Will US “Stagflation” Be Bullish For Gold?

Posted on | by Todd | Leave a Comment on Will US “Stagflation” Be Bullish For Gold?

One of the main policy points from Wednesday’s FOMC meeting was that the US Central bank will accept an overshoot in inflation even if overall GDP growth starts to slow……..more commonly known as Stagflation.

Stagflation is an economic condition which is characterized by higher inflation and lower GDP and employment growth, which is not bullish for equity markets and not bearish for Gold.

Over the last 6-months, Gold has been trading in a broad pennant formation bound by $1365 on the topside and supported at $1300 at the lower end of the range.

Due to recent USD strength, the yellow metal is currently trading near the bottom end of the range near $1315.

If US inflation rates continue to probe higher, we expect the USD/Gold correlation to soften. In an inflationary environment, Gold and the USD usually move higher simultaneously.

As illustrated in the charts below, the local gold mining stocks have been showing divergence with SBM, EVN and SAR near all-time highs, while NCM is trading at $21.55, almost $3.00 below its 52-week high.

Our base case is that Gold will rise over the medium-term, which should be supportive for the local mining names.

For more information on investment strategies within the Gold sector, call our office at 1-300-614-002.

Santa Barbara Mines

Saracens Mineral

Evolution

Newcrest Mining

Technical View Improving For Tabcorp

Posted on | by Todd | Leave a Comment on Technical View Improving For Tabcorp

Shares of TAH have had their strongest week in 3 months despite mixed news about increased competition and lower overall wagering forecasts.

The share price posted a high of $4.52 yesterday but has slipped back to initial support near $4.35 in early trade today.

We still prefer the long side of TAH and are expecting run back over the $5.20 area over the medium-term.

Based on the current price, TAH is yielding 4.6% on this year’s dividends.

Tabcorp

 

 

 

NAB – 1H18 Earnings

Posted on | by Leon Hinde | Leave a Comment on NAB – 1H18 Earnings

The NAB result was subdued with revenue growth deteriorating. 1H18 NPAT $2.75bn down 17%, EPS 99cps and Div 99cps.

“looks like a dividend cut is imminent”

1H18 revenue rose just 0.7%, whilst Net Interest Income fell and loan growth was anemic at +1%. 

In both the ANZ and NAB results, we’ve seen early signs of bad and doubtful  debts, (for 90 days+), beginning to rise from very low historical levels.

Lower loan growth, no revenue growth, increased costs associated with restructuring, competition from technology disruptions, increasing bad debts, wafer-thin bad loan provisioning are reasons to “sell the rally” in the banking shares.

6100 – 6200 on the XJO Index should be a level to review bank holdings.

NAB

 

ALGO Buy Signal In BBOZ

Posted on | by Todd | Leave a Comment on ALGO Buy Signal In BBOZ

Our ALGO engine triggered a buy signal in the BBOZ  ETF into yesterday’s ASX close at $14.80.

BBOZ is an inverse equity ETF based on the shares which trade in the ASX 200 index.

Since BBOZ is an inverse ETF, the price will rise as the ASX 200 index trades lower.

The “higher low” buy signal is referenced to the January 14th low of $14.40.

With the ASX 200 index trading near the highs of the year, investors can look to buy BBOZ to hedge their exposure to a wide basket of shares in just one ASX regulated transaction.

As the local share index has rallied sharply over the last 4-weeks, the price of BBOZ has dropped over 14% from $16.85 to $14.50.

For more information about how to profit with trading strategies in the BBOZ ETF, call our office at 1-300-614-002.

BetaShare BBOZ ETF

 

NAB Reports Lower Half-Yearly Profits

Posted on | by Todd | Leave a Comment on NAB Reports Lower Half-Yearly Profits

Shares of NAB are down over 1.5% in early trade as the bank reported a 16% drop in half-year cash profit as it booked a restructuring-linked costs related to workforce reduction.

The bank posted cash earnings, that excludes one-offs and non-cash accounting items, of $2.76 billion for the six months ended March 31, compared with $3.29 billion last year.

NAB bank maintained its interim dividend at 99 cents per share, which puts it on 13.2 times earnings.

Our ALGO engine triggered a sell signal for NAB on February 27th at $30.40.

The technical picture is fairly neutral, and with NAB going ex-dividend on May 16th, we see initial support in the $28.50 area.

NAB

 

Medibank + 10 to 12% cash flow

Posted on | by Leon Hinde | Leave a Comment on Medibank + 10 to 12% cash flow

We’ve been recent buyers of Medibank following the Algo Engine buy signal at $2.80.

With the stock now trading over $3.00 we recommend investors look to add a covered call option into December at the $3.10 strike price.

The addition of the option premium combined with the September dividend is generating an annualized cash-flow of almost 12%. The strategy also allows for 10% capital growth, should the call option get exercised at expiry.

Medibank goes ex-div $0.30 on the 21st of September.

 

FMG Continues To Look Attractive

Posted on | by Todd | Leave a Comment on FMG Continues To Look Attractive

Shares of FMG have posted as 6-week high at $4.75 as the Iron Ore miner reaffirmed FY18 shipments of 170 million metric tons.

It’s worth noting the Q4 is typically FMG’s strongest quarter for shipments.

This should continue this year as the company broadens its customer base to include low-grade ore users like India.

We still prefer the long side of FMG and have a medium-term price target of $5.35.

Fortescue Metals Group

Suncorp Near Resistance At $14.20

Posted on | by Todd | Leave a Comment on Suncorp Near Resistance At $14.20

Recent research on SUN has outlined a number of earnings hurdles the company will face for the rest of 2108 and into next year.

The hurdles include a higher trajectory of operating costs, findings of the royal commission on the insurance industry and lower Gross Written Premium growth.

All of these combined will likely lead to a lower underlying profit margin outlook.

Technically, our ALGO engine triggered a sell signal last November at $14.20 and we see price resistance in this area.

Our initial downside target is $13.35, followed by $12.90 over the medium-term.

Suncorp