June – Week 3 and 4 update

The official end of the financial year. Tax returns or Tax paying time.

The ASX 200 (XJO) remains close to all time highs. US markets similar. US Jobs numbers were slightly higher than expected (850k vs 700k). Wages were up slightly too. These numbers led Joe Biden to quote:

“This is historic progress, pulling our economy out of the worst crisis in 100 years, driven in part by our dramatic progress in vaccinating our nation and beating back the pandemic as well as other elements of the American Rescue Plan”.

Interestingly 40% of the job gains came in the hospitality & leisure industry. 150 million Americans are now fully immunised allowing the US to lift restrictions for businesses. It’s a hint that Australia could take to achieve higher breadth and depth of vaccinations. Far better we all go and get vaccinated than lock people up and lock the country down. If the US can do it with 330 million people surely Australia can do a bit better with 24 million people.

What were the highlights and companies that we focussed on this period? Members can find out in a 30 minute video from Fahd and Moin, below, including a deep dive into another company that seems to have currently bottomed.

The ASX VIX (volatility index) has seesawed remains currently under 12.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

CEO Insights

Automotive

“To put it a simpler way: electric vehicles account for less than 1 per cent of vehicles globally at the moment. To reach net zero emissions that needs to be much closer to 100 per cent within 30 years. So that’s at least a 100-fold increase ahead, just for vehicles” 

Robyn Denholm, Tesla chairwoman

Aviation

“Space [exploration] has always been a competitive environment…These new players [SpaceX, Blue Origin, Virgin Galactic, etc] are here to stay, I think, and we’re working with them” 

James Taiclet, CEO, Lockheed Martin Corporation

Workplace & Employment

“There isn’t a CEO I speak to who isn’t seeing their industry transforming at the moment in many different ways, from their customer behaviours to the actual structure of its competitive nature” 

Jane Fraser, CEO, Citigroup Inc

“Of course, working at home just went crazy, but those that did a temporary solution are now realising this is the way I’m going to run my life for the future, maybe working hybrid 50-50 [home-office], so now I will upgrade my lighting and chair, so we are seeing the second wave of those investments” 

Jan Gardnerg, CEO, IKEA Australia

“I think most businesses and companies have moved into remote-only work with their organic teams and they’ve noticed that this is actually a pretty viable way of working and because of that, they’ve been also more open to figuring out how to integrate freelancers into that mix. So that has been a massive tailwind” 

Micha Kaufman, CEO, Fiverr International Ltd [top-tier global freelance marketplace]

Technology

“We just have never seen customer demand like this” 

Marc Benioff, CEO, Salesforce.com Inc

“We see three important industry trends now…The first trend is consumption upgrades as people spend the most time on their devices, leaving them to buy more devices and upgrade more often…The second trend is the infrastructure upgrade. The ever-growing use of online applications has not only increased the demand, but also raised the bar for ICT [information & communications technology] infrastructure…The third trend is application upgrade” 

Yang Yuanqing, CEO, Lenovo Group [worlds biggest PC company]

“We have found that clients on average have typically only moved about 20 per cent of their operations to the cloud. And the big thing that clients are now trying to solve is how you go from 20 per cent on the cloud to 80 per cent on the cloud” 

Matt Coates, Managing Director, Accenture ANZ

“The fact that almost one in three households [4 million out of 12 million] is not using the NBN today, illustrates the dynamic nature of the market” 

Market Statement, NBN Co Ltd

Electronics & Chip Shortage

“If you want electronics, buy them now. Otherwise, next year I think it will be very difficult to find anything” 

Serena Ross, CEO Circuitwise [Australian electronics manufacturer for medical device industry]

Media & Entertainment

“For markets that are opening up, where people are going back to school, going back to work, returning to their normal“The importance of the PC extends far beyond work and school. In many cases, this has become the entertainment center of the home from streaming and content creation to the rise of gaming and eSports” 

Enrique Lores, CEO, HP Inc

Residential Property & Households

“Coming through the other side of the pandemic…my view is that as first home buyers — particularly who look at apartments and smaller places and so forth — come out of the market, that volume will probably be replaced by investors” 

David Bailey, CEO, AFG Ltd

“In Australia, the significant uptick in housing approvals is now translating to increased building activity, with our sales particularly strong in Queensland and Western Australia over recent months” 

Lindsay Partridge, Managing Director, Brickworks Ltd

“We all can see that affordable homes are not coming forward, prices are just continuing to go up…we believe people will continue to want a home but will demand more value out of every dollar spent. That means for the future we will see much more competition into the affordable and smart home solutions” 

Jan Gardnerg, CEO, IKEA Australia

Banking & Finance

“That business [commercial banking] is really exploding with newborn digital players, as well as more and more companies that are looking at going into different geographies” 

Jane Fraser, CEO, Citigroup Inc

“There could be some pent-up demand out of COVID, but my belief is there is going to be more steady continuous momentum during the next couple of years as many businesses start shifting their financials to the cloud” 

Chano Fernandez, CEO, Workday Inc

Payments & Lending

“Open banking [sharing banking data with verified third parties] is a trend” 

Michael Miebach, CEO, Mastercard Inc

“So, what you’re seeing is that even as people are up and about and going into stores and card-present [payments] is recovering, card-not-present [payments] is still almost 60% above 2019 levels. So, you’re starting to see that that card-not-present is not slowing down, even as card-present recovers to, let’s say, almost pre-pandemic levels” 

Vasant Prabhu, CFO, Visa Inc

Agriculture, Food & Beverage

“Food production is Australia’s biggest manufacturing sector, with a third of all manufacturing jobs and over 14,000 food businesses. With our total food exports going up by 60 per cent since our first Global Food Forum in 2013, I’m confident more and more countries will be looking for safe Australian food as global markets realign” 

Anthony Pratt, CEO, Visy Industries

“There is increased competitive activity when it comes to milk supply in Australia. So, we are seeing some of our competitors that are offering higher milk prices” 

Kai Brockmann, COO, Saputo Inc [one of the worlds largest dairy processing companies]

Energy, Raw Materials & Resources

“Australia has the minerals to power the renewable energy age throughout the world in the coming years” 

Robyn Denholm, Chairwoman, Tesla Inc 

“Miners continue to benefit from global commodity consumption growth. Decarbonisation [is] expected to generate a structural change in metal demand including lithium, copper, and aluminium. Miners [are] continuing to increase their efforts to decarbonise their supply chain” 

Market Statement, Worley Ltd

“If our solution is entirely just to get a green world, we’re going to have much higher inflation, because we do not have the technology to do all this, yet. That’s going to be a big policy issue going forward too: Are we going to be willing to accept more inflation if inflation is to accelerate our green footprint?” 

Larry Fink, CEO Blackrock Inc

“Analysis by the International Energy Agency shows that half the global reductions required to achieve net zero will come from technologies that are not yet ready for commercial deployment” 

Angus Taylor, Federal Energy Minister

Commodities

“Although doubling in production over the past decade [and now the world’s second largest steel producer behind China] India is considered at an early stage of development with consumption per capita around a third of the global average” 

Andrew Harding, CEO, Aurizon Holdings Ltd

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More updates on the market and highlights video for members follow below.

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