Morning all,

Once again the ‘push me pull you’ US market was beholden to ‘Incidents and accidents, hints and allegations’ coming from both sides of politics. Paul Simon would have been pleased indeed. The market dropped 50 points as one Republican starting speaking only to rally as they realised he was ordering his lunch. Strange days indeed…..in the end though markets rallied so expect another greenday today although may be a little muted given it’s a Friday and no one wants to be too long going into the weekend. Up 15 today I think should do it….banks will be ok and Resources will join in too..RIO strong in UK overnight and no bad news from BHP is good news indeed!

Just to be clear… I believe that the Fiscal Bluff will be settled in the next few weeks..there is not the pressure of an election to cloud their judgements and they know what happened last time..so when it does get sorted the market can move on and things aren’t too bad…as long as you conveniently forget all the problems..but the economies of the World are improving.. a survey on Bloomberg said that it’s in its best shape for 18 months!! US is getting better and China is trending back up..it will never be as good as it was but the base is now so much bigger!

Our market wants to go higher and the industrials are leading the way..especially the dogs..TEN,FXJ ,SWM  and others..avoid the mining services sector where things are slowing down faster than you can say  “BRICKWALL” !!RBA meeting next week where I do not think they will cut rates..they will look at an improving world and keep their powder dry…and let’s face it the RBA rate cut is not worth that much after the banks only pass on a fraction..so they will wait and hope that the rate cuts of the past start to weave their magic!

Idea of the Day

I remain a fan of LYC as they move to actual production and commercial sales next year..I believe that 70 cents is a good entry and gradually the stock overhang from the placement will get chomped through..I am targeting at least 85-90 on the upside in the next few months.

And if you are looking for high yielding mid cap stocks that pay fully franked divs..MOC is a good place to start..quality management and very conservative with a good loan book and a div of around 13c making it 8.2% fully franked..more volatility and the Yellow Brick Road is starting to compete but think this is still a hard one to walk past…

Things to make go all Leveson Inquiry!

1.The Murdoch-owned company News International seriously failed in corporate governance over phone-hacking and James Murdoch’s account of a key event was less credible than that of an executive who told a different story, the Leveson inquiry has found…”What the Hell was going on?”screeches the headline…sure Rupert is shaking in his slippers!

2.BHP chairman Jac Nasser has declined to put a time frame on the company’s search for a new chief executive but believes there is a strong group of internal contenders for the role.

3.The resources investment boom shows signs of faltering faster than expected, complicating the RBA’s plans for an orderly transition to other sources of economic growth. Companies have scaled back their spending plans this financial year to $173bn from $179bn according to the Bureau of Statistics.

4.President Barack Obama and the Republican Mitt Romney, met privately for a lunch at the White House that ended with pledges “to stay in touch.”….Yeah how many times have you heard that and they never call!!!Cept when they are drunk at 2 in the morning!!!

The president’s spokesman said there was no agenda for their discussion over a lunch menu of white turkey chili and southwestern grilled chicken salad…..Wonder if he had an official food taster!

5.Europe’s VIX (their own fear index), meanwhile, closed at 16.49% – its lowest since June 2007!In Space no one can hear you scream!!!

 “We all know what to do, we just don’t know how to get re-elected after we have done it. Jean –Claude Junckers in a rare moment of honesty..this from the head of the Zombie zone who famously said “When it gets serious, you have to lie!”

6.Found this gem on my favourite web site www.zerohedge.com…just shows what is driving this market..dyslexic computer trading programs!!!The Wall Street Journal (WSJ) published this piece….

Whiting Petroleum Corp. explored selling itself [BULLISH buy buy buy] earlier this year but decided not to proceed after buyers balked over the oil producer’s asking price [BEARISH sell sell sell], according to people familiar with the sale efforts.

By the time the algos had read that first sentence of a WSJ Deal Journal blog post, the stock had pumped-and-dumped over 8% in 250 milliseconds – at which point humans entered the party (and sold). Efficient liquidity providers indeed.

7.And while we are on the subject of computers gone mad..here’s a doozy.. We have seen some supposed ‘fat-finger’ trades in the last few days but Stockholm’s stock exchange was brought to its knees yesterday as a record-breaking order hit the book and halted trading for four hours. A 4.3 billion contract buy order in the OMX30 futures (the Swedish equivalent of the Dow futures) caused the fiasco…the order was 130 times the size of Sweden’s GDP!!!

8.In more shocking news about inanimate objects causing major problems ….Actress Lindsay Lohan is under arrest after police say she hit a woman during an argument at a New York City nightclub.

9.RIO Tinto chief executive Tom Albanese was bearish on the outlook for Australia’s coal industry given competition from unconventional gas and coal suppliers in the US, Indonesia and East Africa. Costs in Rio’s Australian coal business were rising.Tom announced that RIO was looking at saving $5bn over the next few tears..music to the markets ears as the stock rallied 5% in London!!

10.Once again the Australian public is treated to the stunningly edifying display from our elected official in Canberra..no wonder we do not respect either side of politics anymore.I have seen better behaviour in a Primary School Playground…and these are our leaders and we look up to them..I don’t think so!!!

And so with that in mind and thanks to (you can call me ) Al…..there Paul Simon again!

A driver is stuck in a traffic jam on the highway outside Canberra and nothing is moving.   Suddenly, a man knocks on the car window. The driver rolls down the window and asks, “What’s going on?”

“Terrorists have kidnapped all the Members of Parliament and they’re asking for a $100 million ransom!  Otherwise, they are going to douse them all in petrol and set them on fire. We are going from car to car collecting donations.”

“How much is everyone giving, on average?” the driver asks.

 

“Roughly 4 to 5 litres.”

 

Have a great weekend and try to endure the heat in Sydney! Third and final test starts ..so long Ricky…you are a great player and will be sorely missed.

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.