the COB: rate relief

0:00Still waiting in line? Again? That's time you'll never get back. Save time and money with stamps.com. Over 4 million businesses have skipped the line with stamps.com. Join them to save up to 90% off-career rates from your computer or phone right now. Print postage for Certify Mail, Registered Mail, and packages in seconds. Then schedule a pickup right from your home or office. For a limited time, go to stamps.com and use code podcast for a free welcome gift. The C O B is brought to you by Longview, a new way for investors to access Australian residential property. Visit longview.com.au. Bring me the next shiny new thing. Hello, welcome to the C O B on this Wednesday. The final day of September, can you believe this year is flying by?

1:05It was a very good day on the market though to round out the final day of the month off. And do see a little bit of that window dressing coming in on a final day of the month. Don't we? And have a look at that buying that all occurred from around 1130. Now the other thing that happened at 1130, of course, was the CPI data. So that rally into equities that you can see there was really as traders started to reassess whether or not a follow-up rate hike in November will be necessary. The S&P ASX 200 also had a good day up by more than 1% to 8806 points. So yeah, getting to the themes of the day. It really was about this rate relief inflation coming in softer than expected reducing perhaps the chances of an aggressive tightening cycle by the RBA. There's a few people on different sides of the coin here, but of course the timing of this inflation data as well was really just so unfortunate given that the RBA met yesterday. The governor was asked about that and the scheduling, I suppose, conflict.

2:05She said, look, they're all busy people. They made these board meetings about 18 months to two years out ahead of the changes by the ABS. Now JP Morgan says that they still expect the RBA to be relatively dovish following the inflation data, but not so fast because WestPak is expecting the RBA to lift rates again in November after previously, only just yesterday, forecasting just that increase in September. And global XETF also says there is a chance that we could see an November rate hike, EY also flagging another rate rise by year end. So what does this mean for currencies? Well, Aussie anxiety, the Aussie dollar hitting a two-month low as we do start to see these bits being placed as to whether or not there will be an November follow-up hike. Now, Aussie has asked RBA governor Michelle Bullock yesterday the concern of our shared David Koch, whether households and small businesses are being unfairly asked to pay the price for circumstances beyond their control, namely higher oil prices from the Middle East conflict and government spending.

3:14People are feeling quite rightly very annoyed and very upset about the fact that the costs of everything arising, that their wages are not keeping pace with that. They're seeing real wage cuts. And then on top of that, they've got this shock from the Middle East, which is nothing to do with them, but it's made us all poorer. This is true. So I understand all those sentiments. The best, but again, back to the point, the best thing we can do is get that inflation rate back down to 1.5%. All right. Well, you saw the reats rally on those rate hike or expectations. They're a good man group. That was also in the news, which I'll get to in a minute out for 1.5% center, SGH, Charterhall, GPT, all moving higher. What does it mean for consumer discretionary? Well, maybe if that is the peak, we have seen a little bit of buying coming through into some of those consumer discretionary stocks.

4:14They all looked pretty positive today, looking at energy stocks as well as we continue to monitor the flowing through somewhat more of shipments in the Strait of Humores energy stocks all looked pretty good today. Well, she has in land leased really did lead the charge today, rising more than 12% following an update that it's remaining 25.1% interest in the Keaton retirement, living trust issued for divestment today. There's also reports that Goldfields is weighing a sweetened takeover bid for Northern Star with more cash on the table. Remember, Northern Star rejected that near $40 billion offer earlier in the week. She has up 6.5%. She has in lindian resources, though slumped after coming out of a hole did, though, confirm its Malawi rare-esque project has not been affected by the country's ban on raw material exports. TILICS was a little weaker despite winning FDA fast status for a new program aimed at improving how prostate cancer is detected before a biopsy. And AI media initially shot up by about 14% but fell into the red. It's targeting annual into the close, I should say, targeting annual recurring revenue of $44 to $46 million. That's up 22 to 28%.

5:26We also had an update from drone shield. It secured a three-year US Army contract worth up to $500 million US dollars or around $716 million Aussie dollars strengthening its position in the rapidly growing counter-drone market. And we spoke with drone shields Joshua Bollett to unpack what the contracts mean for drone shields. And actually what we see is that it's another way of opening up the gateway for agencies to buy counter drone, which is very important across not just military bases, but a whole lot of agencies, which includes Department of Transport, Federal Aviation Authority. And these agencies recognize that counter drone is no longer something that you can ignore or just pretend is not going to be required. All right, well, let's put all that together and welcome to the COB Jonathan Takadena from MPC markets, my guest for today. Jonathan, your thoughts there on what the inflation print means for further rate moves.

6:26Well, first thing I want to say is that the market's celebrating a 4% print. It's amazing. Like if you zoom out and go hang on. If someone had told you that the September print was 4%, the market should fall on that. But due to the positioning and the border, you know, bit of trading, playing games and cat and mouse, you know, everyone was kind of expecting a higher print. But just that little miss meant that the balls could actually come out and start buying this market. And you can just say it was a risk on mode, all of the consumer discretionary stocks, banks rallying pretty much just a general rally. Now, my early call on this is that this is just, you know, end of quarter window. Well, we have a joke in our office. It's window washing. So it's an end of quarter window dressing. And we shall see how this market reacts as we go into October. Now, interesting is that seasonality just hasn't played out this whole year in the S&P.

7:28Basically, higher bond yields, equity is rally. It doesn't matter what's thrown at it. S&P. That's that just wants to rally from here. Yeah, interesting window dressing, window washing, whatever you like to call it. Certainly the timing of the end of month really does come into play somewhat. And, you know, a big move in reach to on these interest rate expectations. So what do you like here? I mean, I know you're also looking at some data center movement to what what do you sort of got your eye on? So what I'm still I'm still looking at mainly defensive plays at this stage. So I am still early in the, you know, I think this is a bit of a short term bounce. So there will be a good opportunity here just to lighten load on a lot of things. But I just feel like this, you know, that bond that moving the 10 years in pretty much all around the world. I still think that hasn't washed through to a risk of the environment in the equity market. So I think I'm, you know, just a short term move. But what I do like here going forward, I mean, like I do think that the everything that has been sold down. I think here in Australia, we have been sort of punish unjuly in regards to just equity valuations and there are cheap bargains here.

8:43So I do like JBI, I do like West farmers at these levels. And I do think that you know, you've got a risk, good risk to reward play here. Stop at the lows, just by here and you know, see if the momentum carries a four week or two. Yeah, I was speaking to Mark. Your colleague, of course, on wealthy and wise about your guys view on on JBI high fights. So really sort of bullish thesis there. As soon as we get a little bit more money into our accounts. Of course, we do want to spend it somewhat now getting back to that data center point. So good, but earlier in the Greek Greek week rather, it counseled one in in Lankov on Sydney is lower North Shore. Is this a bit of nimbyism here? Oh, absolutely. So just to I actually live in that area. So I, my kids actually go to the skate park at Blackburn Park, which is pretty much 50 meters from where the data center was going to be built. And you know, for last year, I would get pamphlets while I'm watching my kids at the skate park. And I'm just like, interesting. You know, you look at the numbers and you're like, yeah, I don't want it here.

9:51But nimbyism is right all around the world. What I'm finding interesting is that there's actually nimbyism in states that you wouldn't expect like, you know, states like Texas. But I think that obviously lower North Shore, the nimbyism would actually be the strongest. And so that's why Goodman decided to pull out because you know, just it wasn't appealing to to their public relations department. Yeah, interesting. I'm just looking at the map. You, you must be hanging out where I used to live very, very close to Blackburn Park. We know Lankov well. But what is all this mean in terms of like the investment thesis for companies like Goodman, because data centers are going to be built. Yeah, absolutely. So it all depends on where you are on the AI stack. So obviously, AI is going to be a dominant force going forward. That money is going to be spent. But you've got to just figure out if the if it's already been priced into the stock that you're trying to buy into. Or if it's kind of inflated at these levels. Now there is very strong opinions on both sides of the argument.

11:02I'm in the waiting C camp at this stage. It is fairly clear that the money is going to be spent. They've already raised the debt for it. So I am still bullish at this stage. But I'm also worried about, you know, the whole AI trade is based on future growth and future demand and, you know, and actual monetization going forward. And if there is a slowdown, if there is some sort of financing problems. And you will see in say credit, the whole swaps firstly and in the credit markets. That's when I'll be like, okay, well, you know, this AI trade has run its course, but not as yet. So that's quite I'm still bullish at this stage. But obviously cautiously optimistic because it's the biggest infrastructure build out in the history of pretty much mankind. So like, you know, we're talking about dada centers all over the world, you know, having colossal amounts of capital being put behind it. If there is a slowdown in growth or if the demands sort of tapers off.

12:03Yeah, I will pull all the plugs quite quickly, but not yet. All right, not yet. Always good to chat. Jonathan, thank you so much. I'll let you get back to the screens. Jonathan, Takadena there from MPC markets. Well, of course, we're talking very much about what stocks were in focus and the stock of the day was drone shield. We spoke to our experts at your wallet from DP, well, advisory Henry Jennings from Marcus today. Could be the start of a turn in drone shields fortunes if they could just clear. I don't know if there's been an announcement while I was away about ASIC. But if they could just clear that and get back some credibility, then maybe they could ride the drone wave as code and has, and as EOS has. All right. Okay, I'm not in this town, Henry. 30th of September, it could be the turning point just a future reference. Yeah, you can, you can ride that down Andrew. I'm more than happy to stick with that.

13:07So is that a buy it? I think yes. Europe as Henry says, there's lots of opportunity there. North America, not so much at the moment, but there's this contract announcement or the pathway to a contract announcement today. Does that open it up? So I think it's a hold that to it being a turning point. Yeah, we could certainly look at this sort of say, you know, six or 12 months time. That was, that was the time. But to me, you really want to see that short interest position falling. So if the time being, it's a hold plenty of opportunity, but there's still a couple of analyze. All right. Well, AI can give you information, but investing is about understanding the thinking behind it. So that's what Osbus Plus comes in. It's real people verified experts, their ideas, analysis insights connected by AI to what we're doing. And by AI to what you're interested in, it is not AI replacing the expert. It's AI helping you find the expert that matters to you. So powered by people match by AI, tuned to what you like. Osbus.co slash free seven.

14:15Let's have a look at some of the leaders in today's session and the laggards. We mentioned Len Lee's there on its divestment, also just the reets in general rising. Karoon energy emits that optimism in the energy space dominoes looking good to northern star on these reports that there may be another nibble from Goldfields. Let's have a look at the laggards though. And those included develop global down by almost 9% pinnacle investment down by more than 4%. And a few lithium players as well in the small end of town, these stocks did well, including elementos, which was up by more than 20% 3% while the laggards in the small end of town included metallic and down almost 18%. All right, so we get the US core PC price index tonight, also the weekly ADP non farm. Implement data, the second quarter GDP and micron coming out with some earnings tomorrow. Australia trade balanced you along with the judo bank manufacturing PMI and Japan's bank of Japan summary of opinions.

15:21But that is where the market has finished the day's trade, whether you want to call it rate relief window dressing window washing. It is the last day of the month and the S&P ASX 200 has closed higher by 80 points, 9.10% to 8,789. And I'll just get you caught up on what it did over the month of September if my computer wants to play ball. Lower by 3.3% in September. All right, that is where we leave you. We'll be back tomorrow for October. Can you believe it from 9.45 AM East and see then? The C.O.B. is brought to you by Longview, a new way for investors to access Australian residential property. Visit longview.com.au. 5.00 orders a month was manageable. 5,000 is madness. Embrace intelligent order fulfillment with shipstation. The only platform combining order management, warehouse workflows, inventory, returns and analytics in one place.

16:46What used to take 5 separate tools shipstation does in one. Automate fulfillment and rate shopping to ship up to 15 times more with up to 90% savings. Go to shipstation.com and use code audio to try shipstation free for 60 days.