Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

ASX News LIVE | XJO Rises, Myer Boosts Profit, US CPI Fallout

Net overseas migration accounts for vast majority of March quarter population growth

The March quarter population growth largely was overwhelmingly driven by net overseas migration.

84% of the quarter’s total population growth comprised net overseas migration.

The quarter’s natural increase (births minus deaths) rose by only 260 people. That’s the patron capacity of a local pub!

Tim Gurner ‘not alone’ in his views: AFR

The Australian Financial Review has struck gold at its recent Property Summit.

Developer Tim Gurner pugnaciously said people needed to be reminded ‘they work for the employer, not the other way around’.

He then called for more ‘pain’ in the economy to raise unemployment and restore balance to the worker-boss relationship.

The backlash was swift … and global.

The AFR’s analytics are probably through the roof in recent days.

Their social media team certainly knew in Gurner’s comments they found gold.

The publication clipped Gurner’s most controversial points and posted them on Twitter. The Internet did the rest.

Now, of course, the AFR can run countless commentary and cross-commentary and meta-commentary on the ‘incident’.

Like yesterday’s piece claiming that despite worldwide opprobrium, Gurner’s comments have backers in the corporate world.

Here’s a snippet:

‘Minerals Council of Australia chairman Andrew Michelmore, who has more than 35 years’ experience in senior leadership roles in Australia, told The Australian Financial Review that office workers in certain parts of the economy were enjoying “a lifestyle that was not sustainable” and were exploiting their newfound freedom to work from home to slack off, while demanding the same income.

‘“Employees have got used to earning the same amount of money but not putting in the same hours, and not the same production,” Mr Michelmore said.’

Michelmore argued workers have too much power to set the terms of their employment, citing remote work demands as an example:

‘He said remote workers asking their boss to pay them to travel to work if they wanted them back into the office was an example of workers having too much power to set the terms and conditions of their employment.’

But where is the balance? And can employers have too much power to set terms and conditions of employees?

 

‘Sobering’ picture for Australia’s housing

Australia’s annual change in population is well outpacing dwelling commencements.

Speaking at yesterday’s AFR Property Summit, AMP chief economist Shane Oliver suggested a migration cut:

‘In Australia, this housing debate – I’ve been following it for many years – and it goes from one bogeyman to another. Whether it’s negative gearing, the tax system, foreigners – we’re always blaming something or other. But we don’t really get to the nub of the issue. The nub of the issue is that we’ve had, particularly since 2005, immigration levels way, way above the level of supply that we actually need.’

Tim Gurner better stop calling for more unemployment and commission more housing projects!

 

Aussie bank bosses think a ‘soft landing’ is likely

But is that a contrarian indicator?

Unemployment remained at 3.7% in August

Australia’s unemployment rate remained at 3.7% in August, according to seasonally adjusted figures released today by the ABS.

Australia added 65,000 workers last month but the number of unemployed only fell by 3,000.

ABS’s Bjorn Jarvis said the injection of workers in August came after a small drop in July, which was a school holiday period.

Over the past two months, average employment growth was 32,000 people per month, ‘which is similar to the average growth over the past year’.

Jarvis said the labour market remains tight:

‘The employment-to-population ratio rose 0.1 percentage point to 64.5 per cent, around the record high in June. The participation rate also increased, up to a record high of 67.0 per cent in August, which, together with the high employment-to-population ratio, continues to reflect a tight labour market.’

These numbers won’t please Tim Gurner.

Hydrocarbon Man is not dead yet: Callum Newman

Oil is threatening to break US$100 again. That’s not what we want to see with inflation still an issue and flat real wages growth.

This immediate move north is taking me by surprise too. I assumed the oil rally was out of puff when it was around US$75 a month or two back.

Therefore, I have no problem giving a hat tip to my colleague Greg Canavan, who did see the current rally before it happened — and acted on it!

His subscribers are now benefiting as high oil prices pour a river of revenue through some of his recommendations.

What’s driving the rally?

Saudi Arabia is doing everything they can to keep prices high by limiting their production.

In other words, they’re giving the world the middle finger and making a motza at the same time.

We also have diesel ‘cracks’ at roaring levels now. Diesel prices are up 40% since May.

That hurts most of us, because the global economy runs on diesel.

However, refiners — the businesses that buy crude oil and process it — are making a fortune for every drop of diesel they can bring to the market.

That gives them every incentive to keep bidding up crude oil while this continues.

That’s not a great signal for the economy in general. High diesel prices are essentially a tax that removes further discretionary power from consumers.

However that doesn’t mean you can’t make a buck from this dynamic in the stock market.

Refiners are one idea. Oil producers are another.

Let me tell you something too. It’s tough going out there in the share market currently. I don’t recall a time when so many sectors are suppressed, at least as the ASX goes.

The market comes under constant selling pressure lately too.

One way to hold with confidence through this difficult period is to know your companies are making a lot of money.

To paraphrase Warren Buffett, in the short term the stock market is a voting machine. In the long run it is a weighing machine.

What he means is that real cashflow is what drives stock earnings, and that, in the end, drives stock prices up.

In fact, you can often consider buying big cash producers when the market sells off.

After all, you’re acquiring a growing stream of cash flow — if you’re right — at a discounted price on the day.

I made the case last week for iron ore producers with the same logic. But oil is just as good right now. All we want really is a business with fixed costs and growing margins from higher commodity prices.

Generally speaking, this is what explains the relative robustness of the Aussie share market over the last year or so.

High commodity prices for oil, gas, and coal are driving big cashflows through the producers.

Nobody, as they say, sells a gold mine!

And if oil — and iron ore — rise from here again these type of firms will make even more money.

Here’s another benefit.

Most oil producers are paying out these profits as dividends to their shareholders, in the same way Rio and BHP have done the same thing with higher iron ore prices since 2019.

That is to say, these commodity producers are not reinvesting their profits back into exploration and new mines or wells.

Why would they?

Everyone is keen to tell oil producers that their business is in decline and a pox on the global house.

Unfortunately, this doesn’t quite square with the fact that we still need to provide 100 million barrels of oil a day just to stay where we are.

And every day, the known existing reserves of oil run down a little further.

We have gotten away with this dynamic for so long now that few people would stop to think about it for a second.

But major oil projects take billions of dollars to find and develop. They might produce for decades.

But there’s the catch, you see.

https://www.moneymorning.com.au/20230914/not-dead-yet-hydrocarbon-man.html

AOC takes aim at Tim Gurner

Tim Gurner has gone global.

Probably not in the way he’d like.

But who knows.

Is Gurner of the view that bad publicity is good publicity?

Myer: sales down in first seek weeks of FY24

Despite FY23 being Myer’s strongest sales year since 2005, FY24 is starting off slow.

In the first six weeks of FY24, department store comparable sales are down 1.9% over the same stretch last year.

CEO Jogn King said Myer, ‘like all retailers … remains cautious about the macroeconomic environment’.

 

Unpacking Myer’s FY23 results

Retail icon Myer released its FY23 results today.

A quick recap:

  • Total sales up 12.5% to $3.36 billion
    • Total sales growth was anemic in 2H23, up less than 1%
  • Group online sales down 4.5% to $690.5 million
    • Online sales comprised 20.5% of total sales
  • Statutory net profit after tax up 23.3% to $60.4 million
  • Operating gross profit up 6.9% to $1.22 billion
    • Operating gross profit margin down 189 basis points to 36.4%
  • Cash on hand down $66 million to $120 million (so down 35%) due to ‘higher dividend payments and investments’

Myer CEO John King said FY23 was the best sales result since 2005 despite a ‘softer trading outcome in Q4’.

Will Australia ever embrace nuclear?

Speaking of uranium … and nuclear.

Our editorial director Greg Canavan recently spoke to Ian Plimer, who thinks Australia has unique advantages for adopting nuclear power.

You can watch the interview below!

https://www.moneymorning.com.au/20230913/the-irony-of-net-zeromore-costly-more-energy-intensive-interview-with-ian-plimer.html

Uranium stocks open higher

I hope everyone’s having a good morning.

Uranium stocks certainly are.

  • Deep Yellow is currently up 13%
  • Bannerman Energy is up 10%
  • Boss Energy is up 8%
  • Peninsula Energy is up 7%
  • Paladin Energy is up 6%

Uranium’s spot price has been on the rise this year, up around 30%.

Surprisingly, uranium is now once of the top-performing commodities. Who would have thought!

In fact, the current spot price is nearing a decade high.

Source: Wall Street Journal

Kiryll Prakapenka

Key Posts

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988