Tech stocks have borne the brunt of the recent sell off in equity markets and with the Nasdaq firmly in bear market territory, it is unprofitable tech stocks that have been hit the hardest - down almost 60% this year.

But amid these sell offs, there can be category leaders that fall to attractive valuations, relative to their long-term growth profile. Seagate Technology (NASDAQ: STX) is an example of this today. It's a beneficiary on the ongoing trend around data moving to the cloud as our lives become increasingly connected, and it's priced at just 8x next year's earnings. 

In this episode, Alison Savas hosts a deep dive into the company.

Part one (2:20): Alison interviews Seagate Technology Executive Vice President and CFO, Gianluca Romano. 
Part two (22.00): Alison is joined by Graham Hay (Antipodes Portfolio Manager of Hardware, Industrials and Commodities) to discuss the Seagate investment case.

Antipodes has owned Meta (previously Facebook) since the end of 2018 and despite the recent volatility in which many sold out of the company, it remains one of our top 20 holdings. 

We think that even though competition for eyeballs is increasing, and will continue to increase, the digital advertising pie is growing, and Meta can continue to dominate advertising revenue over our investment horizon. Further we believe there are opportunities to increase the monetisation rate of core Facebook and Instagram.  

In this new podcast episode, Alison Savas is joined by Ben Legg, one of the world's leading authorities on the digital advertising industry. Ben is a former Google COO, and now helps global brands advertise on social networks.  

Some key points covered include:

• Overview of how online advertise works today (04:00)
• The digital advertising landscape and why digital advertising as a percentage of GDP is likely to grow (07:30)
• The rise of Tik Tok (10:50)
• Meta's advertising technology and why it's seen as being superior to competitors (12:00)
• How Meta is moving to maintain user engagement (21:10) 
• Can Instagram become the world's biggest fashion retailer? (28.30)

Leaders indicators warn of global recession

Central banks state they are not seeing signs of a recession as they continue hiking rates to curb spiralling inflation. But with forward indicators flashing red across the board, low consumer confidence, declining forward sales, the US yield curve beginning to invert, and the continued drop in the global equities, markets are telling us they see slowing growth ahead.

Will the RBA pause in August, or will they continue to tighten at the fastest rate we have seen in 30 years and drive the country into a recession?

Speakers: 
Darren Langer, Co-Head of Australian Fixed Income &
Chris Rands, Senior Portfolio Manager

Speakers:

Gerald Stack, Head of Infrastructure
David Costello, Portfolio Manager
Ofer Karliner, Portfolio Manager
Ben McVicar, Portfolio Manager
Jowell Amores, Portfolio Manager

Time stamps:
22.00 Infrastructure review by sector
45.00 Impact of inflation and interest rates
48.15 Opportunities and risks from the energy transition
58.46 Safe transition methodology
1.00.00  Conclusion
1.04.00  Q&A

In this week's video insight Roger discusses what could be next for the stock market. We already know that P/E ratios have compressed considerably, and taken into account all of the increase in bond rates. What they haven't done, of course, is priced a very significant recession, nor have they priced the possibility of a financial crisis of any description. But what happens if rates stop rising, and if economies don't go into a recession, and we don't get a financial crisis?

Transcript 

Roger Montgomery:

Hi, I'm Roger Montgomery, and welcome to this week's video insight. Well, bearishness pervades almost every corner of the market at the moment. In my travels, in talking to brokers, other fund managers and economists, I don't find many people who are very bullish at all. In fact, most of them expect another leg lower in the stock market. Of course, for me, that starts to become optimistic because if everyone's already bearish, there's not many others left to become bearish. Those who are bearish have already sold, there's not many people left to sell, and so it may be that prices are now on the cusp of a bounce.

But rather than speculating about that, let's just think logically about what could happen next. We already know that P/E ratios have compressed considerably, and taken into account all of the increase in bond rates. What they haven't done, of course, is priced a very significant recession, nor have they priced the possibility of a financial crisis of any description. We'll address those two subjects in a moment.

But if rates stop rising, and if economies don't go into a recession, and we don't get a financial crisis, then there's a very real possibility that the indiscriminate selling that we've witnessed recently becomes something more discerning and buyers return to the market to look for downtrodden, high-quality growth companies. That's one possibility. The other possibility, of course, is that the deterioration in consumer confidence, such as what we're seeing in New Zealand at the moment, after five interest rate increases there, and a similar event here in Australia is a consequence of rising prices as well as declining property prices, could result in less funding being available to venture capital and private equity companies. If that happened, then that would mean a lot of people who are currently employed, thanks to the altruism of shareholders, could become unemployed.

There's also a more significant possibility that those people employed in construction, and remember construction is the third largest employer in Australia, there's a very distinct possibility that those people have less work on. And that's because falling house prices and rising costs make people defer or delay any alterations and additions that they might have conducted on their properties. And so it's significant to think about, or important, rather, to think about the possibility that we get rising unemployment from those sectors of the economy that are being funded by altruistic shareholders, those who have previously had very cheap money or free money to access to be able to fund startups, venture capital and private equity. Or there's a possibility that we see unemployment rising amongst those people in the construction sector.

Now, thinking through the transmission mechanism of that, if that happened, then we would get a much more significant decline in economic growth, and then the possibility of a recession goes up. But as I said earlier, in the absence of a recession and in the absence of a financial crisis, and I don't think any of those two things are very likely right now, then we're in a situation where we've had indiscriminate selling, pushing P/E ratios very, very low, and that of course means the possibility of better returns in the future. So if indiscriminate selling gives way to more discerning buying, we'll get an expansion of P/Es again, and that will increase the return available, that would normally be available, rather, just from the earnings growth.

So my suggestion now is to start dipping your toe back in. It's not a recommendation of course, but it's something that I'm doing myself. I don't know whether prices will rise from here or continue lower. It could be that the rest of my peers in the market are absolutely correct and we get another leg down. I just don't know. But I do know that there are some mouthwatering opportunities already appearing, and rather than try and predict what prices are going to do next, I'd rather start filling my portfolio with wonderful businesses at rational prices. That's all I have time for today. I look forward to speaking to you again next week, and in the meantime, please continue to follow us on Facebook and Twitter.

Speaker:  Roger Montgomery, Chairman and Chief Investment Officer

Bennelong's Dave Whitby speaks with Greg Goodsell, 4D's Global Equity Strategist, about 4D's unique country review process - an integral part of the business's investment process - and its impact on the portfolio.

• 0:32 - How Russia stacks up in 4D's country review process 
• 2:06 - The origins and purpose of the country review process
• 3:11 - Red, yellow and green: the four-step process behind 4D's traffic light system (and the subsequent implications)
• 5:45 - Examples of when the process has unexpectedly changed a country's rating
• 8:01 - Global recovery, growth, and opportunities in an inflationary environment

For more detail on our country review process, you can read our Global Matters article: Why country risk matters

Has the RBA hit panic mode?

With rates on the rise, higher inflation and wages below expectation, has Australia's central bank panicked by hiking rates by 50bps, the largest monthly move in over 20 years? The RBA's charter is to ensure the economic prosperity and welfare of the Australian people, which increasingly appears to be being overlooked in favour of an inflation target that isn't easily achievable without causing recession.