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Morning all,

The new battlefield of World growth appears to be increasingly currencies. It seems that the magic bullet answer to every countries woes on growth and unemployment is to get the local currency down as low as possible thereby stimulating growth in exports. So yesterday we saw the Japanese who are always good at copying and better anything the west can do have a go at their own currency talk down. In raising the inflation target to 2% they have opened the flood gates to cranking up their own printing press. This moves was swiftly matched by the Governor at the Bank of England “Merv the Swerve” announcing that maybe what was good for the goose was also good for the gander and talked about the UK moving the goalposts on its own inflation target. Both moves were significant…The US has been printing money and weakening the dollar for a while now and it seems to be working so everyone else is now going to follow..not to get alarmist but there is a great article by Ambrose Pritchard Evans in the UK press which made it here yesterday and is worth a read..last time this war broke out it ended in tears!!Lots of tears…so here is the link to his article as I say worth a look.

Overnight once again the Dow pushed ahead as it drives relentlessly towards its all time high…the fear index is down at 12.4 and the outlook is sunny and clear with the chance of the occasional thunderstorm receeding.Investor confidence is returning although volumes don’t seem to back that up, German confidence is the best it has been in 2 ½ years and punters seem set on pushing up equities as risk recedes and lack of alternatives add to the fire..the good old FOMO will start to take over soon..that’s Fear of Missing Out!

Expect our market to burst through the breech early before the 4800 level repels the invading index and trim its gains..maybe a shade under 4800 to finish but the trend is up and everyone is keen to buy on a pullback..I still believe we will have a run at 4950 in the next month or so before the Aussie earnings season kicks off…quick look at this chart of our market shows what some have missed out on in the last few months..there’s that FOMO again!!

 

Idea of the Day (Still a Buyer of LYC)

Now readers will know that I have been pushing LYC for some time and to no avail but now someone who actually knows what they are talking about agrees with me as JP Morgan have moved to a Buy in the thing..they point out that commercial sales will be made this quarter and a milestone achieved…think this one has lots of potential if you are after speculative end of the market.

Things to make me go all…..

1.BHP numbers are in and look to be a little underwhelming..no mention of write offs or change in the key to the executive loo so maybe room for some profit taking…

“BHP’s Pilbara operations produced an extra 3 million tonnes in the December quarter compared to the September quarter, but the 42.1 million tonnes attributable to the company was below the 49 million tonnes hoped for by some analysts.”SMH

2.Beyonce faked her Star Spangled banner..who would have guessed a Pop star miming to a backtrack ..unheard of!First scandal of Obama’s new term..there will be more!

3. Former Banca Monte dei Paschi di Siena SpA Chairman Giuseppe Mussari quit as Italy’s top banking lobbyist as scrutiny of the lender’s use of derivatives deepens.

The resignation is effective immediately, he said in a letter posted to the Italian Banking Association today. He leaves as Monte Paschi, where he was chairman from 2006 until April, comes under growing pressure to disclose the extent of losses it faces on derivatives….the Banca Monte dei Paschi is the World’s oldest bank and one of the dumbest I suspect!

Monte Paschi’s former managers signed contracts with Nomura Holdings Inc. (8604) three years ago that will reduce 2012 earnings by 220 million euros ($293 million). Nomura said in a statement Mussari “fully reviewed and approved” the trade.

4. The ABS today releases CPI data for the December quarter at 11.30am. A Bloomberg survey expects the inflation rate to have risen to 2.4 per cent cent over the year, up from 2.0 per cent, but the quarterly rate is expected to have fallen to 0.4 per cent, down from 1.4 per cent during the three months to the end of September.

5. Building products maker Boral has upgraded its forecast for its underlying first-half profit due to cost saving measures and improved trading conditions in the lead-up to Christmas.Boral now expects its net profit for the six months to December 31, excluding one-off items, to be about $52 million, it said today..this comes after sacking 700 last week!..That’s the way to do it!

6.News from the BOE’s “Merv the Swerve” …let the Hunger Games begin!

  • BOE IS READY TO PROVIDE MORE STIMULUS IF NEEDED
  • KING SAYS QE WAS CRUCIAL IN AVOIDING U.K. DEPRESSION
  • KING SAYS U.K. BANKS SOME WAY FROM CONVINCING MARKETS ON SAFETY
  • KING SAYS POUND DROP WAS NEEDED FOR U.K. REBALANCING
  • KING: U.K. 4Q GDP ALMOST CERTAINLY CONSIDERABLY WEAKER THAN 3Q

7. Linc Energy announced that two separately commissioned and independent reports from DeGolyer and MacNaughton (D&M) and Gustavson have confirmed the significant resource potential of the three formations of the Arckaringa Basin (the Stuart Range, Boorthanna and Pre-Permian). The unrisked prospective resources for unconventional reservoirs in the Arckaringa Basin have been estimated by Gustavson to be 233 billion barrels of oil equivalent (233 BBOE) and by D&M to be 103 billion barrels oil equivalent…this one will go higher too!

8.With the current Masters of the Universe all meeting in Davos, I have enclosed a behind the scenes look at what really happens there..The Davos Diary

9. Google Inc. (GOOG), owner of the world’s largest search engine, reported profit that topped analysts’ projections as advertisers boosted spending to reach consumers during an extended holiday shopping season. Fourth-quarter profit, excluding certain items, rose to $10.65 a share, Google said in a statement. Analysts had projected per-share earnings of $10.50.

 

10.Ex Allco Chief David Coe has died in Aspen from a heart attack..sad news at only 58..makes a man think…

 

And finally………….

A man goes to the doctor and says: ‘Doctor, there’s a piece of lettuce sticking out of my bottom.’ The doctor asks him to drop his trousers and examines him.

The man asks: ‘Is it serious, doctor?’ and the doctor replies: ‘I’m sorry to tell you, but this is just the tip of the iceberg.’

 

Have a great day

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.