• Finally on the seventh day we rallied. Even god rested on that day! Very tentative rally today as banks and defensives led us out of the wilderness. It has been the worse December in 40 years so far! Of course next week is crunch time as the FOMC meeting will give us the verdict on the taper. Lots of speculation from the ‘wiggles and squiggles’ merchants(chartists) that we are seeing a repeat pattern to 1929 and the Dow is in danger of displaying a triple top or a Hindenberg concerto, Death Cross or any number of bearish signals. The thing that worries me is that we know everyone is long. Everyone is margined to the hilt and so if (or when ) it cracks it can go quickly and savagely. Much like Lead Chef today (used to be called SilverChef).Until today that is!
• Today’s corporate disasters were G.U.D. Holdings Limited (A$5.15, -3.7%) and Silver Chef Limited (A$5.24, -29.4%). The ‘downdates’ were pretty serious and goes to show how inflated some of these small and mid-caps have been, with too many buyers chasing too few stocks and what happens when things don’t quite go according to plan. Absolutely smashed. Everyone tries to get out at once. The casualty ward is growing ever longing in corporate Australia. Blame the dollar. Seems the only way to go. Bad management no way!
• Most sectors rose a little today led by Commonwealth Bank of Australia (A$74.20, +0.9%),Westpac Banking Corporation (A$31.00, +0.6%) and National Australia Bank Limited (A$33.35, +0.9%) together with recently bloodied and bruised QBE Insurance Group Limited (A$10.60, +1.9%) and Macquarie Group Limited (A$52.20, +1.7%).Woodside Petroleum Limited (A$37.75, +1.5%) continued to attract fans as the window for Shell to sell closes in and Wesfarmers Limited (A$41.30, +0.5%) and Westfield Group (A$9.99, +1.4%) all recovered some of this week’s losses. Other defensives like ResMed Inc. (A$5.19, +3.0%)Sonic Healthcare Limited (A$15.76, +3.6%)(even with an update)and Amcor Limited (A$11.30, +1.4%) also improved.
• In resource land, BHP Billiton Limited (A$35.85, +0.9%) put in a tepid performance grinding out some gains despite RIO Tinto Limited (A$65.09, -0.1%) falling slightly but Fortescue Metals Group Ltd (A$5.36, unch) felt some love as did Mount Gibson Iron Limited (A$1.03, +2.0%) but gold stocks were once again disappearing faster than a English batsman in Adelaide. Newcrest Mining Limited (A$7.42, +0.7%),Evolution Mining Limited (A$0.56, -4.3%),Kingsgate Consolidated Limited (A$0.995, +3.6%),Silver Lake Resources Limited (A$0.42, -2.3%) and Oceanagold Corporation (A$1.61, -1.8%) all suffering as did the whole sector. We even saw some bargain hunting aroused in the leperous Mining services sector today led by Bradken Limited (A$5.31, +0.4%),Boart Longyear Limited (A$0.305, +7.0%),Macmahon Holdings Limited (A$0.115, +4.5%),MND# and WorleyParsons Limited (A$15.43, +0.4%)
• In the final countdown the ASX 200 finished up 35 at 5099(so close to 5100 a coincidence perhaps, doubt it!) which for the week was down around 1.6%.
• The Aussie dollar having broken through 90 stayed there at 89.40 whilst Bitcon popped back up to 1060.Volume was slightly better at around $4.5bn
• In the winner’s circle today included Freelancer, Seven West Media Limited (A$2.26, +4.6%),Aurora Oil & Gas Limited (A$2.87, +4.0%),Duluxgroup Limited (A$5.42, +3.8%),Drillsearch Energy Limited (A$1.31, +4.8%),Sigma Pharmaceuticals Limited (A$0.625, +5.0%) and Sonic Healthcare Limited (A$15.76, +3.6%) whereas the biggest losers included $PPC#,United Overseas Australia Limited (A$0.55, -4.3%),Lynas Corporation Limited (A$0.28, -1.8%),Adelaide Brighton Limited (A$3.51, -3.6%), NPX, Regis Resources Limited (A$2.90, -2.4%) and #OFX#. In smaller caps Silver Chef Limited (A$5.24, -29.4%),Liquefied Natural Gas Limited (A$0.295, -18.1%) and G.U.D. Holdings Limited (A$5.15, -3.7%) took things to heart!
• Meanwhile far away Asian markets were also in the green as they eventually ran out of selling enthusiasm.
Stocks and Stories
• Big story today is the success(?) of the RBA chief Uncle Fester in talking down the Aussie dollar. Better than cutting interest rates. Crikey if he had known it was going to be this easy maybe he should have started a long while ago. While we still had some manufacturing! Still it will help all those overseas investors pick up things cheaper down here. Of course that is if GI Joe lets them. Well they can buy property til the cows come home.
• Silver Chef Limited (A$5.24, -29.4%) and G.U.D. Holdings Limited (A$5.15, -3.7%) both announced profit guidance on eth negative side so down they went and savagely.
• House favourite G8 Education Limited (A$2.90, -1.4%) bucked up after an announcement about the impact of Government funding in the media. They did not apply it seems ,so yah boo sucks to that. No impact if you don’t apply! Also Buru Energy Limited (A$1.48, +5.7%) announced a resumption of Oil production at Ungani ,helping the shares to a good day today.
• Adelaide Brighton Limited (A$3.51, -3.6%) announced the retirement of long serving CEO Mark Chellew to be replaced by Martin Brydon the current general manager of cement and lime.
• AWE Limited (A$1.185, unch) also went into a trading halt today as they look like someone is circling them with a non-binding conditional merger proposition. Interesting as they are trading well below their asset value. Watch this space.
• Recent IPOs continue to struggle with NEC, DSH, VED and RLE experiencing mixed fortunes.
• Yancoal Australia has agreed a $US250 million long-term debt facility with its majority owner, China’s Yanzhou Coal Mining, to repay debt. The announcement comes just days after the federal government cleared the way for the Chinese state-owned company to take full control of its local unit, indicating that Yanzhou’s investment in the beleaguered industry was welcome.
• Westpac Banking Corporation (A$31.00, +0.6%) AGM today. All good no surprises, no downgrades ,no words of warning. The machine just keeps rolling along!
• News out today as well that the Victorian Government have whacked on a new levy to pokie machines. Crown Limited (A$15.90, -4.3%) came up all lemons on this one and also had an impact on Woolies that sell the lemons in the first place. Looks like Jamie will have to pay another $184m in taxes to keep the wheels spinning at Crown from the levy and new parking charges. Gotta love a tax grab!
Tomorrows News Today
• Good to see recent car departures haven’t hurt them globally as Ford announced that they were hiring .11,000 new jobs in the US and Asia in 2014 as it rolls out 23 new vehicles, the biggest launch year in the company’s 110-year history. And this comes at a time of record profits coming out of Detroit. Just not Geelong or Adelaide. Talk about rubbing salt into the wounds!
• There is some hope after all. Four former bosses from the Icelandic bank Kaupthing have been sentenced to between three and five years in prison. They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch. Maybe it should have been called Kaput.
• The German regulator has asked ever so politely to see Deutsche Banks books to see if they were manipulating the price of Gold and Silver. After LIEBOR everything is open to question. Let’s face it the five banks involved in the London Fix didn’t call it that for no reason! Der!
• US House of Rep votes overwhelmingly for a cessation of hostilities on the budget front 332-94…convincing. Sorted. Nothing to see here. Move along.
• Some good news from Ireland apart from a rumour of free Guiness. On Sunday they are due to come off life support from the EU. After relying on $114bn of bailouts and loans they will finally exit the program.
• Always suspected this. Prices posted at a cafe in France suggest that a spoonful of politesse will sweeten the prices for a cup of coffee. Ordering simply “a coffee” at the Le Petite Syrah cafe in Nice runs you 7 euros, about nine-and-a-half dollars, according to the prices on the chalkboard menu. But add “please” and the price drops to 4.25 euros, about six dollars. Go for the full, “Good morning, a coffee, please,” and the politeness discount gets even steeper, 1.4 euros, or two bucks.
• Apparently I am the second best afternoon report in the market according to FN Arena. What a lovely thing to say. Have a great weekend.