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Morning all

Well, things are now starting to get interesting. Not only do we have the rug pulling going on in the US but China looks like it is setting itself up for a full blown credit crunch. The shadow banking system in China looks like it is finally starting to unravel. Now for those who don’t follow these thing shadow banking is a system whereby institutions offer the same services as banks such as credit and loans but they are not protected and cannot access central bank funding. In China this system has ballooned out of control and the Government is trying to rein it in. This is producing a whole world of pain and hurt for the whole banking system. Not pretty and the falls yesterday in the Chinese stockmarket,6%, are now reverberating around the world. Things could get nasty!

Another weak night in all asset classes with copper at a three year low, gold smashed again, Dow down, Zombieland still buggered and the Aussie dollar rose 1 cent! Really? Anyway after yesterday drop of 70 odd points expect another 40 today as we head down to that 4600 level that I have been talking about. As you will all know I have been bearish for some time for a variety of reasons but China is now just adding to that feeling. We have given up all the 2013 gains and a bit more now! The previous powerhouse in the market was the banks and yield stocks. The banks are coming under some funding pressure overseas as their costs are starting to rise with the general uncertainty facing the globe…hence the downward move in their share prices. Yesterday we had AMP as the latest to issue a profit warning..sorry, Charlie got that wrong as well! It seems all is not well in the land of income protection as more and more people claim on it due to job losses…who would have thought eh?And all the while the Official figures showing loads of jobs being created.

The debut of iselect was greeted with a wave of selling yesterday from a bunch of Meerkats. These guys are brutal and competition in this space is heating up. Iselect was supposed to be a shining beacon in a sea of red ink..not to be..one of the worse debuts for some time..worse than MYR and at least that had pictures of Jen Hawkins. Congratulations Credit Suisse..woofer of the year!

Idea of the Day

My view continues to be that these months pre the election will be sideways to down and there is no great imperative to wading in and bargain hunting. If you must then I still reckon the yield is your friend and the AUD/US dollar exposed stocks will hold up better. BUT even the pretty girls get hurt in the bus crash!

Things to make me go all Bunga Bunga…..

1.Bungasconi gets 7 years in jail…appeal to follow for ever!!!Nelson Mandela, jail then President..Bungasconi the other way round!!

2. “The Federal Reserve has fallen short of meeting its employment and inflation objectives,” Fed Chief Dudley said today in Switzerland. “This suggests that with the benefit of hindsight, U.S. monetary policy, though aggressive by historic standards, was not sufficiently accommodative relative to the state of the economy.”

3.Apple falls below 400 and heading lower…sorry guys you are now ex growth! Although I am a fan of Apple TV..new thing just added Qello..chocked full of music documentaries and concerts for 5 bucks a month…bloody good deal!

4. AMP may be forced to slash its dividend after a shock profit downgrade fuelled fresh concerns about systemic problems within the broader life insurance industry. Shares in AMP, one of Australia’s biggest listed fund managers, plummeted 13 per cent or 64¢ to $4.34 as investors punished the stock for the downgrade. AMP expects a lower underlying profit of $415 million to $435 million for the first half of fiscal 2013 as poor claims and lapse rates in its wealth protection arm.

5. Newcrest Mining has begun cutting jobs at its giant Lihir mine in Papua New Guinea as it recalibrates the operation to suit the lower gold price. By the end of the week, Newcrest is expected to lay off about 150 of its 2500 employees at Lihir.There is one job that should be added to this list ,the CEO…give him a  sword to fall on..maybe he is just negotiating his parachute package!

6. Wotif Group escaped yesterday after issuing a surprise profit downgrade, saying its full-year result would be up to 12.9 per cent below last year’s after sustaining significant “one-off” adjustments related to asset writedowns. Wotif expects to book a total $2.5 million asset writedown related to the value of selected Asia Web Direct domain names and IT development costs, which will crunch its net profit after tax to between $50.5m and $51.5m for the 2013 financial year.

7. It’s a sad state of affairs when NSA Whistleblower Edward Snowden has been forced to flee to the governments of China, Russia, Venezuela, and Ecuador in order to avoid rotting away in a US prison, simply for publicizing the government’s very unconstitutional crimes….this one quote is a little scary from Henry Kissinger in 1975..sums it up… “Before the Freedom of Information Act, I used to say at meetings, ‘The illegal we do immediately; the unconstitutional takes a little longer.'”…still if you lose your password in the US the NSA is a nice back up .

8.Wimbledon has started and the unthinkable has happened Nadal has been knocked out in the first round..Lleyton did well and Murray through too…but so long Mickey Arthur…two weeks to the Ashes and the English have shown they can choke with the best of them..Champions league loss to India!

9. Brazil’s President Dilma Rousseff has proposed a referendum on political reform, following nationwide protests. Ms Rousseff also pledged to invest 50 billion reais ($25bn, £16bn) in public transport, one of the protesters’ main grievances.More than one million Brazilians have taken to the streets to protest against rising costs, government corruption and the expense of the 2014 World Cup.

10.In a land far, far away… China’s biggest squeeze on credit in at least a decade is increasing the chance that Li Keqiang will be the first premier to miss an annual growth target since the Asian financial crisis in 1998. The danger is that putting the growth goal aside undermines public confidence in China’s economic policy making that’s already been shaken by limited communication on the government’s objectives behind the cash squeeze. The central bank yesterday contributed to the biggest drop in Chinese stocks in almost four years by releasing a week-old statement saying liquidity was “reasonable.”

11..Looks like Kev07 was behind the toppling of Mickey Arthur…couldn’t get rid of Jules so he started on the cricket team…nice work Kev..talk about taking the mickey!

And finally…….

A guy goes to the Post Office to apply for a job. The interviewer asks him, “Are you allergic to anything?”

He replies, “Yes, caffeine. I can’t drink coffee.”

“Ok, have you ever been in the military service?”

“Yes,” he says, “I was in Iraq for one tour.”

The interviewer says, “That will give you 5 extra points toward employment.” Then he asks, “Are you disabled in any way?”

The guy says, “Yes. A bomb exploded near me and I lost both my testicles.”

The interviewer grimaces and then says, “Okay. You’ve got enough points for me to hire you right now. Our normal hours are from 8 a.m. to 4:00 p.m. You can start tomorrow at 10 a.m., and plan on startingat 10 a.m. every day.”

The guy is puzzled and asks, “If the work hours are from 8 a.m. to 4 p.m., why don’t you want me here until 10 a.m.?”

“This is a government job”, the interviewer says. “For the first two hours, we just stand around drinking coffee and scratching our b**ls. No point in you coming in for that.”

Have a good day…7 weeks to go until City to Surf!!!need to step up the training!

Clarence

XXX

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

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