Morning all,

So many big events happening today the stock market will probably get overlooked! We have the Melbourne Cup, RBA rate decision and the US Presidential Election plus the $100m lotto tonight..Not sure which is the biggest event.

For those who are looking to the cup today to increase their wealth I have enclosed Macquarie’s Quant team’s analysis of The Race ..purely for fun…

 

For those of you that are looking at more prosaic matters… I am still of the opinion that the RBA will leave rates unchanged this month…I also think that Obama will get back in albeit with a narrow margin..but I think Sandy has helped him look good…

Our market yesterday shrugged off the weak leads and after a down 20 start rallied to close up 14…WBC numbers helped as did some economic numbers out late morning and volume was none too shabby for a Monday.

The WBC result was the best of the banks and shows that they have focussed on their Australian business whilst ANZ and NAB have been distracted by overseas businesses like Asia and the UK. The sad fact of banking is they are boring businesses with limited growth except from cost cutting and technology change…without a major kick to the economy and credit conditions improving they will trundle along gouging customers and have slick marketing campaigns…they have all performed extraordinarily well this year and so upside may be limited..good yields though and conservative management will ensure they have strong support…

Gold had a good night..well relatively and will be a continued winner if as expected Obama gets back in…don’t forget that China is also changing its leadership this week in a once in a decade change..they don’t vote this one in ,unlike the US although with the turnout figures so low there it’s debateable there too!

Idea of the Day

 

Time to nibble away at those Gold stocks..SLR springs to mind and can be bought slightly cheaper through their takeover of IGR..IGR trades a t a small discount…terms of the takeover are 6.28 IGR =1 SLR…at last nights close IGR is 323 in SLR ..SLR was trading at 3.30…so BUY IGR for a rally in the Gold price as Obama gets the nod by a head!!!

 

Things to make me go all Birdcage today!I wish!

1.The ‘Big Bogan’ seems to be having a few problems with feeding his horses and one of his top blokes has spoken out about the scale of cut backs on feed..not a good look…and…

2.In Whitehaven news..After winning a round against the “Big Bogan” last week, the latest talking point is whether the company’s board could look to a more permanent solution to lessen his influence on the company. Investors may suspect the stock will be subject to a deeply discounted rights issue meant to dilute Tinkler’s 19.4 percent stake in the company. A placement of up to 15 per cent of shares is another possibility. The idea is believed to have been discussed among WHC and its advisers, but it remains uncertain whether the miner would be willing to pull the trigger.

3.The federal government faces a fresh threat to its plan to return the budget to surplus after the High Court agreed on Monday to hear a challenge to the mining tax by the minerals boss Andrew Forrest….now I know everyone is slagging off theBlack swan for not raising any revenue through the new mining tax but I was always under the impression that this was a super profit tax…so if there are no super profits then no tax…simple really!!!

4.UK finance minister George Osborne has joined forces with the German finance minister, Wolfgang Schauble, to announce an international crackdown on tax avoidance by big multinationals, such as eBay and Amazon….rememebr yesterdays piece about the amount of tax Apple pays!!!May not last!!!

5.This one has potentially big ramifications for the poor old ratings agencies..The Federal Court’s Justice Jayne Jagot has accepted the evidence from 12 New South Wales councils – who claimed they had been duped into buying a toxic financial product – that the ratings agency Standard & Poor’s was little more than a lapdog for merchant bankers….. McGraw-Hill Cos. and Moody’s Corp., owners of the two-largest credit rating firms, plummeted after an Australian judge ruled Standard & Poor’s misled investors by giving its highest credit grade to securities whose value plunged during the global financial crisis.

6.Greece is the word as the Troika is still waiting to see if the Greek Pollies can agree on the cuts necessary to ensure the funds keep flowing…their economy is completely stuffed and will never recover..they now have more people living in poverty than Iran…and it will get worse..at some stage they will be forced by the people out of the Zombie currency as it is the only way to get out of this mess is through a massive revaluation of the economy..not that they have one really…

7.Yet another reason to buy TLS as Aussie telcos now slashing the amount of data they have on their plans…less data allowed +better smart phones+4G + addiction =more profit for Telcos…easy equation..if you do not own any TLS you have not been listening to me since 2.80!!!Remain a fan..buy on any weakness..yield is still king!!

8. RIO Tinto has been given a big boost with the finalisation of a long-awaited electricity deal for the company’s most important growth project. The $US6 billion Oyu Tolgoi mine in Mongolia will be powered by a Chinese power company in a deal to import electricity across the border.

And finally…..after my plea yesterday from readers for their best jokes..this one has to be up there..you have to click on the link though as it’s the way its told that is a beauty..thanks to MP for this gem!! http://youtu.be/yHx8y1rFjdk

Have a great Cup day and be lucky

Clarence

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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.