Morning all,

Onwards and upwards it is then as concerns pushed to the back of investor’s minds. Good economic numbers out of the US on housing once again ignited interest and the Dow is now back within a cooee of its all-time high. Uncle Ben spoke for a second day and shows no sign of taking away the markets liquidity toys..he even suggested that higher interest rates are a sign that things are working and he is succeeding in kick starting the US economy.I always had a misguided idea it seems that the leadership on economic matters was something that the politicians were responsible for ..isn’t this why we elect them to make the country a better place for all…looks like ‘Owebama’ is not keeping his end up on this one.

To our market and its back on..those like me who were waiting for a pullback…doesn’t look like it’s gonna happen soon…expect the usual runners and riders to take up the pace with financials, yield stocks out in front. Followed by industrials and then resources.

 

Reporting season has generally been positive with analysts now scurrying off to do their new numbers there will be more upgrades than down and this will underpin the markets.Also we have seen dividend increases..WOW the latest so confidence is returning.

Idea of the Day

BUY IZZ for a bounce in Chinese Markets.

“Chinese stocks will resume this year’s rally as the government works to shore up the nation’s economic recovery, according to China Asset Management Co., the biggest fund manager.”

Now if you believe in the Global rebound story(and the man above) and let’s face it the markets do right now there may be some value in buying the Shanghai market..too hard I hear you cry…well yes it was until some bright sparks came up with the idea of Exchange Traded Funds..basically they mimick a market..there is a huge Gold ETF and for those looking East there is one that tracks the FTSE China 25 Index…it has recently come well off its highs as the Chinese leadership fine tunes a few things..but let’s face it if the US economy improves so will China as sure as night follows day..so if you are a keen on this story..IZZ is the code..it is priced in Aussie dollars so you get a double whammy if the dollar goes down and the Chinese stockmarket goes up..and we all now know the RBA is looking at the Aussie dollar..finally!

I have enclosed a chart of this one for your info..

And if you are looking for something a little more Vanilla with good exposure to China..why not have a look at SVW..Seven Group…invest alongside a billionaire with 88% of its profit coming from Westrac…stock has run hard but more to come!!

Things to make me go bugger!

1. Woolworths’ first half profit has grown to $1.15 billion as earnings from its supermarkets rose by 6 per cent. The supermarket giant’s net profit in the six months to December 31 was up 19 per cent from $966.9 million in the previous corresponding period. Importantly though the company has increased it dividend from 59c to 62c..sign of confidence and will be good for sentiment.

2.Perpetual’s first half profit has grown by 19 per cent as it continues to cut costs. Perpetual made a net profit of $27.3 million in the six months to December 31, up from $22.9 million in the previous corresponding period. Under its new chief executive Geoff Lloyd, Perpetual has begun a three-year restructure program aimed at achieving $50 million in pre-tax savings each year.

3.Gold companies are now waking up to the fact that they have zero credibility in the investment World..they have been dogs it’s fair to say compared with the price of the underlying metal..now two of the World’s biggest are trying to win back your trust by publishing “All In Sustaining Cost”..this is a step in the right direction..cash costs have never really included all the true costs and this has led to massive disappointment….I mean next thing you know Gold companies will start paying dividends rather than the endless recycling of profits into new projects or acquisitions until they stuff it up! And they do!

4.In the US the major parties continue to play politics with the $1.2trillion Budget cuts to be phased in ..starting with $85 bn this year. “Owebama” is hoping that the voters will blame the Republican Party for this mess and is showing no real signs of compromise despite summoning GOP leaders to the White House to discuss what can be done…looks like the 0.6% hit to GDP that forecasters are talking about is not an issue..

5.For the oil fans out there…companies are drilling deeper and deeper and with better technology are finding the black stuff..in recent months a few highlights…notice that Africa is starting to figure quite highly in the majors plans…

•    Eni finds new oil in Egypt’s Western Desert
•    Maersk makes a new pre-salt discovery offshore Angola
•    Sonatrach finds a new oil field and gas deposit in beleaguered Libya
•    Tullow moves toward commercial viability in Kenya
•    TAQA and Fairfield Energy find two columns of oil in the North Sea
•    Karoon Gas Australia hits light oil offshore Brazil..bit more on this one…

Karoon Gas Australia Ltd in late January discovered light oil at the Eocene level in its Kargaroo-1 exploratory well in the Santos basin offshore Brazil. This is a good discovery for Karoon (and 35% interest partner Pacific Rubiales Energy Corp. of Toronto) because the well was not the company’s primary target. Its primary targets were the Emu-1 and Bilby-1 wells in the Santos basin in blocks S-M-1102 and S-M-1137, the company’s second and third wells to be drilled.

6.Chelsea set a FA Cup tie with Man U after beating Middlesborough 2 Nil…gonna be a tough game that one…

7.More fun and games in Italy as comedian turned Politician snubs forming any alliance with the biggest party in the lower house..who is laughing now eh?

8. The Dow Jones Transportation Average surged the most in more than 11 months, led by railroad Kansas City Southern, as growing confidence in the U.S. economic recovery strengthens demand for freight shipments. Great lead indicator of the economy..

9.And in more US news …NY State has now approved internet gambling..this is going to be adopted by more and more states as they look to increase their tax take…and join the 21^st century…one of the Aussie winners in this may be JIN …Jumbo Interactive runs web sites that sell lotto tickets in Australia but they are expanding in the US and this latest move will certainly help them in their push to diversify.Worth a look perhaps?

And finally…for you wine buffs..

You just can’t tell by appearances!!

At a wine merchants, the regular taster died and the director started looking for a new one to hire.

A drunkard with a ragged, dirty look came in to apply for the position.

The director of the winery wondered how to send him away.

He gave him a glass to drink.

The drunk tried it and said:

“It’s a Muscat , three years old, grown on a north slope, matured in steel containers. Low grade, but acceptable.”

“That’s correct”, said the boss.

Another glass….

“It’s a cabernet, eight years old, a south-western slope, oak barrels, matured at 8 degrees. Requires three more years for finest results.”

“Correct.”

A third glass…

”It’s a pinot blanc champagne, high grade and exclusive,” calmly said the drunk.

The director was astonished.

He winked at his secretary, secretly suggesting something.

She left the room, and came back in with a glass of urine.

The alcoholic tried it.

“It’s a blonde, 26 years old, three months pregnant – and if I don’t get the job, I’ll name the father.”

 Enjoy the bull market,

 

Clarence

XXX

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