Tyger Fitzpatrick: So welcome back to another edition of Market Minute. Today I’m joined by Michael. So Michael thanks for joining us. With earnings being on the forefront of investors minds at the moment. I guess let’s go into the US earnings. What are the key themes that you’re sort of seeing so far.

Michael Malseed: Yeah. So US earnings seasons. Most of the way through. And we’ve seen pretty good results out of the fundamentals there. About 86% of companies have beat earnings expectations. So it’s really showing that there’s a strength in the US economy that’s broadening up until you know more recently there was a lot of strength in the AI thematic names in the hyperscalers.

And now we’ve seen that broaden out across the economy. So that is positive. There’s been mixed reaction to names, particularly in that AI space. So there’s certain companies that are showing real revenue benefits. So companies like Microsoft and Amazon have actually reported very strong cloud services revenue numbers, which have supported that thesis. But then on the other side, the companies that are still generating, you know, a lot of CapEx and and not seeing the free cash flow come through yet to support that.

So on the side of meta in particular, we’ve seen weakness in those names. So it’s a bit of A Tale of Two Cities. You’ve also seen Space Report in the last week. And those CapEx expectations probably spooked the market a little bit as well, despite the results being quite strong.

Tyger: Rolling into Aussie reporting now. So although it’s early on what are you guys sort of expecting.

Michael: Yeah. So in Australia the market has lagged global equities materially over the past 12 months. So we’re seeing currently a little bit of a relief rally on more positive results than expected. One notable area is in the sort of tech and software names that got sold off heavily in the first quarter on the so-called SaaS ellipse. As you’re seeing numbers come through that are resilient.

Those are seeing a little bit of a rerating in those names. So car sales in particular had a good result and a strong rebound off the back of that result. RA also reported reasonable numbers. We’re early on in the reporting season. So still getting numbers through. We had Westpac a couple of days ago and and that certainly did show some softness in the residential mortgage market.

So that’s something to watch as we progress through reporting season. CBA’s coming up this week, and in the next week we’re getting into the big names like BHP.

Tyger: The key question here is how you guys positioning based on what’s happening in earnings in the US and domestically as well.

Michael: The market is no doubt expensive. Equity markets are expensive, but it’s good to see that earnings are coming through now. So that’s supportive of of high valuations. But we we are valuation sensitive when we invest. So we’re looking for pockets of attractive value where we’ve got a high probability of generating excess returns going forward. So we think globally there’s still good pockets of value in areas that have been under a bit of concern.

Things like consumer discretionary things like healthcare. So discretionary got impacted by the tariff concerns last year. Healthcare was has been impacted by policy decisions in the US. So there are areas that we’re sort of tilted into and taken positions. And we still prefer global equities broadly over Aussie just because of the diversification that you can see across that market, whereas Australia is going to be quite concentrated in the in the banks and and the resources names.

Disclaimer

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