After trading below both the 5-year and 10-year P/E ratio averages last month, the S&P 500’s forward 12-month P/E ratio ticked above the 10-year average.
The forward 12-month P/E ratio for $SPX of 17.5 is below the 5-year average (18.6) but above the 10-year average (17.0). #earnings, #earningsinsight, https://t.co/d3mgPKmOGQ pic.twitter.com/zHfDDBKdzL
— FactSet (@FactSet) August 7, 2022
The S&P/ASX 200 closed 0.07% higher on Monday, recovering from an early morning dip.
The biggest movers:
‘Intangible assets are now responsible for 90% of all business value.’
Lithium junior Lake Resources (ASX:LKE) is trading over $1 a share for the first time since late June after gaining over 15% on Monday.
The lithium stock fell sharply in 2022 after hitting a high of $2.65 a share.
A pullback in frothy lithium valuations and a short report from J Capital saw LKE erase much of its gains this year, with LKE shares up about 7% year to date.
Yet since hitting 60 cents in mid-July, LKE has gained nearly 80%.
Lithium junior $LKE is trading over $1 a share for the first time since late June after gaining over 15% on Monday.
— Money Morning (@FatTailDaily) August 8, 2022
Online book retailer Booktopia (ASX:BKG) is up 12% nearing end of trading on Monday.
The book retailer provided an update regarding a new customer fulfillment centre.
Booktopia noted its existing Lidcombe facility was crimping growth and efficiency after several ad-hoc retro-fitting changes were unable to account for ‘a number of years of high growth … and an increase in inventory’.
So, with the Lidcombe lease ending in 2023, Booktopia will move its customer fulfillment centre to a larger, 20,000sqm facility in the same area.
BKG expects the new facility to drive ‘significant operational efficiencies’, with the centre expected to be operational by Christmas 2023.
Booktopia Acting CEO Geoff Stalley said:
We continue to see opportunities for growth in the Australian book market and the investment in a new customer fulfilment centre is not only critical to business performance but also to ensure Booktopia is able to meet its customer promise now and into the future.
The new CFC re-shapes our supply chain and unlocks a significant opportunity to increase profitability and generate cash with a purpose-built design that is efficient and scalable.
For the half-year ended 31 December 2021, Booktopia ended the period with cash and cash equivalents of $5 million, down YoY from $16 million, after reporting negative free cash flow of $5.1 million.
Tech Crunch has reported that Chinese internet giant Baidu acquired permits to provide a fully driver-less commercial robotaxi service in Chongqing and Wuhan via its ride-hailing unit, Apollo Go.
Baidu’s wins in Wuhan and Chongqing come a few months after the company scored a permit to provide driverless ride-hailing services to the public on open roads in Beijing. The difference here is the service in Beijing is still not a commercial service — Baidu is offering free driverless rides in the name of R&D and public acceptance — and Beijing’s permit still requires a human operator in the front passenger seat of the vehicle.
When Baidu launches in Wuhan and Chongqing, it’ll be the first time an autonomous vehicle company is able to offer a fully driverless ride-hailing service in China, Baidu claimed. Meanwhile in the U.S., Cruise recently began offering a driverless commercial service in San Francisco, and Waymo has been offering one in Arizona since 2020.
Rising stock prices can be very alluring — as the market moves higher, you naturally think the worst must be over.
Sometimes that is the case. Sometimes it’s not. Instead of just looking at prices and reaching a conclusion, the best option is to simply use common sense.
The commonsense approach today is pretty simple — the US economy is in a recession, yet the Fed continues to hike rates.
It takes a brave or foolhardy investor to think that stocks can sustain a rally in such a scenario.
Alternatively, to justify the rally, you have to think the recession is over, and the Fed is much closer to cutting rates than most investors currently think.
But with headline and core inflation readings still too high, it’s clear to me that the Fed will continue to increase rates despite the recession.
Read on here.
There’s no sign that China or India are slowing down on fossil fuels.
In 2021, the number one emitter, China, commissioned 56% of the world’s new capacity for coal-powered power stations.
Similarly, India is the number three emitter in the world and relies on coal for 70% of its electricity generation.
And like China, their priority right now is on cheap, reliable energy.
As reported in Clean Energy News:
‘The surging demand has led to power rationing in the Punjab, Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Jharkhand, Bihar, Goa, Telangana, Andhra Pradesh, and Karnataka states, with residential, industrial, and farming areas all affected. The situation could worsen—the summer peak demand season has yet to arrive.
‘Looking forward, some players are signaling a shift back to coal to avoid chronic power shortages.
‘State-run NTPC, India’s largest electricity supplier, will reportedly award a contract to build a 1.32-GW coal plant in Odisha in eastern India later this month.
‘If confirmed, this would be NTPC’s first coal expansion project in six years. The company might also seek to revive two stalled projects in Lara and Singrauli, according to media reports.’
Make no mistake, many countries — especially poorer ones — are turning back to coal to secure energy.
And you can’t really blame them.
Who are we to tell them they can’t enjoy higher living standards by using cheap energy after we’ve just spent a century benefiting from it?
Not only that, in an increasingly uncertain world, coal is a pretty safe choice for most countries.
And we’re seeing that’s not the case for other types of fuel.
If we’re going to transition to a #renewable future, we’re going to need to do a heck of a lot of mining first.
I’m talking A LOT!
— Money Morning (@FatTailDaily) August 8, 2022
Read on here.
The Australian Institute of Petroleum reported that the national average unleaded petrol price fell by 8.1 cents last week to a 15-week low of around 174 cents a litre.
As CommSec noted:
Pump prices have fallen for 49 straight days in Sydney, down from 218.7 cents per litre to 163.1 c/l. That fall of almost 56 cents represents savings of around $30-35 to fill up a vehicle from near empty. In Brisbane, prices have also fallen for 49 days, down 59 cents a litre. The $64 question is when will the petrol cycle end given that pump prices are only modestly above the wholesale price?
CommSec estimates that it is costing the average family $243.04 a month to fill up the car with petrol – well below the recent record high of $297.50 a month in March. But despite recent falls in pump prices, it still costs around $21 a month more to fill up the car compared with the start of the year – over seven months ago.
Here are the biggest market movers on Monday:
While the S&P/ASX 200 is down 0.2% nearing midday, some stocks have managed to hit their 52-week highs.
In its latest Statement on Monetary Policy, the Reserve Bank of Australia noted that coal-fired electricity generation has been ‘substantially lower in 2022 that in recent years.’
In its latest Statement on Monetary Policy, the Reserve Bank of Australia noted that wholesale electricity and gas prices are set to remain elevated in the coming months, partly due to lower-than-expected renewables output.
Lower-than-expected output from renewables generation for a time may have also contributed to the increase in wholesale electricity prices. Overall, to date, renewables generation has been higher in each month of 2022 compared with previous years, largely due to an increase in capacity. However, electricity produced per unit of installed renewables capacity has been lower than in previous years, partly reflecting adverse weather on the east coast.
This may have put further pressure on wholesale electricity prices if market participants had anticipated that renewables generators would supply more electricity into the NEM. Lower-than-expected output from rooftop solar may have also led households and businesses to demand more electricity from the NEM in recent months.
Watch as Fat Tail Investment Research’s Murray Dawes reviews the week that was in markets, with a special focus on gold and gold stocks.
Don’t misread the Fed’s resolve to quash inflation, come what may.
According to Fed insider Joseph Wang, the market may be underestimating the Fed’s mettle when it comes to the inflation fight.
It also features insights from Wang's recent blog posts.
This thread covers:
– Fed Pivot
– QE and Yield Curve Control
– What's next for equities, housing, fixed income and more.
Let's dive in!
— The Notetaker (@FinTwitNotes) August 6, 2022
Watch the full interview here.
In rejecting BHP’s indicative proposal of $25 per share, OZ Minerals said the proposal did not ‘sufficiently recognise [the] unique nature of OZL’s core business.’
We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand particularly for the global electrification and decarbonisation thematic and we have a long-life Resource and Reserve base.
OZL said it provides a unique investment proposition ‘as the only primary copper company in the ASX 100.’
The nickel and copper miner also cited a strong long-term outlook for copper and nickel markets.
OZ Minerals thinks it is highly leveraged to ‘increasing geological scarcity, global electrification and accelerating decarbonisation.’
The S&P/ASX 200 opened 0.4% lower on Monday.
Suncorp (ASX:SUN) and Aurizon (ASX:AZJ) both fell over 3% at market open.
OZ Minerals (ASX:OZL), on the other hand, shot up 35% in early trade after rejecting an indicative offer from BHP (ASX:BHP).
BHP offered to acquire all OZL shares for $25 per share.
However, OZL’s board unanimously determined BHP’s initial offer ‘significantly undervalued OZ Minerals.’
Bidding in OZL shares this morning has seen the stock trading at $25.3 per share.
4:58 pm — August 8, 2022
4:54 pm — August 8, 2022
4:47 pm — August 8, 2022
4:24 pm — August 8, 2022
4:08 pm — August 8, 2022
2:28 pm — August 8, 2022
2:17 pm — August 8, 2022
1:58 pm — August 8, 2022
1:52 pm — August 8, 2022
1:39 pm — August 8, 2022
11:47 am — August 8, 2022
11:24 am — August 8, 2022
11:17 am — August 8, 2022
11:04 am — August 8, 2022
10:38 am — August 8, 2022
10:32 am — August 8, 2022
10:19 am — August 8, 2022
Investment ideas from the edge of the bell curve.
Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.
All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.
The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.
Fat Tail Daily is brought to you by the team at Fat Tail Investment Research
Copyright © 2023 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988