As I have been saying for some time now, the market is due for a pullback and like the little boy holding his finger in the Dyke, eventually he gets wet. Today he got a drenching! The shock news of 71,500 jobs created in February has dashed hopes of another rate cut. Not that it was never really on the cards in my humble opinion. GDP at 3.1% and a pickup in the housing market and stocks markets around the globe at records, hardly the stuff of GFC crisis level interest rates. But, of course that is the very reason why stock markets around the World are at record levels. Der! Trouble is if we have entered the a period where interest rates have stopped falling and maybe even rise, then we may see some hot air fly out of equities. Maybe a prophetic sign today that a Hot Air Balloon crashed into the Treasury in Canberra. In other news we have a new Pope, a new President of China and more importantly Miranda Kerr had a car crash. But she is ok.

To the markets and after a tentative start we waited with baited breath for the Unemployment numbers. Everyone got it wrong. But if you believe the numbers you are a better man than me. Really 71,000 new jobs in February, I think these guys do the Chinese numbers as well. Anyway it was the excuse the traders were looking for and down she went. The resources already struggling due to a fall again in the Iron Ore price and the Gold price were under the kosh. BHP Billiton (A$35.09, -2.3%), RIO Tinto (A$60.70, -2.3%) and Fortescue Metals Group Ltd (A$3.97, -6.1%) bore the brunt with Newcrest Mining (A$21.85, -2.0%) looking sad again. Other gold stocks were punished with Kingsgate Consolidated (A$3.94, -1.7%), Silver Lake Resources (A$2.14, -4.5%), St Barbara (A$1.23, -2.8%), Evolution Mining (A$1.365, -2.2%) all soggy. Other iron ore stocks were also whacked with Atlas Iron (A$1.26, -4.5%), Arrium (A$0.98, -6.2%) and Mount Gibson Iron (A$0.585, -4.9%) in the dog house. Banks finally succumbed to the profit taking with Westpac Banking (A$30.13, -1.2%) and Australia and New Zealand Banking Group (A$28.18, -1.1%) leading us down whilst National Australia Bank (A$30.69, -0.8%) stayed firm for some time before succumbing to the negative news. As the afternoon wore on the index continued to fall, although there were a few bright spots in Pacific Brands (A$0.88, +6.0%), Sigma Pharmaceuticals (A$0.655, +3.1%) and Xero Limited (A$7.99, +3.77%). In the end we closed on our lows which is not a good sign 4950 is my target.

Good news though for embattled retailer Myer (A$3.07, +5.9%) which impressed the market this morning with its profit result and promptly punished the shorts with a good run, although the rest of the sector was no better for the experience. David Jones (A$2.97, unch), Harvey Norman (A$2.76, -0.7%) and JB Hi-Fi (A$14.85, -0.8%) all lacklustre.

Media stocks struggled after Senator Conjob’s well received new policy, Ten Network (A$0.345, -6.8%), APN News & Media (A$0.345, -4.2%) and Seven West Media (A$2.33, -0.4%) all in the red.

Financials were also easier AMP (A$5.29, -1.9%), Bendigo and Adelaide Bank (A$10.10, -2.9%) and Macquarie Group (A$37.43, -2.5%) all in the naughty corner. Mining services were hit hard with Macmahon (A$0.26, -5.5%), Mineral Resources (A$10.29, -1.8%), NRW (A$1.835, -4.4%) and Boart Longyear (A$1.345, -5.3%) all looking nasty. Defensives like Woolworths (A$35.12, -0.4%), Wesfarmers (A$42.08, -1.0%) Westfield Group (A$11.04, -0.9%) and Telstra (A$4.48, -1.1%) were also sold down.

Volume was not bad which suggests a few players were taking money off the table rather than buyers pulling back.

Stocks in the News

Aussie dollar had a good day pushing up towards the 1.04 level. No rate cut to come!

Ramsay Health Care (A$31.65, +2.7%) had a good day following media speculation that they were in discussions with Sime Darby over a transaction. The company confirmed there was some truth to the story but it is early days.

Myer (A$3.07, +5.9%) was firmer after making $88m and raising its dividend. It seems getting out of electrical and whitegoods has allowed it to focus on the higher margin business of fashion.

Aurora Oil & Gas says it will offer $US250 million ($244.27 million) in unsecured notes due in 2020.The company said it intended to use the proceeds from the offering to fund the acquisition of $US117.5 million ($114.81 million) of assets related to its February 28 purchase in the Eagle Ford shale area of Texas.

Big Nath finally turned up in court and admitted he had no idea how he was going to pay for the placement in Blackwood. Rather worrying when you are up for $28m!

Big news today Australian bond yields are now above the cash rate for the first time since 2011. So it’s a very strong signal that the RBA is unlikely to ease any further.

Tomorrows News Today

Now, I know it’s not fashionable to praise the incumbent Government but growth at 3.1%, Unemployment at 5.4%, Interest rates at 3% and 926,000 jobs created by the Labour Government since it was elected and the World’s greatest Treasurer in charge, does suggest that they have either been very lucky or very good at handling the economy. I think they should buy a lotto ticket myself but on those numbers they are doing something right. Forget about the deficit; let’s face it everyone else around the World has done!

Looming large in the issues to gather some steam is the Troika funding Greece is still negotiating with the Government about 150,000 job cuts in the Public service in the next two years.

The number of dead pigs in the river in Shanghai is now at 6600.Certainly a chart breakout there. They appear to have found the farmer responsible. I suspect he may get thrown in the river too.

The Chinese Government looks set to continue to squeeze the property developers and the housing market in an effort to curb price rises.

And from our ‘Zombieland’ cousins, Germany has decided against stimulus and spending to revive the Zombie  economy .Instead they have taken a spoonful of their own medicine with budget cuts of 5bn Euros and a balanced budget by 2015.All this while the French are going to miss their budgetary targets by a Gallic mile. Hollande shrugs, perhaps takes out a Gauloise and lights it. “On n’apprend pas aux vieux singes à faire des grimaces” Or You cannot teach old monkeys to make faces.

Can the price of Copper lie, there is currently ½ million tonnes of Copper sitting twiddling its thumbs in the LME warehouses .This stockpile has doubled in the last six months and has grown at the fastest pace since the GFC crash. So if the World is really a safe place and mending why is this so?

And finally a comment from the Wall Street Journal from July 1937-did collapse 40% in the next three months!

“While the Street remains in a cautious frame of mind, there are undoubtedly more possible buyers than sellers around, and it would not take a lot of encouragement to get these gentlemen aboard. Feeling in brokerage circles is that stocks are more likely to advance on any break in the unpleasant headlines these days than to decline far on a continuation of current uncertainties.”

Clarence

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