Morning all,

Even harder to get going this morning after a long weekend. Thanks Liz…after all my years living here ,I still find it weird that we have a holiday for the Queen’s birthday..UK doesn’t get a holiday!!Anyway I will take it…

Our market remains under pressure despite the rise of the US market on Friday. Last night did nothing but Friday will seem a lifetime ago as Chinese numbers over the weekend once again show their economy is stuck in the slow lane..this and the dollar will continue to weigh on us here..Little Aussie battler has touched 94 cents over the last few days…be careful what you wish for Mr Stevens…good news with the Aussie down is commodity stocks get a small boost as does what is left of our manufacturing business but the bad news is at the bowser for motorists and the inflation genie that was slayed due to the high dollar is looking for a way out of the bottle..I believe the Aussie will go sub 90 cents as we run into the farce that we are going to call the election!

My market view remains that we are going to continue to experience the doldrums pre September and Mr Rabbit’s ascendency to the throne…the market is now unchanged for the year…rather pleased that my “Sell in May” call has worked out again!! I would continue to target reliable sustainable yield in this tricky market and the banks and TLS are in my spotlight..yes I am looking at you …still!! Despite what the masters of the universe say at Goldman sucks!

The ASX has moved this morning to raise $553M of capital in a 2 for 19 entitlement offer. The capital will be raised at $30/ share which is a 16% discount to the last close.Apparnetly it will be used to retire debt and bolster its balance sheet ! Will suck some of the wind out of the sails today…I would hope we could see a modest positive day but once again look to Japan…the bath tub of money seems to be sloshing from east to west at the moment!!Sell Eastern marlets like Australia and Japan and buy UK and US…time will tell!!

Idea of the Day

BUY GEM for continued growth and dividend expansion

GEM are a child care provider..they are NOT Eddie Groves!!!They are very conservative in a nice government supported industry and they do it very well…they buy centres on a low multiple,increase attendance and are growing rapidly…the dividend yield is growing and currently around 5% fully franked..today they have announced another 17 centres bought at around 4 x EBIT..cheap..they stick to this number and do NOT pay up…paying up was ABC’s problem..not GEM..have met the management and am impressed…one of the best perfroming stocks around this year..what is not to like…two things that continue despite recessions etc ..death and childcare!!But childcare is better as the Government subsidises it!!

Things to make me go all Minty!!!

1.Read this morning that the biggest threat to the Aussie Cricket team regaining..note regaining the Ashes, was the mints the English team chew which apparently allows them to ball tamper!Are you for real…minty freshness is the key apparently!

2.In the world of sport or at least surf Quicksilver in the US have missed 2^nd quarter revenue targets despite saying a few weeks ago that it was on target to swing back to earnings growth..sorry guys, ain’t gonna happen…obvious implications for Billagone who will continue to struggle…I am not hopeful on a good outcome for this one I am afraid… I reckon the administrators will be salivating at the moment!!

3.China’s industrial production rose a less-than-forecast 9.2 percent last month, while export gains were at a 10-month low and imports dropped, data over the weekend showed.

4.PetroChina has lauded Woodside Petroleum’s Browse liquefied natural gas project as a “world-class” project after completing a $US1.63 billion deal to take over BHP Billiton’s circa 10 per cent stake in the venture. Shrugging off doubts about the viability of the project, which was shelved by Woodside in April under its original configuration as a massive onshore LNG plant at James Price Point, PetroChina singled out the quality of the resource and of the project partners in a formal statement that also pointed to its strategic significance in its global portfolio.

5.Investment banks’ core revenues in Australia are again under pressure in 2013, with fees sinking to their lowest year-to-date level in three years, despite an upturn in equity capital markets activity. Fees across mergers and acquisitions advisory, equity capital markets and debt capital markets work dropped 12 per cent to $US573 million in the year to June 7, compared to the same period in 2012.

6.In Japan the rise of Abenomics and the rush to devalue the yen is having a devastating impact on Japanese energy costs…as a country that imports all its energy it’s a shock to the consumer indeed..Japan’s crude basket has risen 35% in the last six months and is now at its highest since 2008….leaving a cash strapped consumer to ponder the benefits of the massive stimulus..no wonder the Nikkei has fallen 20% from its high!

7.In Newcrest, investors have slammed their handling of a dire market update and $6 billion of write-downs that are now being investigated by the corporate watchdog, putting more pressure on management as concerns over performance and governance mount….these guys have made one stuff up after another and it beggars belief that they are still in a job…looks like some analysts may have come to the same conclusion a day before the announcement..really? Go the ASIC…still the bigger issue is the complete mismanagement of one of the country’s biggest gold miners..it’s a disgrace!! Class action coming I reckon!!!

8.Fed Bank of St. Louis President James Bullard said inflation below the central bank’s 2 % target warrants prolonging the “aggressive” use of bond buying to spur growth and bring down unemployment. While “labour market conditions have improved since last summer,” Bullard said in remarks prepared for a panel discussion in Montreal, “surprisingly low inflation readings may mean the Committee can maintain its aggressive program over a longer time frame.” That’s why everyone is long to the eyeballs of the Dow.

9.Apple has tried to stem the flow with a new look to its operating system..not sure it’s quite the game change that the iphone was!!!No wonder the stock is 438!!Had a look at the web site this morning…hope increasing the battery life is addressed..iphone five is useless as the battery is gone in 60 seconds..also importantly the system is COMING THIS FALL!!Too little too late me thinks!!

10.And as every hedge fund in the World tries to justify their fees they are all maximum long,leveraged to the hilt and all bullish the Dow and addicted to the Benny Stimulus package…numbers like these are worrying.. “US dollar notional net exposure rose by 11% to $463bn notional in 1Q13 – setting a new record. The bullish positioning indicates that risk appetite is back to the peak set in 2007.At of the end of 1Q13, hedge funds owned 5.0% of the Russell 3000 float shares, second only to the 2Q08 peak of 5.1%”.

 

11.And now instead of the fat finger we have the sleepy finger..a German bank clerk who fell asleep briefly whilst typing “2” has inadvertently transferred 222m Euros to a retiree…nice…

And finally……….

When a preacher’s car broke down on a country road he walked to a nearby roadhouse to use the phone. After calling for a tow truck he spotted his old friend Frank, drunk and shabbily dressed at the bar.

“What happened to you Frank?” asked the good reverend. “You used to be rich”

Frank told the sad tale of bad investments that led to his downfall.

“Go home”, the preacher said “Open your Bible at random, stick your finger on the page and there will be God’s answer.

Some time later, the Preacher bumped into Frank who was wearing Gucci shoes, sporting a Rolex watch and had just stepped out of a Mercedes.

“Frank” said the preacher, “I’m glad to see things turned around for you”

“Yes preacher, and I owe it all to you” said Frank. “I opened my Bible, put my finger down the page and there was the answer – Chapter 11”

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