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Episode details

Brendan Larsen
Good morning. It’s Monday, Fourth of July and I’m Brendan from Milford. Last Thursday marked the halfway point for 2022. And it’s worth reflecting on where we’re at. For the first six months of the year, the s&p 500 was down 21% The NASDAQ 100 It was down 29%. And closer to home the ASX 200 Fits slightly better given commodities tailwinds down 12% conflict in Ukraine and the ensuing global ramifications seen in surging inflation has put a lot of pressure on markets, and the data suggests there could be more to come. global data this week did little to abate mounting growth concerns. US personal income and spending data show that real consumption fell by point 4% versus an expectation of minus point 3% in May. With downward revisions to previous month’s readings. inflation adjusted spending on services was more resilient than goods advancing point 3% but not enough to offset weakness in spending on durables. This slowdown and spending adds to concerns about the economic outlook given this is the main driver of the US economy. The isn manufacturing index was released last week, falling to a two year low of 53 from 56.1. Still an expansionary territory, but certainly adding to fears over the health of the economy. Looking into the detail, new orders fell to 49.2 from 55.1. A sign that we could see a sharper slowdown in the coming months. We also got to read on the US consumer via the Conference Board Consumer Confidence Index. The headline level fell 4.5 points in June to a 16 month low of 98.7. below expectations of 100. Within the reading assessments of the present situation were broadly similar to the prior reading. However, expectations slumped to the lowest level in almost 10 years. And Australia data is so far holding up better. Retail sales data for me rose point 9% versus an expectation of point 4%, reaching a fresh record of 34 point 2 billion. The rise was broad based with five of the six categories gaining led by department stores and followed by spending on cafes, restaurants and takeaways. The strong numbers suggest the RBA will continue on their path of more rapid monetary policy tightening. And we’ll get more clarity on this at this week’s meeting. And equity News Corp announced that it would exercise its option over the remaining 51% in US based trader interactive for approximately 1.2 billion with funding coming via $1.2 billion equity raise. The acquisition multiple paid was 23.4 times enterprise value to EBIT da down from the 26.5 paid in May for the initial stake. The strategic rationale for the transaction was at Trader interactive has market leading position in the US non autos industry. They have a strong business model and large future growth opportunities. Collins food reported FY 22 results last week, with underlying impact of 30 point 8,000,004.9% above market expectations. The beat was driven by a 2.6% beta the top line and a 4% beat of underlying EBIT da KFC Europe was the standout was same store sales growth of 16.8% and an EBIT margin of 14.5% or KFC Australia. So same store sales growth of 1.4% and an EBITDA margin of 21.6%. Looking ahead to this week, the key event on the calendar is the RBA meeting on Tuesday, when many are expecting the RBA to hike another 50 basis points, which will take the cash rate to 1.35%. Market participants are pricing an 80% chance of a 50 basis point hike elsewhere. We will be watching us Durable Goods Orders for further science on the health of the US economy as well as FOMC minutes, and US non farm payrolls later in the week. Thanks for listening. We’ll see you again next week.

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