Day: 17 February 2023

The S&P/ASX 200 Index (ASX: XJO) ended the week in the red, falling 0.86% on Friday to close at 7,346.8 points. That leaves it down 1.17% week-on-week.

Today’s tumble followed an equally disappointing overnight session on Wall Street. Dow Jones Industrial Average Index (DJX: .DJI) slumped 1.3%, the S&P 500 Index (SP: .INX) slipped 1.4%, and the Nasdaq Composite Index (NASDAQ: .IXIC) dumped 1.8%.

Back home, it was a bloodbath across much of the market today.

Tech was hit hardest, with the S&P/ASX 200 Information Technology Index (ASX: XIJ) tumbling 2.3%. Its worst performer was the Block Inc (ASX: SQ2) share price, which fell 7.8%.

The S&P/ASX 200 Energy Index (ASX: XEJ) also suffered, falling 1.8% as coal producers spent a second day deep in the red after tumbling amid news of the NSW government’s coal price cap policy yesterday.

There was a bright spot on the ASX 200 today, however. That was the S&P/ASX Utilities Index (ASX: XUJ), which rose 1%, driven by the Origin Energy Ltd (ASX: ORG) share price’s 1.7% gain.

So, with all that in mind, which ASX 200 shares outperformed all others today? Let’s take a look.

Top 10 ASX 200 shares countdown

The biggest gainer on the ASX 200 today was the QBE Insurance Group Ltd (ASX: QBE) share price. It rose 7.4% to close at $14.39.

The insurer posted its full-year earnings this morning, detailing a 2.7% jump in net profit after tax (NPAT) and a 30-cent final dividend­ up 57% year-on-year.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
QBE Insurance Group Ltd (ASX: QBE)	$14.39	7.39%
A2 Milk Company Ltd (ASX: A2M)	$7.10	6.29%
Corporate Travel Management Ltd (ASX: CTD)	$18.10	4.5%
GUD Holdings Limited (ASX: GUD)	$10.04	4.47%
Imugene Limited (ASX: IMU)	$0.14	3.7%
Super Retail Group Ltd (ASX: SUL)	$12.90	3.2%
Orora Ltd (ASX: ORA)	$3.43	3%
Computershare Limited (ASX: CPU)	$23.88	2.67%
Graincorp Ltd (ASX: GNC)	$7.78	2.37%
Collins Foods Ltd (ASX: CKF)	$8.87	2.31%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 shares rerated by brokers following earnings results
• Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher
• QBE share price leaps 10% amid explosive dividend growth
• Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday?
• Why term deposits can’t compete with these 5 ASX dividend machines

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Collins Foods, and Super Retail Group. The Motley Fool Australia has positions in and has recommended Block and Super Retail Group. The Motley Fool Australia has recommended A2 Milk, Collins Foods, and Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking to add some growth shares to your portfolio?

If you are, two ASX growth shares that could be worth considering are listed below. Here’s why they are rated as buys:

Allkem Ltd (ASX: AKE)

The first ASX growth share to consider is Allkem. It is one of the world’s largest lithium miners aiming to maintain a 10% share of global lithium supply over the long term.

Although Goldman Sachs is bearish on the lithium industry, it is positive on Allkem due to its production growth plans and its downstream optionality. The broker commented:

Of our covered Australian lithium companies, Allkem has the best LCE growth outlook with production growing >4x to FY27E with further downstream optionality on carbonate production

Goldman has a buy rating and $15.50 price target on Allkem’s shares.

Lovisa Holdings Limited (ASX: LOV)

Another ASX growth share to consider is fast-fashion jewellery retailer, Lovisa.

Much like Allkem, it is the company’s growth plans that has analysts and investors excited. Lovisa has been growing its store network at a rapid rate in recent years but isn’t anywhere near the end of its journey. This is a journey being navigated by a highly talented and experienced management team that has been there before with other global retail brands.

In light of this, Lovisa has been tipped to become one of Australia’s biggest retail success stories by analysts at Morgans. The broker said:

LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious new leadership in place, we think now is the time LOV steps up to become a global force. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.

Morgans currently has an add rating and $28.50 price target on Lovisa’s shares.

The post Two ASX shares with bucketloads of growth potential: experts appeared first on The Motley Fool Australia.

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More reading

• Why this US$1 trillion milestone matters for ASX 200 lithium shares
• Could this new advancement reignite ASX 200 lithium stocks?
• How to create a second income from ASX growth shares
• 2 highly-rated ASX growth shares to buy according to experts
• 2 ASX growth shares that also offer incredible dividends

Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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AGL Energy Limited (ASX: AGL) shares have come under pressure this month.

Since the start of February, the energy giant’s shares have fallen 5.5%.

All of this decline has come since the release of AGL’s half year results, which fell well short of expectations.

For the six months ended 31 December, AGL reported an underlying net profit after tax of $87 million, which was a massive 55% decline on the prior corresponding period. This led to AGL slashing its dividend by half to 8 cents per share.

Well, with the bad news out of the way, investors may now be looking at AGL shares and wondering if an investment opportunity has been created by this weakness.

What if you were to invest $1,000 into its shares now? Would you get a good return on your investment in 2023?

Would you get a good return from AGL shares?

While opinion is divided on where AGL shares are heading, one leading broker sees plenty of upside ahead for investors. Particularly given that a return to form is expected in FY 2024.

According to a note out of Credit Suisse, its analysts responded to AGL’s half year results by retaining their outperform rating with a trimmed price target of $8.70.

Based on the current AGL share price of $7.22, this implies a potential return of 20.5% for investors over the next 12 months.

This means that a $1,000 investment would turn into $1,205 if Credit Suisse is on the money with its recommendation.

In addition, the market is expecting a 26 cents per share dividend in FY 2023, which equates to a 3.6% dividend yield. This would add an extra $36 to your return, bringing your total potential return to a solid $1,241.

The post If I invest $1,000 in AGL shares now, what could my return be this year? appeared first on The Motley Fool Australia.

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More reading

• Company directors are buying the dip on AGL shares. Should you?
• Why AGL, New Hope, News Corp, and REA shares are dropping today
• Is the AGL share price sell off a buying opportunity?
• 5 things to watch on the ASX 200 on Friday
• How to burn a billion dollars: AGL shares tumble 10% on painful half-year results

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AMP Ltd (ASX: AMP) share price took a tumble on Thursday after the former-financial giant dropped its full-year earnings, declaring its return to dividend.

The stock dumped 13.4% in yesterday’s session and it’s continuing its fall today. It’s trading 1.32% lower at $1.12 at the time of writing.

That’s its lowest point in months. And looking further back, the S&P/ASX 200 Index (ASX: XJO) stock has dumped 79% since February 2018.

Does that leave the AMP share price in the buy zone right now? Let’s take a look.

Are AMP shares a buy following Thursday’s dive?

The market turned its back on AMP shares on Thursday when the company announced a $184 million underlying net profit after tax (NPAT). That marked a 34% year-on-year fall.

The dint was mainly put down to market volatility, repricing in the wealth management business, and a reduced net interest margin in its bank business.

Though, it did post its first dividend in four years – offering investors 2.5 cents per share.

It also vowed to continue its $1.1 billion capital return initiative in the coming financial year.

While the 20% franked dividend did mark a milestone for the embattled company, it wasn’t enough to impress UBS.

The broker kept its sell rating on AMP shares, tipping them to fall to $1.09, The Australian reported. That marks a potential 2.75% downside on its current price.

Analysts were disappointed by the results and guidance, saying courtesy of the publication:

[O]ur first impressions are that the result highlights the depth of challenges facing the core businesses, and FY23 guidance commentary does not indicate FY23 will be much easier.

Looking to future dividends, the ASX 200 staple is tipped to pay 4 cents per share in financial year 2023, according to CommSec data. That’s forecasted to increase to 5.2 cents per share in financial year 2024.

The post Are AMP shares finally cheap enough to buy following Thursday’s 13% crash? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• The AMP dividend is back! Here’s what you need to know
• Why AMP, Evolution, Perenti, and Whitehaven Coal shares are dropping
• AMP share price dives 12% on earnings miss
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of Citi, its analysts have retained their buy rating on this biotherapeutics company’s shares with an improved price target of $350.00. This follows the release of a strong first half result. Citi was particularly impressed with CSL’s plasma collection growth and believes it will be supportive of future revenue growth. Outside this, the broker feels that CSL’s shares deserve to trade on higher multiples in-line with long term averages. The CSL share price is trading at $297.77 this afternoon.

Evolution Mining Ltd (ASX: EVN)

A note out of Morgans reveals that its analysts have retained their add rating and $3.70 price target on this gold miner’s shares. While the broker was a touch disappointed with the company’s first half performance, it was pleased to see that its full year production and cost guidance has been reaffirmed. Morgans feels this suggests that a strong second half is coming. The Evolution share price is fetching $2.87 on Friday.

Telstra Group Ltd (ASX: TLS)

Analysts at Goldman Sachs have retained their buy rating and $4.60 price target on this telco giant’s shares. This follows the release of a half year result which came in a touch ahead of the broker’s estimates thanks to the mobile business. This has led to Goldman increasing its earnings estimates modestly through to FY 2025. The Telstra share price is trading at $4.22 today.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• Broker gives its verdict on the Telstra share price post-results
• Passive income watch: 3 ASX 200 shares that slashed their dividends this week
• Evolution Mining share price dives after 50% cut to dividend
• Why Bapcor, Magellan, Sonic Healthcare, and Telstra shares are charging higher

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX 200 earnings season is well underway with brokers progressively rerating various S&P/ASX 200 Index (ASX: XJO) shares based on their FY23 half-year results.

Here we take a look at four ASX 200 shares that have received upgrades from the experts, courtesy of The Australian.

Cochlear Limited (ASX: COH)

Cochlear released a strong set of results for the six months ending 31 December. There was a 9% increase in sales revenue to a record $893 million but its underlying net profit fell 10% due to increased costs.

A strong balance sheet enabled the ASX 200 stalwart to maintain its interim dividend at $1.55 per share.

Cochlear also announced a progressive on-market buyback, starting with a $75 million program.

Cochlear reaffirmed its FY23 guidance. It expects an underlying net profit of between $290 million to $305 million, up 5% to 10% on FY22.

On the back of this news, Morgan Stanley raised its rating on Cochlear to equal weight. The broker has given Cochlear a share price target of $214.

RBC Capital rerated the stock to ‘sector perform’ with a $207 target. Jarden Securities cut Cochlear shares to neutral with a price target of $224.71.

The Cochlear share price is currently $225.02, down 0.63%. It is up 7.7% for the week.

Corporate Travel Management Ltd (ASX: CTD)

The ASX 200 travel share fell upon the release of the company’s half-year results, despite a $15.7 million profit. Corporate Travel also reported $4.2 billion in total transaction value (TTV), up 102% year over year.

The company reported $51.3 million in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), up 182%, and a $15.7 million statutory net profit after tax (NPAT), up from a $10 million loss.

The ASX 200 share will pay an unfranked interim dividend of 6 cents per share.

Looking forward, Corporate Travel is expecting record full-year earnings with forecasted EBITDA of between $160 million and $180 million and an underlying profit before tax of between $120 million to $140 million.

Investment group CLSA raised its rating to reduce with a share price target of $16.50. The Corporate Travel Management share price is already well above this target at $18.18, up 5.37% today and up 10% for the week.

Vicinity Centres (ASX: VCX)

A large real estate investment trust (REIT) within the ASX 200, Vicinity Centres announced a 24.1% bump to funds from operations (FFO) at $357.1 million. This was primarily due to a 20.5% increase in net property income to $459.6 million.

The company said there was “continued strength of retail sales leading to improved cash collections, rental growth, and higher percentage rent”.

The A-REIT has revised its FY23 guidance to FFO per share of between 14 cents to 14.6 cents.

Vicinity Centres declared an interim distribution of 5.75 cents per share, up 22.3% on 1H FY22.

JPMorgan upgraded its rating on the ASX 200 share to neutral with a price target of $2.10. CLSA cut its rating to sell with a target price of $1.88.

The Vicinity Centres share price is currently $2.10, up 0.48%. It is up 6% for the week.

Wesfarmers Ltd (ASX: WES)

Wesfarmers had a ripper result for 1H FY23, reporting a 27% jump in revenue to $22.56 billion and a 14.1% bump to NPAT at $1.38 billion. Basic earnings per share (EPS) came to $1.223 – a 14% rise.

The top 10 ASX 200 share will pay a boosted dividend of 88 cents per share, up 10% on 1H FY22.

Macquarie has raised its rating to neutral with a price target of $56.70, up 23%. This implies a potential 11% upside for Wesfarmers investors, with the share price currently $50.96, down 0.7% today.

Jarden Securities went the other way and cut its rating to neutral with a price target of $46.

The Wesfarmers share price is up 3.7% for the week.

The post 4 ASX 200 shares rerated by brokers following earnings results appeared first on The Motley Fool Australia.

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More reading

• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why did the ASX 200 leap higher on rising unemployment data?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and JPMorgan Chase. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended Cochlear and Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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National Australia Bank Ltd (ASX: NAB) shares are on course to end the week in the red.

In afternoon trade, the banking giant’s shares are down almost 2.5% to $29.78.

This means that its shares are down almost 6% since this time last week.

Should you buy NAB shares?

According to analysts at Goldman Sachs, they believe that investors should be loading up on NAB shares following the release of the bank’s first quarter update.

In response to the stronger than expected update, the broker commented:

NAB has released its 1Q23 trading update, with unaudited cash earnings from continuing operations of A$2.15 bn, up 18% on the previous period average, run-rating 3% above what was implied by our previous 1H23E forecasts. The better than expected performance was driven by stronger revenues (Markets) and lower BDDs, partially offset by higher expenses. NAB’s CET1 ratio of 11.3% was running in-line with our forecasts.

In light of this, the broker has reiterated its buy rating with a $35.42 price target. Based on where NAB shares are currently trading, this implies potential upside of 19% over the next 12 months.

Why is Goldman bullish?

Goldman explained that it is bullish on NAB due largely to its exposure to commercial lending, which it expects to fare better than home lending in the current environment.

The broker believes this will be supportive of further net interest margin (NIM) strength. It said:

We reiterate our Buy on NAB given: i) we see volume momentum over the next 12 months as favouring commercial volumes over housing volumes and we believe NAB provides the best exposure to this thematic, ii) NAB has delivered the highest levels of productivity over the last three years, which we think leaves it well positioned for an environment of elevated inflationary pressure, iii) NAB’s 1Q23 operating trends seem consistent with management commentary at its FY22 result, particularly with regard to NIMs, which we view as a positive given the commentary CBA made at its 1H23 result, which suggested NIMs have peaked. Reiterate Buy.

The post Should I buy NAB shares after the ASX 200 bank’s latest update? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• NAB share price higher on stronger than expected Q1 update
• NAB share price in focus following Q1 $2.15b cash profit
• Earnings preview: Here are the ASX shares reporting on Thursday
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX tech share Whispir Ltd (ASX: WSP) is having a day to forget, down 9.7% in afternoon trading.

Shares in the technology stock closed at 45 cents yesterday and are currently swapping hands for 42 cents apiece.

This comes following the release of the software-as-a-service (SaaS) provider’s half-year results for the six months ending 31 December (1H FY23).

Here are the highlights.

Whispir share price sinks on diving revenue

• Revenue of $28.8 million, down 27% from 1H FY22
• Net loss after tax of $13.7 million, compared to a net loss of $7.0 million in the prior corresponding period
• Earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $8.8 million, up from a net loss of $6.9 million
• Cash on hand as at 31 December of $9.4 million and $1.6 million in restricted cash

What else happened with the ASX tech share during the half year?

While the United States market was said to be “challenging”, Whispir saw revenue in its Asian market increase 13% from 1H FY22.

With that in mind, the ASX tech share intends to refocus its resources away from North America and to ANZ/Asia, where it said telco partnerships are delivering a steady stream of customer leads.

On the positive side of the ledger, cost came down year on year, with the ASX tech share reporting cost of services of $11.9 million, down 27% from the $16.4 million reported in 1H FY22.

The company has no debt and said it’s on track for positive cash flow in the current half.

What did management say?

Commenting on the results sending the ASX tech share lower today, Whispir CEO Jeromy Wells said:

Whispir is at a significant point in its corporate journey, offering a strong proposition to investors. Our telco partnerships and land and expand strategy are paying off, and we are seeing some healthy developments in our sales outlook in Asia…

We continue to take a prudent approach to managing cash while focusing on what Whispir does best – supporting existing and new customers to leverage our digital communications platform to enhance business operations for better outcomes.

What’s next?

Looking ahead, the ASX tech share forecasts revenue of $58 million to $62 million for the full year and positive EBITDA for the second half of FY23.

“Over the next three to five years, we anticipate strong organic revenue growth of more than 20% year on year, as well as an improvement in gross margins above 65% as regions scale,” Wells said.

How has this ASX tech share been performing?

It’s been a rough full year for the Whispir share price, down 79% over 12 months.

2023 is showing more promise for the ASX tech share, which was well into the green at yesterday’s close.

With today’s intraday losses factored in, shares are down 8% year to date.

The post ASX tech share Whispir dives 10% as half year revenues plunge appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ordinaries shares getting hammered on quarterly updates

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Whispir. The Motley Fool Australia has recommended Whispir. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on course to end the week in the red. In afternoon trade, the benchmark index is down 0.8% to 7,349.5 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down 7% to $2.29. Investors have been selling this baby products retailer’s shares following the release of a disappointing half year result. Baby Bunting reported a 6.6% increase in sales to $254.9 million but a 59% decline in net profit after tax to $5.1 million. This led to the company slashing its dividend by 59% to 2.7 cents per share.

Integral Diagnostics Ltd (ASX: IDX)

The Integral Diagnostics share price has sunk 16% to $2.63. This morning, this diagnostic imaging services company reported a 36.4% decline in operating profit to $7.8 million. This was driven by significant cost pressures, especially from higher labour costs, driven by inflation and labour market supply constraints.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down almost 7% to $4.38. Investors have been selling Pilbara Minerals and other lithium shares despite there being no news out of them. Though, with some analysts tipping lithium prices to fall materially, there could be some profit taking going on here after stellar gains were recorded over the last 12 months.

Zip Co Ltd (ASX: ZIP)

The Zip share price is down 3.5% to 58 cents. This appears to have been driven by concerns that ASIC could be about to make things tough for the buy now pay later (BNPL) industry. Potential new rulings could see BNPL providers face largely the same regulatory hurdles as credit card companies. That means they may need to look into customers’ financial health before opening a line of interest-free credit.

The post Why Baby Bunting, Integral Diagnostics, Pilbara Minerals, and Zip shares are falling appeared first on The Motley Fool Australia.

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More reading

• ASX BNPL shares deep in the red as ASIC turns up the regulatory heat
• Baby Bunting share price plunges as profits tumble 67%
• Own Pilbara Minerals shares? Here’s what the market is expecting from its half year results
• Earnings preview: Here are the ASX shares reporting on Friday
• Why this US$1 trillion milestone matters for ASX 200 lithium shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Baby Bunting Group and Zip Co. The Motley Fool Australia has recommended Baby Bunting Group and Integral Diagnostics. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Well, it’s been a helluva busy week. Here are my Friday afternoon reflections…

What do you do if you’re invited to a dog-and-pony show?

RBA Governor Philip Lowe has had to front not one, but two, parliamentary committees, each keen, on the surface, to get more information about the current monetary policy settings.

On the surface? Well, there’s been just a little grandstanding, too.

How much?

Well, the pollies have taken it upon themselves to express their displeasure about where we are, how we got here, and what might happen next.

Though none of them, as far as I know, have run a central bank before.

And none of them, as far as I know, has moved even an inch to make some changes to fiscal policy that might take the pressure off interest rates.

Maybe it’s just easier to point fingers and get your mug on the telly for a few seconds, demonstrating that you’re the battlers’ friend, and that mean Mr Lowe is responsible, and hopefully we’ll remember that at the next election.

Too cynical?

Perhaps.

And some have, commendably, asked good questions, seeking to understand, rather than to grandstand.

And yet.

And yet my criticism – that fiscal policy (that’s government taxation and spending for those of us who didn’t do economics at high school) has been MIA – remains 100% unequivocal.

My solution? Thanks for asking.

Here’s what I wrote on Twitter during the week:

Politics aside, good governance, inflation-wise, probably includes:

— Structurally balanced budget

— Using Super contributions and/or GST to moderate/boost demand

— And *then* interest rates to seal the deal.

That’s… not what we have.

And I followed up with:

And housing policy probably includes:

— No (new) NG for existing residential housing

— Resumption of CGT indexing

— APRA’s lending buffer used counter-cyclically

— Integrated population, environment, transport, broadband and planning policies

It seemed to go down well.

Except with the pollies. No movement there.

Yet.

Stop asking for specifics

Speaking of Governor Lowe, the politicians keep asking him for predictions.

Now maybe that’s not silly – the RBA was forthcoming with their prediction that the preconditions for rate rises wouldn’t be present until 2024.

That… didn’t age well.

And I guess if you have someone who has given predictions in the past, you might as well ask them for an updated version.

So the pollies want to know how many rate rises will come.

What will happen to prices.

What the RBA is expecting the impact would be.

As I said, given the RBA has made predictions in the past, the pollies are well within their rights to ask.

But the politicians, the RBA, economists, journos and plenty of the rest of us are barking up the wrong tree.

Why?

I just told you (sort of) – he was so spectacularly wrong last time!

Not because he’s hopeless – but because forecasting is somewhere between really, really hard and impossible.

And much closer to the latter.

There are a million things that could happen over the next six months that would mean any prediction, given today, would not come to pass.

That’s exactly what happened last time.

The RBA should know better than to give forecasts.

The pollies should know better than to ask.

And the rest of us should know better than to listen.

It’s not just the RBA, either. Company CEOs do it. Some financial analysts do it.

Because we all like the feeling of certainty.

It’s hard-wired into us.

But, if we don’t stop, all we’ll get is a combination of a little luck and a lot of disappointment.

And a lot of time, effort and emotion, wasted in the process.

The market doing what the market does

It’s almost easy to forget we’re also in the middle of earnings season.

Well, except when share prices bounce around like a 3yr old with a key to the cordial cupboard.

This week?

Commonwealth Bank of Australia’s (ASX: CBA) profit was up 9%. So…. the shares fell 5.7%.

Corporate Travel Management Group Ltd (ASX: CTD) (I own shares) forecast a return to record profit. So… shares fell more than 8%, after being up 3% in early trade.

Then jumped 10% the next day.

And that’s just the Cs.

The ‘smart money’ at work, huh?

And don’t get me started on ‘Company X missed estimates’. It should instead read ‘Analyst forecasts were wrong for Company X’s profit’.

But it’s easier to blame the company…

(Corporate Travel is up another 5% at the time of writing, today. More gyrations.)

Quick takes

Overblown: As above, the sense that a central bank governor, with one single, solitary lever, can overcome generational inflation without causing collateral damage, while fiscal policy whistles (and, worst, we have a structural budget deficit) grossly misunderstands the way our economy works. Yes, Lowe has made mistakes. And this ‘medicine’ hurts. But we’re focussing on the wrong thing.

Underappreciated: The headlines are 75% interest rates, 15% artificial intelligence and 10% corporate scandals at the moment. Each will have a small impact on long-term value creation on the ASX. But the more important stories are the quality companies whose CEOs are just getting on with maximising long term value, day after day, by understanding their business and finding incremental opportunities to improve. The headlines will fade. Quality endures.

Fascinating: The surge of AI is incredible. Really, really impressive. But how will it play out? The ‘internet’ is incredible, but it became a (very valuable!) feature, rather than a product in itself. Very few ‘internet’ companies (think hardware or cabling) made huge profits, but lots of businesses used the internet to improve costs, reach, scale and lots more. Hard to know how AI will revolutionise business, but I’d bet it makes its mark.

Where I’ve been looking: Everywhere! Earnings season is like that – drinking through a firehose. We’re keeping an eye on our active recommendations, as they release results, as well as looking for interesting opportunities thrown up by unexpected results, or by market reactions. Overall, I’ve been really happy with the (business) performance of our companies!

Quote: “You must do deep research to build a high-conviction non-consensus view. Remember that to generate excess returns (above-market returns) you must be non-consensus and right…” – My US-based colleague, John Rotonti Jr.

Fool on!

The post CBA’s profit soars… and shares sink appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has positions in Corporate Travel Management. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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