Apologies for not sending out my morning email in the last few days. Not sure if you missed it or not but Sydney buses stuffed me up and meetings with companies also intervened. However today I am back in the saddle, so Nil Desperatum!
It has been a strange time in the last few days as the world has been watching with worry after the tragic loss of the Malaysian airline. Looks like it will go down in aviation history with Glenn Miller and Amelia Earhart.Or a plot from a Bond Movie!!disappearing planes? Suspect SPECTRE may be behind it !!
Equally worrying for somewhat different reasons is the tragic fall in the Chinese economy and with it the Iron Ore and Copper price. Both have crash -landed and have dragged the Aussie miners with them. Now one of the problems these days is that the commodities that consumers use are also used for speculation and to finance other forms of asset purchasing. It’s a but like margin calls on stocks. It forces sellers to sell when they are low and buy when they are high. This ensures that the volatility can get pretty nasty and falls similarly nasty. Certainly seems to be what is happening with the Iron Ore price. It was good to see yesterdays recovery in the likes of BHP, RIO and FMG as buyers decided that it was ok and the yields on some of these things is irresistible. Not sure just yet…they were irresistible when the stocks were much lower a few moths ago. Anyway we will see. Luckily the banks as usual power up and save the market.
I had written some time ago that it may pay to “Beware the Ides of March”. Still think that is the way forward. Caution. I know everyone is bullish .Are they always and brokers in particular but I just see storm clouds appearing on the Australian horizon. Aussie dollar got whacked last night and I would expect to see another lacklustre day with miners coming under a bit of pressure dragging the index down…gold did well but everyone hates the sector!! NCM has hardly been a shining beacon of hope!!!
A few of the storm clouds:
1.Government inaction and leadership void
2.All focus from Canberra on the budget…two months away! Could be good? Could be bad?
3.A resilient Aussie Dollar
4.China behaving badly
5.Crimea and other Geo Political issues
6.And finally let’s face it the US numbers have hardly been shoot the lights out stuff. Blame the weather I know.
7.No more rate cuts for the Aussie economy.
The road ahead always looks clear until you hit something out of nowhere and if you are going too fast then beware….too late…
Idea of the Day-NTC and the Internet of Things!
Last night we met with the management of Netcomm..for those of you who read this stuff(Mum, I am looking at you) I recommended them a while ago at 34 cents..well they are now 47 ish..not too shabby ..anyway to refresh your memories these guys make modems(clever ones now) ..they used to make them for people and sell them through Telstra however they are changing their business rapidly and they are now in the M2M market..that’s machines talking to machines without a human interaction..their biggest product is a smart meter than wireless connects with the company enabling better information all round..they also are looking at wireless telephony in lifts around the world as the cost of maintaining a telephone line in a lift for the odd emergency is quite high and they can do it much cheaper…now I believe in the internet of things..everything connected to everything..these guys are heading in the right direction with some great global partners like Verizon.Vodafone and others…at 47 they obviously don’t look quite so attractive but I suspect they may need to raise a little working capital…when they do pounce!!
Things to make me go mmmmm!
Chelsea beat Spurs 4-0 at the weekend.
Have to say I feel that the good old ETF or exchange traded funds can be compared to Nuclear weapons…they are dangerous things and the world may be a better place without them..in case you don’t know ETF’s are a way for investors(punters) to replicate the performance of an underlying asset without actually owning it..someone else buys that asset and passes it on to you…now like Nukes they have the capacity to keep the baddies at bay but if something goes wrong ,it can all turn to custard pretty quick..the prime example is the massive growth in the Gold ETF market that saw Gold go critical up to nearly $2000 before plummeting to earth .Now just saying but the flow of funds to US ETF equity accounts continued with $13.1 billion added in the past five days against $8.2 billion of withdrawals from bond ETFs.That is a lot of money chasing assets higher…let’s hope someone doesn’t shout fire!!! And don’t get me started about the Facebook valuation..just stupid..
Over in the UK poor old Mark ‘Circus’ Carney was up in front of a inquiry into FX rigging..four and a half hours of it…he said at one stage..“it isn’t our job to go out hunting for rigging of markets.” …would have thought that was part and parcel of running the system…looks like they have a lot to hide and this may get bigger than the LIEBOR scandal
The first Chinese bond default occurred last week..it will not be the last..the really worrying thing is that the collateral behind some of these loans and debt instruments has been shared around and lent out multiple times..one example of this is a Property Trust called Magic..well it may not be quite so as my friends at Zerohedge have written today.
On the Rmb196mn borrowed by Magic Property & arranged by CITIC Trust
They invested in an office building in Chongqing. The Chongqing developer ran into financial problems in mid-2013. CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.
Rumours around last night of another bond collapse and Chinese commodity fund leveraged to the hilt having to liquidate….it’s all happening …once again though commodities and currencies are seeing the big games being played.Aussie back under 90 cents.
Last night it was conformed that DJs Paul Zahra had re-signed after quitting because he was tired..now I am a cynic but I would re-sign if I though that the company was about to merge, get a big payout because of it and /or make a motza on my share options…maybe I am too cynical but why wouldn’t you want t be a part of the DJ/MYR omnichannel, omnicentre, omnivore..makes sense to me…lets face it he had hardly done a stellar job for DJ’s so far…maybe its me!!
BHP Billiton/Rio Tinto: have both moved to reassure the market about the medium to long-term outlook for iron ore prices as investors grappled with the sharpest downturn in the commodity for years. BHP’s head of iron ore, Jimmy Wilson, and Rio Tinto’s iron ore chief Andrew Harding have both talked down the likelihood of the sudden drop.Think it has happened boys…isn’t $140 to $104 a pretty big drop..now I know you all still make lashings of wonga but bet it still hurts!!!
Sterling Early Education’s IPO is up in the air, with management asked to recheck prospectus forecasts after receiving February trading data.Oops!
Lynas had a shocker yesterday as it revealed that it was running a bit short of the readies….I always though that once in production the big drain on cash is over..seems not..Avoid like having a Rare Earths plant next door!
An elderly Italian man who lived on the outskirts of Rimini Italy, went to the local church for confession.
When the priest slid open the panel in the confessional, the man said:”Father, during World War II, a beautiful Jewish woman from our neighbourhood knocked urgently on my door and asked me to hide her from the Nazis. So I hid her in my attic.”
The priest replied: “That was a wonderful thing you did, and you have no need to confess that.”
“There is more to tell, Father. She started to repay me with sexual favours. This happened several times a week, and sometimes twice on Sundays.”
The priest said, “That was a long time ago and by doing what you did, you placed the two of you in great danger, but two people under those circumstances can easily succumb to the weakness of the flesh. However, if you are truly sorry for your actions,you are indeed forgiven.”
“Thank you, Father. That’s a great load off my mind. I do have one more question.”
“And what is that?” asked the priest.
“Should I tell her the war is over?”
Have a great Wednesday
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