A quiet day with Syria on my mind. After a weak start following offshore leads, we grasped the nettle and picked ourselves up and pushed into positive territory by lunch but slipped slightly to close up a smidge at 5141.News out of China helped the region as industrial profit growth rebounded with a net 12% rise focussed on power telecommunications and carmakers. Financials were the stars(again) with Commonwealth Bank of Australia (A$73.47, +1.2%) leading the way followed by Australia and New Zealand Banking Group Limited (A$29.88, +0.2%), whilst Westpac Banking Corporation (A$31.61, -0.2%) gave up gains to close down. Other financials also suffered with QBE Insurance Group Limited (A$15.62, -2.1%),AMP Limited (A$4.78, -0.4%),Flexigroup Limited (A$4.34, -1.8%). Consumer staples were better led by Woolworths Limited (A$33.91, +1.0%) and Wesfarmers Limited (A$40.05, +0.5%), whilst retailers David Jones Limited (A$2.81, +0.7%) and Myer Holdings Limited (A$2.75, +0.4%) saw small gains.

Energy stocks drew little power today from a higher oil price on emerging risks in Syria, Woodside Petroleum Limited (A$37.91, +0.3%) was the only one better with Santos Limited (A$14.70, -0.2%),Origin Energy Limited (A$12.89, -2.0%) and Oil Search Limited (A$8.33, -0.6%) all running out of gas.

In resource land today BHP Billiton Limited (A$35.60, +0.1%) and RIO Tinto Limited (A$59.74, -0.1%) fell slightly and Fortescue Metals Group Ltd (A$4.41, unch) was pretty much unchanged. Gold stocks were weaker led by a capital raising in Silver Lake Resources Limited (A$0.95, -5.9%) and Kingsgate Consolidated Limited (A$2.69, -4.3%),Evolution Mining Limited (A$0.945, -1.6%) and Regis Resources Limited (A$4.24, -0.7%) fell.

Big grinners today were Hutchison Telecommunications (Australia) Limited (A$0.043, +7.5%),Flight Centre Limited (A$48.41, +8.5%),#CIN#,Carsales.Com Limited (A$11.48, +4.6%),Treasury Wine Estates Limited (A$4.81, +2.6%) and Lend Lease Group (A$9.66, +2.5%) whilst in the kennel club were #ZIM#,Western Areas Limited (A$2.98, -9.7%),Seven Group Holdings Limited (A$7.12, -7.5%),M2 Telecommunications Group Limited (A$6.32, -6.0%),Resolute Mining Limited (A$1.02, -5.1%) and Energy Resources of Australia Limited (A$1.37, -5.2%).

Volume was disappointing for a Tuesday but with risks of an air strike on Syria rising by the day, it’s hardly surprising. Asian markets were slightly easier with Thailand ,Indonesia and the Philippines especially hard hit. Tokyo, China and Hong Kong also down around 0.5 to 1%. Aussie dollar seems to be taking a hit too as negative sentiment around the region feeds through into the currency.

Stocks and Stories

Billabong International Limited (A$0.535, -5.3%) announced a shocker today as they finally admitted that the Billabong brand was effectively worthless. I could have told them that after the teenage kids stopped buying it years ago. It’s only the daggy Dads that bought Billabong. And which trendsetter wants to look like their Dad! Massive loss and no one in charge. Thankfully there are a couple of suitors that think it’s worth saving otherwise boom..gone. How the mighty have fallen. Like watching two bald men fighting over a comb.

Flight Centre Limited (A$48.41, +8.5%) a great result as these guys made a profit in all 10 countries that they operate out of. Posted a 23 per cent rise in net profit to $246 million for the year to June. Revenue rose 8.7 per cent to $1.985 billion as sales increased in both leisure and corporate travel. The travel company’s pre-tax profit of $349 million was better than what it had forecast at the start of July. Flight Centre will pay a final dividend of 91 cents on October 18, up 28 per cent from 71 cents in the same period a year earlier. It takes the payout for 2012-13 to $1.37.Australia was the standout as our love affair with overseas holidays continues unfettered. According to figures released today by the UN nearly half a billion people spent at least one night overseas this year. Looks like most of them booked with Flight Centre.

Seven Group Holdings Limited (A$7.12, -7.5%) had the sword put through them today after their figures showed a tale of two cities. It was the best of the times .It was the worst of times as it looks like things are getting tough out there. The company has forecast a fall of up to 40 per cent in earnings before interest and tax this financial year, following a weak start to calendar 2013.Seven Group Holdings owns the WesTrac’s Caterpillar dealerships in Australia and China, a 45 per cent stake in equipment hire firm Coates Hire, and a 35 per cent stake in Seven West Media.

Myer Holdings Limited (A$2.75, +0.4%) big management shake-up today as Myer’s general manager of marketing and brand development, Megan Foster, will become managing director of the department store’s part-owned fashion label sass & bide.As the retirement of Bernie Brookes looms ,the company is starting the shuffling of deck chairs well in advance.

Big report out today from a leading investment bank highlights the strength of Commonwealth Bank of Australia (A$73.47, +1.2%) and the possibility of paying a special dividend in 2014.The return of capital may also be hastened when Tony Abbott takes charge with his plan to reduce company tax.

And Centuria pulled their IPO for their $215m property trust today. Not what you want!

New home loans approved by banks and other lenders jumped by 28 per cent to $79 billion in the June quarter, amid growing signs of a recovery(boom) in the residential property market. Official data released by APRA today puts Australian lenders’ total exposure to residential property at $1.13 trillion, an amount that has increased by 7.3 per cent in the year to June.

Tomorrows News Today

Most talked about event in the Western world does not appear to be the looming air strike on Syria but Miley Cyrus’s appearance at the MTV awards!

The US government will reach its debt limit by mid-October unless Congress acts quickly, Treasury Secretary Jack Lew has warned. The debt ceiling was last raised in January. The government can no longer borrow if it is reached.

Greece may seek to ease its debt burden by renegotiating its bailout terms, the Greek finance minister said on Monday. Yannis Stournaras told German newspaper Handelsblatt this could involve lower interest payments and more time to repay 240bn euros (£206bn) in loans.

And it should be looking so good for Brazil. Olympics and World Cup to come but it seems that the decade long commodity boom has in fact hollowed out the economy completely with capital leaving the country faster than you can see Usain Bolt. Brazil is vulnerable since it has a large current deficit and it became too reliant on commodity exports during the boom. The receding tide of liquidity has exposed the structural flaws beneath: severe bottlenecks in infrastructure and lower scores for competitiveness than many sub-Saharan countries. Does this sound familiar?

And finally talking of countries in crisis, let’s not forget about India which looks to be on the verge of a full blown currency crisis. Output growth has been decelerating for several years, and private investment has fallen for 10 consecutive quarters. Industrial production has declined over the past year. But consumer price inflation is still in double digits, providing all the essential elements of stagflation (rising prices with slowing income growth).With a collapse in exports and still the imports come flooding in its got all the hallmarks of a coming rout.

And we hoover just below 5150, does feel that the risks seem to be building.

Clarence

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