Morning,

Well I was a little too bearish yesterday as we put on a good 40 points in light Monday trade. Strange that we can rally when Wall Street is on holiday, still last night ‘Zombieland’ was once again dominated by Spain and its latest bank bailout…the Spanish PM added to the negativity with his words or warning.. ‘Spain cannot afford to let a single bank or regional government collapse as that would bring the entire country to its knees’..remember the loose lips sink ships ,well this may qualify…Greek Polls show that the pro austerity and bailout party is ahead so maybe they can stay in the gang but they are still broke..that doesn’t change anything I am afraid.

 

The gap on Spanish 10 year bonds and German ones is pretty scary..and rising…

 

Not looking good on that differential

The rally in the market was a short sharp bear covering rally as they tend to be in these conditions…remember I believe that rallies should be sold into to de-risk…I know there are some out there that are getting very bullish about a sharp recovery(you know who you are!) and the fact that equities are so cheap..well they are cheap but I suspect they may get a bit cheaper..if you are a believer in a positive outcome in Europe you should be loading up at the moment ..if not then you should be selling the rallies..I am NOT expecting anything positive out of Europe..I continue to be pessimistic about Greece ,Spain and Italy..they have had two years to fix this and nothing has been done…except pain and suffering…it will not change..and although Twiggy thinks ‘Zombieland’ is irrelevant, he is wrong..I respect him immensely for his achievements but this he has got wrong!

 

The only stocks that I would look at seriously are high yielding things like the banks and TLS..NAB, ex div 31st so 3 dividends in 13 months and all franked…not too shabby.

There are a number of small stocks that are catching my eye but it’s hard in this environment..they are very illiquid and forced selling can take them down..there are opportunities however but you have to be disciplined on price and also be patient on exit…I continue to like Shale stocks and would recommend punters look at NSE and OBL as BRU’s younger brothers..I also like CDT as a graphite play and of course Gold and feel that at some stage it will start to improve and take  the gold shares with them.. WPL are having investor days and Pluto looks to be delivering sooner than expected so that’s a positive…

 

Things that make me go…

1.Egyptian elections –only 46% turnout-why have an Arab spring and then not bother showing up…voting is easier than fighting surely..

2.Hastie Group shows what happens when you have incompetent management and willing investment bankers..the moral is avoid companies that go on acquisition sprees(ABC Learning etc) and have Deloittes as auditors..asleep at the wheel yet again..and where is ASIC…

3.Gillard creeps up in the polls..everyone hates Abbott and Lara Bingle…what’s not to like with Lara?

4.More high profile restaurants go bust..more building companies suffering..mining costs rising…booming economy ..tell that to Hastie employees..

5.Gina buys more Fairfax and has a go at Roger Corbett…I used to love him on TV with Ronnie Barker…you have the money just bid for the company already..about two days work!!

6.According to the news this morning,1 in 10 Australians believes that the World will end this year as the Mayans predicted..December 21st is the date..those retailers are going to miss out again..Gerry won’t be happy!

7.I remain convinced the RBA will lower rates again next week…they need to pull the East Coast out of its death spiral before lasting damage is done.

8.Reports that Sino Iron is paying its Chinese workers half the rate of Aussies is interesting, no wonder Gina wants to import 1700 foreign workers..

9.Tony Blair tells inquiry what we all know…Rupert Murdoch is pretty key to success in politics..don’t upset him if you want to win!!

10.Japanese employment numbers worse than expected.

11.UK backs down over Pastie tax..if they are cooling down they do not attract VAT..only flies!

 

Thought for the day

Spain replaces extend and pretend with delay and pray..good strategy!!

Clarence

XXX

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