Morning all,

Apologies for being late today but got talking to a client and time flies! Slightly optimistic start to the US reporting season helped their market and better numbers out of the Zombies helped them rally. Expect another up day today. The interesting space and the theme emerging is when is it time to look at these resource stocks. I have been asked many time on TV and by clients when do we do the switch. Out of defensives and into the risk assets like BHP,RIO etc. I have been slightly cautious about this switch. The management of resource stocks has been woeful to say the least. The companies almost feel like they are run for the benefit of directors and management rather than the benefit of shareholders. The performance has been woeful. Cost overruns, production downgrades ,EGO driven acquisitions and big write offs has done nothing to endear investors to the sector. Not whilst Banks have quietly running their monopolistic businesses and making like bandits..and importantly rewarding shareholder with lovely fat dividend cheques. And in the not too distant  future they will be doing so again. However ,and this is the big however, the worm is turning, slowly and with some false dawns but turning it is and BHP is starting to look attractive.3.5% yield is still higher than the RBA interest rate! So time to start nibbling away at some of these bombed out resources I suspect.

Expect the day to start with a flourish and then hold that level.US reporting season will be a good yardstick of whether the US recovery is real or just an asset bubble in the stock market!

Idea of the Day

Nibble at those bombed out resource stocks…in Gold my favourite is BDR…in Iron Ore I would look at BHP or FMG for the braver and in other resources WPL and maybe KAR  in oil and gas.

When everyone else is selling that’s the time to be picking up a few things…of course they might be right!!!But in the words of Del Boy!!…’Who dares wins Rodney’…you may need to Google who Del Boy is though!!!

Things to make me go end of an era!

1.RIP Mrs T…as a product of the Thatcher years, as she started her stint as PM, so I started my working career in the City of London, I have mixed feelings about her tenure in the top job in the UK. An unbelievably divisive character no doubt and some will be rejoicing today but as Martin Luther King said “I will mourn the loss of thousands of precious lives but I will not rejoice in the death of one, not even an enemy”.

2. The Ten Network has reported a 21.9 per cent fall in its revenue and a net loss of $243 million for the six months to the end of February, taking a hit from restructuring and impairment charges. The broadcasting company did not declare an interim dividend. Ten had recorded a non-recurring cost of $304 million, including a $292 million television licence impairment charge and restructuring charges of $11.9 million. Ten reported a net profit of $14 million in 2012 first-half reporting period. Seems they are the Biggest Loser!!

3.Horrible day for Sundance as the deal is now officially dead…no 45 cent bid…stock is sub 10 cents…must be a bargain here…way overdone!!!BUY SDL for a punt..and it is a punt!

4.Talking of horrible takeovers ..Billagone falls into that bracket..awful…and getting worse I suspect..thankfully they are suspended!But looks like the US are going to get their hands on this one at bargain basement prices…or so they think…60 c perhaps…well played Gordon Merchant you have served shareholders brilliantly…NOT!!

5. Qantas: travellers to Britain appear to be already benefiting from the Qantas-Emirates deal, with competing airlines slashing fares on the highly contested route. An analysis by Flight Centre has shown British Airways, Cathay Pacific and Malaysia Airlines offering deals.

6. Every cloud has a silver lining for some CSL is monitoring a new strain of bird flu, with outgoing CEO Brian McNamee indicating the company is ready to assist the Chinese government with a vaccine, if required. Chinese cities have banned live poultry trade and begun culling fowl after six people died from a new bird flu strain known as H7N9. China’s drug watchdog, the State FDA, quickly approved a drug called Peramivir.

7.It never rains but it pours… Whitehaven Coal’s share price decline has been matched by increased short-selling by hedge funds, according to the latest short positions data. In the four trading days ended March 28, Whitehaven shares reported as held short increased to 6.7 per cent of shares on issue from 5.9 per cent.

8. According to the U.S. Bureau of Labor Statistics, there are 11,742,000 working age Americans that are officially unemployed. In addition, the U.S. Bureau of Labor Statistics says that there are 89,967,000 working age Americans that are “not in the labor force”.  That is a new all-time record, and that number increased by a whopping 663,000 during the month of March alone.

9.Meanwhile in a land far, far away…Spain… a record 2,564 companies filed for “insolvency proceedings”, a more palatable version of the word bankruptcy, in the first quarter – an increase of 10% from Q4 and up a whopping 45% from Q1 2012.

10.And the biggest story is Japan …the massive injection of cash into their system will find its way to sunny Australia..it will push up the dollar even more and with rates here so high compared to nada everywhere else, we will suck money in…expect the asset bubbles to continue here…property may be on the cards again!!Unleash the dogs of war!

And finally….and thanks to Hans for this one…blame him not me!!

 

A man was sitting in the bar at Mascot Terminal and noticed a really beautiful woman sitting next to him. He thought to himself, “Wow, she’s so gorgeous – she must be an air hostess. I wonder which airline she works for. ”

“I still call Australia home,” he says to her.

She pulled away from him and gave an ice-cold glare.

“Obviously not with QANTAS, ” he thought.

Hoping to pick her up, he leaned towards her and uttered the Delta Airline slogan, “Love to fly and it shows..”

She gave him a blank, confused stare and he immediately thought to himself, “Well, she obviously doesn’t work for Delta.”

A moment later, another slogan popped into his head, so he leaned towards her again and said, “Something special in the air.”

She gave him the same confused look, and he mentally kicked himself, while scratching Singapore Airlines off the list.

He thought, “Perhaps she works for Thai Airways…” and said, “Smooth as silk.”

This time, the woman turned on him and said, “What the bloody hell do you want ?”

The man smiled, slumped back in his chair, and said, “Ahhhhh, Jetstar!!”

 

So true

Clarence

XXX

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