Aussie customers: not as bad as you assume! | Australian Markets
Here are three issues I’m occupied with immediately…
But earlier than I get to them, I’ve a breaking message from our writer:
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A New Reckoning Begins! Announcing the return of The Daily Reckoning Australia: James Woodburn right here, writer at Fat Tail Investment Research And I’ve been working with our group on one thing that can improve your market understanding… The return of our flagship e-letter publication, The Daily Reckoning Australia. In reality, it was the VERY FIRST e-letter in your entire industry as far as I’m conscious. Well, this iconic e-letter is coming back to your inbox subsequent week, along with your common Fat Tail Daily subscription. And identical to Fat Tail Daily, it’s fully FREE. You’ll obtain direct insights from some of essentially the most revered voices in finance: our founder, Bill Bonner, Nickolai Hubble, Brian Chu, and Jim Rickards. These contrarian macro thinkers have been predicting main financial shifts for years, typically effectively earlier than the mainstream catches on. So, how can you get entry? You don’t need to do a factor. As a valued subscriber of Fat Tail Daily, you’ll mechanically obtain The Daily Reckoning Australia fully free. This fastidiously curated content material enhances your Fat Tail Daily studying, giving you deeper insights into the financial forces that can form markets in 2025 and past. Your first subject of the revived The Daily Reckoning Australia will hit your inbox subsequent week. Of course, whereas we imagine this publication will probably be a beneficial addition to your financial studying, you’re free to unsubscribe at any time. In the meantime, look out for “The Daily Reckoning Australia” in your inbox subsequent week. |
I’m delighted we’re bringing back the OG of e-letters. Watch this space!
For now…
1) VCX: helpful snapshot of the buyer proper now
We’re getting helpful ASX updates popping out now.
You and I wish to get a sense of how fragile or resilient the economic system is. Who is aware of? It may even lead us to an investment alternative.
One share I watch is Vicinity Centres (VCX). I really useful this one years in the past.
This is a real estate investment trust that owns half of the mammoth Chadstone Shopping Centre in outer Melbourne. It additionally has different centres sprinkled round Australia.
If people are purchasing usually, VCX goes to know.
What do they are saying?
They’re seeing “robust” retailer and shopper confidence.
Retail gross sales are up 2.4% for the quarter. VCX cashflow is probably going on the high finish of their steering.
No complaints, in different phrases!
A retired pal of mine purchased VCX years in the past. I keep in mind telling him in 2022 so as to add to his holdings within the bear market on the time.
REITS had been getting slaughtered from the high charges impacting markets back then.
My pal by no means obtained round to that second chew of the cherry.
It’s a disgrace as a result of VCX bottomed out that yr at about $1.70 per share. It’s $2.40 now, and paid out income all the best way.
OK – it’s not Nvidia. But for the correct mix of capital risk, income and normal market backdrop, I’ve seen worse concepts.
Now, REITs like VCX are extremely prone to keep trending, slowly, from right here as their debt servicing prices come down as rates of interest fall, and client spending helps elevate rents.
You’re much less prone to get smashed right here too, as a result of they’re underpinned with actual belongings.
Their home focus can be a tailwind whereas Trump’s ADHD type Presidency continues.
For our functions immediately, VCX is telling us that retail shares could be value a look.
Consumer spending is thru the worst of the fee of residing disaster now.
As mortgage charges fall, this may choose up. The ongoing Labor authorities ought to give people a sense of continuity and stability.
The job market is healthy. And China could possibly be about to dump items galore over us!
2) We even have an replace from mining service company Imdex.
This is an attention-grabbing one as a result of Imdex is up practically 40% during the last 12 months regardless of useful resource exploration being weak for two years.
What’s happening right here?
The market is transferring forward of the arduous knowledge on this one. The market is saying that we’re on the backside of the cycle for exploration.
The roaring gold price and obvious structural deficit in copper means exploration {dollars} have to come back out in some unspecified time in the future. Gold and copper are 75% of exploration spending.
You can see from the chart under why the market loves copper firms. The demand line stays degree whereas the provision is falling away fast.
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Source: Imdex |
(PS. My favorite small cap of the yr is a copper producer about to elevate into a 10 yr run. All the small print will probably be launched right here on Thursday)
As for Imdex, it already trades on a P/E of 25.
The share price could be vary sure now till exploration spending begins turning into income growth and income.
Keep an eye on it.
One last thought…
3) Should we be bullish?
Go back a month. The share market was cratering. The economic system seemed prefer it was going to tank from Trump’s tariffs.
As it’s, each the market and the economic system proved more resilient than most of us presumed.
However, trade between the USA and China is on monitor to go to a full halt until the tariffs are negotiated down.
It places in play a state of affairs that feels unlikely, however potential. Could the US markets end 2025 up?
January 2026 is a long time away. But it’s a likelihood. In markets, it’s important to keep an open thoughts.
Regards,
Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
Murray’s Chart of the Day
– Shipping Container Bookings
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Source: Vizion |
After a torrid rally in stocks over the previous few weeks, I believed it will be helpful to have a have a look at what is occurring to trade between the US and China as the trade struggle continues.
The quantity of customary 20-foot containers booked to go from China to the US is falling off a cliff for the time being.
I needed to put collectively the chart above from knowledge contained on the Vizion web site.
You can see clearly that the quantity of containers booked has fallen sharply over the previous few months from above 100,000 to the present degree round 50,000.
That is not far off the low created during the Christmas period final yr.
So as stocks have their best profitable streak in years, I believe it pays to have one eye on what is definitely occurring out in the true economic system.
My view is that the present power in stocks is no more than a short squeeze and we are going to quickly see critical promoting strain return.
Regards,
Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
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