friday dog

ASX 200 finishes the week strong up 23 points to 5508 in quiet trade (options expiry last night). Miners and gamers in demand as banks tread water. Asian markets mildly firmer with Japan up 0.12% and China up 0.21%. AUD 74.27c and US Futures up 46.

  • ASX 200 has risen nearly 2.8% this week as the resource stocks outperform. AGM season is coming to an end and will give more reasons to be cheerful.
  • Copper is headed for the biggest monthly gain in a decade of around 21%.
  • Gold is down 8% this month and has lost US$160 since Trump
  • Iron ore has rallied beyond all expectations; its weekly rise is more than 12%. The so called ‘experts’ predict in 2017 that prices are anticipated to settle at a “financially sustainable” level of $US45/t price. Coking coal, has seen prices top $US300 a tonne due to mine closures in China, here the price is forecast to unravel early next year. Of course these are the same experts that predicted Clinton to win and iron ore to stay subdued. Same experts?

STOCKS AND SECTORS

  • It’s all about the Base. Well base metals anyway as the resource rally continues to push ahead aggressively. Independence Group (IGO) +2.76%, Iluka Resources (ILU) +3.45%, Lynas Corp (LYC) +4.62%, Alumina (AWC) +1.76% and of course the big daddy BHP +2.28% and RIO +2.42%. South 32 (S32) missed out though with consolidation in vogue.
  • Gold stocks were back in sell mode as Newcrest Mining (NCM) -2.01%, Metals Ex (MLX) -1.32% and Perseus Mining (PRU) -3.57%.
  • Energy stocks continue to attract fund dollars with Woodside Petroleum (WPL) +1.14% leading the charge. Mid cap oilers did well with Buru Energy (BRU) +2.63%, Beach Petroleum (BPT) +1.15%, Karoon Gas (KAR) +2.46%.
  • In industrials Telcos were bid up, Telstra (TLS) +1.00%, Vocus Comms (VOC) +3.09% and TPG (TPM) +3.04%. Some good moves on China facing stocks like Tassal Group (TGR) +1.05%, Blackmores (BKL) +1.36%, Bega Cheese (BGA) +2.31% and Treasury Wine Estates (TWE) +2.34%.
  • IT stocks came in for some profit taking after a strong week. Technology One (TNE) -2.59%, Xero (XRO) -1.60% and Megaport (MP1) -4.56%. Codan (CDA) +10.00% after upping profit guidance last night to $20m-$22m.
  • Healthcare remains under pressure with Ramsay (RHC) -1.32%, Fisher and Paykell (FPH) -1.39% and Resmed (RMD) -0.38%. Estia Health (EHE) -1.68% gave up some of its recent gains.
  • Financials looked a bit like Shannon Noll. ‘What about me’.

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  • The action is all in resources. Some gains in insurers as QBE +2.23% continues to benefit from higher interest rates and a stronger USD. Clydesdale (CYB) -2.36% the worse of the banks with the big four basket slipping to $166.99. Wealth managers feeling some love though Magellan Financial (MFG) +1.56%, Platinum Asset (PTM) +1.43% and Pacific Group (PAC) +4.81%
  • Speculative stock of the day: Top End Minerals (TND) +121.43% after announcing an acquisition of the high grade Long Keng mine and the Lashio zinc refinery in Myanmar.

CORPORATE NEWS

  • ANZ -0.18% and Macquarie Group (MQG) -1.39% have admitted their traders tried to rig contracts in Malaysia’s foreign exchange markets, breaking cartel laws and resulting in multimillion-dollar fines. NZ has agreed to the allegations and offered to pay a penalty of $9 million, while Macquarie has volunteered to pay a $6 million fine.
  • And there it is Westpac (WBC) +% have raised fixed rate interest payments on two, three and five year fixed loans. Five year to 4.79%.
  • Tabcorp (TAH) +1.09% has put its foot on around 10% of takeover target Tatts Group (TTS) +7.12% in a $640m equity swap giving a cash price around 434c.
  • Vita Group (VTG) +16.50% and Telstra (TLS) +1.00% have finally come to terms for the reseller after some months of negotiation. Vita said the impact of the changes was difficult to forecast but expects margin compression to be made up by volume improvement.
  • More positive AGM commentary from RCG Corp (RCG) +5.36%, Select Harvest (SHV) +2.04% and Austen Engineering (ANG) +13.89%.
  • Rio Tinto (RIO) +2.42% chief executive Jean-Sébastien Jacques says the election of Donald Trump as US president could help boost commodities demand and cut red tape, boosting the mining industry.
  • Qantas (QAN) +0.31% In a further sign of China’s growing appetite for Australian agricultural products, Qantas has announced a partnership with VAN Dairy that will see fresh Tasmanian milk exported directly to the port city of Ningbo.

ECONOMIC NEWS

  • An oversupply of apartments in Melbourne and Brisbane could send unit prices down by as much as 6%in 2017, according to HSBC. Nationally, housing price growth is expected to slow to between 2 % and 5 % in 2017.
  • Negative gearing is back in the headlines again as NSW planning minister spoke today about housing affordability and generous tax breaks.

BOND CORNER

Australian 5-year bonds rose 6 bps to yield 2.28% and 10-year bonds up a similar amount to a 2.76% yield.

ASIAN NEWS

  • The Chinese yuan is set for a third week of declines as the mighty USD continues to surge. The currency has fallen 0.4% this week to approach 7 per dollar, and extending its loss in November to 2%.

Japan’s consumer prices fell for an eighth straight month.

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Key Points

  • Consumer prices excluding fresh food, the Bank of Japan’s primary gauge of inflation, dropped 0.4% in October from a year earlier (forecast -0.4%.).
  • Overall consumer prices rose 0.1 % (forecast unchanged), with a spike in fresh food prices compensating for continued falls in energy costs.
  • Consumer prices excluding food and energy rose 0.2% (forecast +0.1%).

EUROPE AND THE US

  • UK real estate prices may be dropping at a much faster pace than official reports indicate, according to the Irish agency, NAMA, that manages property loans acquired from bailed-out banks. The value of land in central London declined by more than 10% in the past year, while house prices are 11% below their 2014 peak according to the report.
  • Mind the Gap. The 10-year yield gap on French and German bonds hit a two-year high

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  • Shareholders at Italy’s Monte dei Paschi di Siena have voted in favour of the lender’s EUR5bn recapitalisation and a restructuring of its EUR28bn in gross non-performing loans.
  • Donald Trump is expected to appoint Wilbur Ross as his commerce secretary. He is a billionaire. Just as well Trump is draining that swamp.
  • UK Baby chain Mothercare, has warned that prices will have to rise 5% next year as the fall in the pound starts to bite. The company is hedged until May 2017 then reality bites. Many more price rises to follow as other hedges run out.

And finally…………………………

A young newlywed couple wanted to join a church.

The vicar told them, “We have special requirements for new parishioners. You must abstain from having sex for two weeks.”

The couple agreed and came back at the end of two weeks. The vicar asked them, “Well, were you able to get through the two weeks without being intimate?”

“Father, I’m afraid we were not able to go without sex for the two weeks,” the young man replied.

“What happened?” inquired the pastor.

“My wife was reaching for a can of corn on the top shelf and dropped it. When she bent over to pick it up, I was over come with lust and took advantage of her right there.”

“You understand, of course, that this means you will not be welcome in our church,” stated the vicar.

“That’s okay,” said the young man. “We’re not welcome in Coles anymore either.”

 

Ok, cos its Friday and its been a long week…….

Steve and his buddies were hanging out and planning an upcoming fishing trip.

Unfortunately, he had to tell them that he couldn’t go this time because his wife wouldn’t let him.

After a lot of teasing and name calling, Steve headed home frustrated.

The following week when Steve’s buddies arrived at the lake to set up camp, they were shocked to see Steve.

He was already sitting at the campground with a cold beer, swag rolled out, fishing rod in hand, and a camp fire glowing. “How did you talk your missus into letting you go Steve?”

“I didn’t have to,” Steve replied

. “Yesterday, when I left work, I went home and slumped down in my chair with a beer to drown my sorrows because I couldn’t go fishing. Then the ol’ lady Snuck up behind me and covered my eyes and said, ‘Surprise’. When I peeled her hands back, she was standing there in a beautiful see through negligee and she said, ‘Carry me into the bedroom, tie me to the bed and you can do whatever you want,’

So, Here I am!”

Have a great weekend

Clarence

XXXX

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NT Markets

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