Morning all

We ended the financial year not with a bang but with a  whimper. However for 12/13 the ASX 200 was up around 19% so not too shabby at all..of course most of the gains was concentrated in yield stocks especially financials.Resources and especially golds were horrible and the industrials did ok. The big rise in the market though was not through increased earnings in fact earnings went backwards..no the big rise was in the multiples that punters were prepared to pay for thise earnings…at some stage though earnings have to improve..we can’t keep the market pushing higher on just a P/E expansion story..no way Jose!…And even the yield argument will wear thing!!

In big news from Friday the Aussie Dollar got a thumping back to a 3 year low just about and the Gold price had a big rally,up 2%…SPI fell as did the US market so expect a dull day to start the week and the index to lose around 20 ish I reckon…Golds will be better but they have been finding a level for a few days whilst the price has been falling so the reaction today will hardly be meteoric but at least a nice warm glow…NCM are starting to attract some spec players as the blood in the water is leaking and that usually brings sharks!

So what’s in store for the new year..well maybe we will learn when the election is that would be nice as that probably holds the key…however we will see the Aussie dollar to stay pressured, the Us economy to continue its tepid recovery as China continues to slow and Zombieland goes no where. Japan will draw the ire of all its neighbours as it gets its currency down ,prints money and tries to throw off the shackles of the last two decades..not going to happen..Our market will bumble along at these sort of levels for the next few months until we get Rudd or Abbott in the hot seat..not sure who is worse! Rates around the world will start to edge up especially in the US and …you know what..nothing much will change …the big focus will be on the Fed turning off the free money in the World…that will be pivotal….handled well it will be seemless..handled badly it will seem a lot less!!

Idea of the Day

Shanghai market has fallen 21% since mid may due to the credit crunch there…looks like that may be calmed if so maybe a good time to have a look at the ETF IZZ which is an investment in the FTSE China 25…pulled back to support around 3500…top was 400 a few weeks ago…interesting!

Expect Volatility to continue in the coming months as the Fed gets nearer to the dreaded tapering!! Volatility provides opportunities which is a good thing!

Few things to look forward to this week..

1.the Japanese release the results of their Tankan Survey Monday

2.RBA keeps rates on hold Tuesday

3.Chinese PMI on Monday and Wednesday..so big that release it twice

4.EU and BOE rate policies on Thursday

5.US jobs numbers Friday.

 

Things to make me go mmmm!

1.Billabong International -Sources said NY hedge fund Centerbridge Partners had bought $80 million worth of Billabong debt from Westpac and HSBC. The latest sale by Westpac over the weekend comes as private equity suitor Altamont Capital Partners arrived on Friday to conduct further talks with Billabong management about its proposal to refinance the balance sheet and buy one or two brands.

2.Santos says the industry’s embrace of revolutionary floating LNG technology is being driven by high costs and remote discoveries but must also be accompanied by a push to maximise the creation of jobs for Australians.

3.Vale has added a third project, the Degulla mine in Queensland’s Galilee Basin, to its list of Australian coal assets up for sale. The sale comes as Vale tries to make its Australian operations profitable in their own right. It follows Vale’s billion dollar write-down of its Australian coal assets earlier in the year.

4.Great set up for the Lions v Wallabies clash at Sydney this weekend…Go the Lions!!

5.Confused about the numbers that come out of the US at times!!!Business activity in the U.S. cooled more than projected in June, a regional report showed, as fiscal constraints and stagnant export markets buffeted manufacturers. Consumer sentiment held close to a six-year high in June as higher home values gave Americans more reason to be optimistic about the economy.

6.Below is a chart of the Baltic Dry Index which is the cost of moving bulk commodities around..as you can see the last month has seen a huge pick up …does this mean the Global recovery is gathering pace? Not sure but if everyone is moving more stuff around that’s a positive.

 

 

 

7.Samsung Electronics Co. lost $25.3 billion in market capitalization last month, more than the value of competitor Sony Corp. ,as sales of its flagship Galaxy S4 smartphone fell short of investor expectations..seems the World can only buy so many smart phones no matter who makes them!

8.China’s President Xi Jinping said officials shouldn’t be judged solely on their record in boosting gross domestic product, the latest signal that policy makers are prepared to tolerate slower economic expansion.

The Communist Party should instead place more importance on achievements in improving people’s livelihood, social development and environmental quality when evaluating the performance of officials, the Xinhua News Agency reported June 29.

9.Good to see the US has been bugging is Zombieland friends too…they looked really please with that… German Justice Minister Sabine Leutheusser-Schnarrenberger: “If the media reports are correct, then it is reminiscent of methods used by enemies during the Cold War. It defies belief that our friends in the US see the Europeans as enemies.”    You sure they don’t!!!!

 

And finally….

Few quickies to start the week….

The Grim Reaper came for me last night, and I beat him off with a vacuum cleaner. Talk about Dyson with death.

A mate of mine recently admitted to being addicted to brake fluid. When I quizzed him on it he reckoned he could stop any time….

I went to the cemetery yesterday to lay some flowers on a grave. As I was standing there I noticed 4 grave diggers walking about with a coffin, 3 hours later and they’re still walking about with it. I thought to myself, they’ve lost the plot!!

My daughter asked me for a pet spider for her birthday, so I went to our local pet shop and they were $70!!!   Blow this, I thought, I can get one cheaper off the web..

Have a great start to the New Financial year! Six weeks til the City to Surf…scary!!

 

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