Investment Ideas From the Edge of the Bell Curve
Retail sales exceeded market expectations, rising by 2% in November.
The move was driven by the increasing popularity of Black Friday sales, which saw a 2.2% YoY increase.
Many were expecting this year’s Black Friday to be the largest yet as cost-conscious consumers were awaiting the day to purchase held-back discretionary items.
Regardless, the surprise upside in retail sales has helped bolster the market today, with the ASX 200 making strong gains around midday.
While Aust retail sales are up 2.2%yoy (boosted by longer & bigger Black Fri promotions than in Nov 2022 & more consumers seeking discounts v a yr ago), they are likely still negative in real terms and down sharply in per capita terms (ie adjusting for the surge in population). pic.twitter.com/ryS4uDlInP
— Shane Oliver (@ShaneOliverAMP) January 9, 2024
The ASX 200 is up by +0.95% around 1pm as all sectors are sitting in the green.
The rally today was led by strong gains on the Nasdaq overnight as the Magnificent Seven bounced off two sessions of drops.
ASX tech was the strongest gainer, up 2.13% in the 200 benchmarks, while the XTX tech stock gained 1.88%.
All Ords are up 0.97%, mainly held down by losses seen in energy stocks as oil prices saw sharp cuts from Saudi Arabia.
On the XJO the biggest gains were seen by Resmed up 6.12%, and Johns Lyng Group up 5.51%.
The latest data from the ANZ-Roy Morgan Australian Consumer Confidence Index has seen a 3-point rise to 84.4.
That’s the highest level since January 2023 and is a positive sign, although it is still below the 100 level, which denotes underlying pessimism.
The rise in confidence is likely due to rising wages across the economy as well as successive rate holds and the hopes of cuts sometime this year.
Source: ANZ-Roy Morgan
The approval ‘deadline’ for the Bitcoin ETF this week is approaching, with traders buying heavily overnight as some reporters say approval is ‘likely’.
BTC jumped 7.43% overnight to US$46,963 as a CNBC report poured onto the bullish news with an interview with former SEC chair Jay Clayton.
Mr Clayton told CNBC that the decision on Wednesday (US time) would likely go ahead, saying:
‘Approval is inevitable…. There’s nothing left to decide. … This is a big step not just for bitcoin, but for finance generally.’
The decision is for the first application of a Bitcoin ETF by Cathie Wood’s Ark Investing. But that is just the first in a string of applications from a host of competitors.
Known as Ark 21 Shares, this is just the first application deadline, which will then see Blackrock, VanEck and others see their own applications processed.
Described as ‘a price war’, by Jim Angel, an associate professor specializing in financial market structure at Georgetown University’s McDonough School of Business.
He thinks the space is going to heat up as the ETF’s battle for market share if approved.
‘Multiple vendors are coming out of the gate with a nearly identical commoditized product and the only way they can compete is on price.’
The effect of the approval is likely going to be less than many investors hope, but the longer-term outlook will be very positive for the space.
The next thing to look towards for the crypto market after the approval will be the BTC halving in April.
This is where the rewards for BTC miners for creating blocks on the blockchain is halved, thereby restricting the supply of new coins and usually pushing prices up.
Buyers beware: between now and April, Bitcoin could see large retracements as it has done in previous pre-halving periods.
Australian-based Alumina [ASX:AWC] is in a trading halt pending an announcement that may not be great for investors.
As reported by Bloomberg, US industrial giant Alcoa is about to announce that production will be cut at its Kwinana alumina refiner in WA, as part of cost-cutting initiatives.
Alumina has a 40% stake in Alcoa World Alumina and Chemicals and will likely take a hit as a result of the news.
1,200 workers’ jobs are currently uncertain as the refinery’s future looks dim.
Incoming Alcoa CEO Bill Oplinger had previously warned that the plant could close, calling it a ‘marginal asset’.
Whether the output cut is the end of the story is still to be seen, but for now Alumina shares could see a downside as they come out of the halt.
Chinese bank authorities have hinted that a fresh wave of liquidity might be coming.
The People’s Bank of China has indicated that it may once again lift the reserve requirement ratio (RRR) of its big banks.
The head of the PBOC monetary policy, Zou Lan, recently told a Chinese paper that he intends to use these policy tools to provide ‘strong support for reasonable credit growth ‘.
This will open up fresh medium-term liquidity for the banks to lend.
For ASX miners, that will be music to their ears as this fresh wave of stimulus directly translates into further demand for critical minerals and metals.
Many sectors are looking towards China in early 2024 to see just how far the talks of stimulus will go.
Good morning. Charlie here
The ASX 200 opened up +0.39 % to 7,480.8 as megacap tech stocks lifted Wall St from its slumber.
Nvidia was the big mover overnight, gaining 6.43% after a series of announcements at the CES 2024 conference.
New graphics cards, some generative AI news, and rumours of a China-compliant AI chip for Q2 2024 were the big things moving the needle for the chip powerhouse.
Meanwhile, oil prices erased all gains seen in the past week, falling over 3% after sharp Saudi price cuts came along with a rise in OPEC output.
Wall Street: Dow +0.58%, Nasdaq +2.20%, S&P 500 +1.41%.
Overseas: FTSE flat, STOXX +0.49%, Nikkei +0.27%, SSE -1.42%
The Aussie dollar rose +0.05% to US 67.18 cents.
US 10-year bond yields -2bps to 4.03%.
Australian 10-year bond yields -1bps to 4.12%.
Gold fell -0.79% to US$2,028.03. Silver flat at US$23.10.
BTC rose sharply in anticipation of the ETF approval on Wednesday (US time) +7.05% to US$47,090, while Ethereum rose by 5.09% to US$2,336.
Oil Brent fell sharply, down -3.10% to US$76.32, while WTI Crude fell -3.79% to US$71.01.
Iron ore fell -0.5% to US$137.85 a tonne.
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Investment ideas from the edge of the bell curve.
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