Good morning,

Last night we saw a bit of optimism creep into markets…news out of China helped sentiment that they would do whatever it takes to continue to grow…well that is good news…unfortunately the Gr8 meeting looks to have come up with more platitudes and weasel words..the French bureaucrats are meeting with the Germans in the next few days and we will see if we get some concrete plans…the truth though is it is NOT up to the bureaucrats and Zombieland Pollies as to whether Greece stays in the Euro but it is the people who will decide..and they get their chance on June 17th…they can bribe and buy the people with incentives but if they vote in the Socialist left then they will take them out of the Euro…the vote is a referendum on their membership….if the Greeks want to know what life will be like in a default scenario this is a good summation…worth a read.. and this on their potential new leader!

Our market had a brighter day yesterday and will have a brighter day today…expect the usual jump on the opening followed by apathy..the sad truth for brokers everywhere is that clients have switched off..they are not interested..volumes are low ,interest is lower unless you get the tap on the shoulder from the margin lender and any bounce is likely to falter…the only people interested are the computer traders who have set the programs to run and then go to lunch..I read a great article on Algo wars last night which I will link here as its very enlightening. The numbers are huge!

So the big question is do you buy now?..one of the well known commentators around suggests you wade in boots and all..but then he said that 10% higher as well whilst I was urging caution..so who you gonna call?

My view remains unchanged despite the Dow rallying…the market will trend sideways to down from here punctuated by strong painful bear rallies which should be sold into..the light at the end of the tunnel may prove to be a ‘Golden Dawn!’ BUT one thing is certain if the Masters of the Universe want to head off the collapse of the Euro zone they will have to print and print often..fiat money will be devalued which can only be good for Gold..I would urge you to reduce risk in rallies ..prepare for the worse, hope for the best! Return of Capital rather than return on Capital is the way to go for the next quarter..I believe that the Northern Summer will prove long, hot and uncomfortable but if we can make it through to September/October then we might be in a better place and would hope for my year-end target of 4700 to be achievable.

If you must buy stocks ..the really bombed out ones like FMG,AGO in the Iron Ore Space and some of the Golds like GRY and AMX may prove fruitful but stay on your toes. I would also caution on diving into mining services companies despite the great result from Campbell Brothers yesterday…their time may have passed..very crowded trade and with all crowded trades when the man shouts ‘fire’ it’s hard to get out of the exit first.

Things to make me go ….???

1.Facebook already disappointing … all the hype is reminiscent of the Myer float and Jen Hawkins…just keep your eye on the personality while we take your money…look over there there’s a guy in a hoodie..genius! DOWN 11% last night! Dislike!

2.Retail continues to do it tough..Retravison in all sorts of problems and Hardly Normal looking to lay off staff  at  their Taren Point Commercial operation..

3.QAN sticks the boot in…500 more jobs to go..

4.Craig Thomson is clearly delusional..phone cloning..I mean really…it’s hard enough to get a signal from Vodafone even when you own the phone! Reminds me of the Bill Clinton defence.

5.As the June elections approach in Greece, every Euro in the land will be stashed under the bed..banks will be in trouble..ATMs will run out.

6.Another Leighton meeting in Sydney …always fun..more losses ..more calming statement..more hope..

7.Some Coal and Iron Ore shipments being cancelled..

8.JP Morgan losses to continue from their Whale of a time!

9.Chinese leader Wen highlighted the importance of adjusting policies to avoid an economic slowdown, raising hopes for further fiscal and monetary easing measures from Beijing.

10.World’s tallest tower opens in Tokyo..634m twice as tall as the Eiffel Tower..Dubai 828m Burj Khalifa is still tallest building.

 

So I hope that helps with your thoughts this morning…there are so many Doomsday scenarios around on the Net at the moment, from so many commentators it is easy to get into the negative mood…I am trying to remain less doom and gloom, I have even stopped listening to Nick Cave and now have Echo and the Bunnymen on my ipod ..may help!!I remain wary and rallies are nature’s way of helping you reduce risk!

 

Thought to leave you with

 

“I said to the Gym instructor “Can you teach me to do the splits?” He said, “How flexible are you?” I said, “I can’t make Tuesdays.”

Clarence

XXX

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