Despite (or perhaps because of?) being the final full week of Reporting Season, it's been a slow week in the markets. Even the Bloomberg editors thought so, as they released multiple articles this week lamenting how quiet markets were. There's no need to join them, however, as we've got your weekend reading covered here at Livewire. David Bassanese thinks central bankers need a reality check, Nick Griffin explains what to look for in growth stocks, and Jakov Maleš says CSL is failing to deliver. Here are three things you should read this weekend.
Central banks have lost the plot
The weekend’s Jackson Hole Summit in Wyoming is one of the most important events on the calendar for central bank watchers. The attendance list is a ‘who’s who’ of interest rate markets and it features a speech from Janet Yellen. In the lead up to the event, Betashares Chief Economist, David Bassanese, has written a scathing piece on the shortcomings of central bank policies. In an easy read that’s full of charts, he explains why neither growth nor inflation is as poor as policymakers would have you think. He also explains what he sees as the biggest risk to markets today: (VIEW LINK)
5 essential traits of growth stocks
While ‘growth investing’ gets a bad rap among value investing circles, but in reality, growth is an aspect of value, and value is an important consideration for growth investors. Nick Griffin, Head of Investments at Munro Partners, invests in global growth companies, and there are merely 800 stocks that meet his definition around the world. Experience has allowed him to identify five common traits that all these companies share, and in this video, he shares them with the Livewire audience: (VIEW LINK)
The market is ignoring CSL’s valuation risk
Jakov Maleš, Head of Equities at UBS Australia, isn’t positive on ‘market favourites,’ and CSL in particular. Referencing ‘Growth At a Reasonable Price,’ he says CSL offers no growth, but at any price. CSL is on a PE ratio above 30, yet has only achieved its 5% growth target by removing the effects of it’s the Novartis flu vaccine business. Most interesting, though, was his comment that “the company is asking the market to accept $1,470m as the measure of the performance in 2016, and $1,278m (-13% lower) as the target in 2017, and arguing this still represents growth. Read his skewering of the market darlings here: (VIEW LINK)
Chart of the week
The image below shows the disparate share price reactions post-results from Blackmores, APN Outdoor, and Woolworths. While Blackmores & APN were both ‘earnings misses,’ it demonstrates the violent reactions that can be seen when market darlings miss earnings expectations.
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Patrick was one of Livewire’s first employees, joining in 2015 after nearly a decade working in insurance, superannuation, and retail banking. He is passionate about investing, with a particular interest in Australian small-caps.