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Morning sports fans,

Today no budget speak..promise…and not much politics…it gets my blood pressure up and at my age…

last night Wall Street got spooked…once again high flyers were in the spotlights and the valuation question remains…has the emperor got a stitch of clothing on …of course it’s different this time.. The Russell 2000 index of small companies tumbled 1.4% in overnight trade and is now down 8.5% from the March high…but even more worrying is the cost of stuff..the US PPI rose 0.6% against estimates of 0.2% with food prices one of main contributors. The YoY PPI now stands at 2.1%….what happens when the mother of dragons rears its ugly head, inflation…inflation means higher interest rates ..NZ is a trend setter UK will follow soon in 2015 and so will we …US rates are going to move up too…the world of interest rates is ;ike the boiling frog..we all know they are heading higher at some point but will be oblivious to it until we notice that the water is boiling and the chef is adding vegies and seasoning while sharpening his knives!!Free money won’t last forever just like the age of entitlement..

So today we may see a little weakness..volume is pretty low as the big players stick to the sidelines and work out the winners and losers from last nights edicts..World markets are milling about at these elevated recordish levels but for how long…I believe that a lot of the good news is priced into the markets and that apart from Takeover activity in Australia we are pretty fully valued…my old favourite the bank basket..remember you could have bought all four for $100 in sept 2011 is now 180…that’s no dividends included either..my same resource basket BHP.RIO,FMG is now 106..again in sept 11 it was 100!!!shows the dramatic effect of low interest rates dragging in yield investors and the slowdown in China..I know some are sceptical that you could have bought the banks in Sept 11 for 100 so here’s a recap of their share prices..CBA $45.55..NAB $22.30 ANZ $19.52 WBC $20.20..okay so that’s 107 taking month end prices but you get the idea!!And let’s not even look at the lows of the banks in Feb 09!!!

Idea of the Day

As readers will now I have long been a fan of Mortgage Choice…yesterday they rallied nearly 10% as they upgraded their forecast for earnings..who would have thought that a Mortgage broker in a property boom would have done so well!!!der!

Anyway I remain cautious…CBA at a record high…banks continue to power our market and now BHP has joined the fun despite Iron Ore languishing around $102…all this talk of demerger and a few presentations seem to be firing the valuation bulls…me I am not so sure..

Now I saw today that Constellation are looking at TWE brands in the US according to the media..this classy bunch of brands like Penfolds,Rosemount and others is definitely one to watch..they have come out this morning noting the speculation and have said they have had no approaches and have no intention of selling their US biz…well they would wouldn’t they..you can never see anyone approach if they come from behind..ask Caesar…anyway if they come back to around $3.80 fill yer glasses with this one..In a year’s time it will be part of someone else’s cellar!!

Things to make me go mmmmm!!!

Ukraine is heading towards an all-out civil war…Russia has banned the US from their Space Station so things must be bad…and this is proof that the US are supporting a phoney war against Russia it seems..Russia “would like to understand how helicopters with a UN logo were used against protesters in the south-east,”

Now to put our economic situation in perspective..the US has a negative net worth of $17trillion dollars..Japanese Debt is now 1 Quadrillion Yen!!! Don’t even think they have a symbol for that!!And Joe thinks we have problems!!

One of the good things to come out of the new university policy is that because the cost will rise through the roof, there will be no reason to go there unless you are going to be a doctor or lawyer…the debt when you finish will be so huge that it will be like having a mortgage to pay off as soon as you start working…this will mean that no one in a good job,who has a degree will have any intention of buying a house or unit as they will have no money at all..and the debt at 5 or 6% will be just getting so much bigger ..should mean that there are no first time buyers at all…so eventually the housing boom will just collapse in on its self..if your degree debt costs $120,000 after five years it will have blown out to $160,000 at 6%…if you take a few years to travel after working so hard after 7 years its $180,000..just saying…

Luckily I love and like my kids and don’t want them ever to leave home as they won’t be able to now!!

Watched Jokin Joe front the Press Club yesterday..wow they have a lot of members..I thought all journos were unemployed these days..might explain why they are all at lunch then…but have to say that if that is the best we can do for a treasurer we have got REAL problems..awful, woeful performance…whoops no politics my wife has spoken….

alan-and-denny

 

Over in Zombieland as we wait to see what Super Mario is going to do in June the prospect of negative interest rates has reared its head as ECB board member Peter Praet said that negative interest rates are a possible part of a combination of measures…meanwhile over the Channel ..Mark Circus Carney is now looking at raising rates in 1st quarter 2015!!

 

A one man band in India looks like it is about to take control.. Exit polls project  Narendra Modi’s party will secure its best result ever when votes are counted tomorrow, possibly making him the first Indian leader since 1984 to rule with a majority in parliament. They also show the ruling Congress party, led by the Gandhi political dynasty, headed for its worst defeat since India became an independent country 67 years ago.

Another reason to like TLS  SingTel-Optus has posted another fall in its revenue as its mobile customers leave the company for Telstra.In the year to the end of March, Optus lifted net profit by 14.6 per cent to $835 million, compared with the previous corresponding period.

These guys may regret this.. Fund manager Ellerston Capital has increased its stake in former takeover target GrainCorp to 7.6 per cent after selling down 18 months ago to pave the way for Archer Daniels Midland’s $3.4 billion takeover bid…figures out today show an underwhelming performance.. Underlying NPAT A$61M, below our estimates and Bloomberg consensus (A$70M)…may feel some hate!

Private equity firm CHAMP Ventures and Lorna Jane Clarkson, the founder of popular activewear clothing brand Lorna Jane, have decided to put the business up for sale after abandoning plans for an initial public offering earlier this year.

Shares in PNA continued to rise yesterday in the ­expectation that its major shareholder, China’s state-owned Guangdong Rising Assets Management (GRAM), will increase its $1.4 billion takeover tilt.

Worryingly for us Poms,the UK government has knocked back longer pub opening hours during the soccer world cup as they don’t believe the team has a chance to make the knock out stages!!Good to know the support is strong in this one…

And finally……..

Sorry but this is worth it..I promise…m.youtube.com/watch?feature=youtu.be&v=-ex6MAtcOe8

Miss me yet!!

860323-john-howard

 

Have a great day…see no politics at all!!

 

 

 

Clarence

XXX

Any financial product advice contained in this email is general financial product advice only and does not take into account any one person’s objectives, financial situation or needs. Therefore, before acting on any financial product advice in this email, you should consider, with or without the assistance of an independent adviser, the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Get a Global take on things at www.ntmarkets.com

Get a Global take on things at http://www.ntmarkets.com

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