13 DEC 21 – Monday Market Highlights – Transcript

Roland Houghton
Good morning. It’s Monday the 13th of December and um Roland from Milford. US inflation continues to accelerate with annual inflation in November of 6.8%, the highest print on record since 1982. food and energy prices remain an issue in the US increasing 0.7% and 3.5% month a month, respectively. Energy prices are now up 33% year on year. Backing out these more volatile metrics core inflation increased 0.5% month on month, or 4.9% year on year. These were roughly in line with market expectations. Within core inflation, there are some things you could consider transitory, such as used car prices or airline tickets. backing these out inflation grew 0.3% month a month or 2.6% year on year. Now some of the sticky components of inflation such as owners equivalent rent are continuing to grind higher which is a concern. This particular metric grew 0.4% month a month and is up 3.5% year on year accelerating again. initial jobless claims in the US a measure of those entering unemployment came in below expectations at 184,000 versus 215,000 expected implying fewer people in the US are exiting the workforce. This was actually the lowest print since September 1969. In addition, job openings for October were released last Thursday, which ticked up to 11 million only slightly changed from the record 11 point 1 million job openings in July. It’s safe to say the labor market is very tight in the US. Domestically, the RBA held their monthly meeting and to no one’s surprise they lift the official interest rate unchanged. Turning to equity news, the consortium trying to buy Sydney Airport was given the greenlight by the a triple C which came as a bit of a surprise to some who thought given the consortium held stakes and other airports such as Melbourne. It could raise some concerns. Now they aren’t out of the woods yet, but Sydney Airport shares rally 2.9% However, it still trades at a 16 cent per share discount to the $8.75 offer. The a triple C also approved clean waves proposed acquisition of swages Sydney assets, the Cleanaway share price didn’t really react to the news, Iron Gate property raise $50 million of equity to acquire approximately $160 million of assets. The key asset here was a 50% stake in an office asset located in C’mon Melbourne, which cost them 130 million. They raised that $1.55 which was a 6% discount to its pre raised price. Shopping Centers Australia release an update on the valuation of their properties, which grew significantly over the past six months. The cap rate compressed by around 50 basis points, which saw their portfolio of assets increase on average by almost 10% In just six months. This highlights the significant capital demand for neighborhood shopping center assets in Australia. He boss Group announced the acquisition of life health care for 1.2 billion representing an 11 and a half times EBIT da multiple life healthcare is one of the largest independent distributors of third party medical devices, consumables and capital equipment and in house manufactured telegraph material in Australia and New Zealand and it also provides a boss with an entry into the Southeast Asian market. They funded this via 640 mil placement and are currently conducting a $100 million retail offer. The balance will be funded by debt. Looking to the week ahead, domestically, we have the Westpac consumer confidence index out on Wednesday. This will be quite an interesting data point given all capture period where all of Australia is out of lockdown, and should provide a good barometer of how people are coping with what is quite a volatile environment. We also have Australian employment data out for November with the market expecting a 200,000 increase in total employed people and the unemployment rate to drop to 5%. And the US we have the Feds interest rate decision with the market expects no change the current 0.25% policy rate. However, Fed Chairman Jerome Powell speech will be closely analyzed as investors try and get a sense of how the fit of thinking about the inflationary pressures in the US. Thanks for listening. We’ll see you next week.