| Top Stories |
| On Wednesday, June 4, 2025, the ASX gained another 75 points to finish at 8542. This is the highest point since 14 February when the market hit an ALL-TIME CLOSING HIGH of 8556 and an INTRA-DAY HIGH of 8615.2. This occurred on a day when GDP was below expected at 0.2% for the quarter, and iron ore was well below $100. We maybe watching a melt-up (see below). CBA hit a new ALL-TIME HIGH of $181.39 and accounted for 14 points of the 75. It’s now worth $300bn and valued at more than all the German Banks. it has a forward PE of 29. It’s not the only stock running higher; Wesfarmers (WES) hit an ATH of $84.67. JB HiFi (JBH) hit ATH of $112.98 and Telstra hit a 8 year high of $4.89. Additionally, we are seeing the US technology stocks running as they have rebounded strongly after the April tariff sell-off. Last week, NVIDIA provided its quarterly profits, which saw revenue of $43bn up from $22bn a year earlier. This has seen NVIDIA, valued at $3.446 trillion and with a forward PE of 29.1, retake the world’s most valuable company title from Microsoft, valued at $3.441 trillion and with a forward PE of 32. The TACO trade (Trump Always Chickens Out) continues to dominate market sentiment. However, this afternoon, President Trump posted that President Xi of China was very tough and extremely hard to make a deal with. This may suggest the trade war is about to heat up, or the TACO might be right! The bond markets are still reasonably calm, so there are no concerns about the potentially rising US debt. The US tariff revenue for May was $23bn, which is well up from last year, but short of President Trump’s claims of them being paid $2bn to $3bn per day. We will likely see more volatility in the coming weeks. We are happy for you to share our Not So Daily Bulletin with family and friends, and if we can help them, we are also happy to chat. |
 |
| 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. |
 |
 |
| 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 |
Regardless of where you are in Australia, we offer you the best financial planning and advisory services. Feel free to call us today with any question you may have.
People, Big Picture Framework, Quality Services and Value for Money!
We are strong believers in integrity, honesty, professionalism and respect! Our aim is to foster healthy relationships with our clients that last a lifetime.
