Here are three things I’m thinking about today…
But before I get to them, I have a breaking message from our publisher:
| A New Reckoning Begins! Announcing the return of The Daily Reckoning Australia: James Woodburn here, publisher at Fat Tail Investment Research And I’ve been working with our team on something that will enhance your market understanding… The return of our flagship e-letter publication, The Daily Reckoning Australia. In fact, it was the VERY FIRST e-letter in the entire industry as far as I’m aware. Well, this iconic e-letter is coming back to your inbox next week, in addition to your regular Fat Tail Daily subscription. And just like Fat Tail Daily, it’s completely FREE. You’ll receive direct insights from some of the most respected voices in finance: our founder, Bill Bonner, Nickolai Hubble, Brian Chu, and Jim Rickards. These contrarian macro thinkers have been predicting major economic shifts for years, often well before the mainstream catches on. So, how can you get access? You don’t need to do a thing. As a valued subscriber of Fat Tail Daily, you’ll automatically receive The Daily Reckoning Australia completely free. This carefully curated content complements your Fat Tail Daily reading, giving you deeper insights into the economic forces that will shape markets in 2025 and beyond. Your first issue of the revived The Daily Reckoning Australia will hit your inbox next week. Of course, while we believe this publication will be a valuable addition to your financial reading, you’re free to unsubscribe at any time. In the meantime, look out for “The Daily Reckoning Australia” in your inbox next week. |
I am delighted we are bringing back the OG of e-letters. Watch this space!
For now…
1) VCX: handy snapshot of the consumer right now
We’re getting handy ASX updates coming out now.
You and I want to get a sense of how fragile or resilient the economy is. Who knows? It might even lead us to an investment opportunity.
One share I watch is Vicinity Centres (VCX). I recommended this one years ago.
This is a real estate investment trust that owns half of the mammoth Chadstone Shopping Centre in outer Melbourne. It also has other centres sprinkled around Australia.
If people are shopping normally, VCX is going to know.
What do they say?
They’re seeing “robust” retailer and shopper confidence.
Retail sales are up 2.4% for the quarter. VCX cashflow is likely at the top end of their guidance.
No complaints, in other words!
A retired friend of mine bought VCX years ago. I remember telling him in 2022 to add to his holdings in the bear market at the time.
REITS were getting slaughtered from the high rates impacting markets back then.
My friend never got around to that second bite of the cherry.
It’s a shame because VCX bottomed out that year at about $1.70 per share. It’s $2.40 now, and paid out income all the way.
OK – it’s not Nvidia. But for the right mix of capital risk, income and general market backdrop, I’ve seen worse ideas.
Now, REITs like VCX are highly likely to keep trending, slowly, from here as their debt servicing costs come down as interest rates fall, and consumer spending helps lift rents.
You’re less likely to get smashed here too, because they’re underpinned with real assets.
Their domestic focus is also a tailwind while Trump’s ADHD style Presidency continues.
For our purposes today, VCX is telling us that retail shares might be worth a look.
Consumer spending is through the worst of the cost of living crisis now.
As mortgage rates fall, this can pick up. The ongoing Labor government should give people a sense of continuity and stability.
The job market is healthy. And China could be about to dump goods galore over us!
2) We also have an update from mining service company Imdex.
This is an interesting one because Imdex is up nearly 40% over the last 12 months despite resource exploration being weak for 2 years.
What’s going on here?
The market is moving ahead of the hard data on this one. The market is saying that we’re at the bottom of the cycle for exploration.
The roaring gold price and apparent structural deficit in copper means exploration dollars have to come out at some point. Gold and copper are 75% of exploration spending.
You can see from the chart below why the market loves copper companies. The demand line stays level while the supply is falling away fast.
| |
| Source: Imdex |
(PS. My favourite small cap of the year is a copper producer about to lift into a 10 year run. All the details will be released here on Thursday)
As for Imdex, it already trades on a P/E of 25.
The share price might be range bound now until exploration spending starts turning into revenue growth and profits.
Keep an eye on it.
One final thought…
3) Should we be bullish?
Go back a month. The share market was cratering. The economy looked like it was going to tank from Trump’s tariffs.
As it is, both the market and the economy proved more resilient than most of us presumed.
However, trade between the USA and China is on track to go to a complete halt unless the tariffs are negotiated down.
It puts in play a scenario that feels unlikely, but possible. Could the US markets finish 2025 up?
January 2026 is a long time away. But it’s a chance. In markets, it’s important to keep an open mind.
Regards,
 |
Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
Murray’s Chart of the Day
– Shipping Container Bookings
| |
| Source: Vizion |
After a torrid rally in stocks over the last few weeks, I thought it would be useful to have a look at what is happening to trade between the US and China as the trade war continues.
The number of standard 20-foot containers booked to go from China to the US is falling off a cliff at the moment.
I had to put together the chart above from data contained on the Vizion website.
You can see clearly that the number of containers booked has fallen sharply over the last few months from above 100,000 to the current level around 50,000.
That is not far off the low created during the Christmas period last year.
So as stocks have their best winning streak in years, I think it pays to have one eye on what is actually happening out in the real economy.
My view is that the current strength in stocks is no more than a short squeeze and we will soon see serious selling pressure return.
Regards,
 |
Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
Comments