Another strong positive day as the ASX 200 runs another 39 points to 6687, highs not seen since January 2007. US futures rose 77 despite Trump’s view on the Fed chief. Banks and dull bond proxy stocks once again lead the market higher as iron ore miners missed out on the run as Vale looks to be bringing some production back online. Energy stocks gained on the renewed strength in the oil price but CTX issued yet another down grade and suffered a huge sell off, down 13.3%. In other corporate news, QAN fell 1.6% after announcing a $25m change to its frequent flyer program. In tech stocks, WTC rose 2.6% and APT rallied back by 6.5%. REITs though were under a little pressure as the deck chairs got shuffled after the $800m GPT capital raise. The AUD continues to push a little higher as US rate cuts break the USD strength. AUD at 68.92c whist Asian markets were better with China considerably higher driven by trade talk hopes.

Todays Highlights

• ASX 200 up another 25 points to 6669. All time high in sight.
• High 6687 Low 6639.
• Banks and boring bond proxies rally again.
• Iron ore miners under pressure as Vale restarts some production.
• CTX gets pumped and dumped.
• Tech stocks rally yet again.
• Staples head higher.
• Energy stocks a winner too.
• AUD rallying back to 68.92c
• Aussie gold rampant at $2000.
• Bitcoin higher to US$9310
• US futures up 77.
• Asian markets better with Japan up 0.59% and China up 2.67%

STOCKS

• CTX -13.27% third down grade hurts on fuel volatility
• VEA -8.04% tarred with the same brush.
• RIO -4.01% production update.
• PRU +21.00% RSG +10.19% SBM +10.11% NST +9.25% gold hits AUD 2000.
• NAN +2.50% rally continues.
• APT +6.48% bouncing back. Z1P +7.57% sector sentiment.
• PLS +3.67% bargain hunters.
• BOT +46.43% Investor presentation with new data.
• DCN +8.26% high grade gold helps sentiment.
• VLW -6.06% due diligence extended.
• CYB +7.12% earning s reaffirmed.
• QAN -1.63% revamps frequent flyer program.
• STO +0.85% talking Narrabri approval by the end of the year.
• ARU -20.00% Noble group supports fund raising.
• BOQ -0.21% loses a CFO.
• M7T +16.67% board changes.
• Speculative stock of the Day: Botanix Pharma (BOT) +% Investor presentation with new data. Good volume as the superbug killer looks to do just that.
• Biggest Risers: PRU, RSG, SBM, NST, WGX, Z1P and CYB
• Biggest Falls: CTX, VEA, IFM, SGF, RIO, and GXY

TODAY

• Sydney Airport (SYD) +4.42% report a 2.4% increase in May traffic compared to last year. Domestic passengers rose 0.3% on last years number up to 2,210,000, while the number of international passengers rose 6.3% to 1,217,000.
• Bank of Queensland (BOQ) -0.21%CFO Matt Baxby has announced his resignation today, after 10 years with the Group, as he looks to pursue other leadership opportunities. He will remain in his post until the company’s full-year results in October this year.
• Rio Tinto (RIO) -4.01% has cut its guidance for iron ore production in the Pilbara by around 4%. The company now expects to ship between 320m tonnes and 330m tonnes. The slight downgrade is because of operational challenges, particularly in the Greater Brockman hub in the Pilbara.
• Caltex (CTX) –13.27% expect NPAT on a replacement cost of sales operating profit (RCOP) basis to be between $120m and $140m for 1H19, less than 50% of the $296m reported last year. On a historic cost profit after tax (HCOP) basis NPAT is expected to be between $150m and $180m. 1H19 group RCOP EBIT is expected to be between $240m and $270m, with EBIT of $190-210m for fuels & infrastructure (down from $314m last year), and EBIT of $75-85m for convenience retail (down from $161m). Management have noted that the industry continues to face a difficult macro environment arising from the slowing domestic economy, low refining margins, high crude prices and a low FX rate. The company has gained retail market share and held its market share in wholesale markets by leveraging fuel supply chain expertise and a national retail network.
• Qantas (QAN) –1.63% is investing $25m to revamp its Frequent Flyer loyalty program. The proposed changes will be the first major changes to the program in 32 years and include increasing the amount of reward flights available to high-demand destinations.

ECONOMIC NEWS

• CBA joins the rate cut chorus with a July call.
• RBA says the QE is ‘quite unlikely’. Although disappointed that the banks had failed to pass on the entire rate cut they central bank said QE was not the best option.
• WBC has lowered its APRA buffer as the first bank to do so. Policy will now allow credit officers to have some discretion over loan approvals for those who fall just outside the old parameters. The minimum interest rate a borrower must be able to pay – has been reduced to 6.5% from 7.25% effective immediately.

BOND MARKETS

• 2-Year bond yields fell 2bps to 0.93%
• 5-Year yields fell 5bps to 0.96%
• 10-Year yields fell 5bps to 1.28%

ASIAN NEWS

• Bank of Japan keeps rates on hold.

EUROPEAN AND US HEADLINES

• Norges bank (Norwegian Central Bank) is looking set to raise rates. That’s right raise rates. Unheard of. What are they thinking? So 2018.
• Slack is set start trading tonight with a ritzy valuation of around US$20bn.
• Iran has shot down a US drone over its airspace. Go Gold.
• Early G20 discussion focus on frustrations with China and the US.
• Trump believes he has the power to sack Powell. If he wants. The Federal Reserve Act provides explicit protection for Fed governors against removal by the president except “for cause.” A disagreement over monetary policy wouldn’t meet that criteria. Or would it?
• The world has now got three people worth over US$100bn.

And finally………….

SCHOOLS – 1950s v 2019 Scenario :  Johnny and Mark get into a fight after school.  1950s – Crowd gathers. Mark wins. Johnny and Mark shake hands and end up best friends.  2019 – Police called, and they arrest Johnny and Mark & charge them with assault. Both expelled even though Johnny started it. Both children go to anger management programmes for 3 months. School governors hold meeting to implement bullying prevention programmes.  ————————– Scenario : Robbie won’t be still in class, disrupts other students.  1950s – Robbie sent to headmaster and given six of the best. Returns to class, sits still and does not disrupt class again.  2019 – Robbie given huge doses of Ritalin. Becomes a zombie. Tested for ADHD – result deemed to be positive. Robbie’s parents get fortnightly disability payments and school gets extra funding from government because Robbie has a disability.  ————————– Scenario : Billy breaks a window in a neighbour’s car and his Dad gives him a good hiding 1950s – Billy is more careful next time, grows up normal, goes to college, and becomes a successful businessman.  2019 – Billy’s dad is arrested for child abuse. Billy removed to foster care; joins a gang; ends up in jail. ————————– Scenario : Mark gets a headache and takes some Aspirin to school.  1950s – Mark gets glass of water from Principal to take aspirin with, Passes exams & becomes a solicitor. 2019 – Police called, car searched for drugs and weapons. Mark expelled from school for drug taking. Ends up as a drop out. ————————– Scenario : Johnny takes apart leftover fireworks from Guy Fawkes night, puts them in a paint tin & blows up a wasp’s nest.  1950s – Wasps die.  2019 – Police & Anti-Terrorism Squad called. Johnny charged with domestic terrorism, investigate parents, siblings removed from home, computers confiscated. Johnny’s Dad goes on a terror watch list and is never allowed to fly in an aeroplane again.  ————————– Scenario : Johnny falls over while playing football during morning break and scrapes his knee. He is found crying by his teacher, Mary.  She hugs him to comfort him.  1950s – In a couple of minutes, Johnny feels better and goes on playing football. No damage done. 2019 – Mary is accused of being a sexual predator and loses her job. She faces 3 years in prison. Johnny undergoes 5 years of therapy and ends up gay.

 

Clarence

XXX