Morning all,

As the first trading day of winter hits us looks like the long slow winter has set in with big falls on Friday on the Dow and Zombieland. Hardly unexpected and somewhat overdue. Reality has to catch up a bit and finally they seem to be looking East to Tokyo and Shanghai..talking of which the Chinese PMI surprised on the upside at 50.8…after the contractor reading a week or so ago we now have some better news. This will be the only positive in our market as Gold sank, Iron Ore down, Oil fell, futures were down 57 and the little Aussie Battler hovering around 96 cents. The big concern out there is what happens when Uncle Ben and the Jets turns off the spigot of the free money in the US…traders have got so used to it for so long and everyone is long!!!hate crowded trades. When someone shouts fire the rush for the exits is particularly painful!!

Expect a poor start to the week with weakness across the board and enthusiasm limited. As avid readers will know I have been advocating the Sell in May strategy and that the next four months will be tougher for the market..June will see some Tax Loss selling especially in Resources and will throw up some irrational bargains around the place..ensure you have some cash resources to take advantage of the throwing the baby out with the bath water tactics of some!

My target is 4850 on the index..big fall from 5200 at the beginning of May…

Idea of the Day

Nah, got nothing new…still prefer yield and safety over resources and risk ..may be in the minority but Iron Ore at 110 is hardly bullish, Copper down too! Aussie needs to fall to 92/3 cents before I get too excited about resources…

Things to make me go G8 Meeting

1.In around three weeks the members of the G8 (great) will be descending on a small Irish town to talk about the state of the World..now because things are pretty rubbish in Ireland they have decided to paint the town red..well, not actually red but they have put up murals on deserted shop fronts to pretend they are thriving businesses! Apparently the Butchers business has been replaced by a mural of a butchers shop!!Pretend and extend…reminds me of the legions of tanks ,planes and landing craft that were fabricated for the D Day landings..cardboard cutouts!!I guess it worked then to confuse the enemy but it’s a good metaphor for the way the world has dealt with the GFC..and especially Zombieland.

2.In really big news though, Matt Smith has quit as Doctor Who!!After 4 years in the job it’s time for regeneration…if only we could do that with other European Fictional leaders!

3.Origin Energy managing director Grant King has warned that the global fallout from the US shale oil and gas revolution will increase pressure on Australian coal exporters. The glut of US gas is threatening to choke off further expansion of the local gas export sector, beyond what is already under construction. Cheap gas in the US is forcing more US coal into export markets – in Europe and Asia – which has cut across export growth prospects for much of the local coal industry, Mr King told a conference in Sydney on Friday.

4. China’s government indicated a slowdown in the world’s second-largest economy is bottoming out, underscoring forecasts for policy makers to avoid cutting interest rates this year.President Xi Jinping said expansion is on a “more stable footing,” the Xinhua News Agency reported May 31. An official manufacturing index released the next day showed a pick-up in growth, rising to 50.8 in May from 50.6 in April, after a separate gauge last week signaled a contraction.

5.Brockman Mining’s: attempt to gain access to Fortescue Metals Group’s Pilbara railway line could end up taking years of legal battles to resolve due to ambiguities in the untested railway code in Western Australia. Fortescue’s infrastructure arm, The Pilbara Infrastructure (TPI), has provided Brockman with a “floor” price of $73 million a year and a “ceiling” price of $576 million in a year in return for access for 20 million tonnes of iron ore to be hauled on the railway by a third-party such as Aurizon or Asciano’s Pacific National.

6.Nine Entertainment Co’s: hedge fund owners and the board have given the green light for chief executive David Gyngell to match Ten Network Holdings’ audacious $550 million bid for the right to broadcast cricket, with the networks set to share the rights for the next five years. The size of the existing offer is a big win for Cricket Australia boss James Sutherland, who will achieve his aim of increasing cricket’s annual revenue through domestic media rights by about twice as much as under the old deal….looks like at least of TEN don’t get the rights they will have crippled NINE with massive costs..

7.Qantas: International passenger numbers have yet to live up to the hype surrounding the partnership with Dubai-based Emirates, taking a nosedive in April as the airlines kicked off the alliance. The number of passengers for the month fall 7.2 per cent to 463,000 and the load factor fall by 4.3 points to 77.8 per cent as the fall in traffic outstripped capacity cuts.

8. France is in a worse state than Britain was at the time of its 1976 bail-out by the International Monetary Fund, one of the nation’s best-known businessmen has declared.

Henri de Castries, the chairman and chief executive of Paris-based Axa, the world’s largest insurer by premium income, said that the government of President Francois Hollande must learn the lessons of Britain’s experience.”The UK was not in great shape in the early 1970s,” he said. ”Mr Hollande has to decide if he wants to be Harold Wilson or Tony Blair … So far he has been ambiguous. I hope he is going to go for Blair. I am not asking him to become Margaret Thatcher…apparently he hasn’t he legs for it!

9.As Zombieland unemployment reaches new dizzying heights, the small tax haven of Andorra is introducing income tax for the first time in an effort to placate the EU mandarins on Tax evasion issues..there are now 19.38 million people in Europe without a job…that’s nearly the population of Australia!!!pretty scary..Greece, Spain and Portugal..3.6m of those are under 25!!!Very sad ..a whole generation is being sacrificed in the name of Austerity and to keep the bankers in champagne and caviar!!!

10.NAB has announced a $300m buy back of its own shares..seems there is no growth out there, too much money burning a hole in their pockets and nothing to spend it on..so buy your own shares then!!Seems they think they are good value!

And finally a big thank you for everyone who donated to my City to Surf (Without a coronary) appeal..it’s ten weeks to go and thanks to all my friends and clients who have got me to my target of $700!!Now maybe I was a little low on my target so if you are interested in making it to $1,000 for Starlight Childrens Foundation don’t be shy!!

Here’s the link again…

City to Surf Donations

And for today’s quickie…

A boy asks his granny, ‘Have you seen my pills, they were labelled LSD?’

Granny replies, f@@k the pills, have you seen the dragons in the kitchen?!

Thanks Hans!

Have a good day

Clarence

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Any financial product advice contained in this email is general financial product advice only and does not take into account any one person’s objectives, financial situation or needs. Therefore, before acting on any financial product advice in this email, you should consider, with or without the assistance of an independent adviser, the appropriateness of the advice, having regard to your objectives, financial situation and needs