Assessing the future is all about weighing up the odds. We can never be sure of how the future will unfold. So I talk in probabilities, never in certainties. With interest rates rising in the US, and with the post-2009 economic expansion being one of the longest on record, there is an increasing probability that the business cycle will soon start to turn down.
What a year. Brexit, Trump, North Korea, bitcoin. While it’s nice to check out how much you could have made in 2017, it’s far more interesting to speculate on 2018.
Shares of listed café and bakery company, Retail Food Group Ltd [ASX:RFG], have fallen more than 20% today, as negative media attention is influencing customers and store owners to move towards other companies.
Shares of Zimplats Holdings have shot up by 22.55% this week as Implats (owners of Zimplats) increased production by 9.6% since early November. Their productivity levels are expected to rise further in the New Year.
Shares in lithium mining company, Pilbara Minerals Ltd [ASX:PLS] rose a further 4% to $1.20 today, after a gain of 11% yesterday. Pilbara Minerals’ stock is up a huge 130% for the year, following strong growth from September.
Shares in Aconex Ltd [ASX:ACX] rose 44% yesterday, on the back of a $1.6 billion takeover offer by US tech giant Oracle. Why the share price rise?
On 1 December, Amazon signed a global agreement with GetSwift Ltd [ASX:GSW] to optimise their delivery system. But GetSwift’s 5% share price rise this morning was unrelated to Amazon.
The difference between US and Aussie companies and investors can be broken down as simple as this. The US is more strategic, whereas the Aussie market has a much greater focus on value. I do think US stocks are stretched and vulnerable to a short term correction. And as I said yesterday, that correction could come about as soon as the US tax cut rumour becomes fact.
This morning Aconex Ltd [ASX:ACX], a billion-dollar construction software company, jumped up 44%. What caused the share price rise?
The promise of tax cuts and its impact on company earnings continues to drive US stocks relentlessly higher. While that’s well known, the question to ask is whether the tax cuts are already priced in. Are investors now being too optimistic about the impact of lower tax rates on company earnings?