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Investor U-turn amid signs the wheels are falling off Trump rally

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Original article by Philip Baker
The Australian Financial Review – Page: 27 : 23-Aug-17

The Dow Jones Industrial Average has gained 18 per cent since the US presidential election in November 2016. However, US investor and hedge fund manager Ray Dalio says the uncertainty surrounding the Trump administration may provide the catalyst for a sharemarket correction. The future of President Donald Trump’s much-touted corporate and personal income tax cuts in particular is uncertain, and a sell-off is likely if the reforms are not passed by Congress.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, DEMOCRATIC PARTY (UNITED STATES), REPUBLICAN PARTY (UNITED STATES)

Near enough is good enough in season so far

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Original article by David Rogers
The Australian – Page: 28 : 22-Aug-17

Analysts’ consensus earnings-per-share estimates for 2017-18 have been downgraded by 0.3 per cent so far in the August 2017 reporting season. Hasan Tevfik of Credit Suisse notes that this compares with EPS upgrades of 1.6 per cent in the February reporting season. Meanwhile, just 19 per cent of Australian-listed companies have exceeded consensus earnings estimates so far in the current reporting season, compared with an average of 40 per cent over the last two decades. Likewise, 38 per cent of companies have failed to meet consensus estimates to date, while the historical average is just 28 per cent.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, STANDARD AND POOR’S ASX 200 INDEX, GOLDMAN SACHS AUSTRALIA PTY LTD, BLUESCOPE STEEL LIMITED – ASX BSL, BEACH ENERGY LIMITED – ASX BPT, G8 EDUCATION LIMITED – ASX GEM, FORTESCUE METALS GROUP LIMITED – ASX FMG, APN OUTDOOR GROUP LIMITED – ASX APO, TELSTRA CORPORATION LIMITED – ASX TLS, TRANSURBAN GROUP LIMITED – ASX TCL, CSL LIMITED – ASX CSL, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, AGL ENERGY LIMITED – ASX AGL, FAIRFAX MEDIA LIMITED – ASX FXJ, DOMAIN.COM.AU, CITIGROUP PTY LTD

Reporting season needs a real kick-along

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Original article by Philip Baker
The Australian Financial Review – Page: 20 : 21-Aug-17

To date some 76 companies in the S&P/ASX 200 companies have released their financial results so far in the August reporting season. Just 20 per cent of stocks to have issued guidance for 2017-18 have upgraded their earnings-per-share forecast. Blue-chip stocks such as Qantas and BHP Billiton will need to deliver solid earnings results in the next two weeks in order to bolster investor sentiment and boost the benchmark index. A major issue during the current reporting season has been the dearth of companies to have exceeded expectations.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BHP BILLITON LIMITED – ASX BHP, QANTAS AIRWAYS LIMITED – ASX QAN, WOOLWORTHS LIMITED – ASX WOW, MACQUARIE WEALTH MANAGEMENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, TELSTRA CORPORATION LIMITED – ASX TLS, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, JANUS HENDERSON GROUP PLC – ASX JHG, JB HI-FI LIMITED – ASX JBH, IOOF HOLDINGS LIMITED – ASX IFL, ORIGIN ENERGY LIMITED – ASX ORG, SUNCORP GROUP LIMITED – ASX SUN, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, JAMES HARDIE INDUSTRIES PLC – ASX JHX, NEWCREST MINING LIMITED – ASX NCM, CROWN RESORTS LIMITED – ASX CWN, CHALLENGER LIMITED – ASX CGF, KOGAN.COM LIMITED – ASX KGN, THE A2 MILK COMPANY LIMITED – ASX A2M

Fund managers wind back expectations and hoard a little extra cash

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Original article by David Rogers
The Australian – Page: 28 : 17-Aug-17

Bank of America Merrill Lynch’s latest survey of fund managers shows that just 33 per cent expect a rise in global corporate profits in the next 12 months, compared with 58 per cent in February 2017. Chief investment strategist ­Michael Hartnett says the survey provides a "warning sign" of the likely performance of shares against bonds, as well as cyclical stocks against defensive stocks. The survey also found that the average cash balance of the 174 respondents is now 4.9 per cent, compared with an average of 4.5 per cent over the last decade.

CORPORATES
BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, STANDARD AND POOR’S 500 INDEX, MSCI WORLD INDEX, STANDARD AND POOR’S ASX 200 INDEX, NASDAQ, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK

Lacklustre earnings after alarm bells in July

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Original article by David Rogers
The Australian – Page: 27 : 11-Aug-17

The Australian sharemarket has not risen significantly so far in August 2017, despite some good results during the reporting season. Carsales.com and Orora are among the stocks to have rallied in the wake of positive earnings reports, while the Commonwealth Bank, AGL and AMP have been sold down. Karen Jorritsma of Citigroup notes that capital management has been a major influence on share price movements during the current reporting season.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CARSALES.COM LIMITED – ASX CAR, ORORA LIMITED – ASX ORA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AGL ENERGY LIMITED – ASX AGL, AMP LIMITED – ASX AMP, JAMES HARDIE INDUSTRIES PLC – ASX JHX, SKYCITY ENTERTAINMENT GROUP LIMITED – ASX SKC, TRANSURBAN GROUP LIMITED – ASX TCL, MAGELLAN FINANCIAL GROUP LIMITED – ASX MFG, CITIGROUP PTY LTD, UBS HOLDINGS PTY LTD, MORGANS FINANCIAL LIMITED, PACIFIC INVESTMENT MANAGEMENT COMPANY LLC

Wall St record highs stumble on flare-up of North Korea tension

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Original article by Karen Maley
The Australian Financial Review – Page: 28 : 10-Aug-17

US share price indices have retreated and the Chicago Board Options Exchange’s volatility index has risen by more than 10 per cent in response to the latest war of words between President Donald Trump and North Korea’s Kim Jong-Un. However, some analysts had previously warned that the low level of the VIX suggested that financial market risk may be set to increase, and DoubleLine Capital’s Jeff Gundlach recently said that market indicators point to a rise in bond yields.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, DOUBLELINE CAPITAL LP, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, UNITED NATIONS. SECURITY COUNCIL

Magellan’s new whale rebuffs LICs for trust

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Original article by Vesna Poljak
The Australian Financial Review – Page: 15 & 20 : 10-Aug-17

The Magellan Global Trust will seek to achieve an annual cash yield of four per cent. The trust, which is being listed by Magellan Financial Group, will be similar in structure to a real estate investment trust, although it will primarily invest in international shares. This investment trust model is widely used in the UK, although the listed investment company model tends to be favoured in Australia. The new trust is expected to have between 250,000 and 300,000 underlying investors.

CORPORATES
MAGELLAN FINANCIAL GROUP LIMITED – ASX MFG, MAGELLAN GLOBAL TRUST, CRICKET AUSTRALIA

World shrugs off Dow high

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Original article by David Rogers
The Australian – Page: 19 & 31 : 4-Aug-17

Sharemarkets in Australia and Asia closed lower on 3 August, despite the Dow Jones Industrial Average reaching the 22,000-point milestone. The Dow Jones has gained 20 per cent since the US presidential election in November 2016, and much of this can be attributed to a rise in stocks that have exposure to global economic growth. However, the upbeat sentiment on Wall Street has not been reflected by the Dow Jones Transportation Average Index, which has fallen close to its 200-day moving average. A significant divergence between the two indices has often signalled a pullback in the past.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, DOW JONES TRANSPORTATION AVERAGE INDEX, SUNDIAL CAPITAL RESEARCH INCORPORATED, EDWARD JONES AND COMPANY, CMC MARKETS PTY LTD, STANDARD AND POOR’S 500 INDEX, APPLE INCORPORATED, BOEING COMPANY, McDONALD’S CORPORATION, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, KOSPI INDEX, STANDARD AND POOR’S ASX 200 INDEX, RIO TINTO LIMITED – ASX RIO, SUNCORP GROUP LIMITED – ASX SUN

The sharemarket is not working as capital provider: Credit Suisse

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Original article by Vesna Poljak
The Australian Financial Review – Page: 17 : 3-Aug-17

Annual net equity issuance via the Australian sharemarket has averaged $A40bn over the last 10 years. However, Hasan Tevfik of Credit Suisse estimates that just $A1bn has been raised so far in 2017, saying contributing factors include the limited number of IPOs and access to corporate debt at interest rates of around three per cent. Meanwhile, Credit Suisse has identified BHP Billiton, Qantas and Lend Lease as being among the companies that could potentially announce share buybacks during the August reporting season.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, BHP BILLITON LIMITED – ASX BHP, QANTAS AIRWAYS LIMITED – ASX QAN, LEND LEASE GROUP LIMITED – ASX LLC, COMPUTERSHARE LIMITED – ASX CPU, YANCOAL AUSTRALIA LIMITED – ASX YAL, ZIP INDUSTRIES AUSTRALIA, CRAVEABLE BRANDS LIMITED, ACCOLADE WINES LIMITED, SUPER A-MART PTY LTD, ALINTA ENERGY (AUSTRALIA) PTY LTD, OFFICEWORKS SUPERSTORES PTY LTD, CHOW TAI FOOK ENTERPRISES LIMITED, STANDARD AND POOR’S ASX 200 INDEX, CITIGROUP INCORPORATED

Sharemarket’s worst July for six years cements investor gloom

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Original article by Philip Baker
The Australian Financial Review – Page: 35 : 1-Aug-17

Australia’s benchmark S&P/ASX 200 Index defied the medium-term trend to lose ground in July 2017. Since 2000, the index has gained an average of 1.3 per cent in July, but its underperformance over the last month means it has finished in the red for the last three months. The S&P/ASX 200 met with resistance at the 5,700-point level in July, and indeed in the last several months. The Australian market remains about 16 per cent below its peak prior to the global financial crisis, while key US share price indices are at record highs.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, NASDAQ COMPOSITE INDEX, STANDARD AND POOR’S ASX 200 ACCUMULATION INDEX, BELL POTTER SECURITIES LIMITED, BHP BILLITON LIMITED – ASX BHP, CSL LIMITED – ASX CSL, TELSTRA CORPORATION LIMITED – ASX TLS, ARISTOCRAT LEISURE LIMITED – ASX ALL, AMCOR LIMITED – ASX AMC, MACQUARIE GROUP LIMITED – ASX MQG, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT