Good morning,

Optimism on Greek debt accord will help our market today ,plus the 100 point rise on the Dow on Friday. Better corporate results are driving the Dow higher and we should get dragged along on its coat tails. However the VIX has now fallen to 18.5 overnight. For those of you who follow this rant you will know that the VIX is a measure of fear ..or option premium that investors are willing to if you like..when it is low it means complacency has built up and usually predicates a large move..not always to the downside but the VIX around 17/18 is setting off some alarm bells with me. Time to be a little cautious despite seemingly good news out of Greece.. Plenty of event risk looms this week on both sides of the Atlantic, with Eurozone finance ministers meeting on Monday, the FOMC decision on Wednesday and US Q4 GDP on Friday.

So where does the market go..I continue to feel that we will be squeezed higher towards 4300 and maybe even 4350 in the next few weeks as we head into reporting season here..barring any disasters overseas that is very achievable..the large cap and bombed out will do well..BHP/RIO leading the way..I spoke on Friday on TV about the joys of Sims Metals(SGM) and further upside to come..also I like the turnaround that is happening in RSG around 2.00..

The SPI was down 6 so don’t expect too much today especially with a lot of Asia closed for New Year celebrations..the year of the Dragon is supposed to bring the promise of change also it is good for economics..fingers crossed.

US elections looking interesting..but what sort of names are Mitt and Newt….the sad fact is they are both talking the same talk and it will be hard for them to beat Obama this year.US election years have been good for markets overall.

PPI to be released today with the economist(astrologists) guessing for a easing to 0.4% from 0.6% but to have risen yoy to 3% from 2.7%.CPI on Wednesday…also heard a report on the news today that we are now in a three speed economy!!!WA out front then Victoria and ACT with the rest following up the rear..layoffs in financial services in Sydney will start to bite as we head into the new year…not good for discretionary spending or CBD restaurants and bars!!

Quiet day with bias to the upside to continue..

Gōng xǐ fā cái, hóng bāo ná lái—Means Happy New Year now give me a Red Envelope!!


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