Morning all,

 

Overnight news will do nothing to really help us here today with a muted bounce possible, maybe, perhaps.It has not been a good week with the post US election hangover spilling around the Globe. ’Zombieland’ has officially entered a recession with numbers last night also showing worryingly how much the former power house economies of Germany and to a lesser extent France have been affected. Unfortunately when a body has an infection, in this case gangrene, the solution is not try and slow the disease with drugs (money) until it inevitably infects the whole, but to take drastic action and amputate. Shame they missed this opportunity and now the disease is starting to infect the body..harder to amputate!

 

We have been caught in the downdraft and have slipped back into the 4000 -4400 trading range. For one brief moment it looked like oranges and sunshine but unless we get a US debt solution quickly confidence is ebbing away.

 

Talking of the US Fiscal Cliff, it maybe be useful to think of the ways the US Gov spends its money. It has three types of spending..Mandatory(social security and health care etc),Discretionary(Military and foreign aid etc) plus interest on its borrowings..Now the real problem is that even if they cut ALL discretionary spending then the budget will still be in the red….$251bn…so unless they raise taxes the hole keeps getting bigger….the probable sad fact is that the US wars in the past decade have sent them bust!!Lucky for them the rest of the World is happy to fund that Military adventurism with low interest rate loans..but it will not last forever..so maybe the cliff is not a cliff but a BASE jumping opportunity that needs to be embraced and turned to something positive.

 

Expect a modest up day today as a few bargain hunters and short coverers take to the stage..nothing dramatic though and next week we are again hostage to the usual pressures. +/- 5 today…

 

 

Things to make me go all Daniel Craig!

 

 

1.Skyfall opens next week in Australia..can’t wait..I am a Bond tragic I am afraid.

 

2.The Federal Reserve told the 30 largest banks to test whether they could withstand a severe recession in the U.S. and other major economies with weakening housing markets. Meanwhile the head Fed, Uncle Ben has said he will do whatever it takes to ensure housing doesn’t crash and burn again! Well at least support it as best he can.

 

3.Looks like the Israelis and Hamas have taken to enacting Russ from Gladiator as he said “Unleash hell” and they have…more rockets than a fireworks convention ,being lobbed at each other. Surprisingly the Gold price weakened as did Oil…news out that physical demand for the shiny stuff was at its lowest since 2009 didn’t help.

 

4.BP cop the biggest fine ever with $4.5bn for their Gulf of Mexico Oil spill.

 

5. MSB: Mesoblast boss Silviu Itescu called for closer monitoring of algorithmic trading after the company’s shares were pummelled in dealing yesterday morning..he is not the only one….wild ride yesterday in MSB for sure!

 

6. GORGON: Chevron has given early December as the date when it will make an announcement about its review of costs on its $43bn Gorgon LNG project, with some expecting the budget to surge to more than $60bn.

 

7.BBY hosted a Resource conference and of the presentations EVN was one of the most impressive with great management and emerging as a major player. Maybe one to own instead of NCM perhaps.

 

8.And a cheery thought from a doom and gloom newsletter…

 

shows what happened when Lehmans went under as all the collateral that they held for clients was lost or frozen..how is this relevant to today, well Spain has got way more collateral than Lehmans ever had..around a trillion in Sovereign Bond Collateral!!These bonds are collateral for 50 to 100 trillion in other trades!!Let’s hope they don’t go under!!!

 

9. THE economic slowdown in China has forced industrial and media conglomerate Seven Group Holdings to review its Caterpillar business in the region, which is expected to lead to extensive cost cutting to realign expenses with declining revenue.

 

10.And to finish on a more positive note..usually when all the doom and gloom merchants are out and about as talking heads on CNBC and Sky etc is the time when you should start buying a few things…everyone is bullish at the top and bearish at the bottom…not sure we have seen the extreme doomsday scenario merchants just yet but I am sure we will in time…interestingly it was only a week or so ago that reports emerge that Hedge funds were as bullish as they had been for some time!!!So if everyone is long who is going to buy it..it’s like pass the parcel!!!Then you look around and there is no one there!!!

 

And finally….

 

A lady opened her refrigerator and saw a rabbit sitting on one of the shelves.

“What are you doing in there?” she asked.

The rabbit replied: “This is a Westinghouse, isn’t it?”

The lady replied “Yes.”

“Well,” the rabbit said, “I’m westing”. 

 

Back on Sky TV tonight at 5.30!!

Have a great weekend

Clarence

XXXX

 

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.