Morning all,

I would like to welcome the RBA to the great currency war! Finally the RBA has joined the party not with a bang like the Japanese, but with a whimper but undoubtedly the move from Uncle Fester(Glenn Stevens) to cut 25bps from the headline rate is a belated attempt to get the dollar down…..we have known for some time that the Aussie is too high..everyone has been saying it and finally they get it. Moves from the big banks on their mortgage rates will be welcomed by the third of the country that has mortgages but as Joe Hockey said yesterday low rates are death for self-funded retirees…I found it weird that the Liberal Party was berating the Government for low rates…strange days indeed!!

Still happy to admit I got it wrong on the rate cut yesterday…I am no economist as you all know so I get it right some of the time….most of the economic experts got it wrong yesterday but the disappointing thing was the market reaction which was somewhat muted to say the least. We have seen the move from financials to cyclicals start and investors seem willing to embrace the dark side and buy BHP and RIO etc…the rise in the Iron Ore price overnight will help that trade along but the bubble banks should attract some attention today. In an environment where the RBA is cutting still yield is still going to look attractive and with the banks buying for the upcoming dividend will get you three divs in 13 months!!Not to be sneezed at!

TLS looks like a winner from the Spectrum auctions which went badly for the Government as it looks to have raised $1bn less than they thought..these guys can’t catch a break…Vodafone looks ike it passed and so competitive tension was sadly lacking..but just cements TLS position as the dominant player for some time to come..good news and yield too!

After yesterday’s lacklustre performance we may start to see some traction in the market but punters are still concerned about the Budget and the election ,although that is months away but unfunded Maternity leave plans will sap some money from business to pay for them..seems that business will be slugged whoever wins the election!

Once again I would expect the resources to do slightly better than the banks but good gains in both will send the market knocking on Heavens Door..ie 5200…then what?????

Idea of the Day

Yesterday saw CCL fall spectacularly as Terry Davis told us that the domestic economy was tough, the dollar was killing SPC and canned tomatoes and Pepsi was slicing and dicing their Coke biz in Australia plus pressure from the two bullies, WOW and WES on prices so not good news at all..however, and this is my big however the company is pushing ahead well in Indonesia where the growth could be very good. A huge nation of non-alcoholic drinkers and growing middle class wealth…this may take up the slack…now as  fan of Mr Buffet and who isn’t ,he looks at great businesses like CCL and buys them when they are out of favour…this would fit in with my view and I like CCL around 13.00…may have to be a little brave but Terry did say that he was predicting that the full year would be on track after a better second half..plus they have Beer coming soon..and Cider!!MMmm,Cider!

Things to make me go mmmm!

1.Government now plans to cut out the tax breaks linked to the Carbon Tax…broken promises happening faster than Charlie Sheen’s wedding vows!

2.Perpetual: has launched an agreed $220 million takeover for The Trust Company, but rival bidder Equity Trustees said yesterday that the battle was “certainly not over”. Equity Trustees chief executive Robin Burns said Trust Co shareholders would get 59 per cent of the combined group’s $8m in estimated cost synergies under his February proposal.

3.Coca-Cola Amatil has called for emergency tariffs on tinned tomatoes after a market shift to cheap imports led the company to downgrade earnings forecasts Speaking at the company’s annual meeting in Sydney, managing director Terry Davis said sales to grocery retailers had a very difficult start to the year due to high levels of discounting from arch-rival Pepsi as Pepsi costs half as much

4.The Economist estimates that the world’s population of NEETs (not in employment, education, or training) is a stunning 290 million – or around one-quarter of the world’s youth.

5.Pain is being felt from Appalachia to Wyoming as the U.S. reduces its dependence on coal to almost the lowest level in 63 years — the cost of the country becoming more energy self- sufficient through the production of more natural gas and oil. Prices have retreated 57 % from a record in June 2008 as coal’s share of U.S. electricity generation sank to a record low of 37 % last year from 50 % in 2005.

6.Physical demand for Gold continues to storm ahead of the paper variety through ETFS’s…. Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy. Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to data from the Hong Kong government yesterday.

7.Rumours that Fergie is going to retire from running Man Utd…talk about big boots to fill….

8.Big George Soros is doing pretty well for a dead man..remember a week or so ago his obituary was leaked onto the net…but he is still very much alive and betting against the Aussie dollar..looks like he has made some handy pocket change from the RBA moves yesterday..go George!

9.And from my friends at Zerohedge.com….more fascinating facts…. “Since the mid-November lows, the S&P 500 has gained a remarkable 268 points on the back of faith, hope, and Bernanke/Kuroda charity. But perhaps what is more mind-numbing is that this efficient market has given us more than 50% of those gains on Tuesdays. With 17 up-days in a row, Tuesday is the Monday dip-buyers dream. Since 1/18, absent Tuesdays, the S&P 500 has gone nowhere”

10.And in Zombieland news… German factory orders unexpectedly jumped for a second month in March, suggesting Europe’s largest economy is starting to grow again.Orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, when they also advanced 2.2 percent, the Economy Ministry in Berlin said today….and apparently Greece has seen the worse!!

And finally……A few choice quotes from one of Golf’s more colourful commentators, an Irishman Dave Feherty … not sure how he gets away with it but he does!!!

 

“Fortunately, Rory is 22 years old so his right wrist should be the strongest muscle in his body.”

“That ball is so far left, Lassie couldn’t find it if it was wrapped in bacon.

“I am sorry Nick Faldo couldn’t be here this week. He is attending the birth of his next wife.”

Have a good day and enjoy the ride to 5200!!

Doing Sky Biz at Lunchtime today!!

 

Clarence

XXX

 

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