Remind me to not to have a glass of wine at lunch before writing this!!

Don’t you love headlines such as “Aussie Dollar gets massacred!” For years now we have been complaining with one hand (not sure that’s the right metaphor) about the high Aussie but basking in its strength and buying up the rest of the World in a self-righteous explosion of superiority. Then when things turn against us and the Aspen ski trip is looking a tad more expensive, we get these scaremongering headlines of doom and gloom, death to the Aussie Dollar and all leave cancelled. Really, isn’t this what the plan was! I am sure the RBA guys will be happy. Inflation under control, lower Dollar helping local business and vindication of their rate settings. So today after the large falls on the Dow it was hardly surprising to see our market down 40 early but the banks and yield stocks once again proved irresistible to local guys. As the day wore on though apathy took over and we just milled about as the Nikkei gave up its gains and dropped below 13,000 closing near its lows at 4781 with more damage done on the close. Resource stocks weren’t too bad with BHP Billiton (A$33.77, -0.1%) posting gains and even RIO Tinto (A$54.07, -0.5%) only slightly down. Of course Newcrest Mining (A$13.36, -6.9%) suffered again as they continued their slide towards 12 bucks, no bargain hunters out there prepared to catch a falling knife. In financials Westpac Banking (A$27.71, -1.7%) were the worse or the big fab four whilst QBE Insurance Group (A$15.23, -1.9%) finally succumbed to some selling. Suncorp Group (A$11.96, -2.6%) fell heavily after QLD lost the first round of State against State with Bank of Queensland (A$8.30, -2.2%) also taking a Gallen (t) hit to the face after last night’s mighty contest.

Gold continued to be pressured as Kingsgate Consolidated (A$1.875, -2.8%), Evolution Mining (A$0.84, -2.9%), Regis Resources (A$3.93, -3.9%) and Silver Lake Resources (A$0.87, -6.5%) suffered. Iron Ore stocks gave up today despite the underlying staying stable overnight, Atlas Iron (A$0.83, -3.5%), Fortescue Metals Group Ltd (A$3.43, -3.4%) and Arrium (A$0.765, -4.4%) all weaker.

Sector wise it was all pretty red with Telstra (A$4.60, -1.7%) succumbing late, other defensives down like Woolworths (A$32.08, -0.7%) and Wesfarmers (A$37.97, -1.6%) plus energy stocks Woodside Petroleum (A$35.28, -1.5%), Oil Search (A$7.91, -1.6%), Karoon Gas Australia (A$5.45, -3.0%), Santos (A$12.51, -1.8%) and Origin Energy (A$13.02, -0.6%).

There was really no-where safe today with broad based losses accounting for the dip below 4800.How we remember those halcyon days of April when the market was 5200.

Big winners today included Ainsworth Game Technology (A$3.89, +6.3%), Magellan Financial Group (A$8.75, +4.8%) (were a big loser yesterday!), Xero (A$12.05 +3.88%) Independence Group NL (A$3.35, +2.8%) and Codan (A$2.99, +4.2%) whilst in the naughty corner with a pointy hat on were Flexigroup (A$4.30, -5.1%), IOOF (A$7.59, -5.5%), Senex Energy (A$0.565, -4.2%), WorleyParsons (A$19.20, -4.4%) and Nufarm (A$4.29, -4.7%).

Volume was still on the thin side as players continue to watch from the sidelines, waiting to pounce. Like a tiger!

Stocks in the News

Investor day at Fairfax Media (A$0.59, -1.7%) today as they announced digital subscription prices. The future has arrived. Unfortunately the stock didn’t feel quite as bullish with a small profit downgrade weighing on shares. The good news ,for those that don’t work there, is Fairfax Media will deliver an extra $60 million in cost reductions above the $251 million already promised to the market following a restructure of its print and digital operations. Fairfax is on track to reap savings of $311 million by financial year 2015 following a restructure which began last year which saw redundancies and a management shake-up.

In house stocks Nexus Energy (A$0.089, -3.3%) presented today in our offices but shares finished weaker.

Qantas Airways (A$1.485, +0.7%) Qantas and China Eastern Airlines’ Hong Kong budget airline venture has sold a stake in their airline to a company founded by billionaire Stanley Ho, which will help pave the way for an operating license. The low-cost carrier, called Jetstar Hong Kong, sold a 33.3 per cent stake to Shun Tak Holdings, Qantas said this morning. Qantas and China Eastern will hold 33.3 per cent each, according to the statement.

Australia’s trade balance has recorded its third consecutive monthly surplus, despite a fall in exports during April. Australia recorded a trade surplus of $28 million in April, according to figures released by the Australian Bureau of Statistics. This was well below economist expectations of a surplus around $200 million and followed a surplus of $555 million in March, and a surplus of $203 million in February.

Good that the Commonwealth chief economist Treasury chief economist David Gruen told a Senate hearing ,that we are going through the biggest mining boom we have ever seen. Gone through may be more appropriate! Maybe in Canberra! But that will finish my friend when Tony gets in! Ready with your parachute?

Tomorrow’s News Today

Are you thinking what I am thinking B1… startling news as the ABC has cancelled “Bananas in Pyjamas”. Despite being a huge hit here, apparently it does not sell overseas. Maybe TEN could pick it up and turn it into a reality show. Australia had talent!

PM Abe has announced that his third arrow is actually taking some time to get out of the quiver. He said autumn will be the soonest his government presents legislation for his growth strategy, which spans health industry deregulation to enhanced cooperation with private businesses in replacing aging infrastructure from waterworks to highways. The program is what he calls the third arrow attacking two decades of malaise, along with monetary and fiscal stimulus. Better hurry up my old friend before it’s too late. You have had 20 odd years to work this out!

In the award for “No Kidding Sherlock” the IMF has admitted it has made mistakes. It has admitted that it made mistakes in handling Greece’s first international bailout. The IMF said it was too optimistic in its growth assumptions and said a debt restructuring should have been considered earlier. Really? And if you pay $18 you can get the full report. Not sure that will raise too much revenue.

All that physical demand is taking it’s toll as India has increased the duty on gold imports for the second time in six months, in an attempt to rein in surging demand for the precious metal. The finance ministry said it had raised the duty to 8% from 6%.

Latvia will become the 18th country to use the euro after being approved for membership by the European Commission. In a report, the Commission confirmed that the Baltic state had met the criteria for joining the single currency, ie its completely broke and will need bailing out in two years after it has hidden all its issue off balance sheet. It’s like the ultimate IPO, float your entire country on the great Euro Exchange! Better than MYR!

The “Mouse that Roared”, tiny Gabon has moved to wrest better terms off multinationals after a clamp down on tax evasion and transfer pricing. The Oil minister is planning to reclaim the main onshore site of China’s Addax Petroleum which comes up for renewal in 2015.Citing breaches of contract and not enough brown envelopes around. If you are searching for your Atlas..think west Coast Africa!

Friday will bring Non-Farm Payrolls in the US. Expect a rally here in front of the long weekend tomorrow. Short covering will be in evidence!