Trending On Livewire: Weekend Edition - Saturday 19th July
Markets powered ahead this week as strong US earnings, soft jobs data and rising hopes of RBA cuts drove gains.
Mark Twain supposedly once said, “If it's your job to eat a frog, it's best to do it first thing in the morning. And if it's your job to eat two frogs, it's best to eat the biggest one first."
The job of the stock market is to push higher over time, to break records, to eat frogs. This week, the market ate frogs on Tuesday, Thursday and Friday - it was hungry.
What drove the record-breaking week? Well, US markets were equally hungry, with the S&P and Nasdaq pushing to new all-time highs amid solid earnings - most notably from the banks, Pepsi, TSMC and Netflix.
Locally, wealth platform Hub24 rallied around 10% over the week, after its funds under management numbers (another sign of the market’s health) came in at $136.4 billion – up 30% year-on-year and ahead of analyst expectations. BHP’s results also impressed yesterday, with full-year iron ore and copper production both at the top end of guidance.
Even bad news was good news, with the Australian unemployment rate hitting 4.3% in June, while the growth of only 2,000 jobs was well below the 20,000 forecast. The silver lining? The higher unemployment rate means the RBA will almost certainly cut next month – the market is pricing it as a 94% chance. May the frog eating continue.
Have a great weekend.
Chris Conway, Managing Editor, Livewire Markets
Life changing technology meets a structural growth industry
Step back for a moment and think about how technology has changed your life over the past two decades.
What springs to mind? Smartphones, on-demand streaming (whether it’s music or movies), digital maps, and the broad adoption of artificial intelligence, all powered by fast, affordable and readily available internet access.
The list goes on, and there’s no doubt these advances are changing the way we live. But are they truly life-changing? In many cases, yes, but often they’re about convenience and productivity.
There’s one industry where the pace of innovation is just as rapid, and the impact arguably more profound: healthcare. More specifically, in this episode of The Rules of Investing, we explore the world of medical technology with Jacob Celermajer, founder of Cordis Asset Management.
This SMSF investor isn’t chasing the ASX – he’s looking for global edge
Michael Barrett isn’t your typical retiree. He’s taken full control of his financial future through an SMSF and he sees managing it as his full-time job in retirement. After the GFC exposed the cracks in traditional advice, Michael and his wife went DIY, building a globally diversified portfolio designed to support their lifestyle through sickness and health. He’s big on risk management, wary of hype, and happy to take the long view. If you’re thinking about how to get more from your super, or how to make it last, Michael’s story is packed with insights for investors at any stage.
Top 3 Wires this Week
Here are the weeks top viewed or liked wires by our subscribers:
Some of the best wires from our Contributors this week:
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Chart of the Week: Why ASX PEs are rising – and it’s not crazy
If you’ve been scratching your head over why ASX valuations, especially for banks and industrials, have rebounded so sharply, Macquarie thinks it’s not irrational at all. Their new “Macro Velocity” indicator helps explain it. Macro Velocity combines global liquidity (the net number of rate cuts across 35 central banks) with global cyclical momentum (the OECD diffusion index tracking whether economies are accelerating or slowing). These two factors are historically the biggest drivers of equity valuations – and when both are strong, price-to-earnings ratios tend to expand, even before earnings upgrades come through. For ASX industrials, Macro Velocity has closely tracked PE changes going back to the 1990s, suggesting that the recent rise in valuations is more about improving global liquidity and growth expectations than local factors. Unless Macro Velocity slows, Macquarie argues there’s still upside risk to PEs, much like in past market booms.
Vishal Teckchandani, Senior Editor, Livewire Markets
Weekly Poll
Do you believe the recent PE expansion on the ASX is justified by improving global liquidity and growth expectations?
a) Yes – Macro Velocity explains it perfectly
b) Partly – but valuations look stretched
c) No – this feels like irrational exuberance
d) Unsure – waiting for earnings to catch up
LAST WEEKS POLL RESULTS
We asked "Should governments step in to make housing more affordable for younger Australians - even if it means prices fall?"
The poll shows 58% said yes—housing should be affordable for the next generation, 18% said only if prices fall slowly over time, 17% weren’t sure, and 8% said no—protecting property values is more important.
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