Morning all,

 

“I picked a good week to give up sniffing glue”,gotta love quotes from “Flying High”. Having watched the film “Flight” last night it seemed appropriate given what is happening in the US.A Pilot at the wheel under the influence trying to land the plane without crashing and although he succeeds, his reputation is in tatters after admitting that he was under the influence all the time. Sounds like Uncle Ben, well a bit anyway although he is not as good an actor as Denzel. But the big dummy spit continues in the US. Interesting that only a few weeks ago all the talking heads on TV were telling everyone that it was going up forever and that they were all limit long and maximum bullish….you see that’s the problem when everyone is long..no where left to buy anymore…So it should come as no surprise that at the first sign of trouble, everyone has tried to squeeze through the same door at the same time…I have often said in these ramblings how the new age of computers exaggerates the moves..well hold tight cos this will be one of those.

 

Of course it wasn’t just the US worries on tapering that really hit the market,lets face it we all knew it would end sometime it was just trying to be so smart to get out just before it did..of course we never do..who wants to leave a great party even if you know it gonna get busted any minute.The real concern ,especially for us  downunder was the (not so ) flash Chinese PMI number. This was yet another nail in the coffin! But the bigger nail was news that the overnight bank lending markets were freezing up and interest rates of 25% on overnight lending were seen in places..this is the stuff of Lehman nightmares. Dummy spits and this caused havoc across all markets last night and will ensure we hit 4650 somewhat sooner than I thought..Once again currency is the canary in the goldmine..that’s if there are any gold mines left..NCM will be badly savaged today and at some stage may have to tap shareholders on the shoulder for some more money to waste! They have recalled their Investor Relations man from North America to try to handle the fall out.

 

So where to? Back to 4650..small bounce then the slide will resume to 4500…when it gets there its gonna be time to get set…we need to clear out the last remaining bulls and get some serious towel throwing going…hasn’t happened yet..but as they say it will happen…Let’s face it does Ben really want his legacy to be another financial crisis…course not…he will be back with soothing words..you know it makes sense!

 

Stick to quality and look to top up Aussie banks and yield stocks in this environment..of course you could just do nought which is probably gonna be the case until the dust settles!

 

 

Idea of the Day

 

Reasons to be cheerful (Part 3) …not sure there are any!!

 

Yesterday we saw the US dollar earners outperform…analysts forecasts are for a 90 cents dollar…these ones will continue to do well…QBE was a stand out yesterday…as were CSL…outperform is relative though …in a plane crash everyone dies…unless of course Denzel is flying upside down and drunk and high!!

 

Still maybe time to batten down the hatches and wait for the moment to pounce on your favourite bombed out blue chip high yielding stock….down over 100 again today ..so Terrain! Terrain! ..pull up! ..pull up!!

 

 

Things that make me go all SHIBOR

 

1.Here’s a term that we will start hearing a lot of SHIBOR-its the Shanghai Interbank Offer Rate…ie the rate banks lend at to each other..hit 25%!!!Ouch!!

 

2.And for all those punters that thought the  US rally was based on fundamentals and not the free money train that Benny and the Inkjets were peddling….think again?

 

The US markets since Ben opened his mouth again!

3.Gold got absolutely poleaxed last night as the US dollar rose..no one wants shiny dirt anymore…margins were hiked in the US too just to add to the turmoil…not going to be much fun for gold stocks!!!

4.Greece looks like it is on the verge of imploding again..looks like the coalition is on the verge of collapse and they can’t find the money again..time for Super Mario!!

5.Financiers to the beleaguered ex billionaire big Nathan appear to have taken a haircut of about $50 million on their identifiable exposure on the deal, outlined on Wednesday when the financiers seized control of his 20 per cent block of shares in Whitehaven. My wife was telling me that once Trump and his daughter were walking in a NY street when they came across a beggar. He turned to his daughter and told her the man was lucky as he had aout $8bn more than he had…gotta love debt!

6.From Bloomberg this morning-The People’s Bank of China added 50 billion yuan ($8.2 billion) to the financial system yesterday after a cash squeeze drove money-market rates to record highs, said Hao Hong, chief China strategist at Bank of Communications Co.The sum was supplied to a single lender through short-term liquidity operations and more banks were in talks to obtain financing, Hong said in a phone interview, adding that this is “proper and appropriate” use of the mechanism. Overnight funds were lent at 5.1 % and seven-day money at 5.4 %, he said, citing unidentified people in the industry.

7. For men competing in triathlons past the age of 40, the grueling slog to the finish line could be their last.As the average age of competitors in endurance sports rises, a spate of deaths during races or intense workouts highlights the risks of excessive strain on the heart through vigorous exercise in middle age. Among the recent casualties: Michael McClintock, senior managing director of Macquarie Group Ltd. and a triathlete, who died at age 55 of cardiac arrest earlier this month after training….I knew it could n’t be good for me!!still as someone doing the City to Surf in 8 weeks time I will take it slightly easier after reading this.

8. Aurizon chief Lance Hockridge said he was confident the company’s $6 billion port and rail deal with GVK Hancock Coal will proceed despite speculation the Indian company will pull the plug on its mine in the Galilee Basin in Central Queensland. Mr Hockridge admitted not all projects in the Galilee – which include Indian power giant Adani and Clive Palmer’s Waratah Coal – would get off the ground.

9. Elders could potentially cut jobs from its rural services business and shed a significant part of its network. It is suggested that the figure could be as high as 500 jobs. Elders was counting on rival Ruralco picking up Elders Rural Services for about $300 million to pay down the company’s burgeoning debt of $387 million, compared with its market capitalisation of $33 million. Another corporate disaster!

10. Rio Tinto will begin exporting copper and gold from its $6.2 billion mine in Mongolia for the first time on Friday after negotiating with the country’s government over export revenue and overcoming cost blowouts. Oyu Tolgoi is a partnership between the government of Mongolia, which owns 34 per cent, and 66 per cent owner Turquoise Hill, formerly Ivanhoe Mines. Rio holds a 51 per cent stake in Turquoise Hill and manages the Oyu Tolgoi project.

11. More Americans than forecast filed applications for unemployment benefits last week, showing progress on reducing joblessness remains uneven amid slower growth this quarter. Jobless claims climbed by 18,000 to 354,000 in the week ended June 15 from a revised 336,000 the prior period, the Labor Department reported today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for 340,000.

And finally…..

‘You know, somebody actually complimented me on my driving today. They left a little note on the windscreen. It said, ‘Parking Fine.’ So that was nice.’

Have a good weekend ..back on Sky TV this afternoon at 5.30….and eight weeks to go to my charity run!!

 

Clarence

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