Magellan Global Quarterly Update

Magellan Asset Management

October 2024

Arvid Streimann, Nikki Thomas and Alan Pullen discuss key market themes and how the global strategy is positioned to capitalise on emerging opportunities, whilst monitoring the risks. Arvid also discusses the potential market impacts of the upcoming US election based on various possible outcomes.

Funds operated by this manager:

Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund, Magellan Core ESG Fund

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Hedge Clippings | 25 October 2024

It's going down to the wire, and seemingly too close to call. The US election is now less than two weeks away, and with it will come all the drama, speculation, and, of course, the potential for significant economic consequences across the globe, and potentially social upheaval in the US itself. Here in Australia we're no strangers to feeling the ripple effects of US political shifts. If Donald Trump regains the presidency, we may be looking at a return to the good (or not so good) old days of trade tensions and tariffs, particularly with China. This could spell trouble for our commodities sector and create turbulence for market confidence - after all, the last thing our economy needs is another round of "trade war" antics.

On the flip side, a Kamala Harris presidency might mean more of the same - in a good way. Harris would likely continue the diplomatic ties and trade relationships built during the Biden era, with a stronger focus on renewable energy collaborations. This would align nicely with Australia's own moves towards sustainable energy. Either way, we're along for the ride, and what happens in the US inevitably makes its way across the Pacific - while the ability of the USA to counter aggression from Russia, China, and Korea will be critical to the global geo-political landscape over the next four years.

As far as election tactics go, the race for the last few votes in the crucial swing states is throwing up more claims and counter claims, with both sides bringing out the "big gun" supporters, including Obama and Springsteen for Harris, and Musk for Trump. Given Donald's support for big oil, and Elon's for renewables, it's an interesting alliance.

Meanwhile, back at home, the Reserve Bank of Australia and Treasurer Jim Chalmers are not exactly on the same page about inflation. Chalmers has been cautiously optimistic, pointing to the halving of inflation since Labor took office. But the RBA, led by Deputy Governor Andrew Hauser, isn't ready to declare victory just yet. The RBA remains wary, maintaining that inflation is still proving to be a persistent thorn, and it'll take a while before we can truly say it's tamed. The cash rate, held at 4.35% for eleven months now, is staying put - the RBA wants more evidence before even considering an ease in rates.

And it's no wonder they're being cautious. Global uncertainties, including the turmoil in the Middle East, are pushing investors into safe-haven assets like gold, which has reached record highs. The financial world might be feeling "spectacularly optimistic," but Hauser has made it clear that the RBA isn't buying into the hype just yet. Inflation forecasts from the RBA and the IMF are now closely aligned, underscoring the complexity of the current situation. Chalmers might be waving the flag of optimism, but the RBA is sticking to a message of patience - steady does it, until they're sure the inflation beast is fully under control. One thing's for sure: there's no shortage of interesting times ahead for the world, and with it, the Australian economy.

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Why Australians Are Embracing ETFs

Janus Henderson Investors

September 2024

Funds operated by this manager:

Janus Henderson Australian Fixed Interest Fund, Janus Henderson Australian Fixed Interest Fund - Institutional, Janus Henderson Cash Fund - Institutional, Janus Henderson Conservative Fixed Interest Fund, Janus Henderson Conservative Fixed Interest Fund - Institutional, Janus Henderson Diversified Credit Fund, Janus Henderson Global Equity Income Fund, Janus Henderson Global Multi-Strategy Fund, Janus Henderson Global Natural Resources Fund, Janus Henderson Tactical Income Fund

All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information.

Resources Rally: Boom or Bust?

Marcus Today

October 2024

The resources sector is up 17.96% in 17 days and is now well overbought on a daily chart with an RSI of 74. This is the moment we have been waiting for, the moment to make a lot of money in a short period of time trading the bottom of the resources sector as it comes out of an oversold sentiment hole. We have taken a few trades, as you know, but have 'kept it in our pants' from a Strategy (Portfolio) point of view. The resources sector has rocketed.

Big Moves in Key Stocks

BHP is up 20.3% since the low on September 6, fulfilling the first half of Henry's mantra--"Buy at $40, sell at $50". It is now at $45.96. FMG is up 36.7% since bottoming on September 10 at $15.88, now at $20.68. MIN has surged 76.3% in 15 days and is up 48.3% in six days. PLS is up 41.5% in 15 days and 19% in six days. And that's just some of them.

A Time for Caution

I am never one to stand back and wag a finger at people making money, and I hope, like everyone else, that this is a "big" pivot point, not just a short-term rally. The good news is that this rally shows up on the long-term charts and has some of the anatomical signs of being a major low (a short sharp start). However, I am sceptical. These Chinese announcements are, in my humble opinion, more desperate than effective, more hopeful than guaranteed, and the timing, just ahead of the Golden Week holiday, leaves everybody a bit vulnerable as the Chinese markets, PBoC activity, economic indicators, and commodity markets, including the iron ore price, go dead for a week.

Watching the Herd

This is one of those moments when you have to watch the herd. The herd has lost its head. It is justified in the short term. Sentiment has changed, and sentiment is important to share prices, but believing these measures will meaningfully change China's economic trajectory is a gamble. These measures are a bit like throwing rocks at an oil tanker.

The Bubble is Here

We have seen the "Rocket", but I think we have a "Bang" coming. This short-term rally will deflate at some point. Possibly rapidly. If making money in the stock market is about spotting stocks that have dropped into a sentiment hole, then it is also about spotting stocks that have found themselves in a sentiment bubble.Short-term, we are now in a sentiment bubble. And for the superstitious, you might also like to know that I am going on holiday next week, and you know what that means!

What's Ahead for Resources?

The jury is still out on the medium term. Keep watching the herd. Traders, take your profits when the herd stumbles.

Author: Marcus Padley

Funds operated by this manager:

Marcus Today Equity Income SMA, Marcus Today Growth SMA