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Morning all,

milky bar kid

Strange days indeed.Kev07 has now become Kev13 as he rides to the rescue of the country…really..this guy was a Rudd dudd last time out so not sure what will change. Anyway seems an unbelievable schmoozle and gotta love Bill Shortens impression of Judas..think he would give Tim Minchin a run for his money!!Mind you the biggest shock overnight was Federer being knocked out of Wimbledon!!

Anyway enough about the Circe du Canberra…let’s get on to that other circus Wall Street. Last night we had another big rally on the US markets as GDP was revised downwards big time.

“The US economy grew by less than previously estimated in the first quarter of the year, the Commerce Department has said.Gross domestic product – which measures annual economic output – grew at an annualised pace of 1.8%, down from an earlier estimate of a 2.4% rise.

Usually that is a bad thing but not in this mixed up Lola World. Bad figures are good because that means that the stimulus will go on longer!

So today we will see more gains as the year end touch up exaggerates things too..expect to see BHP RIO etc do well and the Banks to find their feet…the SPI was up 26 but think we may see more than that today especially as it’s the 27th June!!Gold was hammered again but there is some support creeping in for the miners as they look possibly a bit cheap on corporate action. HOWEVER at these Gold prices production will be uneconomic for a huge swathe of the industry…expect lay offs, production cuts,write downs and service companies sacked as things go from bad to terrible…no respite and only the strong and well funded (or hedged) will survive. I remember the good old days when Gold companies hedged their production forward…that’s what the markets are there for really..speculators take the risk, companies reduce their risk…question then is what the ***happened? Was it all just greed or did they believe the hype that Gold would go to 5000 bucks an once! So they became speculators too!!

I remain convinced that the market is basically going nowhere until the election is out the way..looks like that may come a bit sooner perhaps but this quarter will be a lot more volatile than the previous one..that does offer opportunities for the brave..but you have to sell the rallies and buy the dips..talked about this on Sky TV yesterday as investors need to actively manage their portfolios more these days. It is hard to sell when all around are buying and similarly it’s hard to buy when the world is caving in but if you have discipline and a price that you are happy to buy a stock at stick to it..

Idea of the Day

In these tough times and increased volatility it’s hard to make money in the small ones..Best to stick to the large caps and concentrate on the defensives and banks..still love the yield these guys offer and the growth opportunities if the economy here starts to recover. Especially if we get a change of government and some of the red tape is thrown off …best bet is still to back the coalition and the return is getting better and over a shorter period of time!!!

In banking land I would favour WBC,CBA,NAB and ANZ in that order. TLS is a buy in the 450’s and the Aussie Dollar earners like BXB ,AMC,NWS should be looked at especially if they fall away a bit if the dollar strengthens. It will not last!

Things to make me go Kev13…..

1.ANZ, CBA, WBC, NAB: The falling Australian dollar will boost the earnings of the big four banks by hundreds of millions of dollars next financial year, cementing their positions as some of the most profitable financial institutions in the world. ANZ will be the major beneficiary from the weaker currency but CBA, NAB, WBC will also receive a profit boost.  The AUD has fallen by more than 10 per cent against the USD and other currencies such as the British pound over the past two months, leading analysts to re-evaluate their profit forecasts for the major banks.

2.Barrick Gold  may yet cut more jobs in Australia as part of a downsizing exercise deemed necessary because of the slumping gold price and market uncertainty. Barrick announced on Wednesday it had laid off a further 32 people from its regional office in Perth after completing a company-wide review of its business structure.

3.Downer EDI is the latest mining contractor to face job casualties as the slew of cuts across the mining sector continues to ripple down the food chain. Downer confirmed it would make 185 positions redundant after the BHP Billiton Mitsubishi Alliance (BMA) announced it was taking some of its mining services work at its Goonyella Riverside mine in-house from the start of next month.

4.Paladin shares have been pulled back to near 52-week lows because of a delay in a planned debt-reducing sale of a minority equity position in the group’s flagship Langer Heinrich operation in Namibia. It had been hoped that Paladin would make inroads into its $US740 million debt pile by making the sale the news of which pushed the shares from an April low of 70c to more than $1 a share in late May.

5.That’s another fine mess… Rio Tinto  is contemplating a potential sale of its troubled coal unit in Mozambique. Rio is weighing up a whole or partial sale of its troubled division and has run a contest among several investment banks to pick a financial adviser to help with the process. At the start of this year, Rio took a $US3 billion ($3.24 billion) write-down on its Mozambique coal assets, which were bought through the takeover of Riversdale Mining in 2011

6.U.S.-listed bond mutual funds and exchange-traded funds saw record monthly redemptions of $61.7 billion through June 24 amid signs the country’s central bank may scale back its unprecedented stimulus.

The redemptions surpassed the previous monthly record of $41.8 billion, set in October 2008.

7.Gold fell heavily overnight again…longest losing streak since 1920!!!And at present levels it is now below the cost of digging the stuff up for lots of miners .Back to the Internet guys quick!!!

gold costs

8.Billionaire Marc Rich, who invented modern oil trading and was pardoned by President Bill Clinton over tax evasion, racketeering and busting sanctions with Iran, died on Wednesday in Switzerland aged 78.He was also the father of Glencore.

9.With all the turmoil in bond markets, Goldmans has looked at the most leveraged banks in the World!!!Good to see the French come out on top and unsurprisingly most are from Zombieland!!!
banks leverage

10.China said it will start an investigation to ensure the accuracy of data filed by companies as part of efforts to improve the reliability of statistics in the world’s second-largest economy. There is an urgent need to prevent fraud in data submission, National Bureau of Statistics head Ma Jiantang was cited by China Information News today as having said on June 24. Those found submitting inaccurate information for major statistics may be “severely punished,” the newspaper, published by the bureau, reported without citing anyone.

And finally…thanks to my colleague Marilyn for these..

Paddy says “Mick, I’m thinking of buying a Labrador. “Bugger that” says Mick “have you seen how many of their owners go blind?”

 

I saw a poor old lady fall over today on the ice!!  At least I presume she was poor – she only had $1.20 in her purse.

 

My girlfriend thinks that I’m a stalker. Well, she’s not exactly my girlfriend yet.

A wife says to her husband you’re always pushing me around and talking behind my back.  He says what do you expect? You’re in a wheelchair

And I have under seven weeks to go til I run the 14.5 kms the City to Surf….if anyone is interested in sponsoring me here is the link…had a phone call from Starlight yesterday to thank me and give me a T Shirt to run in !That’s nice!

 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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