Morning all,

Overnight we saw weakness across the board. Now if you have been following my comments you will know that this is the scenario I have talked about for some time now…the Summer Doldrums…the US overvalued and everybody long!!Now if everyone is long who else is going to buy it? easy …no one…That’s the problem!!

Expect more weakness today and a fall down below the 4800 level..since my “Sell in May and Go” away call we have fallen from 5200 to 4800 ish…so where does the fall end..well, does seem like we are going to overshoot on my downside target ,in fact with hardly a day going by without a profit warning from someone is hard to see why the market will go up..it’s not exactly cheap on the downgrade basis..the overriding plus though is the yield of the banks etc..when things settle down ,and they will, the banks will be back yielding plus 6% fully franked yields..I would expect more weakness in the next month as tax loss selling and  a bit of panic starts to work its way through! Come July we will stabilise and then have some more nerves in August before we start to climb out of the abyss in September as the election issue is resolved…there is no such thing as a sure thing …elections are there to be won and lost…so keep your cash handy and use this weakness to pick up your favourite yield stocks in all this negativity…

Yesterday’s GDP figures suggest that the WA economy is going backwards in a hurry..there is recession talk in the West..things are bad…the number of jet Skis for sale in Perth has soared…Toyota Hiluxes have flooded ebay!

So todays call is down 40 early then a bit of bargain hunting followed by apathy as we wait for US jobs numbers on Friday. Of course if Abe announces that he is going to kill any more monsters (deflation) anything could happen..the Mother of Dragons may not be pleased and send the Nikkei down another 500 points…did get a bit silly that index though..reality left the building some time ago!With Elvis!

Idea of the day

Both FXJ and NWS having investor days…still like this space but would avoid the REA,CRZ and SEK prefer FXJ over the longer term…and maybe if you hold SYD time to take some profits as overseas travel gets a bit more expensive…justin time for my daughter to go to Europe..bugger!!

Things to make me go very courageous minister!

1.Fairfax Media is to introduce subscriptions for the digital versions of The Sydney Morning Herald and The Age from next month, 18 years after the launch of the newspapers’ websites. The industry standard for digital subscribers is The New York Times, which had 676,000 paying digital subscribers at the end of March – almost as many as its 731,000 print customers. FXJ has significant traffic numbers on its SMH website and its mobile site attracting average daily unique browsers of almost 840,000 and The Age about 587,000.Now they just have to translate that into paid subscribers and Robert is your fathers brother…although the prices do look a little steep compared to NYT..still what’s new downunder eh..gouging ..never!!

2.Australian mid cap miners are burning through so much cash that they may be forced to merge with rivals, sell assets cheaply and raise money at discounted rates, a new study says. Analysis shows that a sample of 354 listed base metals and coal companies with a market capitalisation of $500 million or less have, on average, just under two years left of spending at the current rate. Some risk collapse!

3.Alcoa has been downgraded by credit agencies to junk. Not many companies in the Dow have that honour.In fact only two since 1980..the other one was GM!

4.Struggling retail chain Target is primed to announce hundreds of job cuts and a possible operational restructure following its profit warning last month, as the Wesfarmers-backed business tries to dig itself out of a financial hole.

5.Now we all know that the US is the home of innovation….one of its big growth areas especially in biotech and tech stocks, but listening to the reports last night of a new innovation that will not be so welcome. They are called Patent Trolls..apparently the US has got so litigious and the patents so nebulous that companies are suing big corporates for patent infringement..the one I heard about had sued and won millions of dollars claiming it invented podcasting!!in 1998…they are called Personal Audio!..apparently it is easier to pay these trolls off than fight them in court. Looks like the land of the free is having its hands tied behind its back on this..some estimate that it is costing $29bn a year for industry!!Just want you to know that I am in the process of filing a patent for the question mark…looking for a big licence fee for this one!!

6.Good to see a couple of genius analysts cutting BBG to underweight..probably should be underwater!

7.More Aussie Dollar weakness as the poor little love has slumped to near 95c…now this is a good thing…remember how we bleated when it was 1.10!!Be careful what you wish for…anyway the biggest casualties will be overseas holidays,petrol prices,bit of imported inflation and our national pride but it will help the transistion from the mining boom to a new world of …what…not sure!!

8.The Fed’s little beige book was out overnight..compulsory reading  no doubt ..but the upshot was .. The economy expanded at a “modest to moderate” pace in 11 of 12 Federal Reserve districts, with broad-based gains ranging from business services to construction and manufacturing, the central bank said today.

9.US Treasuries rose, pushing 10- and 30-year yields down the most in almost two months, as a slide in stocks around the world increased demand for the relative safety of U.S. government securities. Bonds extended gains after ADP Research Institute said U.S. companies added fewer workers than forecast.

10.Looks like the lies from China are being exposed.. China’s crackdown on fake export invoices used to disguise money flows is probably trimming the nation’s trade figures, revealing subdued global demand that will weigh on economic growth. Outbound shipments may have grown 7.1 %in May from a year earlier, less than half the previous month’s reported 14.7 %, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9 % from April’s 16.8 %

11.This is extraordinary..it seems that two Labour MPs have already started clearing out their offices..there’s confidence for you..great look..if that is the case why not just call the election early and put us all out of our misery..

And finally,

One day I accidentally overturned my golf buggy. Elizabeth, a very attractive and keen golfer, who lived in a villa on the golf course, heard the noise and called out, Are you okay, what’s your name?”

“Its Jack , and I’m Okay thanks,” I replied.

“Jack , forget your troubles. Come to my villa, rest a while, and I’ll help you get the cart up later.”

“That’s mighty nice of you,” I answered, but I don’t think my wife would like it.”

“Oh, come on,” Elizabeth insisted.

She was very pretty, very sexy and persuasive…. I was weak.

“Well okay,” I finally agreed, and added, “but my wife won’t like it.”

After a restorative brandy, and some creative putting lessons, I thanked my host. “I feel a lot better now, but I know my wife is going to be really upset.”

“Don’t be silly!” Elizabeth said with a smile, “She won’t know anything. By the way, where is she?”

“Under the cart!” I said

 

Have a great day..back on Newcastle radio today and Sky tomorrow…and on this day in 1944 the Allies landed in Normandy and began the slow process of pushing back the Nazi tide….brave men indeed..69 years ago..supreme sacrifice for a better World. We salute you.

 

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Clarence

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And for those in the twittersphere you can follow me on @henryj007

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