UBS' top reporting season small cap picks

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.


  • S&P 500 - 4,122 (-0.42%)
  • NASDAQ - 12,494 (-1.19%)
  • CBOE VIX - 21.78
  • GERMAN DAX - 13,535 (-1.12%)
  • STOXX 600 - 436.20 (-0.62%)
  • USD INDEX - 106.31
  • US10YR - 2.779%


NAB reported a slight increase in cash earnings to over $1.8 billion, but its net interest margin story followed that of Suncorp's on Monday - i.e. lower. The silver lining is that CEO Ross McEwan says that 70% of customers are still staying ahead of their home loan repayments. In total contrast, News Corp shot the lights out and delivered a record profit and revenue double. Coronado Global Resources also shot the lights out as the price of metallurgical coal soared due to the war in Ukraine. Profits are up 95% at CRN, and the hiked dividends are going to be a thrill for shareholders. Finally, Megaport reported a miss on revenues and a smaller loss. But it didn't take too long for eagle-eyed viewers to realise that it too will succumb to the fate of other tech darlings in this post-pandemic world: redundancies are coming.

Today, it's the turn of the biggest bank of them all (CBA), along with Mineral Resources and Computershare. Strap yourselves in.


Speaking of earnings, UBS is out with its favoured picks at the small end of town for this August. If you read yesterday's CnC, you'll already be familiar with one of the names on the list - Redbubble (ASX: RBL). 

The woes for small-cap investors are well known, and so are the earnings revisions. As analyst Tim Plumbe pointed out, there has been a 5%+ negative EPS revision for nearly half of the broker's coverage universe. So what's there to love in the emerging end of town? Here's their dashboard to watch out for:

  • APM Human Services (ASX: APM)
  • Breville Group (ASX: BRG)
  • Corporate Travel Management (ASX: CTD)
  • IDP Education (ASX: IEL)
  • Kelsian Group (ASX: KLS)
  • Nufarm (ASX: NUF)
  • Redbubble (ASX: RBL)
  • Ridley Corporation (ASX: RIC)

Don't worry, we've got good tabs on these calls. 


The good news is that headline inflation is predicted to cool down on a month-to-month basis, following the general downtrend core inflation has been set for a couple of months now. The bad news is that the same people who are predicting this phenomenon to occur tonight also completely misjudged last week's payrolls report. 

Conclusion? Who the heck knows?

All the same, tonight's read will help make a case for the Federal Reserve. That is, does it need to go for another 75 basis points hike or will it find a reason to dial it back to a 50? The pace and the breakdown will tell all. The pattern of the last few years has been beautifully illustrated in this chart by Investec (and shared by Mayhem4Markets on Twitter):

How much will this chart change at 10:30pm Sydney time tonight?
How much will this chart change at 10:30pm Sydney time tonight?


Correlation does not equal causation. Or does it....?
Correlation does not equal causation. Or does it....?

A big thanks to Callum Thomas of Top Down Charts for this one - it's the correlation between global equity flows and recession chatter. Unsurprisingly, when the going gets tough, the tough get going. How much in outflows will we see this time and will it pair with the previous definitions of recession for which we are all so used to?


4.5%: The one-week fall in ANZ-Roy Morgan weekly consumer confidence following last week's fourth rate rise from the RBA. 

The level is now also the lowest since April 2020. And if you don't believe me, here's the proof:


The competing Westpac-MI Consumer sentiment index reading was even worse - falling for a ninth consecutive month (to 81.2 in August from 83.8 in July) as rising interest rates, and high inflation weighed on consumers. 

So that inflation expectations fight is going well, then?


Oh Jim, you've done it again. The two charts are the one-month performances of AMC Entertainment and GameStop. Don't fight the Fed may need to be replaced by Don't fight the crowd soon!
Oh Jim, you've done it again. The two charts are the one-month performances of AMC Entertainment and GameStop. Don't fight the Fed may need to be replaced by Don't fight the crowd soon!

Today's report was written by Hans Lee.


If you've enjoyed this edition, hit follow on my profile to know when I post new content and click the like button so we know what you enjoy reading.

If you have a chart and/or a stat that you would like to see featured in a future edition of the newsletter, drop us a note at

Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

2 contributors mentioned

The Morning Wrap
Markets Wrap
Livewire Markets

Livewire and Market Index's pre-opening bell news and analysis wrap. Available weekday mornings and written by Kerry Sun.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment