Company Interview / Jessica's reporting season winners and losers

Jessica Amir, from Moomoo, provides her insights into the earnings reporting season. Jessica points out stark differences between the performance of US and Australian companies, the latter experiencing weaker than average profits. However, there are a few exceptions such as Ingham's (ASX:ING) and Treasury Wines Estate (ASX: TWE) that have stood out with profits exceeding expectations, and property firms such as Centuria (ASX: CNI) and Mirvac (ASX:MGR) also performing strong.

Jessica further highlights disappointing performances from miners and energy sectors, making up 25% of the Australian market. She cites China's pivot to cleaner energies and technological advancements as factors contributing to weaker demand. However, Jessica advises investors to consider repositioning their portfolios to align with China's new focus. She explores the performance of diverse mining companies like Fortescue (ASX:FMG), highlighting their demand for aluminium, nickel and copper in China.

As the discussion progresses, Jessica stresses on the bullish outlook of gold in the commodities market. She points out the historical pattern of gold rallying to new highs every time the Federal Reserve cuts rates. She adds that investor interest in Gold ETFs and central banks accumulating gold reserves, could further boost gold prices. Finally, Jessica gives her input on the upcoming announcement from Jerome Powell and the potential for rate cuts which would bolster equities, independent of the short-term market reactions to the announcement.

Full unedited transcript:

0:11

Well, let's get across some of the highlights from earnings season and more. Jessica. Joining us from member Jess a happy Friday to you. Lots of results to get across. Of course. What are some of the highlights that or maybe even the lowlights for you thus far?

0:29

Yeah, very stark contrast to the US, right. So we saw um, us far better than expected earnings for their sales. And also the bottom line, what we all call earnings. And that for us down under is profits. So I guess really shooting the lights out there. If we have a look at the results down Under where we will and truly through a reporting season. And the bad news is, um, most of the results have actually been to the downside. So we've seen all in all weaker than expected sales and also the bottom line profits. So profits are now declining about in the order on average for the S&P ASX 200, down about 4%. But there are pockets of gold, some of them you mentioned this morning. So staples have been a clear winner this earnings season. And it's funny that because, um, I guess the Aussie is telling us what is happening and we know that we're battling

1:28

higher than expected inflation. You just have to look at what the RBA is saying. Right. Uh, so staples are really shooting the lights out so far better than expected results from Ingham's also Treasury Wines estate I don't know if you call them a staple, uh, Andrew, in your household or at Aussies, but for some people, Treasury Wines is indeed a staple, and indeed they've been far one of the best, uh, better than expected, uh, surprises to the upside from earnings season. And that's, of course, on the back of the wine production being now at 60 year lows. Of course, we've had China's sanctions dropped. They're sending and selling to China at a rate of knots for the first time in four years. And of course, the Penfolds brand, we're seeing high prices for those. So they're benefiting from inflation. So too is Bega Cheese. So you mentioned Inghams this morning Bega Cheese. We spoke about Treasury wine the staple in your household um as

2:29

uh but so they're the better than expected results also. Second of all property. So properties really delivering the goods. And I guess it's the unsung hero isn't it. And of course, as your previous guest, uh, centura CEO spoke about a centura really does or rather, uh, property stocks really do rule the roost if we do go into an easing cycle and that is expected at some point, but not exactly one hard and fast rate cut is expected or priced in at this stage, but far better than expected results from Centura, Mirvac and the like. So rates really are surprising to the upside, which is great. But then on the downside, a bit of a disappointment. Doozy from two core sectors that make up 25% of our market. And that is, of course, miners and energy. And you just have to really take a step back and go. A bit of a head scratcher here. What's going on? Well, of course, a couple a couple weeks ago or indeed a month or so

3:29

ago, China announced their new pivot. And of course, they're focusing on clean green energy and, um, how they're going to lead, uh, the tech AI frontier. And so that means that we've seen weaker than expected, uh, demand from energy. And no surprise, we've seen earnings declines and huge, uh, huge pullbacks in profits from some of those, uh, core energy buyers and of course, iron ore as well. But we do have to have to give honorable mention to those more diversified miners. So I guess, uh, Fortescue Metals, uh, of course, their shares are down the most out of the big miners. If you look at BHP and Fortescue Metals and FMG, stack them all up in a line up. Who's looking best in terms of China's future facing metals? We just have to look at what China wants and needs are for I. And of course that's aluminium, nickel and copper. So you might want to think about repositioning your

4:29

portfolio in line with China's new pivot and focus for the next two decades. Yet I guess if we look at commodities, gold has been the standout there as investors have sought. Well, I mean, the yield is looking, you know, given its non healing given we've seen the US dollar and those bond yields come off that has obviously made gold more attractive. Did come off a little overnight back below that 2500 dollars level. But overall obviously the gold is are extremely bullish at the moment.

4:59

Absolutely. I guess if gold had a playbook, you'd be continuing to see the gold playbook well and truly slammed down on your dining room table at night. Um. And go. Here you go. The plot and the the case. That book for gold. And why should consider it in your portfolio? That's getting thicker. So yes, we did see gold punch through those all time new record highs. Uh, it is pulling back, uh, ever so slightly.

5:28

Um, and that's of course, because of the uptick in the US dollar index, the DXY. But the fact of the matter is we've got, um, a huge lot of, uh, catalyst to push gold higher. Of course, look back at history. The last three times the fed cut rates, gold rallied up to a new record high. Of course, history never repeats itself, Andrew, but it does rhyme. So you might soon be talking about, um on Aussie gold. Punching through 3500. Seems hard to believe, but this has been my thesis for a while, and it's, um, it's good to see, I guess some investors really, um, adding, uh, and being rewarded to, um, or for exposure in, in gold. So have a look at Newmont shares. Uh, there are um 67% in the past six months. So, uh, Newmont is not the only, uh, not the only gold stock that's really shining bright. But we do have to remember big catalysts again, if history repeats itself, if the fed cuts, which is indeed very likely, and

6:28

gold could rally up. But this time is different. We do have ETFs really ramping up their pivot into buying gold. And last but not least, we've got central banks buying gold at a pace of knots as well. And that's not slowed down by any means this year.

6:43

Just finally just of course um, tonight all eyes are going to be on Jerome Powell, uh, Jackson Hole. Uh, of course, the market is so keen about hearing something from him that's going to give away what they're going to do at the next meeting in September.

7:01

Yeah, absolutely. Will it be a hole in one for markets? I think that's what everyone's gunning for. But I guess we've got to reflect on non profit taking. Naturally. We were always going to say profit taking on the back of that incredible bounce back that we've had in equities. But of course, we already know, based on the FOMC meeting minutes that, um, that Jerome Powell has flagged that there's probably going to be a rate cut coming in September. We are more interested, I guess, about his future language and what that's going to how that's going to play out. Um, but of course, uh, I mean, is there is a room for disappointment. Possibly. But, um, will we probably see rate cuts on the horizon? Uh, probably. Probably maybe. Yes. I think that's what the equity narrative is really supportive and focused on. Um, on potential 200 basis points of cuts coming over the next 18 months. Um, so that plus some GDP holding up above ground, um, and of

8:01

course, that freight train of stimulus continuing to come through, uh, in big Tech that is supportive of equities. Um, so regardless of what happens tonight, we are focusing on the bigger picture, the long term horizon of rate cuts.