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Morning all,

As I was saying last week there are a few things in life that are certainties…Death, Taxes and the Dow going to an all-time high. Well it’s getting there..very close as earnings continue to be better than expected..admittedly expectations were not great, so not that hard to beat and even when you don’t beat them like Amazon, it seems to be irrelevant. So what is going on out there…simple word..CONFIDENCE…confidence that Zombieland is improving, confidence  that the US will not default and is on the rise, confidence that China is turning back up and confidence that Japan has a new printing press..confidence is a magic ingredient to any equity market and the confidence that interest rates are low and staying low across the Globe is the reason for all this confidence. It’s infectious too..just as doom and gloom have a life of their own when the talking heads on CNBC and Sky talk about the end of the World ,people listen…it’s turned and equity markets have responded…analysts are rushing now to upgrade their numbers as their pessimism is turned into optimism.

Yesterday surprised me I must say as I was calling for a mildly positive day, not the whoosh out of the blocks that occurred…it’s the banks stupid!!While confidence is returning investors are still looking for a the defensive way to get their money working for them and the banks and TLS fit the bill nicely..it’s a crowded trade though and everyone wants in..I find its always wise to leave the party early though and leave the mess for the late comers to clear up ..so at some point this Banks/TLS trade will be over and time to leave but not just yet…TLS have $5.00 in their sights, our analyst has even upgraded his price target and recommendation to over $5 (figures next Thursday)…so must be true!

My target since I started writing this year has been 4950 by March I thought..well at this rate it will be there by Friday!!!we need a pullback…but ……..

 

Idea of the Day     KAR Buy

KAR-Kangaroo 1 drill hole has intersected a 25m column of oil after drilling to just over 3000m.BUT importantly this discovery, although not huge, did intersect the Eocene sands play which does de risk the other two wells in this program..the other two wells start in late Feb and then May /June..should be an interesting year for KAR and expect to see more upside…this one is a buy for a move over the next twelve months to 9.00 on success in this drilling program..of course if no success then not so flash but nothing ventured ..nothing gained as they say..of course banks are safe and still are attractive!!But the easy money has been made I suspect!

Things to make me go all Karmic!!

1.Eddie Groves goes bankrupt…how the mighty have fallen, as has Nick Curtis’s son Oliver, who is being done for insider trading… whereas Macquarie have been pinged by ASIC for compliance issues on their Private Client side!

2.In other great success stories Amazon reported after hours in the US… the world’s largest Internet retailer, reported fourth-quarter sales that rose 22 percent as more shoppers turned to its broad product selection and speedy shipping for holiday gifts. Amazingly the company workforce increased from 56,000 to 88,000 in a year and they still don’t make a profit..although valued at $117bn..whereas Apple which makes squillions is valued at $430bn..I know which one I would rather own but hey that’s me..

3.In commodity news the amount of Gold holdings in exchange-traded products are poised for the biggest monthly decline in more than a year as global economic recovery curbed demand for the metal.

Assets contracted 0.8 percent so far in January, the largest decrease since December 2011, according to data compiled by Bloomberg. The holdings, which reached a record in December, dropped to a two-month low of 2,610.272 metric tons yesterday.

4.Who is the most miserable country in the World….on this measure its Spain..6m people can’t be wrong!!

Misery Index (1)

5.Seen this before recently.. Anglo American Plc (AAL) will write down $4 billion from the value of its Minas-Rio iron-ore project in Brazil and raise spending for a sixth time after prior blowouts forced Chief Executive Officer Cynthia Carroll to quit.

6.Back in December I talked about buying IZZ an Exchange Traded fund which replicates the Chinese market…well since then China’s stocks have risen, sending the benchmark index into a bull market, on optimism over the outlook for the nation’s economy. Financial and energy shares led gains.The Shanghai Composite Index climbed 0.5 percent to2,358.98 at the close, extending its advance since Dec. 3 to 20 percent, a threshold signaling a bull market to some investorsThe CSI 300 Index advanced 0.9 percent to 2,675.87 and is up 27 percent since Dec. 3.IZZ have risen from 3600 to 4000..none too shabby..ETFs are a good way to play other markets and commodities sometimes.

7. Insurance Council of Australia declared a catastrophe for parts of Queensland on Jan. 27. SUN fell as much as 4.9% yesterday before paring drop to 1.9%; the company said it received ~4,500 claims related to Oswald. IAG yesterday said it got 2,000 claims as a result of Oswald-related flooding; too soon to estimate cost. QBE yesterday said it had ~700 claims from Australian floods; expects claims to be “well below” those experienced after 2011 floods. Aurizon yesterday said Gladstone coal rail lines may be shut up to 10 days; unable to fully assess some locations because rail line is still under water.

8.Bank of Queensland: FY11 net income fell 13% on bad debts driven by one-off commercial deals, economic conditions, and “extreme weather events” of early 2011.

9. Billabong: sources have suggested that the pre-Christmas downgrade is looming large over the due diligence process. Altamont Capital Partners and VF Corp, lobbed a $1.10-a-share cash offer for Billabong on January 14….in every bid there is a moment when the poo hits the fan and the shares get the shakes as the hedge funds exit stage left pursued by a bear..this could be that moment but we shall see.

10. Wesfarmers has lifted sales in all its retail businesses in the first half of the financial year, with the strongest growth coming from Coles and Bunnings.Sales at Coles in the six months to December 31 were $18.3 billion, up 4.7 per cent from the same period in the previous year.Sales at Bunnings and Office Works in the six months to December were $4.7 billion, up 4.9 per cent from the previous corresponding period.

And finally…one for the grey haired amongst us..

A little silver-haired lady calls her neighbour and says, “Please come over here and help me. I have a killer jigsaw puzzle, and I can’t figure out how to get started.”

Her neighbour asks, “What is it supposed to be when it’s finished?”

The little silver haired lady says, “According to the picture on the box, it’s a rooster.”

Her neighbour decides to go over and help with the puzzle.

She lets him in and shows him where she has the puzzle spread all over the table. He studies the pieces for a moment, then looks at the box, then turns to her and says,

“First of all, no matter what we do, we’re not going to be able to assemble these pieces into anything resembling a rooster.”

He takes her hand and says, “Secondly, I want you to relax. Let’s have a nice cup of tea, and then,” he said with a deep sigh …………

“Let’s put all the Corn Flakes back in the box.”

 

Have a good 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.