage below 100% is the potential upside over the next 12 months (not including income). If at or over 100%, then this indicates the Banks are fully priced. The Banking index decreased from 108% to 112.5%. only ANZ is below 100%. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.00 6.05% 166.40 6.07% 168.2 6.13% CBA 475.00 3.07% 480.00 3.11% 488.4 3.16% NAB 169.00 5.00% 170.00 5.03% 170.2 5.03% WBC 166.00 5.42% 155.40 5.08% 156.6 5.12% MQG 645.00 3.58% 635.25 3.52% 739.25 4.10% Dividend expectations for BHP and RIO. The forecasts below are for the full year. Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). FY24 % FY25 % FY26 % cps cps cps BHP 219.00 6.08% 159.00 4.42% 180.00 5.00% RIO 617.00 5.58% 655.00 5.92% 640.50 5.79% |
| Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 52.33 to 33.62. Which is still at very high levels. Iron Ore increased from $94.90 to $96.80. The average expectation for 2025 is $99.80 Copper increased from $4.13 to $4.45. ALL TIME HIGH of $5.26 last week. Massive jump after recent sell off. Gold increased from $3033 to $3137. ATH today of $3196.60 AUD/USD decreased from 59.68c to 61.93c. Big jump today. 59.15c recent low.. CHN/USD Yuan decreased from $7.35 to $7.32. China has been devaluing its currency to lessen the impact of the tariffs. Asian markets – STRONGLY HIGHER US 10-year Bonds decreased from 4.42% to 4.30%. It fell to 3.9% last week, but has pushed higher. 2-year rate 3.90. German 10 year Bonds decreased from 2.63% to 2.61%. Japanese 10 year Bonds increased from 1.27% to 1.37%. Highest for 16 years was 1.59%. Aussie Bonds 10 year Bonds decreased from 4.37% to 4.30%. Recent high 4.95% Oil prices increased from $57.23 to $61.81. Energy prices bounced sharply. Tungsten—China price remained at $358mtu . The European price range remained at $350mtu-$370mtu. Not included in the US tariffs, therefore exempt. |
| This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), 6 US states (California, Massachusetts, Colorado, Connecticut Ohio & Virginia), Bulgaria, Sweden, Italy, Iran, This week – In Office – Next week – On the road all week – Central and Northern NSW Contact details PO BOX 149 Deniliquin NSW 2710 125 End St Deniliquin NSW 2710 Mobile 0412113524 scottm@provincialwealth.com.au kevinh@provincialwealth.com.au chrisp@provincialwealth.com.au maddyl@provincialwealth.com.au |
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