Australia | Aug 13 2014
By Mathan Somasundaram, Baillieu Holst Quant Strategy
Summary:
Aussie market had a slight negative day due to negative data from China, Euro and Japan. We suggested clients should buy back into the market on Monday 11th morning after the pullback with Russia retreating and markets beginning to show value. We continue to believe that US and Russia are playing high level chess game to get the most strategic global position with the least cost. Russia is able to move a lot faster than US and continues to put them on the back foot. It will not serve either party in Middle East or in Ukraine to go to war. Once again logic prevailed and we are back to war of words with sanctions before some level of deal to be bargained. Middle East is a lost war for US and they will get dragged back every so
often, but their involvement will be limited.
Australia is a side show in this global power move and we must not over-stretch our capabilities with number of humanitarian and political issues simmering in our own region. Recent unemployment data and wages growth data shows that confidence recovery will be short lived. The marginal consumer sentiment improvement through rising house prices by “external forces” is a declining force. Government needs to get the budget through compromises rather than grand standing and let the corporates move forwards. Japan slowdown after tax hike and Euro slowdown with Russian affairs will get market talking about more QE. We can never have enough QE!!!
Trading idea of the day:
Carsales.com (CRZ)…we have been positive on this stock since the sell-off in late Jan to $8.80…now trading $10.50 after result update today. Global double digit growth story maintained. Quant Target Price $12.50…more when the market starts to pay attention to the global growth outlook.
Market Move:
Aussie market was down 0.28% with turnover was just above $5.0b.
Macro Events:
Tonight – EU June industrial output, UK July jobless claims, US advance July retail sales, US July monthly budget statement. Tomorrow – Telstra, Dexus, Southern Cross Media, Fairfax Media, Goodman Group results; Germany Q2 GDP, EU Q2 advance GDP, US June business inventories, US July import price index.
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Baillieu Holst Ltd
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