Good morning,

Once again troubles in Southern Europe dominated proceedings with new doubts over the Greek package…the sad fact is the Europeans don’t want to keep pouring water into the sand and the money they will spend on another Greek rescue will be wasted..they will always need to be rescued..the muddle through option is the best case outcome and default the worse..I am now in the default camp..

Our market rallied yesterday as the Chinese said they would be willing to lend more help to Europe! Good for them I say…anyway our market will come under a little pressure this morning but news that Private equity is lobbing a bid for BBG will be welcomed..I mentioned this possibilities back on 24th January with a note from our research partners at Morningstar..well looks like it has come to pass………also the CBA press was mainly positive and shows just what can be achieved with a motivated staff and good strategy..let the other banks take notice..nothing de-motivates that large scale job cuts..QAN look to be yet another company to be weighing in with large scale job cuts…employment figures out today will be interesting..I would expect a bad number and the RBA to have to jump back on the rate cut band wagon.

Hybrids are coming thick and fast at the moment, as clients you would have received information regarding TAH Hybrids and ANZ as well…this is sucking a lot of the money out of the markets at the moment and is attractive for investors looking for yield and more safety than ordinary shares..may be worth having a read of our special notes on these instruments as they can be quite suitable for investors who have money in deposit accounts. Of course, the more money that Hybrids suck out the less there is available to invest in Equities and thus we struggle to go higher..

Results season has been ok and yesterday Westfield surprised with buybacks, US deals and good numbers..shares rallied whereas FMG fell after highlighting the cost blowout that is occurring all over the Pilbara and other mining regions..I have enclosed a research report suggesting it’s time to reduce in FMG..I agree wholeheartedly!!

For followers of the AUN takeover, I have always been a believer in this proceeding and we look as if we are getting towards the pointy end of this deal and I STILL BELIEVE THAT THE DEAL WILL GO THROUGH! Buy at 1.26 for a 1.52 takeout price..

WBC profit number was another whopper at 1.5bn but says conditions are challenging and has fallen short of analyst’s estimates…probably will slip a little.

I have also enclosed a report on Carsales.com..it’s the major car sales suite of web sites in Australia..worth a read..worth a look and if you like whats happening in the web space this should be on your list!

The market will drop back today and that’s a good thing as it presents opportunities…

Results season to continue..and economic numbers today..we should ease 25 -30 points I suspect.

Have a good day

Clarence

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