Morning all,

Last night we got the ‘Benny and the Inkjets’ testimony ….now it seems the Fed has a bit of a mutiny happening as Uncle Benny seems to want to keep printing money forever but when the Doves Cry ,we get a couple of members suggesting that ‘tapering’ of bond purchases could begin as early as Mid-June!!!After a Bernanke inspired rally these comments were enough to send the Bipolar Dow into a tail spin and swing 2.3% to close down 80…It appears that the focus of Ben is the jobs number…when that improves towards 6.5% then the rivers of money will dry up…or when inflation moves above 2.5%…

Our market yesterday was once again somewhat lacklustre as we waited for US news…expect us to give a little more back today as the index looks to go to 5100…still believe that we are going sideways to down for the next quarter..tax loss selling to come in June will throw up some bargains in the resource sector though as they get more belted..

Aussie dollar fall is happening and long overdue…question is will it help what’s left of industry or just stuff up that overseas holiday…may need to go below 90 cents for Industry to feel the love…

Expect a down day today around 35 perhaps…slide set to continue…still my calls this week have been atrocious so maybe we will be up 50!!!

Idea of the Day

If we do see the Aussie dollar fall towards that 90c level ,which is a way to go yet..we may see some pick up in bulk commodity stocks..they are already pulling back on their spending habits ,tightening the purse strings and chopping staff so if commodity prices hold up then cash will be piling up big time..now what to do with it…acquisition or give it to shareholders…ah to be or not to be ..that is the question…US dollar earners will be winners…happy to send round the list of big US earners and BHP may be worth a look…weaker dollar and cost cutting will help…

Things to make me go all David Bowie (the boom that fell to Earth)

1.Headline in the Fin today is “Resources boom falls to earth’.$150bn in projects cancelled.$29bn in cost blowouts and looks like the project pipeline is pretty bare…not good news at all…looks like we have priced ourselves out of the market..$6 coffees in Perth are a symptom of the boom.

2.And the good news keeps on coming!!! Significant job losses are expected at Telstra after the telco announced sweeping changes to its operational structure as it shifts away from its legacy business.The telco plans to divert its resources towards high-growth areas such as wireless, NBN and network services while cutting back on loss-making ventures, such as the Sensis directory business.

3.And now Ford looks set to cull a number of plants and announce significant job cuts…all this in an economy that is booming…apparently…I think not..the sad fact seems to be that here downunder we are just lagging the rest of the world economy and now it’s time to catch up!!!yet the FTSE is at a 20 year high..go figure..as is the Dow and the Dax..free money is a wonderful thing!!!!!!!!!!!!

4.Having watched Joe Hockey on TV yesterday..two things occur to me…get a refund on your gastric banding and get ready for some really tough decisions! Sad news as well for the Hockey family as his cousin closes up his clothing business Varino after 30 years…”Retail has never been as bad as it is now!” He said!

5.Fortescue Metals Group faces the prospect of more iron ore hopefuls with stranded Pilbara deposits applying for access to its railway line, as Flinders Mines and Winmar Resources consider the same strategy as Brockman Mining. Brockman last week lodged the first access application with WA’s government. It is in talks with three potential third-party haulage providers understood to include Aurizon and Asciano’s Pacific National about the prospect of hauling its iron ore down Fortescue’s railway line.

6.And in some rare good updates…ILU shares shot to a nearly one-year high yesterday after the company painted a rosier picture of demand for its major product, zircon. Speaking at the miner’s annual meeting in Perth, chairman John Pizzey said a first-quarter trend of higher customer inquiry and orders in all markets apart from Europe had continued in April and May.The words encouraging and pick were muttered in the same sentence…

7.Westfield Group is in negotiations to sell seven of its US malls to the US investment firm Starwood Capital Group for over $US1 billion, according to a report in The Wall Street Journal. Westfield has made no secret of its intention to downsize, sell non-core malls and focus on the management and development of prime flagship malls in global cities.

8.Another day another downgrade from this time WTP..maybe should be WTF!!Anyway .. they were savaged on Wednesday after announcing a substantial earnings downgrade. Its shares fell 25 per cent to 55¢ after the company adjusted its fiscal 2013 underlying profit after tax to between $3 million and $9 million, down from $15.3 million last year….WTF!

9.As Greek youth unemployment hits 75% in some areas it’s good to see one area of the economy flourishing… As the NYT reports, in just the past two years, the numbers of Greeks engaging in prostitution as a last course source of income has more than doubled: according to the National Centre for Social Research, the number of people selling sex has surged 150% in the last two years. Now my question is who is buying?..if no one has got any money! … maybe their Euro entry and now national economic strategy of “Alcohol is Free” is the answer.

10.And some words from Ben….“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.” Bernanke lamented the human and economic costs of an unemployment rate at 7.5 % nearly four years into the recovery from the deepest recession since the Great Depression, and he said the Fed’s record easing is providing “significant benefits.” To whom..brokers and Investment bankers?

11.Just read in the paper that the cost of raising two children has risen 50% in the last five years to $812,000…that’s pretty scary…now remember that figure next time you are in bed and working on receiving that $5000 baby bonus!!!!

And finally ..my thanks to my many readers for some gems..some even fit to pass on…Hans..thanks mate

In an recent interview, General Norman Schwarzkopf was asked if he thought there was room for forgiveness toward the people who have harboured and abetted the terrorists who perpetrated the 9/11 attacks on America.

His answer was classic Schwarzkopf.

The General said, “I  believe that forgiving them is God’s function… OUR job is to arrange the meeting.”

 

Have a good day

Clarence

XXX

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