Did you miss me? No probably not! Still it’s been a funny old week with a fall of around 70 points from last Friday’s levels with the start of ‘Tapering’ talk the biggest concern and all this is in a week when interest rates were unsurprisingly cut to record lows. The Aussie dollar even bounced on the news. Bit of book squaring on the close as it managed to hold above 5050 at 5055, down only 10 points in the end.

I think its fair to say that the volumes this week have been disappointing and after a tentative start to the week we got smashed on Wednesday by 90 odd points before a better day yesterday but once again today, confidence retreated to the sidelines. Earnings season gets into full swing next week but we have had some biggies this week, RIO Tinto Limited (A$60.25, +1.3%), Telstra Corporation Limited (A$5.08, -1.0%) and TABCORP Holdings Limited (A$3.27, -2.7%).

So far so good, no real surprises except I guess how good TLS was plus the cost cutting and stubborn iron ore price for RIO. We have seen good numbers out of China and the US and we have even seen better numbers out of  Zombieland although record Greek unemployment is a blight in a sea of goodness. We have even seen new kid on the Central Bank block, ‘King’ Carney gives the UK economy some “forward guidance” as he hopes to inspire growth through certainty. Certainly some green shoots from the UK as house prices recover and manufacturing also improving. Amazingly they still have some!

In today’s action we saw a miserable start to the session with a reversal of the SPI’s overnight strength as the big blob of Banking fell into a hole. Westpac Banking Corporation (A$30.77, -0.5%) led the way with all the others dragging their chains behind them ,at one stage down around 1.4% before sense prevailed and we had a small rally. The index hit a low of 5023 as Telstra Corporation Limited (A$5.08, -1.0%) fell away on growth concerns and the strategy that all Aussie investors hate hearing,”Overseas Growth Opportunities”. Nearly as scary as those words from a sixties band, ”This is one from our new album”!

Resource stocks had a great day as the old Mark Twain maxim about rumours of their death being exaggerated came home with a bang.RIO Tinto Limited (A$60.25, +1.3%) hit 60 bucks, BHP Billiton Limited (A$35.94, +1.8%) hit 36 and Fortescue Metals Group Ltd (A$4.01, +5.5%) hit 4 bucks. Back in September 2011 that package was 100 bucks. Four Banks were also 100 bucks(now 163!).Resources only just back there! Good comments and numbers from China on steel demand really helping these babies. And good to see some life left in the old dogs, Golds. Even Newcrest Mining Limited (A$11.48, +2.3%) rallied taking Silver Lake Resources Limited (A$0.705, +3.7%), Beadell Resources Limited (A$0.69, +4.5%), Evolution Mining Limited (A$0.775, +4.7%) etc with them.

Twenty-First Century Fox, Inc. (A$36.01, +2.0%) continued their run pursued by the hounds of News Corporation. (A$17.84, -0.1%) and other industrials, healthcare stocks fell  with Csl Limited (A$66.00, -1.0%) down whilst Cochlear Limited (A$58.32, -1.0%) continued to fall on deaf ears and Sonic Healthcare Limited (A$14.33, -1.2%) couldn’t find any friends. Brambles Limited (A$9.05, -1.8%) too weakened as did Sydney Airport (A$3.51, -1.1%),Transurban Group (A$6.95, -0.3%) and Leighton Holdings Limited (A$15.81, -2.2%) with property trusts and other financials also weaker. Wesfarmers Limited (A$40.75, -0.6%) and Woolworths Limited (A$32.80, -0.8%) weakened so too did Macquarie Group Limited (A$43.75, -1.6%),Suncorp Group Limited (A$12.38, -1.0%),Coca-Cola Amatil Limited (A$12.64, -1.9%) and Insurance Australia Group Limited (A$5.66, -0.2%). Energy stocks also suffered as Santos Limited (A$13.80, -0.4%), Oil Search Limited (A$7.94, -0.9%) Woodside Petroleum Limited (A$38.37, +0.3%) and Caltex Australia Limited (A$18.21, -1.2%) fell.

Heading the winners today were IRESS Limited (A$8.70, +7.9%),Evolution Mining Limited (A$0.775, +4.7%), Beadell Resources Limited (A$0.69, +4.5%),Fortescue Metals Group Ltd (A$4.01, +5.5%), Lynas Corporation Limited (A$0.40, +6.7%) and Oz Minerals Limited (A$4.23, +4.2%) with the doggies being Peet Limited (A$1.265, +0.4%),Flight Centre Limited (A$42.40, -4.4%),ERM Power Limited (A$2.56, -3.8%),Westfield Retail Trust (A$2.97, -2.9%) and Myer Holdings Limited (A$2.59, -3.4%)

Volume was again uninspiring but the good news is there is now one week down of this election campaign. Suspect it’s a week that One Nation Candidate Stephanie Bannister would rather forget! May need a brain more than a minder!

Stocks and Stories

Karoon Gas Australia Limited (A$5.27, +2.7%) good to see this one recover today after the recent placement at $5.10 that we did. After the usual indigestion it seems the share price is now back on track.

Buru Energy Limited (A$1.81, -1.6%) little weaker today following the funding package that was put together in the last day or so. Good support from both their partners, Mitsubishi and Alcoa together with the market, to give the company the flexibility they need for the coming 18 months of drilling.

TABCORP Holdings Limited (A$3.27, -2.7%) Results today with pretty much inline growth especially in fixed odds betting. Good dividend increase will keep the yield investors happy .And interesting news in the Tom Waterhouse story as he has sold his business to the UK’s William Hill for around $34m. Long way away from the fancy figures he was hoping for more Joyous… nah!

RIO Tinto Limited (A$60.25, +1.3%) results overnight showed the benefit of cost cutting, asset divestment and capital management. Sam Walsh was keen to point out the increase in dividend for Aussie holders of around 35% due to the dividend being paid in US dollars. Maybe resource stocks are finally jumping on the yield bandwagon.$4.2bn of underlying earnings and it comes as no surprise ,if you design your own tax, that you don’t pay any! Sorry Mr. Government we want our Mining tax contribution back!

In homegrown economics we saw the RBA busy this week with a rate cut and then GDP revisions. In its May statement, the RBA forecast GDP growth of 2.5 per cent through the year to June 2013, 2.0 to 3.0 per cent in 2014 and 2.5 to 4.0 per cent in 2015.The revised forecasts show growth of 2.5 per cent in the year just ended, then 2.5 per cent in 2014 and 2.75 to 3.75 per cent in 2015.

Commonwealth Bank of Australia (A$72.85, -0.2%) appears to be selling more of its home loans through Mortgage Brokers. Bigger commission to them and bigger discounts for customers. If you read my morning newsletter you will see that I have been pushing Mortgage Choice Limited (A$2.47, +0.8%) for so long now on this very theme. Love it when a plan comes together!

In China it appears that inflation is pretty muted; in fact in its producer prices things are going backwards leaving the Government some room to stimulate perhaps. The consumer price index (CPI) rose 2.7 percent in July from a year earlier, official data showed on Friday, unchanged from June and slightly lower than a forecasts of 2.8 percent. But the producer price index (PPI) fell 2.3 percent in the month from the year before, slightly worse than the 2.2 percent drop markets were expecting.

Tomorrows News Today

Looks like JP Morgan is on the verge of doing a deal with UK and US regulators after the London Whale incident, which left them reeling after a $6.2bn loss punting around.

Vale, the biggest iron-ore producer, forecast a 10 percent increase in steel output this year in China, the world’s largest steel maker. China probably will produce 780 million metric tons of steel this year compared with 683 million tons two years ago, they said.

Bank of Japan’s Kuroda offered an upbeat view of the state of the economy, he is optimistic the planned sales tax increases wont kill the economy. Hope not as Japan’s total debt is approaching 250% of annual economic output by some measures. Worse than Greece perhaps!

Rumours continue to circulate that Bungasconi’s daughter Marina will take over the leadership of his political party. She is already in charge of his business empire so shouldn’t be too difficult to squeeze in a few extra responsibilities.

Corruption is being rooted out in China as another one bites the dust. Liu Tienan, formerly deputy head of the National Development and Reform Commission, “accepted huge amounts of bribes”, Xinhua news agency reported. Gone for all money! And thanks to a online journalist!

Ashes start again tonight in Durham! Hot spot will be interesting!

Enjoy the weekend. I am doing the City-to-Surf for my first time with a dodgy hamstring on Sunday. Should be interesting! May not be able to walk Monday!

That is all

 Clarence

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