The Affect of Scott Morrison’s Appointment on the Stock Market

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And just like that, Australia has another Prime Minister we didn’t elect.

This is becoming some sort of joke. And the joke is on us.

At some point we must ask, what is the underlying structure that delivers our political leaders to us? Who are these people? What are they in it for?  Why do they find it so difficult to forge a bond with us, and with their political allies? What are their motives?

So now Scott Morrison is our leader. Meh! He didn’t even challenge for the leadership. He got the job due to the machinations within the Liberal Party and not through any personal desire to have the job now.

Although giving a politician an opportunity for more power is like waving a red flag at a bull. Of course they will go for it.

So, who is Scott Morrison? Well, he had the tourism portfolio initially, followed by a stint as immigration minister, and until last week he was Turnbull’s treasurer. Josh Frydenberg now takes on that role.

It’s fair to say that Morrison has done a good job in the treasurer’s seat. But the harsh spotlight that comes with being the nation’s PM is a different beast.

In terms of stability, the petulant Liberal Party may be a little better now given Morrison’s ideology is more conservative than Turnbull’s. But the risk is that this leadership change gives the socialist Bill Shorten a good shot at winning the next election.

Failing that, protest votes made in disgust will ensure another few years of a fractured parliament, as any substantive bills will fail to get through.

Scott Morrison’s relationship to Hillsong

What you won’t read in the mainstream press is Morrison’s affiliation with the Hillsong Church. But I think it’s worth pointing out. This is after all the new head of the country (after the Queen, that is). Here’s an excerpt of Morrison maiden speech when first entering parliament in 2008:

Growing up in a Christian home, I made a commitment to my faith at an early age and have been greatly assisted by the pastoral work of many dedicated church leaders, in particular the Reverend Ray Green and pastors Brian Houston and Leigh Coleman.’

Brian Houston is the founder and leader of the Hillsong Church. When his father, Frank Houston, was exposed as a paedophile, Brian tried to cover it up. Hillsong is big business. According to a Good Weekend article from 2015, Hillsong (both Australian and overseas) generated $100 million in revenues in the prior year. They should list it on the ASX…

I don’t know about you, but using the Bible/God/Jesus Christ to make such vast sums of money leaves a sour taste.

I’m not suggesting anything untoward in relation to Scott Morrison. But as your newly (unelected) leader, his affiliation with the church is something you should be aware of, even if the mainstream media won’t tell you about it. But don’t take my word for it, look it up for yourself.

By the way, I’m not having a go at religion here. I am a Christian. It’s the ‘organised’ nature of it, and the hierarchical and patriarchal structure of it, that is problematic.

The instances of abuse that this structure enables are far too numerous around the world for it to be a good thing.

You don’t need a church or someone to sermonise to you to have a relationship with God.

The recent political turmoil’s affect on the stock market

Anyway…

Let’s bring it back to the markets.

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The recent political turmoil has no doubt unsettled the market over the past week. The S&P 500 popped its head up to a new all-time high on Friday, but the Aussie market has actually been a bit weak.

That’s thanks to this ongoing political circus and a few underwhelming earnings results from the likes of Woolworths [ASX:WOW] and BHP Billiton [ASX:BHP].

Still, there hasn’t been too much damage done and the Aussie market continues to look relatively healthy, notwithstanding the current political uncertainty. Having said that, this ‘uncertainty’ has been a feature of the post-GFC environment so perhaps the market will get over it pretty quickly.

Who do you think the biggest winner is in the reporting season so far? The answer will probably surprise you…

It’s Telstra! As you can see in the chart below, the beleaguered Telco has had a strong past few weeks. Since bottoming in late June, the stock has rallied 23%. I think that much of the recent rally has been about short-covering. That means traders who previously bet on Telstra’s share price falling are now covering and buying back shares.

MoneyMorning 27-08-18

Source: BigCharts
[Click to open new window]

I expect the share price to re-trace some of those gains over the next few weeks. But this could be early signs of a turnaround for Telstra. What you want to see now is a ‘higher low’ form on the charts.

If, for example, the stock price falls back to say, $3, then rallies again, it will have formed a higher low on the chart. This is a sign that a new upward trend may be emerging.

Telstra is one to keep an eye on.

The other thing to keep an eye on is US politics. If you’ve been reading my Monday Money Morning articles over the past few weeks, you’ll know I’ve talked about the US political situation heating up.

If you follow the narrative painted by the mainstream media, you won’t really get it. It’s all about how Trump is an imbecile and an embarrassment to the country.

Put simply, Trump is a threat to the establishment, which is why they are going after him with such gusto. Just look at how The Financial Times politicised the death of Senator John McCain over the weekend, by making it about Trump. Here’s the headline, followed by the sub-head…

‘McCain’s death sparks mourning across political divide’

Death of war veteran and statesman robs Congress of its most powerful Trump critic

No mention of how McCain was an integral figure in creating ISIS to overthrow Assad in Syria. No, just that his death has robbed Congress of a powerful Trump critic. Wow.

So why are things heating up?

Well, the mid-term elections are coming up. The Democrats want to impeach Trump and are throwing everything they can to try and do so.

I’ll take up that story tomorrow…

Regards,

Greg Canavan, |
Editor, Crisis & Opportunity

PS: If you want to lay down a little money on the hottest corner of the ASX right now…but you don’t know your way around the small-cap sector…this report is for you. Get access now (free).

About Greg Canavan

Greg Canavan is a Feature Editor at Money Morning and Head of Research at Fat Tail Investment Research.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need…

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