Rudi’s View: Australia’s Sh*t Sandwich

Array
(
    [0] => Array
        (
            [0] => ((RMD))
            [1] => ((FPH))
            [2] => ((CSL))
            [3] => ((AGL))
            [4] => ((BXB))
            [5] => ((WPR))
            [6] => ((DBI))
            [7] => ((CQE))
            [8] => ((QBE))
            [9] => ((MPL))
            [10] => ((QAN))
            [11] => ((QBE))
            [12] => ((RIO))
            [13] => ((RMD))
            [14] => ((S32))
            [15] => ((TLC))
            [16] => ((TLS))
            [17] => ((WOW))
            [18] => ((ALD))
            [19] => ((AMC))
            [20] => ((CGF))
            [21] => ((CQE))
            [22] => ((DBI))
            [23] => ((MTS))
            [24] => ((MYS))
            [25] => ((VCX))
            [26] => ((ALL))
            [27] => ((HUB))
            [28] => ((JDO))
            [29] => ((MQG))
            [30] => ((NEM))
            [31] => ((PME))
            [32] => ((SFR))
            [33] => ((SIG))
            [34] => ((ALK))
            [35] => ((BRE))
            [36] => ((BRG))
            [37] => ((CCL))
            [38] => ((EOL))
            [39] => ((LAU))
            [40] => ((QOR))
            [41] => ((REG))
            [42] => ((SSM))
            [43] => ((SHA))
            [44] => ((SDR))
            [45] => ((ZIP))
            [46] => ((WDS))
            [47] => ((LYC))
            [48] => ((ALL))
            [49] => ((AMP))
            [50] => ((ANZ))
            [51] => ((BSL))
            [52] => ((GLF))
            [53] => ((GMG))
            [54] => ((IFT))
            [55] => ((ILU))
            [56] => ((SIG))
            [57] => ((STO))
            [58] => ((ANZ))
            [59] => ((CBA))
            [60] => ((NAB))
            [61] => ((WBC))
            [62] => ((MQG))
            [63] => ((AMP))
            [64] => ((GDG))
            [65] => ((SUN))
            [66] => ((GLF))
            [67] => ((GMG))
            [68] => ((SCG))
            [69] => ((ALL))
            [70] => ((DMP))
            [71] => ((TLC))
            [72] => ((WES))
            [73] => ((XRO))
            [74] => ((JHX))
            [75] => ((ORI))
            [76] => ((SGH))
            [77] => ((COL))
            [78] => ((SIG))
            [79] => ((CSL))
            [80] => ((RMD))
            [81] => ((IFT))
            [82] => ((TCL))
            [83] => ((TLS))
            [84] => ((TUA))
            [85] => ((BHP))
            [86] => ((BSL))
            [87] => ((ILU))
            [88] => ((NEM))
            [89] => ((PLS))
            [90] => ((RIO))
            [91] => ((S32))
            [92] => ((ALD))
            [93] => ((PDN))
            [94] => ((STO))
            [95] => ((WDS))
        )

    [1] => Array
        (
            [0] => RMD
            [1] => FPH
            [2] => CSL
            [3] => AGL
            [4] => BXB
            [5] => WPR
            [6] => DBI
            [7] => CQE
            [8] => QBE
            [9] => MPL
            [10] => QAN
            [11] => QBE
            [12] => RIO
            [13] => RMD
            [14] => S32
            [15] => TLC
            [16] => TLS
            [17] => WOW
            [18] => ALD
            [19] => AMC
            [20] => CGF
            [21] => CQE
            [22] => DBI
            [23] => MTS
            [24] => MYS
            [25] => VCX
            [26] => ALL
            [27] => HUB
            [28] => JDO
            [29] => MQG
            [30] => NEM
            [31] => PME
            [32] => SFR
            [33] => SIG
            [34] => ALK
            [35] => BRE
            [36] => BRG
            [37] => CCL
            [38] => EOL
            [39] => LAU
            [40] => QOR
            [41] => REG
            [42] => SSM
            [43] => SHA
            [44] => SDR
            [45] => ZIP
            [46] => WDS
            [47] => LYC
            [48] => ALL
            [49] => AMP
            [50] => ANZ
            [51] => BSL
            [52] => GLF
            [53] => GMG
            [54] => IFT
            [55] => ILU
            [56] => SIG
            [57] => STO
            [58] => ANZ
            [59] => CBA
            [60] => NAB
            [61] => WBC
            [62] => MQG
            [63] => AMP
            [64] => GDG
            [65] => SUN
            [66] => GLF
            [67] => GMG
            [68] => SCG
            [69] => ALL
            [70] => DMP
            [71] => TLC
            [72] => WES
            [73] => XRO
            [74] => JHX
            [75] => ORI
            [76] => SGH
            [77] => COL
            [78] => SIG
            [79] => CSL
            [80] => RMD
            [81] => IFT
            [82] => TCL
            [83] => TLS
            [84] => TUA
            [85] => BHP
            [86] => BSL
            [87] => ILU
            [88] => NEM
            [89] => PLS
            [90] => RIO
            [91] => S32
            [92] => ALD
            [93] => PDN
            [94] => STO
            [95] => WDS
        )

)

This story features RESMED INC, and other companies.
For more info SHARE ANALYSIS: RMD
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

In today's edition:

• Australia's Sh*t Sandwich
• A Cautionary Tale
• Too Early To Burst
• What Is Happening With ResMed?
• Best Buys & Conviction Calls

By Rudi Filapek-Vandyck, Editor

Australia’s Sh*t Sandwich

What goes up must come down. It’s usually the simple principles that work best in financial markets.

Judging from the flood of warnings about the share market correcting –if not crashing– that has been flowing into FNArena’s inbox this week, not to mention the general atmosphere on X, there are a whole lot of people positioned for equity market weakness.

Here’s one such email subjectline: S&P 500 Faces Correction Pressure as U.S. Data Complicates Fed Expectations.

Yet again, investors in the Australian share market are subjected to another rough experience as the local index has hardly budged thus far in 2026, but that won’t stop the selling orders from piling on, as also witnessed throughout Thursday’s trading session.

Could this be the early beginnings of markets pressuring the US President to get on with it and seal a deal with Iran?

Might be a case of be careful what you wish for.

The dilemma of 2026 is that midterm election years are supposed to be a disappointing experience, but so far US indices have set fresh all-time record after record throughout the first five months.

Extremely strong earnings growth for a select group of AI buildout beneficiaries has been responsible for this year’s upside surprise.

But make no mistake: underneath the daily headlines and commentary, US equities are as polarised as is the local bourse.

The one key difference: the US has more winners and beneficiaries than the ASX.

Meanwhile, in the background of it all, Bitcoin is increasingly coming under selling pressure with traders pointing at critical technical support that, this time around, coincides with today’s estimated mining cost around US$60k-US$70k.

As one commentator put it: “Without earnings, cash flows or a production-cost floor to lean on, there is little standing between Bitcoin and a sentiment-driven meltdown.”

The importance of more damage happening to the price of Bitcoin is the historical correlation with technology stocks in the US. Traditionally, Bitcoin falls first, technology follows with a delay.

The direction in Bitcoin often indicates where global liquidity is heading. Less liquidity is, in today’s context, a negative for risk assets generally. Hence why now many eyes are staring at what is happening in the world of tokens and e-currencies.

A Cautionary Tale

Longview Economics has now also joined the ranks of worried market commentators with Chief Market Strategist Chris Watling urging clientele to stay “tactically Cautious” as inhouse proprietary market timing models are generating Sell signals.

Liquidity too plays a central role in Watling’s caution: “(…) the market has been propelled in recent weeks by a liquidity tailwind. This has been driven by various factors including Fed policy and US tax collection seasonality, amongst others. That liquidity ‘tailwind’, though, looks set to change into a ‘headwind’ in coming months.”

These headwinds are awaiting global markets that are in parts overbought and dominated by rampant speculation.

Longview’s technical signals usually operate on a 1-4 months horizon. By then, of course, America’s focus will be firmly on voter polls and likely outcomes in this year’s midterm elections, scheduled for November 3rd.

In case we do see a resolution to the stand off in the Middle East –remember late July is universally considered the ultimate deadline if the world is still to avoid a real energy shock– Morgan Stanley analysts in Australia have done the historical analysis into which sectors on the ASX stand to benefit most.

According to history, discretionary retailers, industrials and REITs have the strongest negative correlation with higher oil prices.

Under different circumstances, these would be the sectors poised for the strongest rallies if and when the current bottleneck in the Strait of Hormuz is resolved, but this time around Morgan Stanley’s message is: don’t bank on discretionary.

The local economy is too big a question mark, as things stack up right now.

As is becoming increasingly clear, the housing market in Australia is due for a sizeable correction and analysts at UBS, Macquarie, Morgan Stanley, et al are worrying about the possible implications for household spending and the domestic economy generally.

Indications in Sydney, including some conversations with real estate agents by myself and members of the FNArena team, are that property values already are down by -10%-15%.

Many (forced) sellers who bought in 2022-23 are today selling at a loss.

It doesn’t take a genius to figure out this will have broader ramifications (including for the current government).

Other sectors with negative correlation to expensive oil are healthcare, financials, technology, and even materials.

Those with historically a positive relationship are energy (of course), utilities, and communication services.

The one silver lining is the RBA might well have already delivered its final rate hike. A solution to the Strait of Hormuz remains important though.

Too Early To Burst

The never ending speculation whether equities are in a bubble of historic proportions has the backing of the global strategy team of UBS.

Not that they will be cheering from the sidelines during –potentially– more rocky times ahead, as it is still seen as too early to ring the doomsday bell.

On UBS’s assessment, markets are currently at the equivalent point of 1998, ahead of the ultimate Nasdaq meltdown that started in March 2000.

UBS’ key thesis: This bubble is not bursting when so many people are still questioning it.

“We believe bubbles tend to peak on extreme M&A and when everyone stops asking whether we are in a bubble because they have rationalised it.”

UBS’ recent strategy update also included the following about oil and the energy sector:

“Consensus is higher for longer owing to the need to restock and geopolitical uncertainty (hence the 1-year forward in Brent is up 30% since 27/2).

“We are short of energy.”

What Is Happening With ResMed?

   
At the start of the fresh calendar year, ResMed ((RMD)) shares seemed destined for $40. Today, those shares are struggling around the $26 mark.

In particular the past three months have been brutally negative for what is, arguably, Australia’s most solid and robust healthcare services provider on the ASX (a title only Fisher & Paykel Healthcare ((FPH)) can contest, IMHO).

The answer, it seems, relates to US-based biopharmaceutical Apnimed Inc reporting positive results from two Phase III trials for AD109, a once-daily oral pill taken at bedtime to treat obstructive sleep apnoea.

Apnimed has also submitted a New Drug Application to the FDA for AD109, with a potential FDA decision date in Q1 2027, subject to acceptance of the filing.

In addition, GLP-1 marketer Eli Lilly equally showcased strong test results for its experimental weight-loss drug, Retatrutide.

Combined, this has yet again put the fear of God (proverbially) in the market’s mindset.

Earlier on Thursday, Ord Minnett responded as follows:

“(…) the market is discounting a far more negative scenario in the share price than is ever likely to happen, i.e. it assumes 60% of CPAP users classed as obese and 75% of users classed as overweight stop using their machines in favour of GLP-1 drugs.

“We concede weight-loss drugs will reduce ResMed’s total addressable market (TAM) over the medium and longer term, but investors are pricing in a very unrealistic outcome at current stock levels, in our view, noting high levels of non-compliance with GLP-1 routines.”

Shorter term, Ord Minnett has actually upgraded its EPS growth forecasts. And while the broker’s price target has been reduced to $38.35 from $41.40, it remains well above today’s share price.

Amidst the usual yes/no debates on X, one voice responded as follows:

“As a sufferer of Obstructive Sleep Apnea I feel qualified to comment.

“My Resmed Airsense 11 has been life changing. Happy to fight anyone on this. Great product”

Ord Minnett’s ongoing enthusiasm for ResMed does not extend to Australia’s largest company in the sector, CSL ((CSL)).

Yes, those shares are cheap and they do look undervalued, but yet another review has led to more earnings forecast downgrades by Ord Minnett.

For now, too many ifs and buts, against many ongoing uncertainties, is keeping this broker on Neutral/Hold for CSL.

“Despite the apparent significant upside on offer, Ord Minnett maintains its Hold recommendation on CSL given the significant uncertainty around the earnings outlook and broader issues as management attempts to reset the business.”

ResMed, of course, is rated Buy.

Best Buys & Conviction Calls

Ord Minnett’s High Conviction Ideas are no longer including AGL Energy ((AGL)), Brambles ((BXB)), or Waypoint REIT ((WPR)).

All have been replaced with Dalrymple Bay Infrastructure ((DBI)), Charter Hall Social Infrastructure REIT ((CQE)), and QBE Insurance ((QBE)).

The full selection, per category:

Core Key Investment Ideas

• Medibank Private ((MPL))
• Qantas Airways ((QAN))
• QBE Insurance ((QBE))
• Rio Tinto ((RIO))
• ResMed ((RMD))
• South32 ((S32))
• The Lottery Corp ((TLC))
• Telstra ((TLS))
• Woolworths Group ((WOW))

Value

• Ampol ((ALD))
• Amcor ((AMC))
• Challenger ((CGF))
• Charter Hall Social Infrastructure REIT ((CQE))
• Dalrymple Bay Infrastructure ((DBI))
• Metcash ((MTS))
• MyState ((MYS))
• Vicinity Centres ((VCX))

Growth

• Aristocrat Leisure ((ALL))
• Hub24 ((HUB))
• Judo Bank ((JDO))
• Macquarie Group ((MQG))
• Newmont Corp ((NEM))
• Pro Medicus ((PME))
• Sandfire Resources ((SFR))
• Sigma Healthcare ((SIG))

Small Caps

• Alkane Resources ((ALK))
• Brazilian Rare Earths ((BRE))
• Breville Group ((BRG))
• Cuscal ((CCL))
• Energy One ((EOL))
• Lindsay Australia ((LAU))
• Qoria ((QOR))
• Regis Healthcare ((REG))
• Service Stream ((SSM))
• Shape Australia ((SHA))
• SiteMinder ((SDR))
• Zip Co ((ZIP))

Ord Minnett strategists have a negative view on discretionary retailing, banks & financials, and real estate (REITs).

Materials is the sole sector with a positive view in Australia.

****

RBC Capital‘s selection of Global Energy Best Ideas continues to include Woodside Energy ((WDS)).

****

Strategists at Bell Potter are recommending the following portfolio skews:

Overweight

• Diversified miners (Copper & Lithium)
• Mining Services
• AI/Energy security

Underweight

• Banking Sector
• Domestic Consumption
• Weak pricing power

Here the following quote summarises it nicely:

“While we acknowledge that the +12% EPS growth level is well above average and recent history, over 10% is coming from the Materials sector, with Financials providing the remainder as bank cost-out programs deliver a 3% incremental contribution to EPS.”

****

Morgan Stanley recently issued a list of Key Investment Opportunities and for once it included one ASX-listed company:

Lynas Rare Earths ((LYC)).

As pointed out by the stock pickers, Lynas is only one of two Nd PR producers outside of China.

“NdPr is key for magnet production, where we see there could be significant upside out to 2050 with the adoption of EVs and humanoid robots.”

****

From LGT Wealth‘s latest strategy update:

“(…) we prefer quality companies with robust balance sheets, solid cash flows and good visibility on earnings, rather than broad market exposure. Selectivity across regions and sectors is increasingly important as valuations and fundamental trends diverge.”

****

Morgan Stanley’s Australia Macro+ Focus List has undergone a few changes in May. Current 10 stocks included are:

• Aristocrat Leisure ((ALL))
• AMP Ltd ((AMP))
• ANZ Bank ((ANZ))
• BlueScope Steel ((BSL))
• GemLife Communities ((GLF))
• Goodman Group ((GMG))
• Infratil ((IFT))
• Iluka Resources ((ILU))
• Sigma Healthcare ((SIG))
• Santos ((STO))

Morgan Stanley’s Macro+ Model Portfolio is populated as follows:

ANZ Bank ((ANZ))
CommBank ((CBA))
National Australia Bank ((NAB))
Westpac Bank ((WBC))

Macquarie Group ((MQG))

AMP Ltd ((AMP))
Generation Development ((GDG))
Suncorp Group ((SUN))

GemLife Communities ((GLF))
Goodman Group ((GMG))
Scentre Group ((SCG))

Aristocrat Leisure ((ALL))
Domino’s Pizza ((DMP))
The Lottery Corp ((TLC))
Wesfarmers ((WES))
Xero ((XRO))

James Hardie ((JHX))

Orica ((ORI))
SGH Ltd ((SGH))

Coles Group ((COL))
Sigma Healthcare ((SIG))

CSL ((CSL))
ResMed ((RMD))

Infratil ((IFT))
Transurban Group ((TCL))
Telstra ((TLS))
Tuas Ltd ((TUA))

BHP Group ((BHP))
BlueScope Steel ((BSL))
Iluka Resources ((ILU))
Newmont Corp ((NEM))
PLS Group ((PLS))
Rio Tinto ((RIO))
South32 ((S32))

Ampol ((ALD))
Paladin Energy ((PDN))
Santos ((STO))
Woodside Energy ((WDS))

My personally curated lists on the All-Weathers section: https://fnarena.com/index.php/analysis-data/all-weather-stocks/

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

P.S. I – All paying members at FNArena are being reminded they can set an email alert for my Rudi’s View stories. Go to My Alerts (top bar of the website) and tick the box in front of ‘Rudi’s View’. You will receive an email alert every time a new Rudi’s View story has been published on the website. 

P.S. II – If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

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