Good morning,

Last night the spectre of Spanish/Italian bailouts stalked the markets as the Italian and Spanish bond auctions were not pretty.

 

  Spanish 10-year bonds dropped for a fourth day, sending the yield 23 basis points higher to 5.99 per cent, the most since December 12.

  Germany’s 10-year yield fell 10 basis points to 1.64 per cent, approaching its all-time low of 1.636 percent set on September 23.

  Italy’s 10-year yield climbed 21 basis points to 5.66 per cent

 

European markets were smashed and the Dow got clobbered as well. I wrote just before Easter that the first quarter gains were going to be hard to replicate and it would get harder from here..well it has..somewhat sooner than I thought but the next quarter is going to be one of consolidation and worries about Europe resurfacing. The problem that Europe has are not going away..the issue is with all the austerity measures now really starting to bite, how do they get any growth or income from a rapidly declining work force and economy. Unemployment is massively high and rising and they is no way out for these guys..Spanish property is in free fall and the construction industry for all those shiny white villas that they sell to Germans and English punters is trashed. I expect as the weather warms up in the Northern Hemisphere then we will see mass protests and civil disobedience taking centre stage..as Peter Finch once said..”We’re mad as hell and we’re not going to take it anymore!”

So how does that leave the Aussie market..well I think we have seen the high for a while..4370 on the SPI is the top and 4150 is probably the bottom for the time being..we are likely to outperform on the downside ie. not fall as much..mainly because we have not gone up as much as other markets so that’s some consolation..but we will fall..SPI down 55 today so it will not be much fun..

US company reports will start to come thick and fast and the first surprise is Alcoa which is usually a shocker was surprisingly good this time out (analyst got that wrong)…won’t help much but Apple continues to soar!VIX (fear Index )also keeps its run intact as it has risen from 15 to 20.4 in the last eight days…whenever the index gets down to 15/17 the market is a sell..will probably get to 25 before buyers appear again..

Things that caught my eye

1.Gunns is looking to change its name..not sure how that helps ..maybe could be called ‘Blanks’.

2.Rick Santorum has quit the race leaving Mitt Romney the man to beat Obama.

3.WPL defers its decision on James Price Point ..one step closer to selling its Browse stake perhaps.

4.Gold is looking like a safe haven again and picking up some fans.

5.Aussie dollar heading for parity which will help a little. Copper got smacked too last night.

6.RBA WILL cut rates…they have no excuses left especially if ‘Zombieland’ starts to implode again..

7.Apple hits $600bn market cap..Facebook is officially mad..paying $1bn for a photo app is just dumb..sorry Mark..you have now lost me! It’s a bit like buying the house next door for a huge price to revalue your own..does that work..I think not!!

8.Bankruptcy boom in Western Suburbs.(any Westren Suburbs!Any city!)

9.Nathan Tinkler is a complete pudden..And thats putting it mildly!!

10.China is slowing and trade deficit points to that, plus inflation especially in food is rising again..so the powers that be need to act. Senior party member’s wife suspected of knocking off Brit!

Hold tight today as its going to be a rough ride..yesterday was very quiet with no real interest(3bn turnover is pathetic)..suspect we will open down 50, try to rally then give up and stay where we are and wait for more overseas news..budget is approaching, Mining tax is approaching, Carbon tax is approaching..oncoming big train is approaching..don’t get caught standing on the railway lines looking at the pretty lights. IT’S THE TRAIN!

Clarence

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