Good Morning,
Trust that you had a nice weekend and are looking forward to another busy week on markets…
We headed down the coast…
It’s always great to get out of the “hustle and “bustle” of the city and get some fresh air, right?
So what can we expect this week?
Red Bubble, the much anticipated IPO is listing today on the ASX… the business is on track to generate over $100M in revenues and will be listing on ~ 3x revenues… a key barometer for how Aussie tech is faring in the recent weakness of the NASDAQ.
Interestingly, a year of profit stagnation has left the S&P 500 Index’s price-earnings ratio flirting with some of its its highest readings since the Internet bubble.
This is judged against bonds, though, stocks remain stubbornly cheap.
Plotting the index’s per-share earnings against the yield on the 10-year Treasury note, a technique sometimes referred to as the Fed Model, shows the S&P 500 is still less expensive than any time during the 2002 to 2007 bull market. Stock valuations are held down in the comparison by some of the lowest bond payouts ever.
On Friday night in the US, stocks fell (Dow -173 points), as stronger than expected retail sales figure drove stocks lower as investors are nervous on how much further stimulus will be provided by central banks.
Expect a weak day today, while gold stocks should be well supported as AUD gold, rallies near all-time high.
We do expect further upside in the short-term as global inflation remains weak and fiscal policy remains ineffective to stimulate global growth.
So…What's on today?
Local data: NZ PSI
Local earnings: Elders
Bank of Japan current account; US Empire State manufacturing (May), US NAHB homebuilder sentiment (May), US Treasury net international capital flows (March); Bank of Canada biannual economic review.
Fed speaker: Neel Kashkari.
Overseas earnings: Amaya, Kirkland Lake Gold, British Land, ICAP.
The SPI is down 17 points this morning.
By Niv Dagan
