December – Week 2 update

December 9, 2020

A streak of 7 days in the green for the ASX. The market has 7,000 in its sights. Will we test it before the year ends?

There is a more certainty in the market, amidst progress in vaccine related news and the political / election volatility subsiding for now.

The ASX VIX (volatility index) is under 15 and heading to pre-covid levels.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Watchlist and portfolio updates for members are at the bottom of this update.

On to the latest CEO insights.

CEO Insights by Sector

Banking & Payments

“The virus has been very interesting for payments. On one hand, it’s suppressing cash usage as people are worried about germs being spread via currency and so more people, even for small ticket items where they might have used cash in the past, are looking to use a debit card or a credit card” 

Albert Kelly, CEO, Visa Inc

Technology

“With 5G, data driven insights, automation and embedded intelligence, we will see an explosion of edge computing [computing done at the location it is needed] in smart cities, transportation, factories, hospitals and schools around the world” 

Jeff Clarke, COO, Dell Technologies Inc

Tourism & Leisure

“If you look at the leisure industry, that is airline, hotel, gambling…All those industry specialists are saying that it will take three years and more to recover, then [based on this] we believe that maybe the surge that we had this summer will be a bit reduced. But we have a pretty good runway in front of us” 

José Boisjoli, CEO, Bombardier Recreational Products Inc [owner of Sea-Doo, Ski-Doo & other RV brands]

“I do think the [luggage] marketplace will be disrupted. I do think there’ll be smaller plays in the industry that struggle to come out of this. But it will remain competitive and remain fragmented” 

Kyle Gendreau, CEO, Samsonite International SA

“Travel in 2021 and beyond will be a much more considerate exercise than it has ever been before” 

Luis Cabrera, CEO, Lonely Planet

Workplace & Employment

“I think all of us, as business leaders, have realised that perhaps we had people taking trips that might not have been necessary, or we sent too many people on a trip, or we sent somebody to give a presentation for an hour and a half and sent them around the world, and that cost money and it cost time, which is money, and now realize that, boy, a lot of that stuff can be done on any one of these video platforms that work darned well” 

Albert Kelly, CEO, Visa Inc

“I do believe there will be more change in the next two years than in the last 10 years…Almost every company on the planet is and will have to reimagine their business. Quite simply, different work needs to get done and work needs to get done differently” Gary Burnison, CEO, Korn Ferry Inc

“Printing volumes continue to be significantly below where they were before the pandemic” Enrique Lores, CEO, HP Inc

Agriculture

“Australia has been in a strong moment of rebuilding [cattle] herds. Australia, overall production of beef in Q3 was 30% below last year. Just to give you a perspective, 30% is a big, big reduction…since last year, and even more this year, probably the best conditions for grass in Australia in many, many decades. So, it came from extreme [drought] to another extreme now, so that’s why the [cattle] retention has been so strong in Australia” 

Andre Nogueira, CEO, JBS USA [world’s largest beef producer]

“In the coming period we need to be prepared for ongoing uncertainty in terms of access to the Chinese market” 

Hugh Killen, CEO, Australian Agricultural Company [AACo] Ltd

Residential Property

“I don’t think the housing market is a risk anymore. I mean we’ve substantially upgraded our forecast in and around housing versus where we were in May and even in August” 

Matt Comyn, Chief Executive, Commonwealth Bank of Australia Ltd

Building & Construction

“We’re anticipating this post-COVID retail environment [where] the nesting effect of the DIY starts to minimize over time” 

Marvin Ellison, CEO, Lowe’s Companies [world’s 2nd largest hardware chain]

Manufacturing

“We are starting to see strength in our [aluminium] markets. We gave a view at the beginning of the fourth quarter that was somewhat uncertain around the value-added products markets globally. We are starting to see the value-added products markets strengthen globally” 

William Oplinger, CFO, Alcoa Inc [global aluminium manufacturer]

“We’ve observed in the last month very strong dynamics in the market for hydrogen technologies, at least say which we have not seen before being this strong” 

Martina Merz, CEO, Thyssenkrupp AG [multinational chemical, steel & elevator manufacturer]

Transport & Logistics

“Building on the V-shaped recovery in the September quarter, we continue to see consistent improvement in terms of mobility and miles driven, and this bodes well for the replacement demand of tyres, both in terms of passenger vehicles as well as truck and bus” 

Sean Keohane, CEO, Cabot Corporation [multinational chemicals company/supplier of chemicals for tyre industry]

Consumer Goods

“I think in the label industry in general, because this pandemic has increased at-home purchases, so if you are in the label business, I don’t think it’s been a stressful time…you wouldn’t say it’s been a bad time for consumer packaged goods companies” 

Geoffrey Martin, CEO, CCL Industries Inc [world’s largest diversified label company & banknote maker]

Retail

“Fundamentally it seems like the consumer is relatively strong” 

Katrina O’Connell, CEO, GAP Clothing Inc

“It doesn’t look like the economy is going to be anything other than very strong in the immediate future” 

Gerry Harvey, Chairman, Harvey Norman Holdings Ltd

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