| Top Stories |
| On Tuesday, 13 January, the ASX gained 49 points to close at 8809. That’s 90 points higher than the last Not So. The commodities sector is continuing to rally as Gold, Silver, Copper and Tungsten hit or near ALL TIME HIGHS. Markets are in short supply for critical materials as China controls a raft of these minerals, and precious metals are finding support as President Trump is espousing policies that are more akin to a “banana republic”, which is causing parts of the market to be concerned (rally in gold and silver). The US jobs report was weaker than expected, which puts some downside pressure on interest rates; however, the inflation report this week might slow that pressure down (if the rate is higher than expected). The US markets seem unconcerned as the Dow Jones and S&P 500 hit new ATH. They are approaching 50,000 and 7,000, respectively. In Australia, the RBA’s February meeting appears to be 50/50 at this stage between leaving rates on hold and raising them, as retail spending was higher than expected this week. At this stage, Kevin “the interest rate whisperer” Hanson is suggesting the RBA will be on HOLD. In fact, he thinks they might be on HOLD all year. Big call Kev! CBA dominated the ASX last year, as its market capitalisation rose to over $300 billion (share price x number of shares). However, the gap between CBA and BHP has narrowed over the last few weeks. CBA $258bn & BHP $241bn. Morgan Stanley is expecting the ASX 200 to finish 2026 at 9250 Below is; * a piece from Brad Matthews (PW Investment Committee chair) about the market outlook * The market view on President Trump and the US Federal Reserve chair. * The January Barometer We are happy for you to share our Not So Daily Bulletin with family and friends. If we can help them, we are also happy to chat. |
| Market Outlook 2026 Brad Matthews, our investment consultant, has outlined his outlook. December’s small gain on global equity markets completed the 3rd successive calendar year of strong market growth, which has seen returns from the global equity asset class average 20.3% per annum over these 3 years. Clearly, this rally is in a mature phase, with valuations extended. In addition, the pattern of recent market growth suggests investors are becoming much more circumspect around technology stocks and the potential for artificial intelligence-related capital expenditure to drive earnings growth continuously higher. However, despite some recent caution on equity markets, there remains a strong willingness by investors to continue pushing valuations higher, with the more recent focus being on those parts of the market that have been “left behind” and are trading more cheaply than the market average. The continuation of modest but positive economic growth, a well-functioning and liquid financial sector and the absence of any significant increase in credit defaults, may be all factors that explain the ongoing positive sentiment across share markets. In addition, policy remains generally supportive of share markets, with December’s loosening of monetary policy in the U.S. potentially very important. In addition to lowering the cash rate, the commitment made by the U.S. Federal Reserve to commence purchasing treasury bills may indicate a willingness of the central bank to support liquidity and bank lending, despite remaining uncertainties over the trajectory of U.S. inflation. With changes in the membership of the Federal Reserve Bank Board expected in 2026, market consensus believes that this supportiveness of equity and bond markets will continue, if not improve, further in the year ahead. Australia is now somewhat out of step with the United States. Inflation here has picked up, despite subdued economic growth. Expectations of policy tightening (higher interest rates and more constrained government spending), combined with muted economic growth, is not a combination considered conducive to a strong performance on share markets. The less promising outlook for Australia has already been reflected on share markets to some degree. Australia’s recent share market underperformance would have been even more significant if not for a strong lift in the price of resource stocks (which has been partly driven by a surging gold price). One potential source of upside for the Australian share market is the possibility that inflation will re-commence its downward trajectory, thereby allowing a more supportive interest rate regime. This scenario would be a positive for both Australian share and bond valuations. Although the outlook for global equities may continue to be brighter than that for the local market, there are factors that could disrupt the current broad support for global equities. One example is U.S. inflation, and the possibility that it could start to surprise on the upside. Another is the possibility that the ambitious earnings expectations underwriting the U.S. technology sector fail to materialise. However, whilst it is instructive for investors to consider the possible risks and opportunities impacting market direction in the year ahead, it is normally the unknown (or non-forecastable) factors that have the most impact on markets. For example, 3 years ago, very few investors would have predicted the impact the development of artificial intelligence would have on share markets. Given the future influence of unknown risks and opportunities, investment strategies that pursue genuine diversification, with professional management and the ability to adjust exposures in a timely fashion, are likely to be the most successful over the longer term. |
| US Federal Reserve (Fed) Independence One of the cornerstones of the US economy and the strength of the US market is that the US Fed has been considered independent of political influence in making interest rate decisions. This has been a pillar that markets have relied on to keep the economic boat steady, as they focus on employment and inflation, rather than the political will of the ruling party. It’s the same premise our RBA works on, and it has helped reduce the boom-bust cycles we have seen in previous decades. However, President Trump is very keen to change this, and, like most things, is looking to bring the Fed under his control, as he sees the interest rate as too high. The latest move is that the US Department of Justice (DoJ) is investigating the US Federal Reserve chairman, Jerome Powell, for overspending (fraud) on Federal Reserve renovations, with the aim of removing Powell (who steps down from the chair role in May). Markets appear to have viewed this latest step as a non-event, suggesting that they believe the Fed’s independence remains intact. Some of the reasons could be; * The DOJ is only investigating, and based on Trump’s previous retaliation cases (Comey, Cook, Kelly, James, Schiff & Smith), they have all gone nowhere, which suggests Powell will remain as chair until May. * Replacing Powell as Fed chair in May will give President Trump another opportunity to influence the Fed, but the chair only has one vote. There are 12 votes on the Fed, and President Trump will have influence over a couple. The market thinks the Fed will maintain its independence even with a new chair. If the market loses confidence in the Fed’s independence, then market volatility is likely to increase, as will interest rates on U.S. bonds, which have reached a total of $37 trillion.The US dollar may weaken through this process as global investors allocate money to other markets (US equity markets account for 50% of all global markets and 70% of the MSCI World index). This is why we are looking to hedge the currency with some of the international investors, as the US dollar has potential for weakness. IE, The AUD could move into the 70s or higher over the year. |
| The January Barometer The direction of the market in January can dictate the direction for the year. This is known as the January Barometer. From 1950 to 2024, it had an 84% accuracy rate, as the positive or negative result in January has consistently led to the same direction of the market over the year. There is another barometer: “the first five days of January” barometer. Over the last 76 years, the first 5 days have been positive 48 times. Of those 48 years, 42 have seen positive investment returns from the market, which is an 87% conversion rate. The first 5 days were negative 28 times, with only 11 years remaining negative, which is a 40% conversion rate. The first five days of 2026 were positive, which is a good sign (not a guarantee), but a good start for a positive return in 2026. 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 $30kCommonwealth 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. Macquarie Cash accounts – IF CHANGING YOUR PHONE, YOU NEED TO DEACTIVATE AUTHENTICATOR AND SWITCH TO THE NEW PHONE New AGED CARE fees come into effect from 1/11/25. Only for those entering care after this date. |
| Other Stories Amcor (AMC) is consolidating into 5 shares into 1. Therefore, for current shareholders, you will have 1 share for every 5 you owned yesterday. It’s currently trading on a deferred basis under code AMCDD for the next week. The share of AMCDD closed today at $64.10 |
| 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 Aristocrat Leisure (ALL) decreased from $73.70 to $72.40 Lend Lease (LLC) decreased from $6.58 to $5.70 (lowest broker) Santos (STO) decreased from $7 to $6.76 (lowest broker) Telstra (TLS) decreased from $4.96 to $4.95 Wesfarmers (WES) decreased from $92.60 (Highest broker) to $86 Macquarie BHP increased from $43 (lowest broker) to $48 (equal highest broker)South 32 (S32) increased from $3.70 to $4.20 Bell Potter/Citigroup UBS Tracking changes for 2026 Upgrades 3 Downgrades 10 |
| 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 91.51% to 92.22%. If we removed the 4 banks, the index falls to 88.57% Overall Earnings Per Share (EPS) FY26 decreased from 7.05% to 7.02% FY27 increased from 12.95% to 13.06% Most expensive – CBA 130.7% (176.5% highest ever). Least expensive – NXT 62% The CORE Watchlist has 8 (8) stocks trading above 100%; they are; ANZ BHP CBA NAB RIO S32 WBC WOW lowest number ever is 0, highest is 15. While 11 (11) is trading below 85% (the highest is 18, and the lowest is one). ALL AMC BXB COL CSL GMG LLC NXT RMD SEK STO (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). 12 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $57.22 Broker range $71 to $75 BXB current price $23.39 Broker range $25.50 to $29.40 COL current price $21.15 Broker range $22.90 to $26.60 CSL current price $173.32 Broker range $188 to $275.00 GMG current price $30.65 Broker range $33.50 to 41.50 LLC current price $5.05 Broker range $5.85 to $6.74 NXT current price $12.48 Broker range $18.00 to $22.10 NEC current price $1.15 Broker range $1.22 to $1.41 RMD current price $38.50 Broker range $47.04 to $51 SEK current price $23.17 Broker range $30.80 to $32.50 SHL current price $23.03 Broker range $24 to $29.40 STO current price $6.14 Broker range $6.80 to $8.15 Added 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 113.4% to 115%. The banking index has continued to trade well above 100% for the last 18 months. Over this period, the other two major sectors, resources and health, have underperformed. The banking analysts continue to have SELL recommendations on the big four banks, with much lower target prices, especially for CBA, which is still trading at 130% of the average target price. The switch from banks to resources may have started. |
| Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 15.45 to 15.12. Normal is 10-17. Iron Ore increased from $108.25 to $109.05. The average expectation for 2026 is $92. Copper increased from $5.82 to $6.05. It reached an all-time high of $6.11 on 6/1/26. Gold increased from $4474 to $4602. New ATH $4614 in January. Silver increased from $82.67 to $85.68 which is an all time high. AUD/USD increased from 66.95c to 67.05c. We believe the AUD may rally to 70c by 2026. Asian markets – MIXED US 10-year Bonds increased from 4.17% to 4.20%. 2-year rate 3.55%. 30 year rate below 5% at 4.85%. German 10 year Bonds decreased from 2.91 to 2.83% Japanese 10 year Bonds increased from 2.09% to 2.17%. Highest since July 2007 30-year Bond hit an ATH of 3.25% Aussie Bonds 10 year Bonds increased from 4.68% to 4.69%. 2025 high 4.95%. Oil prices increased from $58.07 to $60.24 The price of tungsten in China remained at $1038 mtu. The European price range increased from $900mtu to $940mtu to $950mtu to $987mtu. Finally, EQR is starting to follow. It now has a market cap of $500m |
| This week & next week Last, “Not So” opened in 7 Aust states (excl NT), 9 US states, Bulgaria, Sweden, Estonia, Turkey, Czech Republic, Switzerland & UK. This week: Back in the office. A new FINANCIAL PLANNER, Nick Barzen, is joining PW from tomorrow. We will provide more information in the next Update. We will disclose more details next week. |
| Top Stories |
| On Wednesday, September 3, 2025, the ASX fell 162 points to finish at 8739, its lowest point since 4/8/25. This was the fourth down day in a row and continues September’s record of being a weak month (seasonal weakness), even though the second quarter GDP(announced today) was better than expected at 0.6%. Likely to see the RBA on hold in September. According to Bell Potter’s Coppo report, a large seller was in the market all day (I’m not sure whether offshore or domestic). The selling was concentrated in the top 10 stocks, which represented 62% of the fall. CBA dropped to $164.55, its lowest price since 29/4/25. The market always has issues of concern to consider, hence the saying that it climbs a wall of worry, as it has been doing since the fall in April (Liberation Day). Apart from the September weakness, there is a risk that the issues of concern may provide the volatility we have been concerned about. Things the markets are watching: 1. President Trump is pressuring the US Federal Reserve to drop interest rates (they meet on Sept 17) and looking to change board members. 2. Long Bond rates are pushing higher (30-year rates are all higher in the UK, Japan, Germany, and the US). This means more interest is paid on Government debt. 3. US Courts have said most of the President’s Tariffs are illegal. If the Supreme Court agrees, approximately $96 billion could be paid back. This will put further pressure on interest rates. 4. Signs are that global inflation is starting to push back up. This may stop interest rates from falling. 5. A global slowing economy due to uncertainty from trade relationships. The US big stick approach may be witnessing another big stick with the summit held in China (Shanghai Cooperation Organisation – SCO) over the weekend. This is the 25th meeting of this group, which included China, India, Russia, Pakistan, Iran and the other stans. Additionally, the meeting was attended by a raft of other countries, including Egypt, Turkey, Indonesia, Malaysia and Vietnam. 6. The price of gold is hitting a new all-time high of $3,616.90. Gold is known to be an investor’s safe haven. 7. Technology valuations have pushed US markets to near ALL-TIME HIGHS. However, valuations remain reasonable for growth companies. NVIDIA, detailed below, has a PE of 29, as does Apple. Google has a PE of 21. These are certainly not like the dot com boom valuations that saw PE in 100’s or even 1000’s. The only Magnificent 7 with a PE in that ballpark is Tesla, which has a PE of 175 and has fallen 18% this year. None of these issues is new, and the market might decide that the benefits from lower interest rates, deregulation and the adoption of AI will provide more benefits than the list above. That’s why we take a long-term view and don’t try to trade the market. 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 excited to chat. |
| Value from the Reporting Season We have collated information from Morgan’s best ideas and Bell Potter regarding stocks in the CORE Watchlist. 1. CSL Ltd (CSL) Morgans – Healthcare. Although a softer 2H Behring result and awkward restructuring timing may unsettle investors, we see the growth engine intact, with cost savings reinforcing the path to sustained double-digit earnings growth. We have a BUY rating on CSL with a blended DCF, PE and EV/EBITDA based target price of A$293.83. Price Target $293.83 Div.Yield 2.3% PE FY26 19x 2y EPSg 11.0%. Bell Potter – Trading on a PE of 17.5 times FY27 (gave guidance of 7-10% NPAT growth for FY26, so I think they should do double-digit per annum EPS growth over the medium term). CSL’s Long Term PE average is closer to 25 times, so looks very compelling, as it trades below the market multiple at current, yet it’s a premium business. 2. Amcor (AMC) Morgans – Industrial AMC is a highly defensive business with leading global market positions and experienced management. We expect the addition of Berry, along with potential divestments, to enhance AMC’s growth outlook and balance sheet over the medium term. While execution of synergy targets will be the key, AMC has a strong track record in integrating large-scale transactions. Price Target $15.20 Div.Yield 6.3% PE FY26 11x 2y EPSg 12.0%. Bell Potter – Trading on a PE of 9.5 times FY27 (assuming all the synergies are realised with Berry) this is a standout buy! Yield over 6% FY27. 3. Woodside Energy (WDS) Morgans – We remain bullish on WDS as a business. The jump in net debt rightly increases delivery risk, but on the positive side the hurdles for WDS to unlock material value upside from here align with where its well-established core strengths sit. If oil prices hold steady we expect a discount in WDS’ share price to persist in the short term until it reassures on its capex profile and/or secures LALNG selldown(s). We remain cautious on the short-term outlook for oil prices, if any volatility were to unfold it would likely offer an attractive opportunity to increase positions. Price Target $29.60 Div.Yield 5.4% PE FY26 21x 2y EPSg -5% Bell Potter – Woodside are likely to have an earnings trough in FY26 with Scarborough production coming on at the end of 2026. BarrenJoey have earnings forecasts 50% higher than consensus for FY27 (see attached), and I think their numbers will be closer to correct over the medium term, as Trion production comes online in FY28 and Louisiana LNG in FY29, so there is going to be a big production uplift coming for the patient investor, and this should see the stock back in to the mid $30’s using a PE of 15, which is close to its long term average. 4. ResMed Inc (RMD) Morgans – Healthcare While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers. We view RMD’s overall fundamentals as sound, with profitability improving as margins expand. Price Target $47.86 Div.Yield 0.9% PE FY26 25x 2y EPSg 9.3% 5. Goodman Group (GMG) Morgans – Property GMG is a global industrial property group with a focus on infill sites across gateway markets. GMG actively manages its portfolio, growing Assets Under Management (AUM) and adding value through a buy, build, manage strategy. We view GMG as a high-quality, founder-led business with a robust balance sheet and a portfolio of Agrade data centre and industrial assets. Whilst uncertain, we see the opportunity in GMG’s 5GW powerbank and its capacity to see sustained earnings growth as development yields improve. Price Target $38.40 Div.Yield 0.9% PE FY26 26x 2y EPSg 13.0%. 6. Orica (ORI) Morgans – Industrials ORI is now not only the world’s largest explosives company, but it is also the global leader in geotechnical and structural monitoring in mining and civil infrastructure and the world’s largest producer of sodium cyanide. ORI is leading the industry with its technology offering. Importantly, this area is high growth and high margin work. ORI is set to deliver solid earnings growth over coming years reflecting strong demand, recontracting benefits, further mix/margin benefits and strong growth from Digital Solutions and Specialty Mining Chemicals. Management continues to execute well and has a solid track record. ORI is trading on attractive multiples which are at a discount to its 5-year average. Price Target $21.70 Div.Yield 4.6% PE FY26 12x 2y EPSg 11.2%. 7. Orora (ORA) – Bell Potter – Looks interesting with the company winning market share in their SaverGlass business (earnings seem to have bottomed here) with $50M of EBIT to flow through to their cans business from FY26, as they finish Rocklea expansion. Good buying in the low $2.00’s, as I think when their buyback finishes this year they are likely to launch another buy back due to the health of their balance sheet and this should see their earnings lift significantly. I think it will trade on a market multiple medium term, so EPS 16 cents FY27 multiplied by 18 equates to $2.88. Market is worried there is a structural decline in alcohol consumption, but the company is confident that SaverGlass is in a growth segment of premium spirits and wines. |
| NVIDIA – the largest company in the world NVIDIA (semi-conductors) is now clearly the largest company in the world, valued at $4.15 trillion. It had been battling Microsoft with a value of $3.75 trillion and Apple with a value of $3.41 trillion for that honour. NVIDIA is one of the most influential and innovative companies in the global technology landscape, especially in the era of artificial intelligence (AI), accelerated computing, and high-performance graphics. However, most people haven’t heard of it, let alone what it does. I have asked Co-pilot for a brief explanation. NVIDIA began as a graphics processing unit (GPU) manufacturer in 1993, and its invention of the GPU in 1999 revolutionised computer graphics and gaming. Today, it is a full-stack computing infrastructure company that provides: GPUs for gaming, professional visualisation, and data centres.AI hardware and software, including supercomputers and microservices for AI model deployment. Software platforms like CUDA (a parallel computing model), Omniverse (for digital twins), and Clara (for healthcare AI). Specialised systems for autonomous vehicles (NVIDIA Drive), robotics (Jetson), and edge computing. NVIDIA is central to the AI revolution: It powers AI factories—data centres optimised for training and deploying AI models. Its chips are used in large language models, robotics, autonomous vehicles, and medical imaging. Over 40,000 companies use NVIDIA AI technology, and its CUDA platform has over 53 million downloads. In July 2025, NVIDIA became the first publicly traded company to surpass a $4 trillion market valuation, underscoring its dominance and investor confidence in its role in shaping the future of tech. Broader Impacts Gaming: Over 200 million gamers use NVIDIA GeForce GPUs. Healthcare: AI frameworks like MONAI are transforming medical imaging. Robotics & Autonomous Vehicles: NVIDIA powers all top autonomous vehicle data centres and supports over 1.7 million robotics developers. Sustainability: Accelerated computing with NVIDIA chips could save nearly 30 trillion watt-hours of energy per year compared to traditional CPU-based systems. Would you like a visual summary or a timeline of NVIDIA’s evolution and milestones? Below is a graph of NVIDIA’s revenue breakdown per quarter since Q4FY21. The light green is the revenue from computer gaming, which has increased from $2.4bn to $4.3bn over the five years. However, the growth has been in the dark green data centres, which have seen revenue increase from $1.9bn in Q4FY21 to a whopping $41.1bn in Q2FY2026. The second graph shows where the revenue comes and goes. A total of $46bn for the quarter saw cost and operating expenses equate to $18.3bn and tax of $4.8bn, which means the Net Profit After Tax is $26.4bn for the quarter or 57c in every $1 of revenue. NVIDIA is part of a raft of ETFs we use: IVV, NDQ, QUAL, QHAL, RBTZ, IOO & SEMI |
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| Ongoing Fee Agreement – some need Reissuing Notification for Provincial Wealth clients As of 10 January 2025, new legislation has streamlined how financial advisers manage ongoing fee arrangements (OFAs). The annual Fee Disclosure Statement (FDS) has been removed, and a single consent form now covers both the renewal of your advice arrangement and authorisation for fees to be deducted from your account. This form must include specific details such as the services provided, fee amounts, account information, and your reference date. We started using these changes in May 2025. We have just been notified that the OFAs used since May don’t meet the requirements set by ASIC. The Financial Advice Association Australia (FAAA) and ASIC have acknowledged that this is a widespread problem across the advice industry. As a result, we’ll be reaching out to affected clients to update and reissue their OFAs to ensure full compliance. ASIC has provided temporary relief for some of these issues, but we’re taking proactive steps to ensure everything is correct and transparent. If you receive a request from us to review or re-sign your arrangement, please know it’s part of our commitment to keeping your financial advice aligned with the latest regulations. Please note the fees haven’t changed. |
| 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. |
| Age Pension Deeming rates change. The deeming rate for Aged pension calculations will change from 20 September. Financial assets are deemed to earn a specific rate of income when being assessed for Aged Pension. For a single, the first $64,200 and for a couple, the first $106,2000 is deemed to earn 0.25%. This is being increased to 0.75%. The assets above these are amounts are deemed to earn 2.25%. This will be increased from 2.75%. For the vast majority of people on Aged Pension it will have litle or no impact. If you have any questions, please let us know. |
| Other Stories Macquarie reduced interest rates after the RBA cut. CMA 2%, Accelerator 3.9%. – The US Court ruled on Google’s antitrust case, saying Google doesn’t have to be broken up. This saw Google up 7% and Apple 3% after the US market closed. |
| Broker Target Price Changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Computershare (CPU) increased from $42 (highest broker) to $43.60 (still highest broker) Lend Lease (LLC) increased from $5.85 (lowest broker) to $5.90 (equal lowest broker) Orora (ORA) decreased from $2.30 to $2.20 Sonic Health (SHL) decreased from $26.50 to $24.50 (lowest broker) Morgans Telstra (TLS) increased from $4.70 (lowest broker) to $4.80 Morgan Stanley BHP increased from $43.50 to $46.50 (highest broker) Goodman Group (GMG) increased from $40.57 (highest broker) to $41.50 (still highest broker) Rio Tinto (RIO) increased from $118 to $121 (equal highest broker) Seek.com (SEK) increased from $30 to $32.50 Macquarie Westpac (WBC) increased from $27.50 to $30 Bell Potter/Citigroup UBS WBC increased from $36 (highest broker) to $38 (still highest broker) Tracking changes for 2025 Upgrades 271 Downgrades 230 |
| 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 98.20% to 96.27%. If we removed the 4 banks, the index falls to 92% Overall Earnings Per Share (EPS) FY25 increased from 1.20% to 2.21% FY26 decreased from 7.93% to 6.17% (new low) Most expensive – CBA 143.2% (176.5% highest ever). Least expensive – CSL 71.3%. The CORE Watchlist has 6 (9) stocks trading above 100%; they are; ANZ CBA JBH NAB WBC WES lowest number ever is 0, highest is 15. While 7 (4) is trading below 85% (the highest is 18, and the lowest is one). AMC CSL LLC NXT S32 SEK SHL (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). 12 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $69.04 Broker range $70 to $76 AMC current price $12.78 Broker range $14.20 to $18.25 CSL current price $206.62 Broker range $258 to $300 GMG current price $32.26 Broker range $32.50 to 41.50 LLC current price $5.43 Broker range $5.90 to $7.12 NXT current price $16.48 Broker range $18.00 to $22.10 RMD current price $41.60 Broker range $47.86 to $49 S32 current price $2.63 Broker range $2.70 to $3.95 SEK current price $26.61 Broker range $30 to $32.50 SHL current price $22.74 Broker range $24.50 to $29.40 STO current price $7.83 Broker range $8.50 to $8.88 WOW current price $27.15 Broker range $28.25 to $33 Added ALL SHL STO WOW Removed |
| 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 127.1% to 123.2%. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. PLUS FRANKING. FY 25 % FY 26 % FY 27 % ANZ 164.00 5.01% 162.00 4.95% 162.2 4.95% CBA 485.40 2.95% 501.40 2.95% 518.2 3.15% NAB 170.00 4.05% 171.20 4.08% 167.8 4.00% WBC 152.00 4.09% 155.20 4.18% 151.6 4.08% 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). FY 25 % FY 26 % FY 27 % BHP 171.00 4.07% 170.20 4.06% 176.60 4.21% RIO 541.40 4.77% 541.40 4.77% 566.20 4.99% |
| Other Indicators (changes since last Not So) US VIX (Fear) Index increased from 15.36 to 17.17. Inside the normal range. Normal is 10-17. Iron Ore decreased from $103.40 to $102.45. The average expectation for 2025 is $98.3. Copper increased from $4.54 to $4.56. It reached an all-time high of $5.8955 on July 8 . Gold increased from $3553 to $3595. New ATH $3616.90 occurred today. AUD/USD decreased from 65.42c to 65.10c. Asian markets – MIXED US 10-year Bonds increased from 4.23% to 4.29%. 2-year rate 3.66%. 30 year rate below 5% at 4.99%. German 10 year Bonds increased from 2.73% to 2.78%. Japanese 10 year Bonds increased from 1.62% to 1.63% . Highest for 16 years was 1.632%. 30-year Bond hit an ATH of 3.25% Aussie Bonds 10 year Bonds increased from 4.33% to 4.42%. Recent high 4.95%. Oil prices increased from $63.73 to $65.36. Increased on increased Iranian sanctions The price of tungsten in China increased from $503mtu to $513mtu. The European price range remained at $495mtu-$545mtu. Prices are nearing an all-time high. |
| This week & next week Last, “Not So” opened in 7 Aust states (excl NT), 5 US states (California, Massachusetts, Delaware, Virginia & South Carolina), Bulgaria, Sweden and a new country visited by a Not So reader. Country 51 Portugal (Lisbon). This week – In Office Next week – In Office except Sept 11. 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 karaw@provincialwealth.com.au |
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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 |
| Top Stories |
| 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 |
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| 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 |
| Top stories On Monday, 16 September 2024, the ASX gained to finish at 8121.60. This is a new ALL-TIME CLOSING HIGH as it passed the previous high of 8115 set on 1/8/24 (just before the Yen carry trade sell-off). It’s not a new ALL TIME HIGH, as the ASX 200 reached 7148.70 on 1/8/24. Today, the highest point was 7145, as the market was led higher by banks, gold, and communications, while other resources and healthcare were dragging the market. The market is focused on the US Federal Reserve when it should announce its first interest rate cut of this cycle. The main debate is whether it will be 0.25% or 0.5%. We think it will be 0.25% as a larger cut would suggest the US economic picture is deteriorating at a quicker pace. The US inflation figures were roughly in line with expectations last week, which boosted the US market on Friday. At the halfway point of the month, the ASX is the only major market to sneak back into positive territory, with all the others currently lower. The main gains have been in the banks led by Macquarie (MQG), up 5.9% for the month (another all time high on Friday at $230). Goodman Group (GMG) is up 6.6% for the month on the Airtrunk data centre deal (MQG benefitted as well). Lend Lease (LLC) is up 5.9% for the month after announcing today they had sold their US East Coast construction business, and the UK sale negotiations for the UK construction business were well advanced. Overall, markets are still skittish due to geopolitical concerns, expensive valuations (especially in technology), and mixed signals regarding the macroeconomic environment (hard or soft landing). 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. Why are the bank analysts negative on CBA? Bank analysts make calls based on a company’s fundamental economics. This has meant that most have had SELL recommendations (currently 0 buy, 0 hold, 6 sell) and an average target price of $99.48 which is 43% below the actual price. Goldman Sachs (GS) provided some insight into the sell recommendation it has held for 5 years and why the CBA share price has continued to climb. Since June 2019, when GS made the SELL recommendation, CBA has outperformed the other 3 banks by 57%. Part of the performance is due to fundamental valuation, where CBA trades at a higher value than the other 3 banks. PE ratio range – the other 3 the range is between 14 to 17. CBA is 24. Price to Book value – the other 3, the range is between 1.2 and 1.5. CBA 2.9. Dividend growth: While the others have been flat at best over the last five years, CBA has grown its dividend. The rest of the outperformance is due to the Cost of Equity. The cost of equity is the return that the market demands in exchange for owning the asset. Over the last five years, CBA’s cost of equity has decreased by 2.7% compared to other banks. In short, the market is saying CBA is a safer and better-run bank than the others, so the cost of equity is lower. Can the gap between CBA and the other 3 banks continue? Maybe, but Goldman Sachs has retained its SELL recommendation and lifted its 12-month target to $100.35, well below today’s close of $142.99. Aged Care reforms The Commonwealth Government announced changes to Aged Care costs last week. This was an agreement between Labor and the Coalition. Most of the changes take effect on 1/7/25. A. Residential Aged Care There are two main costs with Residental Aged Care 1. Accommodation Bond – this is the initial payment required to secure a room. • Maximum accommodation price – amount that can be charged without approval increases from $550,000 to $750,000 from 1 January 2025, but this will depend on your total assets. • Introduction of RAD retention amount – aged care providers will retain 2% p.a. (up to a maximum of 5 years) of a resident’s lump sum accommodation payment (RAD or RAC) where they enter care on or after 1 July 2025 • Indexation of Daily Accommodation Payments (DAPs) – DAPs will be indexed twice per year for residents entering residential care on or after 1 July 2025 • RADs to be phased out – subject to a review in 2029-30, RADs to be phased out by 2035 2. Ongoing Residential Aged Care – Contributions • Basic Daily Care Fee – remains at 85% of single base rate Age Pension. From 1 July 2025, an additional means-tested Hotelling Supplement of up to $12.55 per day will be charged. Not payable by fully or partially supported residents • Means-tested care fee replaced by a new means-tested Non-Clinical Care Contribution – a new lifetime cap of $130,000 (or a maximum of 4 years) applies • Family home – assessment remains unchanged B. Receiving care at Home • New classification system – 10 new funding classifications replace the current four package levels • Participant contributions will vary depending on the type of service received and the participant’s income and assets. No fees are charged for clinical care. Moderate fees for services in the independence category (e.g. personal care). Higher costs for services in the everyday living services category (eg. domestic assistance) • Capped prices – prices for each service must not exceed price caps set by the government Should you have any questions, please let us know. Chinese economic data Over the weekend, Chinese economic data was weaker than expected, which suggests that the world’s growth engine is finally transitioning to a slowing growth economy like most Western countries. Chinese retail sales grew by 2.1% year over year (YOY), but the market was expecting 2.5%, down from July’s figure of 2.7%. Industrial production rose by 4.5% (YOY) but was lower than expected at 4.8% and down from 5.1% in July. Fixed Asset Investment rose 3.4% but was lower than expected at 3.5%. These figures have generally increased by 8% to 10% in previous years, which confirms the Chinese slowdown. Additionally, the extra tariffs announced by the US government passed last week will put more pressure on the Chinese economy. These figures are concerning for Australian resources and the Chinese Government. However, this may finally see some more proactive stimulus from the Chinese Government. However, they could wait until after the US election in November to see who is in the White House. NextDC – Capital raising After the huge Airtrunk deal (refer to last Not So). NextDC (NXT), the largest data centre provider in Australia, is raising more money to expand data centres in Australia and Asia. They announced the raising after the market closed yesterday for $550m to institutions and the deal was full by 9am this morning at $17.15 They are raising a further $200m via existing shareholders, who can take up to $30,000 in new shares at the lower of 1. $17.15 or 2. the 5-day average up to 4/10/24. Paperwork to existing shareholders will be sent out late this week. Offer closes 4/10/24 at 5pm. 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. Other Stories – Austal (ASB) awarded $600m contract with US Navy. Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Seek.com (SEK) decreased from $29.50 (highest broker) to $27 Morgans Morgan Stanley Macquarie BHP increased from $43 to $44 Rio Tinto (RIO) increased from $117 to $120 South 32 (S32) increased from $3.95 to $4.25 (highest broker) Bell Potter/Citigroup UBS Tracking changes for 2024 Upgrades 315 Downgrades 215 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 97.72% to 99.01%. Nearly fully valued Overall Earnings Per Share (EPS) FY24 decreased from 0.61% to 0.55% FY25 decreased from 6.36% to 6.01% Most expensive – CBA 143.7%. Least expensive – Nine Entertainment (NEC) 67.6% The CORE Watchlist has 12, (11) stocks trading above 100%; they are; AMC ANZ CBA JBH LLC MQG NAB ORA RMD TCL WBC WES, lowest number ever is 0, highest is 12. While 3 (6) are trading below 85% (the highest is 18, and the lowest is one). NEC 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). 8 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. BHP current price $39.55 Broker range $42 to $49.20 CPU current price $27.73 Broker range $28.65 to $32 CSL current price $296.69 Broker range $310 to $345 NXT current price $17 Broker range $19.40 to $21.20 ORI current price $17.64 Broker range $18.85 to $21.50 RIO current price $110.81 Broker range $117 to $137.50 SEK current price $22.75 Broker range $23 to $29.50 STO current price $7 Broker range $7.50 to $8.80 Added Removed WOW 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 125.5% to 123.6%. ALL TIME HIGH OF 126.2 reached on Friday 6/9. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. The expectation is slightly increased dividend payments and still attractive yields. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.0 5.27% 166.3 5.27% 166.8 5.41% CBA 465.0 3.25% 475.0 3.32% 488.3 3.46% NAB 168.0 4.32% 169.6 4.36% 171.4 4.47% WBC 165.0 5.18% 155.4 4.88% 152.8 4.80% MQG 632.3 2.83% 688.0 3.08% 729.3 3.26% Dividend expectations for BHP and RIO. The forecasts below are for the full year. FY24 cps % FY25 cps % FY26 cps % BHP 216.83 5.59% 227.00 5.86% 212.8 5.41% RIO 711.67 6.66% 745.17 6.98% 717.0 6.62% Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 19.08 to 16.56 The normal levels are (10 to 17). The VIX has settled again. Iron Ore increased from $91 to $92.90. The new recent low point is $89. Sentiment is still poor. Copper increased from $4.14 to $4.22 12-month high $5.08. Gold increased from $2554 to $2616. A new an ATH of $2,616.60 today. AUD/USD increased from 66.57c to 67.24c. Recent low point 62.9c. Maybe low 70c in 2024 Asian markets – MIXED US 10 year Bonds increased from 3.62% to 3.66%. German 10 year Bonds increased from 2.13% to 2.15%. Japanese 10 year Bonds decreased from 0.851% to 0.84%. Highest since Oct 2011 1.106%. Official interest rates increased to 0.25% Aussie Bonds 10 year Bonds decreased from 3.85% to 3.82%. Recent high 4.95% Oil prices increased from $66.44 to $68.80 – Bounced off a 3 year low. Tungsten – China price remained at $333mtu. The European range remained at $320-$345mtu. This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), US 5 states (California, Massachusetts, Colorado, South Carolina and Connecticut), Sweden, Israel, Indonesia, Bulgaria, France and Italy (Tuscany). This week coming – In office, September reviews (out of office Thursday/Friday) Next week – In office, September reviews (out of office Friday) 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 Friday, 25 October 2024, the ASX gained 5 points to finish at 8211. After a rollercoaster fortnight, the market settled down over the last 3 days to be up 10 points, down 10 points and then up 5 points today. The market lacks direction, given the crosswinds are still blowing, as mentioned last week in the Not So of; – US election uncertainty (toss-up). – Chinese stimulus is piecemeal rather than a bazooka – Central Banks are cutting interest rates, but Government Bond rates are rising. – Australia’s first interest rate cut looks like it’s moving further in 2025. Some suggest the first cut could be in May. – US 3rd quarter profit results look OK so far. – Persistent inflation – High valuations – Continued geopolitical tensions We still see a GOLDILOCKS economy, which is good for markets, but there are likely to be some windy days that may cause volatility. Today, the breeze was a zephyr! Macquarie bank account holders If you haven’t downloaded the Macquarie Authenticator app on your phone or IPAD. Please contact our office!!!!! 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. Market Review & Outlook AMP’s Shane Oliver provided his weekly update this afternoon Market review • Global share markets hit a rough patch over the last week on concerns about valuations amidst rising bond yields even though economic and earnings data was mostly okay. US, Eurozone and Japanese shares fell but Chinese shares were flat to up slightly. Reflecting the weak global lead Australian shares also fell by around 0.8% for the week, with falls in IT, property, industrials and retail shares leading the falls. Oil prices rose slightly but remain well down from recent highs. Metal and iron ore prices also fell slightly but gold made it to a new record high on the back of falling interest rates. The $A fell as the $US rose. • Rising bond yields and share valuations. The past week has seen a further rise in long term bond yields as investors reduce expectations for how much central banks, notably the Fed, will cut rates and price in potentially higher US budget deficits if Trump wins the presidential election. This is potentially a threat to share markets because high price to earnings multiples mean that the risk premium shares offer over bonds (measured by the earnings yield less the 10-year bond yield) is already very narrow compared to what its been since the GFC. See the Equity risk premium chart below. Market Outlook • Easing inflation pressures, central banks cutting rates, China ramping up policy stimulus and prospects for stronger growth in 2025-26 should make for reasonable investment returns over the next 6-12 months. However, with a high risk of recession, poor valuations and significant geopolitical risks particularly around the Middle East and US election, the next 12 months are likely to be more constrained and rougher compared to 2023-24. • Bonds are likely to provide returns around running yield or a bit more, as inflation slows, and central banks cut rates. • Unlisted commercial property returns are likely to remain negative due to the lagged impact of high bond yields and working from home reducing office space demand. • Australian home prices are likely to see more constrained gains over the next few months as the supply shortfall remains, but still high interest rates constrain demand and unemployment rises. Lower interest rates should help the market next year though and we see average property prices rising by around 5% in 2025. • Cash and bank deposits are expected to provide returns of over 4%, reflecting the back up in interest rates. • A rising trend in the $A is likely taking it to $US0.70 over the next 12 months, due to a fall in the overvalued $US and a narrowing in the interest rate differential between the Fed and the RBA. A recession and/or a Trump victory are the main downside risks.  Data consumption Repeated from the last Not So as these companies are delivering healthy quarterly earnings. Computer data is growing at a rapid rate and is expected to continue for some time to come. The amount of money spent on and expected to be spent until 2030 could grow by 25% per year, as noted in the graph below. The expected increase in spending on different aspects of data development will benefit a raft of companies. These include; 1. Infrastructure Microsoft (MSFT) Alphabet (GOOGL) Amazon (AMZN) 2. Hardware Nvidia (NVDA) ASML (ASML) Applied Materials (AMAT) KLA Corp (KLAC) Advanced Micro Devices (AMD) Broadcom (AVGO) Micron Technology (MU) Lam Research (LRCX) Synopsyp (SNPS) Qualcomm (QCOM) Taiwan Semiconductors (TSM) 3. Analytics & Platform Patantir Technology (PLTR) Snowflake (SNOW) Datadog (DDOG) Mongo DB (MDB) 4. Cybersecurity Crowdstrike (CRWD) Zscaler (ZS) Palo Alto (PANW) Cloud flare (NET) Sentinel One (S) Rubrik (RBRK) Unfortunately, these are predominantly US companies, and so the only way we can gain exposure to them is via the Exchange Traded Funds (ETF). The following ETFs hold some of the above stocks. I have listed the stocks and their percentage holdings in each ETF. US S&P 500 (IVV) NVDA 6.8% MSFT 6.3% AMZN 3.6% AVGO 1.7% GOOGL 1.6% AMD 0.5% QCOM 0.4% AMAT 0.3% MU 0.3% PANW 0.2% ANET 0.2% LAM 0.2% KLAC 0.2% PLTR 0.2% SNPS 0.2% CRWD 0.2%. These companies represent 22.9% of this ETF Top Global 100 companies (IOO) NVDA 11.7% MSFT 10.7% AMAZ 6.1% GOOGL 6% AVGO 2.9% ASML 1% QCOM 0.7%. These companies represent 39.1% of this ETF. Global Quality (QUAL) NVDA 6.8% MSFT 4.6% GOOGL 4.2% ASML 1.7% QCOM 0.9% AMAT 0.8% PANW 0.5% LRCX 0.5% SNPS 0.3%. These companies represent 20.3% of this ETF Vanguard International Share index (VGS) MSFT 4.4% NVDA 4.3% GOOGL 2.6% AMZN 2.5% AVGO 1.1% ASML 0.5% AMD 0.4% QCOM 0.3% AMAT 0.2% MU 0.2% PANW 0.2%LRCX 0.2% KLAC 0.1% ANET 0.1% SNPS 0.1% PLTR 0.1% CRWD 0.1% SNOW 0.1%. These companies represent 17.5% of this ETF. US Nasdaq (NDQ) NVDA 8.5% MSFT 7.8% AVGO 5.5% GOOGL 4.7% AMD 1.7% QCOM 1.2% AMAT 1% MU 0.8% PANW 0.8% LRCX 0.6% KLAC 0.6% CRWD 0.5% ASML 0.4% DDOG 0.3% ZS 0.2% MDB 0.1% These companies represent 34% of this ETF. Global Semiconductors (SEMI) TSM 12.3% AVGO 12.1% NVDA 11.8% ASML 7.4% AMD 7.1% QCOM 5.4% AMAT 4.3% LRCX 2.7% KLAC 2.6%. These companies represent 65.7% of this ETF. Global Artificial Intelligence (GXAI) NVDA 3.2% AVGO 3.2% AMZN 2.9% MSFT 2.7% GOOGL 2.6% QCOM 2.5% MU 2% SNPS 1.2% DDOG 0.6% ZS 0.5%.These companies represent 21.4% of this ETF. Global Cybersecurity (HACK) CRWD 8.5% AVGO 8.5% PANW 7.9% NET 4.2% ZS 3.6% S 2.1% RBRK 0.6%.These companies represent 35.4% of this ETF. Global Robotics (RBTZ) Nvidia is the only one at 13.7% These ETFs have benefited from and are likely to continue to benefit from the development of data technology.  Macquarie Cash Management Account (existing account holders only) From Friday 1 November 2024 You won’t be able to write or deposit personal cheques deposit or request bank cheques, deposit cash or cheques over the counter at NAB branches, make a super contribution, or make payment via cheque. Please note that any cheque received after 31/10/24 will be returned to the sender. If you haven’t downloaded the Macquarie Authenticator app on your phone or IPAD. Please contact our office!!!!! 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. Other Stories – The US jobs report is out tonight. The market expects 120,000 jobs and an unemployment rate to remain at 4.1% Broker Target Price changes Target Prices should be viewed as a compass (the general direction) rather than a GPS destination. Ord Minnett Brambles (BXB) decreased from $20.80 (highest broker) to $20.60 (still highest broker) Transurban (TCL) decreased from $13.40 to $13.20 Morgans ANZ increased from $25.95 to $26.11 BHP decreased from $48.30 (highest broker) to $48 Brambles (BXB) increased from $17.95 to $18 CBA increased from $96.13 to $96.81 CSL increased from $315.40 to $330.75 Seek.com (SEK) increased from $25.80 to $26.80 TCL increased from $12.31 (lowest broker) to $12.65 (still lowest broker) Morgan Stanley JB Hi Fi (JBH) increased from $54.70 (lowest broker) to $67.60 Wesfarmers (WES) increased from $55.70 (lowest broker) to $60.70 Macquarie Aristrocrat Leisure (ALL) increased from $55 to $67 (highest broker) Orora (ORA) increased from $2.45 (equal lowest broker) to $2.80 TCL decreased from $13 to $12.67 Bell Potter/Citigroup ORA increased from $2.55 to $2.80 Transurban (TCL) decreased from $14.30 to $14.20 UBS CSL increased from $330 to 4340 Tracking changes for 2024 Upgrades 354 Downgrades 241 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 99.77% to 97.89%. Dropped form highest point since 13/2/20. Overall Earnings Per Share (EPS) FY24 remained at -0.29% FY25 decreased from 5.15% to 5.00% Most expensive – CBA 142.4%. Least expensive – Nine Entertainment (NEC) 67.7% The CORE Watchlist has 10 (13) stocks trading above 100%; they are; ALL AMC ANZ CBA JBH MQG NAB RMD WBC WES, lowest number ever is 0, highest is 14. While 2 (1) is trading below 85% (the highest is 18, and the lowest is one). NEC NXT (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). 7 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. CPU current price $26.23 Broker range $27.70 to $32 COL current price $18.16 Broker range $18.80 to $21 CSL current price $293.69 Broker range $310 to $345 NXT current price $16.01 Broker range $19.40 to $21.20 ORI current price $17.42 Broker range $18.85 to $21.50 STO current price $6.93 Broker range $7.50 to $8.70 WOW current price $32.69 Broker range $35 to $39 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 123.1% to 123.7%. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. The expectation is slightly increased dividend payments and still attractive yields. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.0 5.27% 166.3 5.27% 167.8 5.29% CBA 465.0 3.25% 475.0 3.32% 487.3 3.38% NAB 168.0 4.32% 169.6 4.36% 170.4 4.37% WBC 165.0 5.18% 155.4 4.88% 154.3 4.80% MQG 632.3 2.83% 688.0 3.08% 729.3 3.13% Dividend expectations for BHP and RIO. The forecasts below are for the full year. FY24 cps% FY25 cps% FY26 cps% BHP 216.83 5.59% 227.00 5.86% 200.8 4.74% RIO 711.67 6.66% 745.17 6.98% 709.2 6.01% Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). Other Indicators (changes since last Not So) US VIX (Fear) Index increased from 18.03 to 19.08 The normal levels are (10 to 17). The VIX has settled again. Iron Ore decreased from $101.35 to $99.40. Last month, it bottomed at $89. Copper decreased from $4.45 to $4.35, reaching a 12-month high of $5.08. It bottomed in early August at $3.95. Copper is needed for the electrification of the energy system. Gold decreased from $2744 to $2739 A new ATH of $2,772.60 earlier this week AUD/USD decreased from 67c to 66.22c. Recent low point 62.9c. Maybe low 70c in 2024 CHN/USD Yuan increased from $7.10 to $7.125. If the Yuan strengthens again the USD, the prevailing view is the Chinese is likely to be sustainable. We will wait and see. Asian markets – UP US 10 year Bonds increased from 4.08% to 4.19%. Long-term rates may not move much lower due to traditional yield curve. German 10 year Bonds increased from 2.19 to 2.27%. Japanese 10 year Bonds decreased from 0.961% to 0.95%. Highest since Oct 2011 1.106%. Official interest rates increased to 0.25% Aussie Bonds 10 year Bonds increased from 4.28% to 4.42%. Recent high 4.95% Oil prices decreased from $69.68 to $70.31 – simmering Middle East issues. Tungsten – China price remained at $340mtu. The European range remained at $320-$345mtu. This week & next week Last, “Not So” opened in 7 Aust states (excl Tas), US 7 states (California, Massachusetts, Virginia, Colorado, Connecticut, New York & Pennsylvania), Indonesia, Bulgaria, Sweden and Italy This week is coming – In the office, October reviews. Next week – In office, October reviews – out Thursday Happy 28th wedding anniversary to my wife, Christina 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 |
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| Our work family (Scott, Kevin, Chris and Maddy) wishes you and your family a Merry Christmas and a Happy and Safe New Year. We return on Monday, Jan 6. On Thursday, 19 December 2024, the ASX ran into a massive headwind with a drop of 141 points or -1.7% to finish at 8168. This is a drop of 3.2% in December, as the Santa Rally may have finished early this year. Today, the markets ran into the US Federal Reserve headwind. The interest rate cut caused the sell-off, as a cut of 0.25% was expected. The commentary accompanying the cut spooked the market, with the US DOW JONES dropping 2.5%, which saw it down for 10 days in a row. This is the longest down stretch since 1974. However, the drops have been gradual, with the DOW down 6% (including today’s drop) from the ALL-TIME HIGH reached earlier this month when it climbed above 45,000 for the first time. The NASDAQ dropped 3.5% after hitting an ATH on Tuesday, but it’s still up 29% for the year. I have outlined more information below regarding the US Fed Hawkish cut! The consensus is that the world economy will continue to grow (not evenly) with increasing levels of volatility, given the change in US leadership. China is likely to provide stimulus, but it might keep its powder dry until it sees policy action from the new US administration. The rest of the world hopes not to be hit by any global trade war. I have revisited our view of 2024, written on 12 January 2024. Our rough forecasts have been pretty close. 2025 will be more challenging to predict as we enter the 3rd year of a BULL MARKET. The graph below shows the movement of the ASX 200 (pink) (right-hand scale RHS) for FY25, up 5% since June. As you can see, it reached a high of 8500 before coming back. The Banking index (blue) (LHS) has been well above 100% and hit a high of 129%. The Core Index (30 ASX stocks) (brown using LHS) has been trading near 100% for the 6 months. Each time it hit 100% or was within 0.5%, the market dropped back, continuing the history of suggesting the market is fully priced at 100%. 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 Federal Reserve Hawkish cut! The US Federal Reserve cut interest rates by 0.25% to the range of 4.25% to 4.50%. The midpoint is near the RBA cash rate of 4.35%. The US has cut by 1% over the year, but Chair Powell indicated they would be going slower as inflation had been sticker than expected, the economy was doing better than expected and the new US administration had policy uncertainty. The market reaction was one of disappointment, and we saw a reasonable sell-off across the board. The other interesting point to note is that over time, the Fed has been cutting interest rates by 1%, and the 10-year Bond rate has increased by 0.8% over the same period. There are several reasons for this; – Inflation remains higher than expected. – The interest rate yield curve is moving towards normal, with long-term rates being higher than short-term rates. – US debt will likely become an issue, especially if the new administration can’t reduce its deficit. – The US economy is going well, with reasonable job growth. Below is the US inflation chart, which shows a slowly falling inflation rate over the last six months, but services inflation (blue) remains sticky.  Revisiting & Reviewing our Outlook for 2024 The black writing is from our 12 January 2024 Not So Daily. Blue is our review today. The Australian and global economies continue to grow but at a slower pace. Inflation has reduced with the global supply chain normalising, meaning energy and good inflation has returned to zero; however, services (sticky) remain problematic for Central Banks as it’s reducing but at a slower pace and still risks rising; that’s why the CB’s are unlikely to cut rates too aggressively this year (unless a major downturn in the economy). Demand for jobs and skills is STILL STRONG, which means consumer spending is supporting the economy and, at this point, looks like it will assist in avoiding a recession. This is the main difference from previous slowing economic cycles, where rising interest rates usually end in a recession. Pretty happy with that assessment So, our base case on the asset classes is as follows; Cash – The US, UK and Euro CB have finished raising rates, and the next move is likely down (but not until mid to late this year). The RBA is also likely to be finished at 4.35%, but will be reluctant to cut for fear of restoking inflation. They may cut rates in the 2nd half of the year. If looking for a defensive position, cash is still preferred as the income is similar to Bonds and term deposits, but you retain liquidity and have no capital volatility. Rates have started reducing globally but at a slower pace than the market had been expecting. RBA still not ready to cut. Maybe in the first half of 25 Fixed Interest – Bond rates look to have peaked in October, with US and Australia 10-year rates reaching 5%. They have dropped back to around 4%, and the likelihood of being lower (closer to 3%) by the end of 2024. This will provide positive capital returns for Bonds. Others in the Fixed-interest space. Bond rates initially fell when the US Fed started cutting down to 4%, but have reversed and have increased in recent weeks to 4.5%. Term Deposit – rates have likely reached their highest point. Either lock in for 1 to 2 years or move to other fixed interest areas. Hybrids – these are float rate bank notes. They performed very well when rates were rising. Their capital growth will be limited as rates drift lower; however, yields with franking are well above Bonds & Term Deposits. This has played out as we thought. Property (ex-residential) – has lagged other markets over the last year or two due to work from home and rising interest rates. Good quality assets will retain value and be sought after by renters; however, lower grade property (shopping, commercial & industrial) will struggle as the full change in interest rates hasn’t flowed through to valuations yet, and the vacancies may rise as the economy slows. This sector has performed better than expected, with vacancies remaining low and workers slowly returning to work. Listed Property – still selective about the areas. Goodman Group (GMG) continues to deliver based on higher quality site warehouses and has moved into data storage. Lend Lease (LLC) cheapest on the CORE. They need to deliver for the market to believe, but they will jump if they do. GMG had another stand-out year, up 45%, as data centres become an important asset in AI development. LLC has still struggled but the company has finally announced a restructuring that they are starting to deliver on. Resi–cashed-up buyers and immigration are keeping property prices buoyant. Interest rates and a slowing economy haven’t impacted and are unlikely to see a sell-off due to the strong overall debt position of homeowners; however, banks have tightened credit, which means borrowers will be able to borrow less based on the same income, which eventually has an impact on prices. By then increased supply from loosening of local and state govt regulation might help (but that might be wishful thinking). Housing prices have slowed up over the year. Australian Shares – traded within a range of 7000 to 7500 for most of 2023, with the market nearing an all-time high in early 2024 of 7628 as the market hoped for early interest rate cuts. We think this is too soon for cuts. However corporate earnings have held up well in the face of rising interest rates as the economy and consumer backed by strong employment continue to allow a soft or no landing scenario. The ASX has powered higher, with 26 ATH being set in 2024. It’s mainly driven by banks with resources lagging, so it’s been a stealth bull market (not all boats rise). However, we think, we are likely to see more volatility this year as the economy continues to slow and the impact of previous rate rises impacts different parts of the economy. Unemployment (u/e) is the key. If job demand remains strong, then the economy will keep rolling, and so will the market; however, if u/e starts to rise meaningfully, it could provide a market drop. The banks hid some of the volatility as resources, health and consumer staples struggled. The Core Watchlist index (30 stocks representing over 50% of the ASX) was below 90% (meaning at least an average of 10% from the current price to the target price. Under 90% has traditionally been a good entry point) in October. However, it has risen with the Santa Rally to start 2024 around 95%, its highest point since Aug 2021 (when the ASX was at 7583). There are currently 10 of the 30 stocks trading above 100% of their target price, which makes us a little cautious about the market pushing higher from here. Most researchers have been on holiday for the past six weeks, so it will be interesting to see whether we see upgrades or downgrades to target prices and earnings over the next few weeks/months. We still think the small company space is undervalued. Momentum seemed to be the major trend in 2024. Those stocks that were overvalued at the start of the year remained overvalued for the whole year, as there are still 9 above 100%. The researchers upgraded 409 times compared to 273 downgrades. This provided the ASX with the ability to push higher, up around 9% for the year. The banking index (4 major banks) is trading well above 100% at 109%, which is an indication of overpricing and suggests some caution should be warranted across the market. Highest ever point 116%. We are selective about the stocks and sectors we like at this point based on valuations and are more likely to look to buy any dips. The Banks kept on rallying. The new high for the index was 129% as the analysts were still reluctant to move the target prices higher, especially when forecasting little profit growth. CBA reached 156% above the target price. International Shares – international markets outperformed the ASX by a reasonable margin in 2023, mainly based on a strong US, but also a reasonable Europe and Japan. The only real lagging area was China and some parts of Asia. The weak AUD also helped over the year, but it actually finished only down 0.1% against the USD in 2023. We are again being selective regarding our international choices, but we think some International markets will continue to outpace the ASX, as was the case in 2023. Most global markets outperformed the ASX apart from France and the UK. Additionally, the AUD has fallen 5c against the USD, increasing International returns. We are still trying to use our fundamentals to assess value. This shows reasonable relative value in Global Quality (large and small), Europe, Asia, and Emerging Markets, and we are still strong on the long-term themes of cybersecurity, health, and robotics/AI. We would probably look to buy the dips, and should the Chinese economy recover, then the AUD may continue to strengthen, so we are looking to hedge some of the International exposure. The investment themes have remained in place, and our conviction in these areas remains as we believe there is a strong medium to long-term growth in them. The Chinese recovery is taking time with markets still awaiting the stimulus to turn the market around, this inturn should provide a boost to Australian Resources and the AUD. The currency will also depend on whether President Trump wants a weak or strong USD. Summary We think markets will provide a positive return in 2024 as the economy transitions into a higher interest rate world (albeit with some cuts) and a slowing inflation which only returns to target by 2025. This means a slowing economy, which will affect companies and sectors differently and provide a reasonable amount of volatility and dips as buying opportunities. This year’s theme is probably – patience is a virtue!! Again pretty happy with that summary, given we are looking into the future We will save our outlook for 2025 for when we return in early January. Artificial Intelligence transforming the way we live Investment Manager Walter Scott, who partners with Macquarie wrote an interesting article about AI. The AI journey has progressed to the extent that a growing array of leading companies across the world are exploring, embracing, and harnessing the opportunities afforded by this evolving technology. The ‘compute’ element AI has supercharged the demand for semiconductors, with generative AI (gen AI) requiring substantially more computational power. This demand for leading-edge ‘compute’ – processing power – is particularly positive for Taiwan Semiconductor (TSMC) and Dutch semiconductor lithography company ASML (IEU QUAL SEMI). TSMC (SEMI QUAL IAA) is the world’s largest maker of semiconductors with Apple and Nvidia among its customers. The company’s competitive advantage that has maintained its market leadership lies in its pure foundry model, which eliminates potential competition with customers. It also has a record of strong execution, and has high levels of research and development spending. AI-enabled devices (like smartphones and PCs) are expected to see a material increase in silicon required to manufacture those products, boosting demand across other parts of TSMC’s businesses. The Walter Scott team recently had a rare tour of ASML’s “cleanrooms” – the moniker given to their manufacturing facilities due to the cleanliness required – in the Netherlands, witnessing the manufacture of extreme ultra-violet (EUV) and High NA – the next-generation EUV tools. Each of these tools are critical workhorses of leading-edge chip manufacturing helping chipmakers like TSMC reduce the process steps, costs and cycle time, i.e. the length of time required to produce a semiconductor chip. With its monopoly EUV position, ASML remains a linchpin in the drive towards smaller, cheaper, more powerful and energy-efficient semiconductors. AI’s demand for advanced semiconductors is highly beneficial for ASML. Developing the infrastructure Beyond this ‘compute’ element, infrastructure companies provide the foundational technology and services necessary for AI development, deployment and scaling. These businesses enable client companies and developers to build, train and run AI models more efficiently, with Microsoft (QUAL IVV NDQ GXAI) and Alphabet (Google) (IVV NDQ QUAL GXAI) having developed leading positions in this area. Microsoft’s Azure cloud computing platform in collaboration with OpenAI has democratised access to advanced AI, accelerating the development and deployment of state-of-the-art models such as ChatGPT, DALL-E and Codex. Furthermore, AI will be built into every Microsoft cloud solution through its Copilot application. Copilot is an AI-powered tool to improve productivity and creativity across tasks such as ideas generation and preparing presentations. As a result, Microsoft’s management is confident that this will be one of the fastest growing business areas in the company’s history. Alphabet is establishing a leading position in the AI investment and application race, rolling out its own Search Generative Experience – which will be part of Google – that will craft responses to open-ended queries, responding to prompts with images and text, offering improved user experience and precision. Crucially, Google enjoys three significant advantages. In search channels, Google owns Android, which has over 70 per cent of the mobile operating system market. In its product suite, Google has nine consumer-facing products with over one billion users, all of which are free. And then there is the brand. Google is a verb and is synonymous with search, and advertisers have years of experience placing high-traffic, high return-on-investment ads with Google via its search platform, YouTube, AdMob, Maps, Shopping and Travel. Harnessing AI A growing array of companies are harnessing AI to enhance their products, services and profitability. The AI ‘gold’ for these companies will be in generating incremental revenues, selling more products or services, expanding into new markets or developing new business strategies, or looking to improve the cost or capital efficiency of their operations. There is often a common thread to market-leading companies in that they tend to have more data and stronger digital capabilities, the trust of customers, more capital to invest, and have management teams which have been proactive in thinking about how to use AI. Adobe (IVV NDQ QUAL), with over a decade of AI investment, recently announced the launch of Adobe Firefly, an AI-powered creative tool that will be integrated across its applications. Firefly uses gen AI and simple text prompts to create higher-quality images with better composition, photorealistic details and improved mood and lighting. Adobe expects this will provide users with an easier to use, more powerful and personalised experience. Technological progress is rarely linear, and Walter Scott expects the same to be true for AI. There will be periods when the market will get overexcited in terms of usage expectations and the pace of adoption or monetisation, and for some businesses AI integration may be a slower burn than some of the more bullish proponents of the technology expect. But how fast will the technology be adopted? How will it change our lives? And what AI-enabled products and services are we willing to pay for? The next transformational AI wave will be dominated by a growing list of companies that are identifying real-world use cases for the technology. Consequently, as long-term investors, a focus of our fundamental analysis over the coming years will be on how companies are employing AI to reach customers, more efficiently and more profitably, and with better products and services. 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. Other Stories – Chinese Economic Conference, this week, no stimulus announced. Are they keeping powder dry until Trump shows his hand? – NZ recession worse than expected. – No interest rate cut from Bank of Japan. 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 Amcor (AMC) decreased from $8.04 to $8 Bell Potter/Citigroup UBS Tracking changes for 2024 Upgrades 409 Downgrades 274 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 97.79% to 96.35%. Overall Earnings Per Share (EPS) FY24 remained at -0.19% FY25 remained at 3.93%. Profit expectations are still declining while prices have risen. Most expensive – CBA 151.6% Least expensive – Nine Entertainment (NEC) 70.0% The CORE Watchlist has 9 (9) stocks trading above 100%; they are; ANZ BXB CBA CPU JBH NAB TCL WBC WES, lowest number ever is 0, highest is 14. While 7 (6) is trading below 85% (the highest is 18, and the lowest is one). CSL NEC NXT ORI S32 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). 9 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. BHP current price $39.68 Broker range $42 to $48.95 CSL current price $278.79 Broker range $310 to $345 NXT current price $15.16 Broker range $19.40 to $21.20 ORA current price $2.38 Broker range $2.45 to $2.90 ORI current price $17.39 Broker range $18.85 to $21.50 RIO current price $117.40 Broker range $120 to $136.50 S32 current price $3.36 Broker range $3.60 to $4.40 SEK current price $23.41 Broker range $25.40 to $30 STO current price $6.36 Broker range $7.50 to $8.70 Added SEK Removed 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 122.6% to 119.4% The individual numbers are CBA 151.6% NAB 113.2% QBC 119.2% ANZ 102.6% and the 5th musketeer (not in the index) is MQG at 99.8%. Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. The expectation is slightly increased dividend payments and still attractive yields. PLUS FRANKING. FY 24 % FY 25 % FY26 % ANZ 166.0 5.80% 166.2 5.81% 167.2 5.84% CBA 465.0 2.98% 472.5 3.03% 484.3 3.10% NAB 169.0 4.54% 169.8 4.56% 171.8 4.62% WBC 166.0 5.18% 158.2 4.94% 161.6 5.04% MQG 644.0 2.87% 649.0 2.90% 764.8 3.41% Dividend expectations for BHP and RIO. The forecasts below are for the full year. FY24 cps% FY25 cps% FY26 cps% BHP 216.83 5.46% 184.00 4.64% 192.3 4.85% RIO 627.83 5.35% 700.50 5.97% 707.5 6.03% Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). Other Indicators (changes since last Not So) US VIX (Fear) Index increased from 14.69 to 27.62. A jump from yesterday of 74% in one day. Normal levels are (10 to 17). Iron Ore decreased from $104.75 to $102.40. If China stimulates, it may increase. If trade wars break out, then it might fall. The average expectation for 2025 is $99.80 Copper decreased from $4.18 to $4.09. It bottomed in early August at $3.95. Copper is needed to electrify the energy system. It should be good under most scenarios, but not a trade war. Gold decreased from $2670 to $2621. A new ATH of $2,794.40 last month. AUD/USD decreased from 63.60c to 62.22c. This is the lowest all year. CHN/USD Yuan increased from $7.28 to $7.30. The Yuan weakened against the USD after the Trump win. Tariffs! Weakest since July 2024 Asian markets – DOWN US 10 year Bonds increased from 4.40% to 4.52%. 2 year rate 4.35% Yield curve is starting to slope upwards. German 10 year Bonds increased from 2.24% to 2.26%. Japanese 10 year Bonds increased from 1.047% to 1.073%. Highest since Oct 2011 1.106%. Official interest rates increased to 0.25% Aussie Bonds 10 year Bonds increased from 4.31% to 4.41%. Recent high 4.95% Oil prices decreased from $70.60 to $70.19. Will Trump’s mantra of drill baby drill, bring lower oil prices or will OPEC have other plans to combat US oil production? Tungsten—China price $338mtu. The European price is $345mtu. This week & next week Last, “Not So” opened in 6 Aust states (excl Tas & NT), US 6 states (California, Massachusetts, Virginia, Colorado Washington DC and New Jersey), Bulgaria, Israel, Sweden, UK, Romania and NZ (Canterbury). This week coming – December clean up Next week – HOLIDAY We will be closed from Friday December 20 to Monday January 6. 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.a maddyl@provincialwealth.com.au |
| Top Stories Friday, 3 May 2024, the ASX gained 42 points to finish at 7629. This ended a mixed week as the market was waiting for the bank updates and the data from the US. The NAB half-yearly profit was in line with expectations, and they increased an on-market buyback, and bad debts only slightly increased from 0.75% to 0.79%. Macquarie’s profit was expected to drop, but it came in below expectations, mainly from the lower profits from commodities and green investments. Other notable company updates during the week. Woolworths (WOW) delivered a worse-than-expected quarterly sales update, which saw the share price fall by 5%. Amcor (AMC) provided their 3rd quarter results, which were better than expected and saw them rally 9% this week. The US Federal Reserve left interest rates on hold at 5.50% and indicated that rates will stay at this level until they are confident inflation is moving back to their target of 2%. Over the last couple of months, inflation has moved sideways above 3%. Markets have moved their expectations of rate cuts from 6 at the beginning of the year to 0-2 for 2024. Last night, the US jobs report delivered 175,000, which was lower than the expected 240,000 and saw the unemployment rate rise from 3.8% to 3.9%. The market took a half-glass full view as the DOW gained 1.1%, NASDAQ gained nearly 2%, and the US 10-year Bond dropped 7 points to 4.50%. The reason for this view was the softer jobs report suggested the next move by the US Federal Reserve would be a rate cut rather than a rate rise, and it could be as soon as July or August (if the economic data continues to soften. However, the creation of 175,000 also showed the US economy is still growing and does not look recessionary. While the unemployment rate increased, it’s still below 4% for the 27th straight month—the longest run since the 1960’s. This should bode well for our market at the start of the week as the Macquarie conference hears from 108 of Australia’s top companies. Let’s hope there are not too many confessions. Markets are focused on stock-specific stories. Not all boats will rise with the tide until the inflation genie is back in the bottle. The next “Not So” might not be until May 13. 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. April Market review April saw markets have a breather after 5 strong months. All markets were negative apart from the Chinese markets, which lagged behind all the others and the UK. The US, led by Dow Jones, was the worst, down 5%, but that’s after hitting new ALL TIME HIGHS in March. Apart from 5 positive months in a row, the main catalyst for markets to drift back was the expectation that interest rates would remain higher for longer as inflation has steadied around 3% as opposed to continuing to fall. This has seen expectations of interest rate cuts reduce from 6 times in the US to only 1 and maybe none for 2024. The ASX was down nearly 3%, with AUD changing little against the USD. Over the last six months, most major markets have been in a BULL market where returns are still double-digit returns. THE ASX is mid-pack at 13%, while the World Index (MSCI) is at 18%. Over the 12 months, the picture is similar, with Japan at 33% and Nasdaq at 28%, which are the best. The ASX is only up 4% as we lack the technology companies and our exports are linked to China. The Chinese markets have been negative. Over 5, 10, 15 and 20 years, NASDAQ has continued to lead the pack. Interestingly, the AUD has been weaker against the USD over those longer timeframes. Speaking of currency, the AUD hit a high of $1.10 against the Kiwi and the highest against the Yen since Oct 2007.  Bank profits, will they meet expectations? 3 of the major banks & Macquarie report their profits at the start of May. Citigroup, the most bearish of the brokers on the banks with SELL recommendations on the 4 majors and the lowest target prices, updated their expectations. NAB reports on May 2.Half Yearly results Expecting cash profit $3,545m Earnings per share (EPS) 114c and Dividend 84c. ACTUALS: Cash profit $3,548m and a dividend of 84c. Unexpectedly, they announced an increase of their on-market buyback by $1.5bn Macquarie reports on May 3. Full results Expecting cash profit $3,673m EPS 966c and Dividend 630c ACTUALS: Cash profit $3,522m a 32% drop on FY23. Full year dividend of $6.40. 55th consecutive year of profitability since founded. Westpac reports May 6 Half Yearly results Expecting $3,319m EPS 95c and Dividend 83c ANZ reports May 7 Half Yearly results Expecting $3,573m EPS 119c and Dividend 83c CBA reports May 9, 3rd quarter trading results. expecting $2,400m. Should the results exceed Citigroup’s expectations, then we could see the target prices increase. However, as shown in the table below, the Banking index is already trading well above 100%, representing the view from the brokers that the banks are fully priced. The other key indicator to watch is the level of bad and doubtful debts. These are the loans that are more than 90 days in arrears. These are still below pre-COVID levels at less than 1%. The Banking Index from last week was at 112.7%. All the brokers have target prices below the current share price. UBS 109% Morgans 114% Morgan Stanley 112% Macquarie 107% and Citigroup 124%.  Australia’s super – Worlds best This is not a headline you will see in Australian media, but it was an article from Bloomberg. This is an excerpt from the article. Between BlackRock’s Larry Fink and UK Chancellor Jeremy Hunt, it’s official: Australia’s A$3.7 trillion ($2.4 trillion) retirement system is the envy of the wealthy world. In his budget speech to Parliament in March, Hunt cited Australia’s private pensions, known as super funds, as delivering “better returns for pension savers with more effective investment strategies.” Three weeks later, in his annual letter to investors, BlackRock’s Chief Executive Officer directed American policymakers to “study and build on” Australia’s model, suggesting it could be an antidote to the deeply stressed US Social Security system. Australians have become some of the world’s wealthiest retirement savers in large part because the law that created the super funds also established a steady source of funding: Employers are required to make contributions equivalent to 11% of workers’ salaries. There’s no such requirement in the US and the UK only recently made some minimum contributions compulsory. But in a sign of the enormity of the looming global retirement crisis, even Australia’s enviable pile of cash won’t completely sustain the country’s aging population. After 32 years of mandatory employer funding, almost two-thirds of younger 60-somethings’ accounts had less than A$200,000 at the end of 2023. There’s very little guidance about how to stretch that money over three more decades, or what to do when it almost inevitably runs out.Left to their own devices, many workers don’t set money aside—or if they do, it’s not nearly enough. The UK only recently made minimum contributions compulsory at a level of 5% of salary from employers, plus 3% from workers. In the US, it’s optional for all parties, though within the last 15 years employers have been given more freedom to divert some of workers’ money into retirement investments. “It’s a chance for us to look into the future, really,” said Director of Market Oversight at The Pensions Regulator, a UK agency tasked with overseeing work-based pension schemes in that country’s retirement system. The UK is roughly 20 years behind Australia in its move to make contributions compulsory, he said, but “fundamentally I think we’re really trying to do very similar things.” Australia’s now-celebrated retirement system—officially, the Superannuation Guarantee—was started in 1992. The new laws required all employers to make contributions to workers’ retirement accounts, starting at the equivalent of 3% of salaries in the first year and growing steadily. Today employees get 11% deposited into their accounts. That sum is scheduled to rise to 11.5% in July and top out at 12% next year. The article finished with Australia is world-class good at: Mining, swimming, and superannuation.” Macquarie Cash Management Accounts Macquarie has advised there are changes occurring with their bank account. From Monday 20 May 2024 You won’t be able to: access over the counter services at Macquarie offices deposit or collect cheques at a Macquarie office order new chequebooks. From Friday 1 November 2024 You won’t be able to: write or deposit personal cheques deposit or request bank cheques deposit cash or cheques over the counter at NAB branches make a super contribution or payment via cheque. Please note that any cheque received after 31/10/24 will be returned to the sender. Please let us know if you have any questions about any of the above. 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. Account Based Pension minimum pension payments normal from July 2023. Amended Stage 3 tax cuts starting from 1 July 2024. Other Stories – RBA meetings are May 6 Jun18 Sept 24 Nov 5 (Cupday) and Dec 10. Broker Target Price changes Ord Minnett/Morningstar suspending the Morningstar research. Morgans Amcor (AMC) increased from $15.65 to $15.95 (highest broker) Coles (COL) increased from $18.70 to $18.95 NAB decreased from $30.02 to $29.94 Seek.com (SEK) increased from $27.30 (lowest broker) to $27.70 (still lowest broker) Morgan Stanley NAB increased from $30.60 to $31.50 Macquarie AMC increased from $14.90 to $15.40 Bell Potter/Citigroup NAB increased from $25.75 to $26.50 UBS AMC increased from $15.60 to $15.85 COL increased from $17.50 to $18.25 Tracking changes for 2024 Upgrades 153 Downgrades 105 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. We have removed Morningstar research from our calculations as Ord Minnett is in the process of changing to another research house. The Core index decreased from 94.07% to 93.50% Overall Earnings Per Share (EPS) FY24 increased from 1.15% to 1.29% FY25 decreased from 8.75% to 8.68% Most expensive – CBA 122.9% Least expensive – Nine Entertainment (NEC) 74.7% The CORE Watchlist has 7 (6) stocks trading above 100%; they are; ANZ CBA GMG JBH NAB WBC WES, lowest number ever is 0, highest is 11. While 8 (6) is trading below 85% (highest 18), the lowest is 1. ALL CSL NEC NXT ORA SEK SHL TLS (Figures in brackets is last Not So). STOCKS TRADING BELOW ALL BROKER FORECASTS ARE AS FOLLOWS; (it has been a handy indicator in the past). 13 out of the 30 CORE stocks are trading below the lowest broker target price. Highest 24. Lowest is 2. ALL current price $39.92 Broker range $44.20 to $52.70 COL current price $16.12 Broker range $16.50 to $19 CSL current price $275.80 Broker range $305 to $350 LLC current price $6.30 Broker range $6.90 to $8.03 NEC current price $1.46 Broker range $1.65 to $2.20 NXT current price $16.53 Broker range $19.75 to $20.10 ORA current price $2.17 Broker range $2.30 to $2.90 ORI current price $17.71 Broker range $18.50 to $19.40 RMD current price $32.91 Broker range $33.70 to $36 SEK current price $23.79 Broker range $27.30 to $29.20 SHL current price $26.12 Broker range $27.85 to $36.50 TLS current price $3.58 Broker range $4 to $4.50 WOW current price $30.59 Broker range $32 to $39 Added COL WOW Removed AMC 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 112.7% to 113.8%. ANZ cheapest at 103.8% Based on today’s bank prices, the table below shows the estimated dividends (c) and yield. The expectation is slightly increased dividend payments and still attractive yields. PLUS FRANKING. FY 23 % FY 24 % FY 25 % ANZ 175.0 6.14% 160.8 5.65% 162.3 5.70% CBA 450.0 3.91% 459.7 3.99% 469.8 4.08% NAB 167.0 4.85% 165.3 4.81% 165.0 4.80% WBC 142.0 5.37% 144.0 5.45% 171.4 6.49% MQG 750.0 4.08% 601.6 3.27% 656.8 3.57% Dividend expectations for BHP and RIO. The forecasts below are for the full year. FY23 cps % FY24 cps % FY25 cps % BHP 255.00 6.01% 234.17 5.52% 276.8 6.53% RIO 620.50 4.80% 773.67 5.99% 709.8 5.49% Plus franking. Please note RIO is Calendar Year (CY). Cents per share (CPS). Other Indicators (changes since last Not So) US VIX (Fear) Index decreased from 14.67 to 13.49. Was near 20 last week. The normal levels is (10 to 17). Iron Ore decreased from $117.45 to $117.25. Av expected for 2024 is $112. Copper decreased from $4.66 to $4.57. New 12 month hight. Expecting an increase over 2024. The BHP bid for Anglo America confirms this. Gold decreased from $2334 to $2310. New ATH $2,408.50. Central Bank buying has increased the price. AUD/USD increased from 65.23c to 66.08c. Recent low point 62.9c. Maybe low 70c in 2024 Asian markets – MIXED US 10 year Bonds decreased from 4.61% to 4.50%. recent high 5% (20/10 highest since 2006). The FED looks like it’s on HOLD. US 30 year Bond decreased from 4.73% to 4.66%. Hit a 17-year high of 5.12%. The US 2 year rate has decreased from 4.97% to 4.81% (5.37%, highest since 2006). The gap between the 2 yr and 10 years an inverse -0.16%. It was -0.36% but still inverted, historically suggesting a recession. Widest inverse gap is -1.3%. The gap is narrowing. -0.16% is the lowest for some time. (higher for longer). German Bonds decreased from 2.53% to 2.49%. Hit 3% in October highest since 2008. Japanese Bonds increased from 0.871% to 0.901%. Highest in 10 years is 0.956%. Aussie Bonds 10 year Bonds decreased from 4.56% to 4.43%. Recent high 4.95% Other Aussie Bonds 1 year 4.31% 2 year 4.07% 4 year 4.02% 5 year 4.07% 15 year Bonds 4.59%. Oil prices decreased from $82.31 to $77.99 Tungsten – China remained at $330mtu. The European range increased again from $310-$339 to $320-$345mtu. This week & next week Last “Not So” opened in 7 Aust states (excl NT), US 5 states (California, Massachusetts, New York, Connecticut & South Carolina) Sweden. This week – Kevin and Scott away until Friday (conference in Hobart). Next week – May reviews 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 |
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