Good Morning,

‘Quelle surprise, mon dieu et il est merde’ …France was downgraded after the market closed on Friday from AAA to AA+…the only ones who didn’t see this coming of course were the French but it’s hard to see how France could remain AAA when the US was downgraded months ago…Germany remains steadfast at AAA as does UK…not for too much longer if the Frenchies have their way .

The markets were bombarded with the fallout from this downgrade but the interesting thing is the bond auction went off very well last week and we will see more of the same this week with Germany selling 2 year money and France, Portugal and Spain all looking to tap the markets. Lots of other economic news out this week with the US closed for Martin Luther King Day on Monday. Chinese GDP and industrial production tomorrow are expected to show growth of 8.7 per cent and 12.3 per cent respectively, which is certainly slower than what we’ve seen over recent times but is robust growth nonetheless.

Our market will be under a small amount of pressure this morning but it will be quiet again..the SPI was down 17 points. Looks like the ACCC is dragging its heels again with the AUN takeover according to the Fin Review..TLS has pulled back from that 3.40 level as I suggested last week and is now getting into buy territory again.

LEI has this morning upgraded its forecast which is a nice change but may not help the rest of the market..QBE(research enclosed but personally I would wait for a few more weeks til the dust settles) surprised the markets on Thursday and that will continue to be a negative for stocks..In the insurance space no one can hear you scream!

The Euro issues will be front and centre with Greece default looming it’s hard to get bullish yet…

I spent a large part of Friday dangling at the end of a rope abseiling down waterfalls with my son..it does put things into perspective a little as to what is important..the rope!!!The ‘Zombieland’ Bureaucrats must learn this lesson too..the lifeline is everything..after that it’s all noise..without the rope you just fall to Earth ..how long it takes is dependent on the height but fall you must!

Enjoy the day!

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