The media companies all tabled updates at the Macquarie conference.

NEC (Nine Entertainment) pointed to a weakening TV ad market, but noted that they were growing share, such that Total TV revenues were only down “very low single digit”.

SWM (Seven West Media) likewise pointed to a weakening market “down c11%”, and pointed to share gains of their own, but were much less explicit than NEC, which, in our view, means SWM had the weaker relative outcome.

OML (the outdoors advertising company Out of Home Media) had the worst of it, with more notable dire commentary.

What is the point?

Well, NEC strikes us as interesting, because it is a) performing better b) has a strong balance sheet and buyback c) owns Domain, which is also struggling, but a wonderful company long run, and d) trades very cheaply.

So we think that is a good (but very risky!) trade, although we don’t own it in our flagship funds.

However, the industry wide commentary is suggestive enough – don’t buy domestic cyclicals, there is a real downturn out there.

Advertising gets hit first.

We can see some of the consumer discretionary stocks posting slower and slower sales (today, SuperCheap, but even JBH’s, the best of the bunch by a long shot, confirms a similar point). We can see the general commentary about downshifting to lower priced better value items across the consumer basket.

We know the RBA just hit mortgage holders again.

And so, we own a bit less Australian shares, than normal, have positioned the equity sleeves a bit more defensively (well, AMC or RHC both downgraded, which is very frustrating, given we own them for expressly that purpose) and continue to see value in Australian Government Bonds at current yields (~3.33% for 10s) for the defensive contributions.

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