Another day out for the market as the Dow pushed through its all-time highs and the ASX screamed through the 5100 level. Once again Banks and financials were the big winners with records falling faster than you could say East German’s swim team in the 80’s. Westpac Banking (A$31.66, +1.3%),Commonwealth Bank of Australia (A$69.31, +0.9%), National Australia Bank (A$30.83, +0.8%) and Australia and New Zealand Banking Group (A$29.23, +1.2%) all led us higher with other financials like AMP (A$5.34, +0.8%), Insurance Australia Group (A$5.72, -0.5%) and Suncorp Group (A$11.53, +1.2%) helping out. Putting it in perspective the financial stocks are up 16 %this year ! Pretty soon the yield argument will not work for these babies as they will be sub 5%.News that NAB is looking at taking more costs out of its business helped the sector and the low interest rates coupled with a healthy GDP at 3.1% ensured that the bulls were firmly in control of financials. And surprise, surprise finally the resource stocks were slightly better with BHP Billiton (A$35.82, +1.2%), Fortescue Metals Group Ltd (A$4.50, +3.7%) and RIO Tinto (A$63.20, -0.6%) all holding their own and in the case of RIO which was Ex Div today  90 cents was a winner! Energy stocks also rallied today with Woodside Petroleum (A$37.15, +1.4%), Caltex Australia (A$22.00, +4.4%), Oil Search (A$7.82, +3.2%) and Santos (A$13.29, +1.4%) all doing well. In fact there were very few red stocks today as the rally spread out. ‘Canine Club’ members today included Evolution Mining (A$1.29, -3.0%), Kingsgate Consolidated (A$3.54, -3.3%) and Independence Group NL (A$4.20, -3.2%). Media stocks were better too with Ten Network (A$0.365, +1.4%) up and News (A$29.66, +1.4%) ahead too. Retail continued to push ahead on the GDP numbers, Myer (A$2.90, +1.8%), David Jones (A$2.99, +0.7%), JB Hi-Fi (A$13.98, +4.0%) and Harvey Norman (A$2.68, +2.3%) looked really good. Shorts are being punished. Building stocks also fared well today with Brickworks (A$12.79, +1.7%) and James Hardie Industries PLC (A$10.31, +3.6%) all looking good.

The big winner today in large cap land was Sirius Resources NL (A$3.92, +17.37%) followed by one of yesterday’s loser Nufarm (A$5.16, +6.4%) with Iluka Resources (A$10.01, +4.7%) also putting on a good show.

Volume was respectable with RIO, BHP and CBA filling the top three in value. Whilst Fortescue Metals Group Ltd (A$4.50, +3.7%) had a big trading day with 25m shares turning over as did Westfield Retail Trust (A$3.09, +0.3%) at 52m shares.

Stocks in the News

Economic news was in focus today with an as expected GDP print of 0.6% making it 3.1% for the year. Not too bad considering all the woe that is talked about the Aussie economy. Having said that the big spending seems to have come from the Government which seems odd given that they are supposed to be cutting back. Not sure the small businesses around the country will be that heartened by the GDP figures which obscure the pain that some are going through. Looking around at the beachside Northern beaches suburb that I live in it scary to see how many shops and businesses have closed and lie empty. And have been empty for some time. The rents are too high to sustain activity but the landlords have not adjusted accordingly. Only a matter of time! Maybe the Lowy family is right in selling out recently. Retailing is changing. It was slow to start but it is gathering pace.

In house stocks today, Mesoblast (A$6.45, +0.2%) entered into agreements to raise around $170m for their Phase three trials of their MPC platform and are issuing new shares at $6.30.Pretty good performance in the share price considering and it even fed through to others in the sector like Pharmaxis Ltd (A$0.52, +3.0%).

Not much in stock specific news today except for more great results from Sirius Resources NL (A$3.92, +17.37%) from their Nova discovery. One or two others in the sector did well too with Flinders Mines (A$0.075, +4.2%) which we like improving after announcing a number of MOUs with four Chinese Steel Mills.

Tomorrow’s News Today

And spare a thought for some states after today’s GDP number..

Victoria has slumped into recession, along with South Australia, Tasmania and the ACT, as the Australia’s two-speed economy has sent much of the country into reverse. The Bureau of Statistics reports that state final demand – the total spending of consumers, business and governments – fell 0.7 per cent in Victoria in the December quarter, in trend terms, on top of a fall of 0.4 per cent in September. And to put today’s GDP number in context:

2012: 3.1 2011: 2.7 2010: 2.8 2009: 2.5 2008: 1.6 2007: 3.8 2006: 3.2

Pretty good really. Back to the good old days!!

Finally a few things to ponder last time the US market hit this level…

  • GDP Growth: Then +2.5%; Now +1.6%
  • Regular Gas Price: Then $2.75; Now $3.73
  • Americans Unemployed (in Labour Force): Then 6.7 million; Now 13.2 million
  • Americans On Food Stamps: Then 26.9 million; Now 47.69 million
  • Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • US Deficit (LTM): Then $97 billion; Now $975.6 billion
  • Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion

But in the words of many analysts…don’t fight the Fed!!Stimulus is king and bubbles last longer than you think. Maybe.

Clarence

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