Morning All,

Well it’s all about BHP. Yesterdays late announcement from the Big Aussie of a profit of over $17bn was overshadowed by the Olympic Dam news..now some commentators have suggested that this is the signal for the end of the boom…well maybe  but the reality is that this was a huge project..To put it in perspective the pit would have been the size of Adelaide’s CBD and the overburden would have taken 5 years to remove…that’s a lot of dirt to get rid of…I remember in The Great Escape they scattered the spoil from their trouser pockets..that would have taken some big trousers! So to commit to this project would have required an enormous leap of faith and very large doo daas…not sure Marius was ever going to pull the trigger on this one…so confirmation whilst disappointing for the SA Government it has nothing to do with MRRT or carbon tax just the uncertain period we are in. Kloppers is right, to proceed now would be to effectively lock in the high Aussie dollar and the high cost of labour for this project forever…it’s just not the right time…I was on TV last night and one of the commentators from a fund said he didn’t own BHP for its yield..He owned it for its growth..well ,where is that going to come from now..that is my question..is it just beholden to World commodity prices or being so big can it dictate prices to some extent itself. It changed the game in Iron Ore but that was a once in a lifetime occurrence perhaps…can it do it again..I am sidelined on this one…the Company would have us believe that it can deploy the cash it generates with better returns to shareholders…so far it hasn’t covered itself in glory with its latest buy and three failed attempts to takeover large assets…Marius is a cautious man unlike his RIO counterparts but for a growth stock, I am not sure they qualify at the moment!!

As to other matters, yesterday we saw that all retail is not bad..Noni B killed them ,Super Cheap also put in a good result and showed the large format stores how to do things ..so as usual it’s a stockmarket and you have to pick your winners carefully.

I feel that after the huge run we have had its time to take a look at where we are…we feel a bit exhausted up here and I feel that at 4400 ish the upside is limited especially as BHP and RIO will not be taking us up anytime soon..

Some good results yesterday and special dividends helped SUN overcome some lacklustre performance..a few big ones today with QAN and FMG dues amongst others.ILU have posted better numbers today whilst IAG  has written down their UK business by 300m bucks ..progressing apparently on turning it around!

Some news out of Zombieland may help with Juncker saying that they may be prepared to give Greece one last chance..come on how many do you need…and news from the Fed was positive and helped the market recover in the US with dovish comments on further stimulus helping things along.

“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.”A change from some members!!

Jackson Hole is looking like the focal point here ..August 31st is crunch time! Then Greece in September!

Things to make me go all strip billiards! !Good one Harry!

1.After drilling 25 wells looking for gas to expand the Pluto liquefied natural gas project, Woodside Petroleum has called a temporary halt to the exploration campaign, leaving investor’s questioning where the company’s next phase of growth will come from

2.Boral chief executive Ross Batstone believes the residential housing outlook is more uncertain than a year ago, as Australia’s biggest building materials group posted a 42% drop in annual net profit

 

3.Auto, leisure and sporting good retailer Super Retail Group has reiterated plans to expand its stores by 142, coinciding with a net profit of $83.5m for 2011-12, a 50% increase on 2010-11

 

4.Looks like Big Nath is trying for an extension on the due diligence process at WHC…ie still can’t raise the money!he certainly knows the assets inside out so it’s not his lack of info that is holding this back..maybe the banks want more guarantees or his horses as collateral!

 

5.Chelsea came from behind to defeat Reading 4-2…Tores!!Who remembers Drogba..nah!

 

6.Despite the mining boom ending according to some due to lower commodity prices ,the price of Gold has been quietly picking up and is back up to 1650 again..one of the few to remain fairly steady in the face of the Chinese slowdown.

 

7.Qantas loses $245m,its first loss since it was privatised 17 years ago…no div either…the Kangaroo has lost its bounce that is for sure!

 

8.David Jones also in the spotlight with quarterly sales drop, and predicts a 40% drop in second half as invests in overhaul!QR National cuts 900 jobs..TLS cuts 650 jobs..the pace of the changing economy is hastening..lucky we have a mining boom ..oh yeah I forgot that’s finished as well!!

 

9.Good results yesterday from Seek..one to watch for a move to 8.00 perhaps.

And finally….

They say animal behaviour can warn you when an earthquake is coming. Like the night before that last earthquake hit, our family dog took the car keys and drove to Arizona. (Bob Hope/Gene Perret)

Clarence

XXX

Any financial product advice contained in this email is general financial product advice only and does not take into account any one person’s objectives, financial situation or needs. Therefore, before acting on any financial product advice in this email, you should consider, with or without the assistance of an independent adviser, the appropriateness of the advice, having regard to your objectives, financial situation and needs.

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