Good morning,

It’s hard to believe that the Euro Zone debt crisis is now been going on for two years. After all this time they have achieved so much! No really they have..complete inertia is a great achievement. Although last night the French and the Germans under ‘Teacozy’ and the ‘Moaning Mertle’ have come up with a plan so cunning only Goldman Sachs will be able to help. After their stunning success with the Greek economy, they will now get their chance to weave their magic on the other members of the Euro state..They should be really happy..fiscal responsibility or else is the mantra from Brussels..oh and of course yet another summit..beginning to look like the Himalaya region!

NEWS FLASH-S&P puts 15 Euro Nations on watch for downgrades!

However our market continues to look ok..the RBA WILL CUT RATES this afternoon and that could be a further catalyst..pushing us up towards 4400..where it will look a little toppy. A quick look at the chart below will tell you all you need to know.


If it can break through the 4400 level we may see a push towards 4600 but that may be hard to achieve now..we will see.

Good to see TLS pushing up to that 3.23 level yesterday for all you believers!

As rates come down around the globe those fully franked yields in Australia will look awfully attractive..Banks TLS etc will all continue to find support..I have also enclosed some research on TGA (Thorn Group ) which I continue to like as a safer haven!

Expect another quiet day as we await the RBA this afternoon and the positive vibe from overseas evaporates in the wake of the S&P news..pretty soon there will be no AAA rated anything in the World to invest in..unless you pay the agencies a lot of money that is..

I am enclosing a brief lesson on Euro Economics for those interested..enjoy

It is a slow day in a little Greek Village.

The rain is beating down and the streets are deserted.

Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna.

The tavern owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the bailout package works.

Thanks for that lesson Peter!



BLY: Major Drilling Result



RBA Interest Rate Announcement

US ISM Non-Manfufacturing (Survey: 53,9, Actual: 52.0)
US Factory Orders (Survey: -0.3%, Actual: -0.4%)