Good Evening,

First off, Congratulations to the Matilda’s on their 2-0 victory over Denmark in the Round of 16 World Cup clash last night. Onwards to Saturday night, where the girls will play the winner of the clash between France and Morrocco tonight. Good luck!

Onto today’s recap, here’s a sample of what you may have missed:

1. 🏗️ James Hardie shares rise but flags weaker outlook

2. 🏢 Myer sinks despite earnings upgrade

3. 🔌 Tesla's finance chief bids adieu

4. 🖥️ Zoom calls employees back

5. 💰 CBA puts a cap on Crypto

The Recap

James Hardie Rises High,

Myer Takes a Dive

The ASX200 fell flat today, starting the day strong before falling away to close 0.03% or 1.9 pts higher at 7,311.1 despite a strong market on Wall Street overnight.

James Hardie was the biggest winner of the companies who reported earnings, rising by 14.3% despite providing a bearish outlook in the North American market. Myer was another mover on the market, just in the wrong direction, after reporting slower sales growth in the second half of FY23. Their share price fell by 14% today.

Another day, more M&A, PSC Insurance Group announced it would acquire insurance underwriter Ensurance Limited in a deal worth over $25 million.

Six sectors ended the day green, with Health Care regaining some of its lost ground, rising by 0.59%; ResMed continued its’ slumber, dropping by another 2.2% today to finish at a 12-month low of $28.75. The Tech (+0.22%) and Energy sectors (+0.16%) also ended the day higher. Staples (-0.30%) and Real Estate (-0.19%) fell the most of the five sectors to finish lower.

Earning reports continue this week, with CBA and Suncorp reporting tomorrow. We expect AGL Energy, AMP, Boral and QBE Insurance to report Thursday.

Economic News

• Australia's NAB business confidence index increased to +2 index points in July from -1 in June, the highest level since January, but still at historic lows.

• Consumer confidence declined by 3.4 percentage pts. to 75 last week, according to today's most recent ANZ-Roy Morgan survey. Confidence has continued to be in the ‘very weak’ territory below the 80pt. mark, for the last 23 weeks.

• China’s exports dropped for a third month in July, with overseas shipments falling by 14.5% from last year. Imports also fell by 12.4%, leaving a higher-than-expected Trade Surplus of US$80.6 billion.

ASX200 Stock Snapshot

Wall Street

The U.S. market snapped a 4-day losing streak, rebounding after its worst week since March. The S&P500 ended Monday up 0.90% to 4,518.44, whilst the NASDAQ finished higher by 0.61%. Bond yields resumed their upward momentum, with both short and long-term yields rising back to touching distance of 2022 highs.

Investors will have one eye firmly fixed on Thursday’s July CPI read as an early indicator of what the Fed might do with rates when it meets in September.

In company news, Berkshire Hathaway class B shares rose 3.6%, closing at a record high of $362.58 after reporting record quarterly operating earnings of $10.0 billion - a 6.6% increase. Berkshire is sitting on over $147 billion in cash reserves at the end of June.

Palantir Technologies reported Q2 results after the market close, which took investors some time to digest. Palantir shares initially fell by as much as 12% in after-hours trading before climbing back up to finish 2.6% higher. Palantir reported revenue of $533 million with Adj EBITDA of $143.3m. The company provided Q3 revenue guidance of $553m - $557m and announced a share buyback of $1 billion.

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Markets

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Quick Singles

🪃 Local News

• Private equity firm Advent International secured a deal to acquire a majority stake in Australian fashion brand Zimmermann, valuing the company at about A$1.5 billion.

• PSC Insurance (PSI) announced it will acquire underwriting agency Ensurance (ENA) for $0.28 per share, valuing that company at $25.2 million. ENA shares rose 33% today to $0.265, with the deal representing a 40% premium to ENA's closing price yesterday of $0.20.

• Woodside Energy is cashing out a 10% stake in its flagship gas project Scarborough for $US500 million (A$763 million) to LNG Japan. Woodside will hold 90% of the Joint Venture and remain the project operator.

• Coronado Global Resources fell by 11.5% after it reported a 24% drop in revenue in its half-year results, while adjusted earnings collapsed by 58.4% against the pcp. as coal prices continue to slide from their 2022 highs.

🌏 Around The Globe

• Tesla CFO Zack Kirkhorn will leave his role at the company after 13 years at the company in a surprise announcement. Kitkhorn will remain with Tesla through the end of the year to support the transition. Current chief accounting officer Vaibhav Taneja will take up the CFO position in addition to his current role.

• Is full-time remote work coming to an end? Video conferencing software company Zoom has told its employees that they must go into the office at least two days a week. If a video conferencing company can’t work from home, what chance do the rest of us have?

• Google is another trying to get its workers back in the office, offering full-time employees the chance to book a room at an on-campus hotel for $99 a night. The opportunity to live at the office will run until the end of September.

• Apple will reportedly reveal its new iPhone 15 on either September 12th or 13th, with sales expected from Sept. 22. New features include a faster processor, a better camera, and a USB-C charging port.

• The FDA has approved the oral pill ‘Zurzuave’, a drug developed in collaboration between Biogen and Sage Therapeutics designed to treat postpartum depression. This marks the first of its kind, an antidepressant explicitly intended for new mothers.

• Paramount will sell its’ book publisher, Simon & Schuster, to Private Equity Firm KKR for $1.62B

• Campbell Soup agreed to buy Sovos Brands in a deal valued at $2.7 billion, giving it a foothold in the pasta sauce market.

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Movers and Shakers

✅ Biggest Gainers

• James Hardie (JHX) was the biggest gainer today, rising by 14.3% to $46.62 after reporting Q1 earnings that were ahead of analysts’ expectations. The company did warn of an uncertain outlook in the major markets in which it operates, predicting that the North American total addressable market will drop between 5% - 18% in 2023 compared to 2022. JHX reported net sales of $954.3m vs. estimates of $919.9m & Adj. Diluted EPS of $US0.39 per share vs. estimates of $0.34. Net Sales (-5%) & Statutory Profit (-3%) were down on the pcp.

• Red5 Ltd. (RED) rose after they released promising drill results at the company’s King of the Hills (KOTH) underground gold mine in WA, reporting several high-grade assays. In the update, Red5 said the mine plan is now 85% complete. The better-than-expected results also suggest the possibility of extending the mine’s lifespan, especially in the Regal and Eastern Flank mining zones. Shares ended 5.7% higher to $0.18.

🔻Biggest Fallers

• Myer Holdings (MYR) fell 14% on outlook concerns as trading conditions deteriorated in the second half of FY23, with sales up by only 0.2%. However, total FY23 sales were 12.5% higher than in 2022 after a stronger first half of the year. Total FY23 Group online sales were down 4.5% to $690.5 million, although H2FY23 saw positive growth. Online now makes up 20.5% of the business’s total sales. Myer upgraded FY23 NPAT to $69m - $73m, an increase of 15% - 21% from FY22.

• Charter Hall Long Wale REIT (CLW) fell today after reporting a full-year statutory loss of $189 million for FY23, driven by valuation losses amounting to $362.7 million, or 3.9 per cent, across its asset portfolio. Operating earnings (which exclude re-valuation effects) were down 2% to $202.4 million. Charter Hall declared a full-year dividend of 28c per share, expected to drop to 26c per share per the company’s FY24 guidance. The company closed the day down 5.7% to $3.80.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of 2nd August

1. Core Lithium (CXO) - 11.17%

2. IDP Education (IEL) - 9.94%

3. Flight Centre (FLT) - 9.88%

4. Syrah Resources (SYR) - 8.41%

5. JB Hi-Fi (JBH) - 8.34%

6. Select Harvest (SHV) - 7.87%

7. Pilbara Resources (PLS) - 7.53%

8. Brainchip (BRN) - 7.41%

9. Lake Resources (LKE) - 7.33%

10. LendLease Group (LLC) - 7.18%

📊Broker Ratings

What do the brokers have to say?

• Mesoblast (MSB) - Downgraded to Speculative Hold from Speculative Buy (Bell Potter)

• Pilbara Minerals (PLS) Raised to Overweight (JPMorgan)

• PEXA Group (PXA) Rated a Buy (Jefferies)

Crypto Corner

CBA Takes Sets New Monthly Cap Limit on Crypto Exchanges

Commonwealth Bank of Australia (CBA) has implemented a significant change to its payment policies in a bid to combat what it says is the rising threat of cryptocurrency scams.

CBA has introduced a cap on cryptocurrency exchanges, limiting them to $10,000 each calendar month. This move follows the bank's recent introduction of 24-hour holds, declines, and limits on outbound crypto payments. Existing customers have been given a 30-day notice before the cap takes effect, while new customers have already seen these limits implemented.

The decision comes in light of data highlighting the surge in cryptocurrency scams. In the previous year, 3,910 individuals reported falling victim to scams involving cryptocurrency payments, marking a 162% annual increase. This resulted in losses of $221.3 million, as per the Australian Competition and Consumer Commission (ACCC). As a point of reference, the ACCC estimated that Australia recorded $3.1 billion for all payment scams in 2022, with Scamwatch receiving 239,237 scam reports last year.

The change hasn’t been met with great fanfare. Ben Simpson, CEO of crypto education and research platform Collective Shift, has criticised the move. Simpson expressed his frustration on Twitter, questioning the bank's decision to potentially freeze business accounts involved in crypto transactions exceeding the new limit:

Other major Australian banks, including Westpac, ANZ, and NAB, have also recognised the growing risk of cryptocurrency scams. They have either already implemented similar measures or are in the process of doing so. NAB, for instance, has blocked certain cryptocurrency exchanges as part of its strategy to curb financial crime.

📅 Economic Calendar

Data to keep an eye on this week

DISCLAIMER: None of the information provided in this newsletter should be constituted as financial advice. This newsletter is strictly for educational purposes only. It should not be taken as investment advice or a solicitation to buy or sell assets or make financial decisions. Please do your research.