Morning all,

As the world watched Uncle Ben last night we finally got to see what he has in mind…seems that the soon to be Ex Head of the Fed has basically said “whatever!” He has told the markets that he will keep on going until the economic figures tell him to stop. So it’s not up to him to judge anything, it’s the numbers stupid…so with his target of 6.5% unemployment one of the keys to QEIII ending, I suspect we will have free money for some time to come… have to go back to pre GFC levels…and you know what the world has changed since then in more ways than just the GFC..

 

All still on Ben, at the last Humphrey B Bear/Jen Hawkins testimony ,Chuck Shumer (senior Democrat Senator) said “You are the only game in town.” So True!

So anyway to our market, yesterday was a nothing day but today well today will be huge…maybe…expect lackluster volumes again and probably Groundhog day today..resources a tad better especially in the Iron Ore space  financials not so rosy but still ok and the rest wafting around…..our biggest issue is the election…we have already seen Kev13 make up policy as he goes ..witness the demise of the salary sacrifice and car leasing game after this week’s announcements…seems a little strange that the Government wants Ford,Toyota,Holden etc to stay..they pay them to stay with subsidies to preserve jobs when clearly it cost way too much to build a car here and then they kill the car sales market with these tax changes..is it just me or is that really silly!!Maybe Ford was right to take their ball and bat and go home!

 

Expect a modest gain today as BHP continues to perform well as I suggested the other day and RIO ,FMG and other Iron Ore stocks help things along..should have a go at 5000 today ..

Idea of the Day

Well, still like BHP…lots of reasons…big..cost-cutting..oil up above $100…Iron Ore hanging in at nearly 130!(that’s $140 in Aussie dollars)…lower dollar….new management…yield..oversold…can get to 36 I reckon!

And in small stocks my main man Nick is very keen on a small gold stock called Soverign..SOC…recent good gold assays at their Hobbs Pipe 1 project at Mount Adrah…104m @1.6g/t from 292 m to 396..

Small cap and very speculative but if you are looking for high risk this looks interesting..here at 22 there is plenty of potential..could be a big deposit and the stock is only valued at $30m …one for the punter in all of us!

 

Things to make me go all Uncle Ben…

1.BHP Billiton, Rio Tinto, Fortescue Metals, Atlas Iron: all intend to push ahead with significant iron ore expansions, adding substantial tonnes to the export market at a time when China, the miners’ biggest customer, is predicted to cool steelmaking. This potential surge in production comes as the spot iron ore price remains steady at $US129 a tonne.

2.Envestra appears certain to knock back gas pipeline operator APA Group’s $1.3 billion offer on the grounds it offers little takeover premium, despite the limited prospect of any other bidders emerging.

3.IAG  is bumping up its profit guidance for fiscal 2013 as fewer claims, reserve releases and favourable credit spreads buoy the insurance giant’s earnings. IAG is forecasting an insurance margin of between 16.8 per cent and 17.2 per cent, up from the previously indicated 12.5 to 14.5 per cent target.

4.Doh!! Smartsalary: The $300-million sale of salary packaging group Smartsalary is on hold until after the upcoming federal election, after the government announced the removal of tax breaks for salary-sacrificed cars. Smartsalary, which provides salary packaging services to 80,000 employees, allowing them to replace part of their cash income with items such as car leases or work equipment, had been put for sale by its owner, UT Group, a Malaysian investment holding company, in a deal that could be worth up to $300 million.

5.Data today showed U.S. housing starts unexpectedly fell in June to the lowest level in almost a year. Work began on 836,000 houses at an annualized rate last month, the least since August 2012 and down 9.9 percent from a revised 928,000 pace in May, figures from the Commerce Department showed today in Washington.

6.Now down an incredible 45% from its May highs – the largest 10-week plunge since December 2010 – overall mortgage activity is languishing around the lowest levels of the post-recession ‘recovery’. Year-over-year, applications have dropped 44% which is close to the worst on record as applications and mortgage rates track one another.

7.China needs another round of “decisive measures” to make sure it continues its successful economic growth as its margins of safety are falling amid growing domestic problems, the International Monetary Fund said in its latest report. The IMF did not change its latest forecast for 2013 Chinese growth at 7.75 per cent, though it noted downside risks to the forecast. Its figure is above the Chinese government’s target of 7.5 per cent and also above most private economists’ forecasts of between 7 and 7.5 per cent….of course it will in time but then these guys are always behind the 8 ball!

8.Ausdrill Shares yesterday rose most in 5 years with volume 1.7x 3-months full-day average…corporate activity perhaps?

9.German prosecutors have indicted Formula 1 motor racing boss Bernie Ecclestone on a bribery charge.The charge relates to a $44m (£29m) payment to German banker Gerhard Gribkowsky of Bayern Landesbank, linked to the sale of a stake in F1.

10.Two tech titans, IBM and Intel, have reported big drops in net income.Intel reported a second-quarter profit of $2bn (£1.32bn), down 29% from a year ago. For its part, IBM saw earnings for the same period fall 17% to $3.23bn.Revenue for both companies slipped as well, with IBM’s falling by 3% and Intel’s down 5%.

11.And in Zombieland .. The parliament in Greece has narrowly approved a public sector reform bill that will see thousands of people lose their jobs. In a 153-140 vote, MPs backed the bill tied to the country’s fresh 6.8bn euros (£5.8bn) of bailout loans, needed to keep Greece afloat….great way to promote growth..sack more people and spread more misery..it is only a matter of time before Greece implodes..that is if there is anyone left there !

12. UK unemployment claims fell at their fastest pace in three years in June, adding to evidence the economic recovery is gaining momentum. Jobless claims fell 21,200 from May to 1.48 million, the biggest drop since June 2010. Economists forecasted a decline of only 8,000. Unemployment as measured by International Labour Organisation standards fell 57,000 to 2.51 million in the three months through May. The rate was unchanged at 7.8%.

And finally….

Just been to the gym. They’ve got a new machine in.  Only used it for half an hour, as I started to feel sick.  

It’s great though. It does everything –

KitKats, Mars Bars, Snickers, Potato Crisps, the lot..”

Back on radio today if you are in the Newcastle area!!

 

Clarence

XXX

 

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