Latest / ausbiz a.m / 07.09.26 with Adam Dawes, Shaw and Partners
Transcript
- Andrew: And good morning. Welcome to your morning wrap from Osbys. It is Monday, August. Sorry, August. We're September already, aren't we? It's September the 7th, and we are expecting the local market to begin the week lower. ASX Futures down around four-tenths of a percent. In a moment, we'll preview the day ahead with Adam Dawes. First, though, a quick wrap of where global markets finished on Friday and what happened over the weekend. Now Wall Street finished in the red. The mood firmly risked off. The SP down four tenths, the Dow losing half percent. Nasdaq around three-tenths. And it's after non-farm payrolls pent the August job growth there came in at 162,000. That was triple the number expected. And as a result, rate hike odds for the Fed's September meeting jumped to 63%. Now, among the commodities, ⁓ Brent crude futures rose to $96 a barrel. That's after the U.S. launched strikes against three Iranian crude oil tankers in retaliation for the ⁓ Iranians attacking two US Navy ships. Gold's down to around four thousand four hundred and seventy five dollars an ounce, Bitcoin trading around eighty thousand dollars and the Aussie has risen to seventy two US cents. Or joining us now to get across the market moves. Adam Doors from Shore and Partners. Adam, good morning. Adam: Mm-hmm. Yes, good morning. It's great to be here, Andrew. Andrew: ⁓ well, so let's first start take a look at what happened ⁓ on Friday. That non farm payrolls print, wow, that was ⁓ that was pretty hefty. Adam: Yeah, wasn't it? And it really sort of ⁓ showed really that that America well is is resilient, but then also ⁓ you know, it it does show that ⁓ America's still got a long way to go. And if interest rates do rise, which we're sort of thinking and you sort of alluded to it in in in well, I think next year, but potentially even earlier now. Andrew: ⁓ all right. So what what are the implications then, I guess, particularly for Wall Street? And we saw the reaction there obviously ⁓ also concerned about just where those those bond yields are going. Adam: Yeah, I definitely worry I mean the the bond yield or the bond market's definitely telling us something on especially on the long end of the curve, ⁓ you know, with those numbers getting up there over five, it really does show that ⁓ the bond market's telling us or giving us signals ⁓ going forward. And the equity market obviously is still full of full of AI data and full of ⁓ AI growth. But yeah, that bond yield's definitely telling us a story that ⁓ i things aren't as good as what they seem. Andrew: And obviously the focus now again on the energy market given oil is ⁓ above ninety six, ⁓ potentially one hundred in reach, I mean, there's still absolutely no sign of any breakthrough ⁓ in ⁓ negotiations between the US and Iran. What what should we be concerned about? I mean if if oil continues to climb, Adam, ⁓ what ⁓ what how much of a a handbrake on the economy but also given the prospect perhaps that's gonna be so inflationary? Adam: Yeah, definitely inflationary. And I certainly think that ⁓ it will be a bit of a handbreak ⁓ to to what the economy's doing. ⁓ you know, obviously locally Santos and it's looking pretty good over eight dollars. It's been a long time since that that's happened. So, you know, Santos looking good and Woodside's still ⁓ starting to sort of march higher again. ⁓ but yeah, inflationary definitely on our market or or definitely on our economy. ⁓ a even if you strip that out, I still feel that we'll probably get one more interest rate rise, which will be on Melbourne Cup ⁓ for November. ⁓ and then they'll sort of sit back and see how it goes. But yeah, definitely inflationary with those oil th that the oil coming up to an over a hundred dollars. Andrew: No, I'll get to that prospect of another rate hike in just a moment, but ⁓ just in terms of energy then, how how are you playing that at the moment? Adam: Well, we've been a seller of Woodside ⁓ of for a while now thinking that this ⁓ this Iran will w conflict. They're not calling it a war. They're just calling it a conflict will ⁓ sort of finish. And so then, you know, oil prices will come back to and normalize. But, you know, every firecracker that they send across each other's ⁓ bow it just ⁓ it just escalates tensions and things like that. So definitely We're we're still sellers of Woodside. We still think that this this is going to finish and hopefully before the midterms, but ⁓ history would say that it's probably ha is not going to do that. So I think Santos is probably the way we've been playing it now. We've been switching into some Santos and buying a little bit of that. That looks pretty good over eight dollars ⁓ as well as part of that conflict. We've also been moving into more of ⁓ the the sort of the the picks and shovels. ⁓ we're we're a little bit concerned about Worley at the moment. That w that one hasn't really moved and would be a benefactor of ⁓ the rebuild in in Middle East, but that hasn't really fired as well. So we're sort of reassessing our position on Warley and and looking to what to do because it has been a disappointment for us. Andrew: Now, Adam, just in terms of ⁓ the prospect of a rate hike, so certainly the market ⁓ economists and ⁓ sounds like you as well are convinced ⁓ another rate hike is coming, ⁓ potentially on ⁓ on Melbourne Cup Day. what how would you position for that? what are you being cautious about? Where are you seeing potential opportunity at Adam: Mm. Yeah, I I think well it's it's interesting because it it is gonna slow down our Aussie market and then you've got the the overlay of rate hikes in the US as well, which will slow down a lot of the tech names or the growth names ⁓ in the portfolio. So it is gonna be quite difficult to sort of navigate ⁓ this sort of next three or six months as to to what to do with the interest rate side of things. Obviously the US dollar is gonna come into play as well, so we need to be mindful of your unhedged positions inside of ⁓ the portfolio. But overall I think we're going to continue to sort of ⁓ you know be a little bit more defensive ⁓ and looking for those sort of income style ⁓ names that will sort of help bolster or buffer against ⁓ interest rate rises. ⁓ but We shouldn't be we shouldn't be jumping at too many shadows, that's for sure. And I think the the ⁓ the interest rate rise here in Australia's probably were pretty well priced in. I think it's just the wild card is is what they're gonna do in the US. Andrew: What are you avoiding at the moment? Adam: Well we are avoid ⁓ avoiding some of those higher tech name or those higher growth names, especially in the tech space. ⁓ you know, you've seen the likes of three sixty and zero have a little bit of a a green shoot, you know, ⁓ in the last sort of three six weeks, but then really coming back and and ⁓ coming back down to earth and really not sort of firing again. So I think we're just, yeah, being a little bit cautious on that overall yeah, ⁓ overall growth names. ⁓ we talked about NG. We've been buying a bit of origin and AGL for some really good sort of ⁓ income side of things. And ⁓ we've been sort of fading some APA as well. We talked about that on the show on on Friday, ⁓ you know, sort of selling and doing a bit of ⁓ bit of trimming in some of those ⁓ those those names that have a high ⁓ a higher correlation to a higher bond yield. Andrew: And Adam, how are you playing the resources at the moment? when we take a look at ⁓ well BHP's just taking a bit of a stumble, but ⁓ obviously that copper ⁓ thematic is still very much intact at the moment. Adam: Yeah, it certainly is. And we've yeah, we definitely well, Sandfire's been been fantastic for us. ⁓ the the the ETFs, the copper ETFs, CPPR, as well as wire have been really, really good for us as well ⁓ in the portfolios. look, I think ⁓ yeah, BHP's a little bit of a stumble, but look, you know, that that that rally's still intact ⁓ for that copper thematic, ⁓ definitely moving forward. ⁓ and then there's all these other smaller copper plays now starting to pop up ⁓ as it's the sort of the the metal of the day, as it were, but not that it's been the metal of the day. It's been we've been talking about copper for two years now, saying it's under under under supplied. So yeah, so the big boys, Sampfire, BHP, ⁓ in in the sort of mid tiers, there's a small one, AR one ⁓ Austral. really, really like that. I've we've been buying that. so yeah, the the commodity side of things is is I think that rally's still intact and ⁓ and we're we we still still see that copper deficit coming through in the next coming couple of years. So it's a definitely a place to be in that commodity space. We're certainly iron ore has fallen off ⁓ the perch as far as ⁓ you know, the number one commodity ⁓ to be to be looking at here in Australia. Andrew: And Adam, just before you go, w what what's your view on the on the banks at the moment? Obviously we're seeing pretty much every day negative headlines in regards to the property sector at the moment. Just just how do you see that weighing ⁓ particularly on the on the mortgage business for the banks at the moment? Adam: It's crazy. I mean, you look at Westpac, it's down twenty percent for the last six months. So is that is that correction territory, Tori? Is that is that bear market territory, you know, down twenty percent? ⁓ I still think there's more pressure to come on the banks, obviously with that, ⁓ with the home loans and and the changing of the regulation from the government. But yeah, I still feel that that's probably what's going to keep ⁓ that negative stance on the banks. And you know, a brave man would short something like a Commonwealth Bank, but th this time around does look like it's ⁓ it i you know, it could continue for that sell off in the banks, even though you've got your passive ETF still having to buy them, I still feel that those numbers aren't going to aren't going to do so well. And y maybe you dip your toe back into Westpacet sort of down twenty percent, but I just feel that the the sentiment hasn't changed for the banks. So I'd still be pretty cautious on putting new money into the banks. ⁓ albeit Macquarie probably is the your best bet ⁓ in in that scenario. Andrew: Adam, ⁓ I hope you have a great week. Thanks so much for joining us. Adam: Great to be here. Thanks so much. Andrew: And that is your OzBiz morning wrap. Hope you have a great day. I'm Andrew Gagan. Thanks for listening.