NAB Morning Call

Friday 3rd November 2023

Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.

We’ve been through a tumultuous time, with COVID, inflation, geopolitical unrest. Go back a few years we were also struggling with sluggish growth. It’s been a tricky time for businesses, so what is the magic sauce that has seen successful businesses navigate their way through and come out on top?

Ann Sherry has a wealth of business experience. She’s worked in banking, tourism, and education. She is Chancellor of Queensland University of Technology and sits on the boards of NAB, the Enero Group and the Port of Townsville. She headed Carnival Cruises during a period of turmoil, but managed to reinvent the brand and restore goodwill.

On this edition of The Weekend Edition Ann talks about how companies should be reinventing themselves to cope with changing habits. And how investors can determine which companies are heading in the right direction. She suggests there’s not enough focus on forward indicators that show you how well a company is performing internally.

It’s a useful and entertaining twenty minutes for business managers, entrepreneurs, and investors alike.

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Friday 3rd November 2023

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Bond yields are much lower across the board today. Phil asks NAB’s Ken Crompton if bonds are back in fashion. They are for now, says Ken, but he doesn’t discount the idea that we’ll see 10 year Treasuries hitting 5% sometime soon. Pauses from central banks are certainly helping to push risk assets higher, with equity markets doing particularly well. The Bank of England and Norge Bank both kept rates on hold yesterday, with the BoE revising its UK growth forecast down to zero for 2024. Tonight, non-farm payrolls will be watched closely.

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Thursday 2nd November 2023

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The Fed kept rate son hold this morning, but there are no signs that they have finished yet. Jerome Powell was clear to point out every meeting remains live. NAB’s Gavin Friend says the statement has been updated to include financial conditions as one of the determinants of future policy, reflecting the recent rises in long end bond yields. Will those yields influence future policy decisions? Powell said it was possible if a few conditions are met. Later on, the Bank of England and Norges Bank – both expected to remain on hold. Will the RBA next week be out of kilter with the other central banks?

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Wednesday 1st November 2023

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The Bank of Japan is loosening its grip on yields. Today NAB’s Skye Masters explains what the move means and how markets responded. A sharp move down in the Yen suggests that more was expected. Also today further weakness in Europe – in growth and inflation – shows the ECB has almost certainly run its course, and more talk of how quickly they will start to lower rates. Meanwhile, all eyes today on the FOMC tomorrow morning, just before Thursday’s podcast and why, even though the will keep rates on hold, it’s not plain sailing for the US by any means.

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Tuesday 31st October 2023

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US equities have risen today, alongside a fall in oil prices, as hopes rise that the Gaza war will not see contagion throughout the region. Meanwhile, Germany delivered slower GDP growth and falling inflation, ahead of the Europe wide data today. NAB’s Taylor Nugent says the pressure is off the ECB, who could likely reached their terminal rate, although at least one ECB member is saying there could be more. There will certainly be more from the RBA after yesterday’s retail numbers in Australia, which came in stronger than most had expected. Plus, the Bank of Japan meets today, amidst expectations that they will lift the cap on long end yields. We also we get confirmation of the size of US bond issuance today – and the makeup of that issuance later this week. Each event will have an influence on bond yields and currencies.

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Monday 30th October 2023

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Are equity markets ahead of the curve? US firms have reported better than expected earnings and consumer spending is still growing. Yet shares are lower, with S&P entering correction territory. NAB’s Rodrigo Catril talks about how the tide is starting to turn. Earning projections are less promising, US person income is lower than spending and consumer inflation expectations are rising. The escalation in the war on Gaza over the weekend will add to concerns. It’s a tricky time for the FOMC meeting this week, and for the Bank of Japan tomorrow, faced with rising inflation.

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Friday 27th October 2023

Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.

In these uncertain times, of high inflation, high interest rates, changing consumer patterns, there are some things that seem a little more certain, like our shift to renewables and our need for investment in infrastructure as the climate changes, populations grow and consumer behaviour is transformed to the online world.

Georgia Hall, ESG Analyst at Maple-Brown Abbott, joins Phil to talk about how they have given a priority to investing in long-term infrastructure plays, with geographic monopolies. What are the key ingredients for ensuring you have a safe long-term investment? 

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Friday 27th October 2023

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US GDP came in higher-than-expected driven by strong consumer spending. But the core PCE index grew at the slowest rate since Q4 2019. So, inflation cooling, consumption rising. Phil asks NAB’s Tapas Strickland whether it will last and, if so, why are equiites struggling to much? Meanwhile, there’s growing consensus that the RBA will lift rates. We look at what was said in front of Senate Estimates yesterday. And the ECB on hold. Did they have any choice? Plus, some more big earnings results from the US.

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Thursday 26th October 2023

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Inflation numbers for Australia were higher than NAB’s expectations, which were higher than market expectations. The number is also well above the RBA’s own forecasting which, NAB’s Gavin Friend say, leaves them with little choice than to pursue at least one more rate hike, starting next month. Elsewhere markets have returned to a more cautious approach, as hopes fade of a diplomatic resolution to the situation in Gaza and Israel. The Bank of Canada kept rates on hold and the ECB may well do the same, but have they both reached their peak?

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Wednesday 25th October 2023

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Markets are displaying a degree of hope this morning, presumably because there has been no ground movement by Israelis into Gaza, but press reports seems somewhat less optimistic. Meanwhile, NAB’s Taylor Nugent says the latest PMIs show the continuing divide between the US and Europe, with the EZ Services and Manufacturing numbers both pulled lower. The UK employment numbers have become somewhat unreliable, meaning the BoE has less certainty in one of the key indicators it tracks. For the RBA the most important number is released today – CPI for Q3. NAB believes the number will be high enough to see interest rates lifted in a couple of weeks. Plus, earnings results for Alphabet and Microsoft. 

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