Morning all,

Risk is back and with a vengeance! I was doing Sky Biz this morning at some ungodly hour ,the Dow was calmly down 60 points on fears on the Italian Election and although a little weaker there was a calm about it. Of course this was not going to last as the realisation of what a new ‘Bunga Bunga’ resurrection will mean, became a reality. The Dow closed down 216 with the computers having a field day in the last minutes of the session .Fear is back and stalking the corridors of the hedge funds. Even the jolly old VIX had a 36% gain!!The VIX you will remember is the fear index or how much people are prepared to pay for option protection..

It defies belief that the Italian people can really vote for Bungasconi but they have, that and the Monster Raving Looney party, I guess it just goes to show how the austerity measures are viewed over there. So going forward Zombieland appears to be back on the agenda…there are of course a number of other issues clouding the big picture at the moment. The US Debt is now $16.6trillion …and on March 1^st there are a raft of budget cuts hitting the States and unless there is some solution then the US economy will slow its tepid recovery further and then of course we have Uncle Ben trying to wean the markets off the drug ‘Stimulus’ and its highly addictive QEIII effect…at some stage in the future Uncle Ben will have to get the US into Rehab as there seems little chance the politicians will be able to go there voluntarily..no Betty Ford for them..and with any Rehab it could get ugly…ask Charlie Sheen!!

Anyway after such a great run in the markets and in financials especially here there will be some profit taking from the fast money. I do not think that the theme and strategy has changed the high yield quality companies are still the way to go but maybe they have got a little ahead of themselves and a pullback is healthy..I would expect to see our market pull back to 4900 in the next few sessions as the risk appetite wanes faster than you can say sequestration!

So for all those investors who have missed the party, patience is required as things will calm down and prices will come back to a more sustainable level..the FOMO(fear of missing out ) is ‘strong in this one Luke ‘,but you will get your chance.

I expect to see a short sharp reaction to the present risks and then it will be back to SOP as the Central banks continue to pump in liquidity hoping that the warm and fuzzy feeling from higher capital markets will translate into jobs and growth..nice plan…hope there is more to it than that but suspect not!!

Idea of the Day

What to do in times of trouble?

Firstly investors tend to stick to defensives but they have run so far SO don’t be in a hurry…they will be underpinned by those that missed out but you have to ask yourself if there is still upside left in these babies at these exalted prices…the easy money has been made…NAB at 30 bucks ,CBA at 66 WBC at 30 and ANZ at 28.50…now it was not that long ago you could buy all the banks for around 100 bucks and BHP and RIO plus FMG for 100 bucks…really…now its $154.50 and $103 respectively…the banks are a standout for profit taking I reckon..they led us up and now they will bear the full brunt of the panic!!However they are still worth looking at when and if they come back..the yield is the thing and the security but if you had bought the $100m package you would be up 54% on capital alone..and there are at least three or four dividends in there as well..not too shabby..

So for those investors that have missed out the next few weeks could be a good chance to start picking up a few things..let’s face it we are all kicking ourselves that we didn’t go all in on Aussie Banks…but hindsight is a wonderful thing..

So patience Grasshopper…it’s time to be a little less gung ho with your buying !At least for now…

 

Things to make me go all Sequestration.

1.Finally a good night for Gold ,remember this one…nobody loves poor old Gold anymore as it does not pay a dividend but after rumours of the infamous death cross on the charts it is back..nice to see you my old friend!

2.Fall out from UKs credit downgrade continues as the Pound slide continues…

3.Julia Gillard to start her re-election campaign in the Western Suburbs..Rooty Hill..sums it up really!

4.Good to see TEN igniting the Sports bidding war..of course they cannot afford it but will make it harder for their rivals…Nine has first right of refusal for the Cricket at the highest price..that could be interesting…looks like an ebay auction to me!

5.The Full Monti has addressed his people..not elected the first time and now not elected the second time..Goldman Sachs must be worried that their grip on Zombieland is fading..Merkel is just worried that she is going to have her bottom pinched by Silvio again!!

6. It may come as a surprise to some, but the largest single party in the Italian Chamber as a result of today’s elections, when stripping away all alliance partners, is none other than Beppe Grillo’s Movimento 5 Stelle (monster Raving Looney Party). With 25.53% of the votes (96.44% of the vote counted)…a vote for a significant change I daresay!!!

7.Bank of Japan Governor due to be announced very shorty…looks like they are going to follow the US model with their own QE…20 perhaps..expect the Tokyop Stock market to take a bit of a shellacking today!

8.Shock of the day..Horsemeat found in Ikea meatballs!!Anyone surprised ..nah!

Few Results out this morning-

Flight Centre has reported a net profit of $91.8 million for the six months to December, a 13 per cent increase from the previous corresponding period, as the company set sales and profit records. The travel company declared a fully-franked interim dividend of 46 cents per share.The firm said its growth outlook for the 2012/13 financial year was marginally ahead of targets, and that it would continue to aim for profit before tax of $305 million to $315 million, with the largest profit months ahead.

Ramsay Health Care has reported a net profit of $138.4 million, a 10.1 per cent increase from the previous corresponding period, as it extended its chief executive Christopher Rex’s contract for three years. Australia’s largest private hospital owner and operator declared a fully franked interim dividend of 29 cents per share.

And finally………………

An 18 year old Italian girl tells her Mom that she has missed her period

for 2 months.

Very worried, the mother goes to the drugstore and buys a pregnancy kit.

The test result shows that the girl is pregnant.

 

Shouting, cursing, crying, the mother says, ‘Who was the pig that did

this to you? I want to know!’

 

The girl picks up the phone and makes a call. Half an hour later, a

Ferrari stops in front of their house. A mature and distinguished man

with gray hair and impeccably dressed in an Armani suit steps out of a

Ferrari and enters the house.

 

He sits in the living room with the father, mother, and the girl and

tells them:

‘Good morning, your daughter has informed me of the problem.

I can’t marry her because of my personal family situation but I’ll take

charge.

I will pay all costs and provide for your daughter for the rest of her

life.

Additionally, if a girl is born, I will bequeath a Ferrari, 2 retail

stores, a townhouse, a beach-front villa, and a $2,000,000 bank account.

 

If a boy is born, my legacy will be a couple of factories and a

$4,000,000 bank account.

If twins, they will receive a factory and $2,000,000 each.

However, if there is a miscarriage, what do you suggest I do?’

At this point, the father, who had remained silent holding a shot gun,

places a hand firmly

on the man’s shoulder and tells him.

‘You gonna try again.’

 

Have a good day

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.