Morning all,

Not much to go on overnight I am afraid. SPI is suggesting a positive start to the day but I wouldn’t get too carried away by it..All eyes will be on the RBA at 2.30pm ..I am expecting the RBA to sit on its hands and disappoint George Soros who appears to be having a go at smashing the Aussie Dollar…expect there would be a few exporters that will  be cheering him on!!We shall see but whatever the RBA does is a side show as it’s up to the banks how much they pass on…their margins have been pretty good as we have seen from their results so don’t expect too much largesse from them…

Yesterday was a pretty pathetic day all times considered….banks look a little tired up here and it’s hard to recommend a sector that has run so far in so short a period of time..equally is also hard to get too excited by the resource sector although some bounce in copper and other base metals has been encouraging and they have been whacked so far inevitably there are some bargain hunters around…the really disappointing thing though in this rally is the volumes are still woeful…here we are in a bull market apparently and still we are only just making $3bn days…lots of real investors are still on the sidelines…deposit levels in banks are still very large and there is a wall of money that is looking for alternates to bank deposits…equities do offer that but the boat has sailed in some sectors…so where do we put our hard earned to work…ah that’s the question!!

Expect the market to remain in a tight range until the RBA announcement..maybe resources will be a little better than banks but we will see..

Idea of the Day

Gotta love TLS still…it has announced this morning that it has won a couple of new spectrum licences to close to reserve price…this will enable them to stay at the forefront of mobile technology…they will continue to be the leader with this purchase and as we all love our smart phones this has got to be a positive for the company..add in a 28 cents fully franked div and domestic focus plus a win /win out of NBN..it’s hard not to continue to like the defensive nature of this stock…would expect to see them head towards 5.50 in this low interest rate environment which would put them on a 5.1% fully franked yield..that is all…should be in everyone’s defensive portfolio..

Things to make me go all Q&A…

1.Watched Julia on the ABC last night and once again I was impressed..shame about the rest of her party but she is always an impressive performer and sure knows her stuff…anyway won’t help her cause much but the Abbott back flip with a pike on paid parental leave is coming and I am sure they are going to be able to blame labour for another broken promise…deficit is not looking too flash at the moment with revenue estimates being would back rapidly..budget next Tuesday

2.The Gillard government will not go ahead with a family benefits boost that would have provided a maximum of $600 extra a year to eligible Australian families, as it signals that the budget faces a $17 billion shortfall in revenue this financial year.This bribe was intended to spread the benefits of the mining boom..well as we don’t really have one then hard to justify the spreading of the pork barrel…

3.Karoon has recaptured some of its former highly-flying status after striking oil in its latest exploration well off the coast of Brazil. Its shares rose 90c or 22.5 per cent to $4.89 yesterday on news that its Bilby 1 exploration well in the Santos Basin had encountered oil within at least a 200m (gross) intersection in Maastrichtian (Late Cretaceous-aged) shale and sandstones. Karoon said that as the well was 150m down-dip from the crest of the trap, there was additional oil prospectively higher in the structure that remained to be tested.

4.And this speaks volumes about the complacency and dumbness of some of our resource companies…let’s face it RIO bought Alcan and lost a fortune so expand Iron Ore now…good one….”Rio Tinto will probably pursue a $5 billion expansion of its iron-ore output in Australia, CEO Office Sam Walsh said, according to two people present at a meeting with investors and analysts today. The board is expected to approve in the fourth quarter an increase in annual production to 360 million metric tons from 290 million tons unless there are significant changes to the global demand-supply situation”……expect to see that change as the Iron Ore price continues to trend down.

5.The Australian dollar fell in evening trade on the back of rumours that billionaire US investor George Soros is betting the local currency will fall. The Aussie dollar slipped from $US1.0284 in late local trade to $US1.0253 in offshore trade as traders reacted to unconfirmed rumours that Mr Soros – who famously shorted the British pound back in 1992 – was planning a raid on the dollar ahead of Tuesday’s interest rate announcement.

6.The Greek Finance Minister has declared the worse is over!!Unfortunately they have really done nothing to change the structural nature of their economy and the tax avoidance and debt continues…fooling themselves a little I think…that is one of the issues that could really bite the Zombieland zone in eth back side…if they get complacent and do not put in place the reforms because the crisis has passed then they will continue their descent into oblivion!!

7.Italy’s economy will shrink by 1.4% this year, a much sharper contraction than previously forecast, according to the national statistic agency. And retail sales across the region were weaker for a second month!

8.Gotta love watching the Gai waterhouse/John Singleton stoush at the stewards inquiry into the ‘More Joyous’ affair…reckon Tom is offering odds on for his Mum to win…..

9.Billabong has gone into a trading halt pending an update!!!!Again!

10.Perpetual has just trumped Equity Trustees bid for Trust Company!!!Makes life interesting..good to see some M&A activity back!!

And finally……………..

Two Irishmen were working for the city public works department. One would dig a hole and the other would follow behind him and fill the hole in. They worked up one side of the street, then down the other, then moved on to the next street, working furiously all day without rest, one man digging a hole, the other filling it in again.

An onlooker was amazed at their hard work, but couldn’t understand what they were doing. So he asked the hole digger, “I’m impressed by the effort you two are putting in to your work, but I don’t get it – why do you dig a hole, only to have your partner follow behind and fill it up again?”

The hole digger wiped his brow and sighed, “Well, I suppose it probably looks odd because we’re normally a three-person team. But today the lad who plants the trees called in sick.'”

Have a good day

Clarence

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