Odinian Beta

Earlier this month, the Reserve Bank of Australia was forced to cough up internal documents under Freedom of Information laws. This included an internal modelling exercise from September 2022, which revealed the risk of an Australian recession could be as high as 80% by September 2024.

Meanwhile, a recent Bloomberg survey of 14 economists saw the probability of a recession in Australia climb from 35% to 38% in April. 

Investors themselves, through their positioning, seem to be suggesting the same. Shares in classic defensive names such as Transurban (up 14%), Woolworths (up 15%), Wesfarmers (up 9%), Coles (up 15%), Telstra (up 10%), Origin Energy (up 9%) and AGL (up 11%) have continued to tick higher since the beginning of the year. 

And yet, Tribeca Investment Partners’ Jun Bei Liu is unflinchingly bullish. She doesn’t believe the Australian economy will nosedive into a hard landing in the next few months or years. Instead, she argues the noise in markets has created extraordinary investment opportunities today. 

In this episode, Liu shares: 

• Three rules for investors to live by. 
• Her macro outlook for the years ahead. 
• Why there is still fuel left in the tank when it comes to the China reopening. 
• Her top long and short positions right now. 

Note: This episode was recorded on Wednesday, May 24, 2023

Timestamps 

0:00 – Intro 

1:25 – Three rules investors should live by

4:58 – Jun Bei’s North Star for volatile markets 

7:34 – Jun Bei’s base case: Why she doesn’t believe Australia will experience a recession 

12:38 – The China re-opening theme isn’t over yet (and the stocks’ Jun Bei is backing)

19:53 – Jun Bei’s earnings outlook for the ASX 

21:55 – Companies facing margin pressure over the months ahead 

23:11 – Why Jun Bei is shorting Super Retail Group (ASX: SUL)

26:20 – And why she’s backing A2 Milk (ASX: A2M), NEXTDC (ASX: NXT), Macquarie Group (ASX: MQG), REA Group (ASX: REA), Xero (ASX: XRO), TechnologyOne (ASX: TNE), Pilbara Minerals (ASX: PLS) and Treasury Wine Estates (ASX: TWE). 

28:55 – The unloved stocks Jun Bei is loving right now

32:26 – The importance of emotional intelligence when it comes to investing 

36:49 – The best CEO and management teams in Australia 

39:30 – The Rules of Investing’s three favourite questions (what investors are getting wrong, a big win and loss, and a stock Jun Bei would back for the next 5 years)