Morning all,

Well that was a fun day…dramas all around..Japan was absolutely crushed as the flood of fast money all decided to leave at the same time…hardly surprising given the Nikkei is or was up 45% this calendar year…yesterday the market switched from up 2% to down 7%..that is true volatility..few burnt fingers…our market decided that yield was no longer good..Chinese PMI numbers were disappointing but as I said on TV last night 7-7.5% growth for an economy that is now the second biggest in the World is not too shabby…most Western Countries would give their eye teeth for growth half that!!So their economy is contracting a tad..it’s a soft landing not a hard one..and let’s face it no one believes their figures anyway..being a Communist country they can sort out a downturn somewhat easier than we can here.

Think it has finally dawned on the RBA that they have entered the currency wars a little late..damage has been done..with mining scaling back dramatically, what is left in the country..not much I expect..get the feeling that the economy is falling into a big hole at the moment and will get worse as the election scare mongering plays out!

I sent out a note yesterday afternoon suggesting that it may be a good idea to hunt in the trashed yield stocks..banks and TLS perhaps..well after the Dow did NOT fall 250 last night only a mere 12 points ,expect a 40 or 50 point rally today…suspect though the weakening Aussie dollar is reminding overseas hedge funds that they have made a “motsa” on yield stocks here and maybe it’s time to bring the money home. Big volumes yesterday and I reckon a lot of overseas money was leaving the building…$7bn days are rare these days…anyway there will be some rationale back today as local boys pick over the roadkill that was banks etc…

As everyone who bothers to follow my ramblings in the morning will know I have been a “Sell in May” guy and feel that the best of the gains are behind us for a while…nothing has changed my view…but if we get a few more days like yesterday the banks/defensives will be cheap(er) as!!I suggested yesterday that we may head to 5000..well blimey, it nearly got there yesterday..bounce today but the trend and confidence have been hurt so we WILL see a continual slide with the occasional short covering rally ,like the one today.

Apologies for getting it so wrong yesterday..what was I thinking calling it down 35!!Doh!

Idea of the Day

Anyone would think the yield trade is dead…well it’s not dead it is just pining for the fjords… ‘E’s not pinin’! ‘E’s passed on! This parrot is no more! He has ceased to be! ‘E’s expired and gone to meet ‘is maker! ‘E’s a stiff!

Banks had got very expensive and reality is appearing in these prices but with the lack of alternatives for your money to get a safe consistent yield it is still going to be hard to go past these babys…I have cautioned about chasing them higher as I thought the big gains have already been made and they have …but if they fall more as overseas guys get out they will start to look attractive again..if you own them from way back..keep them unless you are a trader but if you are underweight banks the next few months may give you a chance to start to build the core of a well balanced portfolio…

Things to make me go all Taxi racing!!

1.Ford gives it workers 3 and a half years to find a new job…was a bit puzzled over this whole Ford thing…they are losing 600 over 5 years..so until October 2016 they will rip up another 400 m so why not close tomorrow. That way they could give the 1200 sacked workers a pay out of say 300,000 and still be ahead!!And here we are with record new car sales…of course Tony Abbott has blamed the carbon tax!!Don’t be silly Tony it’s the fact that no one wants the Falcon anymore..400 bucks won’t change that…

2.Was very surprised that the Dow was not down 250 given that the weakness around the World was started to vague comments from Benny and the Inkjets..now I said last night on Sky things to me are pretty clear from Ben’s speech..they realise that getting out of QEIII is potentially quiet dangerous,…no one has ever down this before so they are softening up the market for a gradual withdrawl..bit like Gallipoli where the soldiers get out before the enemy has noticed and so minimise casualties and don’t let it turn into a rout..also the other two things that are clear is they have specific targets in mind to kick off the withdrawl…either Unemployment gets to 6.5% or inflation at 2.5% whichever comes first..pretty simple really

3.One of the more sensible people in Zombieland-ECB’S WEIDMANN WISHES JAPAN `GOOD LUCK IN THEIR EXPERIMENTS’

4.Remember the infamous words of Citi’s Chuck Prince in July 2007. “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

5.Interesting to see that Jamie Packer now reckons he has got a second licence in the bag for Sydney and has sold his Echo…played it very well…there has even been a convenient scape goat in Tom Waterhouse to take some of the heat off his Banangaroo proposal..still it was nice to see my old friend Michael Sullivan from Sportsbet wade into the argument and talk some sense..have known Michael over many years and he is a good guy..for a bookie that is…good stuff Michael..will reopen my account !

6. BHP Billiton’s $US10 billion-plus Jansen potash project in Canada looks likely to be shelved, new CEO Andrew Mackenzie said. Mackenzie told the group the approved spending would run out in a few months and the project needed to be “refreshed” before further work could take place.

7. Billagone has put its Canadian retail operation up for sale in a further sign that the company does not expect a full takeover to proceed. The sale will include the 70-store West 49 chain, which Billabong purchased for $91 million in 2010 as part of an ill-fated push into retail.

8. Horizon Oil -Osaka Gas has joined Horizon Oil in a $US204 million ($211.3 million) deal that could pave the way for a new $US5 billion liquefied natural gas venture in Papua New Guinea that would supply the energy-hungry Japanese market. In its expansion in the Australian region, the Japanese utility has agreed to buy 40 per cent of Horizon’s PNG assets.

9. Sales of new U.S. homes climbed in April to the second-highest level in almost five years as lower borrowing costs and job gains drew more buyers into the market. Purchases rose 2.3 % to an annualized pace of 454,000 homes from 444,000 in March that was faster than first estimated, the Commerce Department said today in Washington…confusing isn’t it..some good numbers then some bad…– Fewer Americans applied for unemployment benefits last week, and consumer confidence approached a five-year high as the biggest part of the economy benefits from improving job and housing markets.

And finally….Hans you are a star!!Have been overwhelmed with jokes from far and wide!!

A police officer pulls over a speeding car.

The officer says, ‘ I clocked you at 120 km/h, sir.’

The driver says, ‘Christ, officer I had it on cruise control at 100, perhaps your radar gun needs calibrating.’

Not looking up from her knitting the wife says: ‘Now don’t be silly dear, you know that this car doesn’t have cruise control.’

As the officer writes out the ticket, the driver looks over at his wife and growls, ‘Can’t you please keep your mouth shut for once?’

The wife smiles demurely and says,  ‘You should be thankful your radar detector went off when it did.’

As the officer makes out the second ticket for the illegal radar detector unit, the man glowers at his wife and says through clenched teeth, ‘Stuff it woman, can’t you keep your mouth shut?’

The officer frowns and says, ‘And I notice that you’re not wearing your seat belt, sir. That’s an automatic $75 fine.’

The driver says, ‘Yeah, well, you see officer, I had it on, but took it off when you pulled me over so that I could get my license out of my back pocket.’

The wife says, ‘Now, dear, you know very well that you didn’t have your seat belt on. You never wear your seat belt when you’re driving.’

And as the police officer is writing out the third ticket the driver turns to his wife and barks, ‘WHY DON’T You shut the hell up?

The officer looks over at the woman and asks, ‘Does your husband always talk to you this way, Ma’am?’

I love this part….

‘Only when he’s drunk.’

Have a good weekend!!

 

Clarence

XXX

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