Latest / ausbiz a.m / 02.10.26 Mark Gardner, MPC Markets
Transcript
- Andrew: Good morning. Welcome to your morning wrap from Ozbiz. It is Friday, October the second, and we are expecting the local share market to reclaim some of yesterday's heavy losses, bearing in mind we lost around 2%. The ASX futures ⁓ up around half a percent. In a moment, we'll preview the day ahead with Mark Gardner. First, though, quick look at global markets. Wall Street stage late comeback, closing marginally high to begin the fourth quarter. The SP up ⁓ around 5th percent, the NASDAQ and Dow edging up just 0.04%. The self in global bond yields, ⁓ global bonds, I should say, temporarily reversing, partly in response to weaker than expected US manufacturing data, which cut bets on ⁓ the need for the Fed to lift rates. ⁓ but of course, those yields remaining extremely elevated. Easing supply concerns in the Middle East saw Brent Crew drop around one and half percent to ⁓ ninety-six and a half dollars a barrel. Gold made some gains, up. ⁓ to four thousand two hundred an ounce, Bitcoin climbing above eighty four and a half thousand US and the Aussie trading at sixty nine point three US cents. Let's ⁓ get across those market moves. Mark Gardner joining some MPC markets. Mark, good morning. Mark Gardner: Morning Andrew. How you going? Andrew: I'm not bad to end the week, but ⁓ gee whiz that was a rough start to the beginning of October and the beginning of the final quarter of the calendar year. Mark Gardner: ⁓ yes, certainly was. ⁓ we do ⁓ quite often see capitulations. So September's seasonally the the weakest month of the year for most indexes. ⁓ but we quite often see October is where there is a where there is a low for the year because essentially all of the combined weakness people start to, you know, give up or capitulate. And ⁓ and yesterday in particular, just leading into that, ⁓ leading into the close, it was it was pretty grim for the Aussie. ⁓ But what you've got to take into context ⁓ is that, you know, while we while we feel like we're being, you know, we're really dour compared to the US, if you have a look at the S P five hundred, ⁓ they've got sixty percent of their of the index is in a it is in a bear market, but they're more than twenty percent off their off their highs. ⁓ eighty two percent are more than ten percent off their highs. So really, I mean, even the S Ps are quite weak if you scratch under the surface. And you know, w I think twenty percent have have dropped more than half ⁓ i over there as well. So if no one really has that hyperscaler ⁓ part of the index except for the Americans. ⁓ so you know, and that's what's r essentially holding that market up there. And you know, there are a lot of questions around this circular financing. ⁓ I think Anthropic tapped AMD for a massive loan last night to ⁓ in ⁓ you know for W which just adds to that circular financing ⁓ questions. And ⁓ look it you know, we'll we'll see how it plays out. I mean it's sort it's a very new sort of thing, but and ⁓ but you know, they're obviously providing ⁓ hardware for on loan, ⁓ for the you know, possibly in exchange for shares, which ⁓ is looking like potentially November this year they may IPO. Andrew: Well, I mean Mark, there are a lot of headwinds obviously, ⁓ given what's going on in the Middle East, ⁓ and where in particular those bond yields are heading. But wha what are you what are you looking at as far as earnings growth's concern for the final quarter in the US? Mark Gardner: I think it's an extraordinarily high bar ⁓ overall. ⁓ I would definitely sort of start to everyone's gonna be really focused on ⁓ they're gonna be really focused on the hyperscalers and probably the memory chip stocks. I didn't like ⁓ a micron's price action yesterday. I mean they absolutely knocked it out of the park. ⁓ you know, they're two hundred and forty percent year on year growth. ⁓ and also ⁓ thirty percent quarter on quarter growth. And we saw the stock up. point three, point four of a percent in the aftermarket trade. ⁓ I think ⁓ SK Heinrich was doing okay overnight, but and Micron did lift the market a little bit. And I think that's what drove ⁓ futures up in that, ⁓ in that Europe well late Asia European session here, Micron finished up three percent. ⁓ the Americans are very good at focusing on the positive. ⁓ but outside of that, I mean three percent move for that sort of earnings result two or three quarters ago would have seen Micron up ⁓ probably 10% plus. And we're talking about companies now like SK Heinex and Micron with forward PEs in like you know, mid to high single digit. ⁓ so they're they're fundamentally extraordinarily cheap. ⁓ but this, but they can't get they're not gaining that momentum to the upside and trading at silly prices. So that that leads me to believe from a price action standpoint that we're probably a little bit overextended here as it stands. And ⁓ bond yields as well, you've got The hyperscaler is now competing for ⁓ you know, for government debt. And in my opinion, I'd rather lend money to Google or Microsoft than the US government. ⁓ so that, and they're around about that kangaroo bomb was around about 7% here in Australia. For Google, it'd probably ⁓ the way yields are going, it'd probably be seven and a half now. ⁓ it if they were to to try and issue more debt here in Australia. ⁓ but you've seen sort of France and European bonds start to spiral to the upside, UK Gilts as well. ⁓ and I that's something that, you know, might maybe an ex credit spread trader from the GFC, which is, you know, what I was doing in that period, it's that sort of gives me the heebie jeebies that I don't like to you know, the last time I was started h hearing about European bond yields was ⁓ was, you know, they're when they w labeled them the pigs, the Portugal, Ireland, you know, Greece, ⁓ and Spain, et cetera. And th and those yields are just absolutely accelerating to the upside. So ⁓ and we did have ten year yields make a fresh ⁓ high since two thousand and two last night. But Williams and that manufacturing ⁓ number, Feds Williams that is, ⁓ sort of calmed it down a little bit. But one part of that manufacturing number last night was raw material input costs were extraordinarily high and showed a lot of inflation. So I'm not entirely sure that, you know, ⁓ you know, a slowdown in manufacturing ⁓ with the with that raw materials rise is gonna be enough ⁓ overall. And I'm think that ⁓ you know investors are probably ⁓ you know not really seeing the forest for the trees. Andrew: Hmm. So, Mark, all that said, how are you positioned in the final three months of the year as it relates to both here and in the States? Mark Gardner: Well, we're still ⁓ we're still fairly high in cash. ⁓ we've got our eye on a few sectors and and a shopping list kind of ready to go. But you know, some clients are, you know, twenty percent cash. Some time some clients have got quite a little bit ⁓ quite a bit more. ⁓ and we've just got a we've just got a list of stocks here in the US which we're very happy to buy once we get through this sort of seasonal weakness. Statistically, ⁓ you know, I I try to be really disciplined and avoid these seasonal ⁓ areas of weakness and and obviously in a midterm year it's even more pronounced. So we'll probably sit on our hands quite a bit ⁓ until at least mid-October, I I would imagine. ⁓ we are we have got an investment at the moment which is ⁓ is more around diversifying returns. So we're we're looking for things ⁓ it's ⁓ that are uncorrelated to the yeah equity indexes rising. So They've got a lot of Chinese bonds, ⁓ US bonds and global bonds in them, ⁓ commodities ⁓ and alternative funds, which you know, it's called ⁓ it's acidic ⁓ multi-asset thing. So we're looking to put an allocation towards that because this thing doesn't it is not reliant on equities continuing to rise because I'm a little bit concerned about over a three year period, you know, where we've had a very good five year run. you know, how much I'm not calling a bubble or a po bubble popping or the market getting hammered or anything like that, but it's gonna be very hard to continue to ⁓ you know, to repeat those gains and this thing's got ⁓ you know, some ⁓ some leverage in it, ⁓ via options where whereby we can, you know, we'll beat inflation. So that's kinda I'm looking for alternatives and some long short funds and things like that. and look, you know, you've we've got ⁓ I think we've got a some positive news coming with Fermos in terms of ASX listings, but ⁓ you know, that there's a story in the ⁓ in one of the papers this morning at forty three billion. ⁓ makes it bigger than I think ResMed and not not not that ⁓ not that ⁓ just short of Woolworth's and I think about six billion short of Fortescue. So ⁓ yeah, I'd be it'll be interesting to see how that's received when that offer comes out is open to institutional investors next week. Andrew: Yeah, what do you ⁓ what do make of that? I mean there's so much ⁓ hype around this ⁓ this IPO and g given those numbers you've just mentioned too, ⁓ w what ⁓ how do you regard the market response at the moment in a when the market is under so much pressure and also I guess at the time when the you know IPOs are few and far between and are actually losing a lot off the ASX at the moment. Mark Gardner: Well, I think that's maybe even why Firmus chose ⁓ the ASX potentially, ⁓ because it'd be fairly saturated in the US in terms of this sort of thematic. ⁓ look, I any ⁓ any new IPOs, particularly that aren't mining IPOs, ⁓ I I categorically welcome ⁓ on the ASX. ⁓ and you know that it's it's good for us all for the to have a healthy local market and we've got and And I really am ⁓ I think it's a shame that we we're we're seeing so many great mid-cap companies end up being gobbled up by, you know, foreign PE or private equity companies. So having said that, I I won't be recommending it to our clients ⁓ bit because it is a very forward ⁓ you know, forward facing thing. ⁓ I and and IPOs in general at the moment. I I was on Wealthy and Wise with Andrew Coleman on Wednesday or Thursday ⁓ it might have been Wednesday or Thursday. ⁓ and saying that the IPOs really feel like, you know, INSTO's handing off the bag to retail. And if you go back and look through history, ⁓ you know, these these massive industrial booms, ⁓ it's the you know, they get very the people who are in early get very rich and then retail ends up holding the bag. so I'm I'm really cautious in terms of those IPOs at the moment because it seems to be the playbook ⁓ is because there's so much capital available to ⁓ these unlisted investments now. By the time they get to public markets, it's it it really is the the early investors and the founders cashing out rather than, you know, 20 years ago we saw that were a real opportunity. ⁓ so a little bit of skepticism, but I think it's a really healthy thing. And and obviously, you know, if it if it does drop back a a a little bit or we can see a couple of earnings and ⁓ and some numbers, then you know, we're certainly very, very happy and ⁓ that they listed on the ASX. Andrew: Hm. That is going to be a fascinating watch. Mark, ⁓ great to get across it. ⁓ hope you enjoy your day and your weekend. I better ask ya who are you going for, ⁓ nights or at roosters? Mark Gardner: ⁓ I I'm gonna have to say roosters because my family I'll be shot if ⁓ we've got I've got a houseful of roosters supporters, but ⁓ probably in my probably in my heart of hearts it'd it'd be ⁓ you know, it'd be quite the story to see the knights get up. Andrew: Indeed. ⁓ I'm still licking my wounds from the AFL grand file on my team at Frio. But anyway, there as they say, there's always next year. Mark, ⁓ have a good one. Thanks for joining us from NPC Markets. And that is your Osbiz morning rep. Hope you have a great day. I'm Andrew Gagan. Thanks for listening. Mark Gardner: Cheers, bye.