Morning all,

Another lacklustre night overseas so once again as ‘Zombieland’ holidays we are left to our own devices. That’s not a bad thing by any means. The highlight yesterday was the dominance of the CBA figure which was another record. I heard the CEO Ian Nareev trying to justify the result as it seemed obscene to not pass on rate cuts and cry poor when once again they have made a record profit. I see nothing bad in this at all, thank heavens that these guys have not gone down the same route as their US,UK or Euro cousins…making a great profit is not something we should be criticising..these guys have done a great job and transformed the banking environment with their technological advantage. That’s why they are the most expensive bank. It’s hard to get too excited about them up here though with the p/e of nearly 12 and a yield around 6.3%.They have had their run and growth still looks elusive once you have finished cost cutting. You can only do that for so long. However the downside is limited and the stock is only 10% off its all time high so the bears on the banking sector are being proved wrong..I have for a  long time liked this sector both for its defensive nature and its great fully franked yield..I remain a fan and would continue to hold but the upside is probably a little limited until we get a bit more confidence in the economy..

 

 

We saw a rotation yesterday back into defensives with TLS the focus as the Dividend nears but as we saw with RIO the stock tends to lose more than the dividend so be prepared for any short term weakness.

 

Results came thick and fast yesterday with some thick and some fast…Simms Metal was certainly thick and OZL was almost definitely fast! Both were walloped on disappointing numbers ,outlook and write downs..straight to the naughty corner for these bad boys..and there they will stay for some time I suspect..some bounce is likely in the next few days but from where that is the question! Best to avoid or sell the rally if you are a holder.

 

Good numbers from Westfield and Primary Healthcare helped again with defensive stocks..healthcare is a good place to be defensive in.

 

More results today with the ASX reporting.. it posted its ‘first decline in annual profit since 2009 after the company lost its monopoly and Europe’s debt crisis sapped trading appetite.

Net income in the 12 months to June 30 dropped 3.7 per cent to $339.2 million from $352.3 million a year earlier, the Sydney-based company said in a statement today. ASX was expected to report profit of $342.4 million, according to the average of nine analysts’ estimates compiled by Bloomberg’

 

Brambles reported this morning as well..

 

‘Pallet and logistics company Brambles’ full-year profit is up 21 per cent and the company expects continued revenue growth in the year ahead.

Brambles today posted a net profit for the year to June 30 of $US576.3 million, up from $US475.3 million ($A551 million, up from $A454 million) the previous year.’

 

 

I still think we are going to be pushed higher but the risk trades in the resources need to get moving..despite my friend Charlie Aitken’s call to arms for the next bull market I still remain underwhelmed by the market generally and feel that we are still range bound..4000-4400 ..until we get better news from Zombieland.

 

Things to make me go all….

 

1.US volumes were anaemic again as the Dow lost 7 points.

2.News from the ‘Zombiezone’ was mixed with the economy shrinking ,Hungary falling into recession,Czech Republic continued to contract whilst Spaish banks borrowed a record amount from the ECB.

3.I got a bit confused last night when I saw an announcement from the ECB on Petersen’s career…thought  they had a new man at the helm until I realised that it was the English Cricket Board.

4. The Japanese economy grew at a weaker-than-expected annualized pace of 1.4% in the April-June quarter, as exports slowed and a domestic-demand led recovery showed signs of faltering .

5.Greece had a successful bond auction as their bankers said that 20% of all domestic loans are non performing!

6.The Star high rollers room remains a smokers paradise after NSW Government gave them an exemption from new smoking in public places laws.

7. China Premier Wen: downward pressure on economy still big, will last for a while.

8. ‘CBA shed more than 1200 staff on the way to posting a record annual profit of more than $7bn as the bank turned to cost cutting to counter slower growth’

9.UK about to go to war with Ecuador as reports that it has raided its embassy in London..all to get Julian Assange off to Sweden…this will be interesting..embassies are sancrosanct and I still remember the Lethal weapon line..of “Diplomatic Immunity..so who’s the …now”

10.AMP reported this morning and increased the dividend above expectations as the integration of AXA looks like it is progressing well…

And finally  a UK newspaper has had to issue a retraction for naming Rowan Atkinson as ArchBishop of Canterbury rather than Rowan Williams…I know which one I would prefer… I am off to an oil and gas symposium today so should have lots to talk about tomorrow.

 

Clarence

XXX

 

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