Auf Wiedersehen Pet,

As the Germans start to get sucked into the Club Med vortex,the voters have shown their displeasure with ‘Moaning Mertle’. Her disastrous showing in the local election polls is a sign of what’s to come for herr in 2013…the great Euro experiment looks to be heading towards a critical moment and the end game does not look good….if Greece does leave then it will be ugly…in order to be more austere the Greeks have stopped production of Houmous and Taramasalata..apparently they are trying to avoid a double dip recession!

The equity markets around the World are set to head lower..there is no doubt…I have been banging on about this for a while now and although we are not in the same boat as other Global economies we are not immune especially as China slows…I feel that we will see 95 cents on the dollar and 4150 on the SPI maybe even 4000 before we get some stability..the sad fact is that stocks are fully valued..it’s been hard to find anything really cheap for a while and the research from others has so many holds its like a mixed sex WWF bout…with all the experts saying the best they can come up with is a hold that’s not a great reason to pile in..unfortunately for us brokers it’s going to be a quiet winter in Australia…for investors you have two choices 1.Batten down the hatches and see this storm out or 2.start bailing…if you have been following my advice for the last few weeks you will have liberated some cash which is a good thing..there will be a time to buy cheap stocks but it’s not yet…so keep your powder dry or get some powder in your keg…

Expect to see the RBA play catch up on rate cuts and the currency respond accordingly..as we head into end of financial year there will be tax loss selling to come as well…in fact it all looks unsurprisingly gloomy and very similar to 2011…history has a habit of repeating itself…

The only bright spot in our market appears to be the high yielding industrial stocks like TLS and the banks..this will continue…TLS is a good place to hide ..although I would be a seller though in the high 3.60’s to move to some cash…ANZ and WBC have now gone ex div with NAB at the end of the month…so if looking for the 3 divs in 13 months routine NAB is the one to look at…

Things to make me go mm!!

1.Greece-we are moving on now to who is going to pay for the funeral!!

2.US stimulus runs out on June 30..things might get a little soggy after that…

3.Hundreds of jobs lost at Rail Corp as Gladys wields the knife..yet more full time jobs being lost..unemployment at 4.9%..JOKE!

4.Italian Banks get their ratings cut to Gnocchi!It’s all Bolognese to me!

5.VIX(fear Index) remember we talked about this was up 10% last night to 22..IT WILL  GO TO 25!

6.European GDP numbers tonight will confirm the worse….this is going to get worse before it gets worse!

7.Those that say Greece doesn’t matter are wrong..everything is connected to everything these days. And if they don’t have a Government by Thursday it’s back to the Poles..and I’m not sure if they have any money either!!!

8.UK Govt borrowing rates below 1.9% for first time since markets began 300 years ago!!!!

9.PIMCO sees China growth at 13 year low!

10.Calfornia which is the World’s ninth biggest economy now has a $16bn deficit and is calling for a four day working week…they have lost 1m jobs since the recession hit!!Schools about to be hit with big spending cuts.

Nothing very optimistic to say I am afraid…sorry…

Enjoy the day!

Some years ago a small rural town in Italy twinned with a similar town in Greece.

The Mayor of the Greek town visited the Italian town. When he saw the palatial mansion belonging to the Italian mayor he wondered how he could afford such a house. The Italian said; “You see that bridge over there? The EU gave us a grant to build a two-lane bridge, but by building a single lane bridge with traffic lights at either end, this house could be built”. 

The following year the Italian visited the Greek town. He was simply amazed at the Greek Mayor’s house, gold taps, marble floors, it was marvellous. When he asked how this could be afforded the Greek said; “You see that bridge over there?”

The Italian replied; “No.”

Clarence

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