Latest / ausbiz a.m / 27.08.26 with Mark Gardner, MPC Markets
Transcript
- Andrew: And good morning. Welcome to your morning wrap from Osbiz setting you up for the day on the local market. It is Thursday, August the twenty seventh, and we're expecting a soft start to the local market. ASX futures down around one tenth of a percent in a moment. We'll preview the day ahead with Mark Gardner. First though, quick wrap of where global markets finished overnight. On Wall Street, the SP and Nasdaq marginally lower, the Dow down around ⁓ one fifth of a percent. The key though, NVIDIA results, huge beats across every major line there. But the stock did dip around 2% ⁓ after the bell there, ⁓ because of, well, high expectations. We know those lofty, lofty expectations. ⁓ revenue for the second quarter at ⁓ over ninety-six billion dollars. That's up more than 100% from a year ago. ⁓ also on the macro front, ⁓ the core PCE, the ⁓ the Fed's preferred measure, came in ⁓ point two percent month on month. ⁓ which pretty much in line with expectations, treasury yields up slightly. Among the commodities, ⁓ Brent crude falling back to eighty seven dollars a barrel, gold about one percent lower at ⁓ close to four thousand six hundred and fifty dollars an ounce, Bitcoin lower at seventy eight and a half thousand, and the Aussie trading around seventy two US cents. Well, let's get into it. Joining us to get across those market moves. Mark Garner from MPC Markets. Mark, good morning. Mark Gardner: Morning Andrew, how are you? Andrew: Not bad, of course. looking forward to those NVIDIA results and wouldn't you know it? It ⁓ it just fails to ⁓ well well doesn't fail at all. In fact, ⁓ the point being that it's it always beats. It's quite remarkable, isn't it? Mark Gardner: Yeah, it is quite remarkable. And we've had a bit, obviously we've had the earnings call start and everyone was sort of hanging on what ⁓ Jensen was gonna say. ⁓ he's quite the orator or showman. ⁓ so from that initial ⁓ poor reaction where we were down sort of two or three percent despite absolutely knocking it out of the park, ⁓ it's bounced about six percent now. I rule. It's up it's up about four and a half in the after hours. ⁓ and deservedly so. ⁓ that initial reaction ⁓ seemed very odd to me. ⁓ all the major metrics that everyone was looking for leading into the announc ⁓ into into the earnings announcement. ⁓ it be and NVIDIA's probably a little little bit notorious for, you know, they know what people are looking for and they and they, you know, Jensen sort of plays to the crowd a little bit. ⁓ I mean they beat you know, on every every single metric. So ⁓ yeah, and that that data set is sort of expanding out. And there's obviously not much news in terms of the ⁓ you know, the circular financing, which everyone's a little bit concerned about. ⁓ but overall I think ⁓ where it's sort of sitting now, ⁓ up around about four percent is probably deservedly so. ⁓ but at you know, at a five trillion dollar market cap, we're talking about, you know, one of the biggest inflation adjusted, one of the biggest companies, ⁓ in terms of market cap to G D P in history. I mean Four percent's a very solid result. We're not talking about a tiny company anymore. ⁓ it's the world's biggest company and you know, the days of those up twenty percent, ⁓ you know, are probably behind NVIDIA at this, you know, at at this sort of size. Andrew: Yeah, yeah, I mean talking about Jensen Huang being the showman, ⁓ he always ⁓ delivers, doesn't he? And gets the market excited and talking about well, I mean essentially th this momentum is continuing to build. So that's gonna certainly encourage investors, isn't it? Mark Gardner: Yeah, absolutely. And and he's investing. I mean, whether you're calling it circular financing and whether you're very sceptical and et cetera, or whether, you know, it's actually looking at it and learning from the mistakes of Cisco back in the back in the AI bubble, ⁓ where, you know, they just it was the most recommended stock ⁓ from analysts in history with ⁓ you know, ⁓ overwhelmingly strong buy recommendations then to fall ninety percent. ⁓ Jensen's been very aware of this transition and obviously going into data center build-out ⁓ but also making other acquisitions. ⁓ I mean, ⁓ look, the the company makes GPUs, whether they're good at acquisitions, that's another matter. ⁓ but you know, that at a ⁓ I think somewhere in the vicinity of a hundred billion dollar quarters in in revenue and free cash flow. ⁓ free cash flow ⁓ quarterly of fifty odd ⁓ plus billion and you know, they can afford to make a couple of mistakes and probably back the industry a little bit. ⁓ he he they very much mentioned that they're in you know in the lead up ⁓ days, ⁓ they're really trying to make ⁓ reduce lead time ⁓ for the neo cloud providers. ⁓ the likes of core weave and things but I mean megaport I suppose here and and next DC to a certain extent. and, you know, some of those US listed ⁓ Aussie companies like Iron and Sharon AI and and things like that. But trying to get those out there as soon as possible. I think the inventory backlogs down to its smallest, ⁓ smallest levels in quite some time. So those neo cloud ⁓ sort of companies will be very much benefactors ⁓ of this new push Nvidia as well. Andrew: Well, Mark, let's ⁓ let's turn to the local market. And I guess ⁓ if you're trying to pull out a a tech stock that's ⁓ the most exciting but potentially the most polarizing, it's ⁓ it's Wise Tech, which we got the results from ⁓ yesterday. W what did you make of that? ⁓ look obviously marked down excuse me on the market, but ⁓ what do you see as a head for the company? Mark Gardner: ⁓ look, I I mean, what the major complaint from and it took quite a while for people to find a reason why the stock headed lower. ⁓ and the and what analysts and and you know, the the Twitter arty and what social media, et cetera, have sort of flagged as what slow organic growth in in cargo wise. But I I would contest that. I I think b you know the market can be sometimes very guilty, particularly in earnings season of ⁓ just you know, picking through the result and justifying a move, you know, a move and, you know, and then attaching an excuse to it. And ⁓ we saw the likes of Salesforce last night up thirteen, fourteen percent in the aftermarket, absolutely smashing it out of the park. And I would say it's far more vulnerable than ⁓ the likes of, you know, a company like Wise Tech with a hell of a lot more moat. and we, you know, there was a few other ⁓ software movers as well. ⁓ CrowdStrike and Cybersecurity and ⁓ Okta and Cybersecurity r ⁓ rose ten percent, seventeen percent ⁓ you know, respectively. And you've seen that cybersecurity sub sector more than double, ⁓ particularly those larger ones, ⁓ you know, since the lows back in I think we were around about March. So I mean Inshu it didn't have a great result. Which would be interesting to see what happens with zero today. But ⁓ you know, the if you've got Mo, the SAS pocalypse is just it it doesn't exist. And and I think ⁓ overall, ⁓ the ACC flushed out some fairly weak longs in Wise Tech recently. ⁓ I think the people that are remaining holders here at the moment, they don't care whether there's another scandal. and I mean because what is not pro is pretty much not ⁓ anything more that we could possibly go through in a 12 month period in terms of governance scandals. ⁓ So if you're there, you don't care anymore. I I would I would expect with those numbers and that new sector of the business for Wise Tech, ⁓ we'll see a bit of a reversal today because we're, you know, that number, even at single digit growth, we're now on a p forward PA around 27. We're not it's this isn't the heady days of a hundred PAs and the stocks trading at 110 bucks. Like this is re this is reasonably valued now and and is cheap on single digit growth. I I personally I think ⁓ you know, I think yesterday's move got it wrong. Andrew: All right, well we'll see see how the market ⁓ whether it responds again today then. Mark, you mentioned zero. ⁓ obviously it's competitive in the States intuit, ⁓ that that did fell fall quite sharply. ⁓ d do you feel as though it's on its way back? You look at the share price, obviously, haven't been caught up in the SaaSpocalypse. ⁓ it seems to have found a base. ⁓ how how ⁓ pivotal is this ⁓ result going to be today for the Mark Gardner: ⁓ I think it's gonna be pretty pivotal, but just in terms of trust, I mean the the CEO went and sold a bunch of shares and ⁓ you know, the the old I've got to pay a tax bill thing, but ⁓ shareholders were pretty upset about that. and, you know, obviously it's been a fairly rough year in terms of share pr ⁓ you know, in terms of the share price. ⁓ I mean, investors probably need to take responsibility well, and fund managers need take responsibility for the fact that they probably shouldn't have been buying at a hundred and eighty bucks either, but ⁓ they they obviously very much focus on that rule of forty, which is ⁓ you know, gr not growing outside of, you know, what they can afford, ⁓ in terms of ⁓ you know, spending on growth in in terms of in relation to their revenue and and ⁓ profits and things. So we want that we want to see them stick to that discipline. We wanna see them ⁓ obviously mention things like ⁓ you know, how they're making productivity gains from AI not being affected by AI. ⁓ but look, I overall I I t I tend to get the feeling that no matter like no matter what they you know what they do I I don't see them like rocketing high necessarily. our software stocks up excluding technology won't have been a a touch disappointing but From a global perspective, ⁓ you know, I can see six to twelve months down the track, we would probably look back and laugh and go, Well, why the hell didn't we buy these quality companies down here? ⁓ but you know, whether that happens in, you know, today or over the next month or two is is another matter. Andrew: And Mark, ⁓ also on the list today we've got ⁓ South of Two Mineral Resources. ⁓ how are you viewing I mean, I know you you you like the Goldies at the moment, obviously what precious metals are doing, those copper stocks, we know where BHP has gone. How do you view a stock like Minres at the moment, given it's got, you know, foot in in many camps there, obviously exposure to lithium? what are you thinking about the company at the moment? Mark Gardner: ⁓ well we saw ⁓ PLS obviously gain on the day because of higher lithium prices. ⁓ probably from Minres you sh just want you I I you know, it's a very volatile stock. It's probably one of it well, it's absolutely my bogey stock in the ASX. ⁓ but the ⁓ I think p quite a lot like Wise Tech, I think you investors are just gonna wanna see no issues because, you know within the last twelve months they have had ⁓ some governance issues of their own, etcetera. but I I think steady as she goes is probably the best result for ⁓ mineral resources ⁓ shareholders. ⁓ you know, we're we're quite liking the it's a very much a forgotten story. We're quite liking that critical minerals is so all strategic minerals play ⁓ because it it's fallen away. ⁓ like the likes of some of the ETFs like R E ⁓ X in the States, which is sort of rare earth critical minerals, it fell back ⁓ around about forty one odd percent from the highs at one point and down maybe twenty five to thirty percent now. And nothing's changed in that sector. ⁓ if anything, it makes, you know, these new sanctions with Canada make, you know, critical minerals even more important. ⁓ I think the US government's been a little bit slow in in pushing out some of those ⁓ promised ⁓ bits of funding to that ⁓ to that space. But we I think y that particular theme to me ⁓ has been lost in the Iran Humu's ⁓ you know and oil prices ⁓ sort of palabra over the last, you know, six odd months. And ⁓ and I think if you sort of step back and see the forest for the trays, the, you know, not only precious metals because of the horrific US debt and but, you know, critical minerals from it locking down your supply chain and, you know, reducing a reliance on China, is ⁓ I think the the investment thesis is more solid now than it was six months ago when we're at those highs. ⁓ I mean let's face it. ⁓ if the if this twenty twenty six has proven anything, ⁓ geopolitics is definitely not more stable. it's it's a hell of a lot less stable and and and is likely to continue. Andrew: Well, that's right. We're lurching from crisis to crisis. Mark, you can only control what you can control. ⁓ let's ⁓ let's look ahead though, to the market. And ⁓ we've obviously got ⁓ today also reporting West Farmers ⁓ quantas among those stocks that we're gonna unpack at a later time. Mark, ⁓ great to get across it all. Thanks for joining us. Have a good day. Mark Gardner: Indeed. Thanks, mate. Have a great day. Andrew: And that is your Osbys Morning wrap. Hope you have a great day. I'm Andrew Gagan. Thanks for listening.