ASX 200 rallied 60 points to 6607 on trade deal lite optimism. Up 1.3% for the week. US futures rose 127 points. A strong end to the week as we await news from the Oval office on a possible ceasefire or mini-deal in the trade war. Banks led the market higher with CBA up 0.9% and WBC up 0.8%. Big miners were better too on higher iron ore and oil and copper prices. BHP up 2.1% and RIO up 2.3%. FMG rallied 4.1% on news the buyback would be extended. Broad gains in industrials with WES up 0.8% ALL up 0.9% and CSL up 2% the stand outs. We saw a good gain too for CYB up 9.4% on Brexit deal hopes, and CIM rose 5.1% on media reports of a possible privatisation. In corporate news, ISX finally responded to the ASX query although still suspended and RFG are tapping institutional investors in a heavily discounted rights issue at 10c to pay down debt. Latitude Financial has been priced at the bottom of the price range at 200c and now the book build begins. In economic news, Australian Financial Group (AFG)  gave us an insight into the strength of the mortgage market which confirmed anecdotal evidence. The 10-year bond yield rose to 1.01% up a massive 12bps on risk on optimism.  Meanwhile in Asia Japan rose 1% and China up 0.5% on deal hopes.

Todays Highlights

• ASX 200 closes up 60 top 6607 as trade deal ‘lite’ looks possible.
• High 6615 Low 6564.
• ASX 200 up 1.3% for the week. Volumes still on the low side.
• Broad based gains led by banks and miners.
• Energy stocks picked up on oil rise.
• Bond proxies fall as yields rise.
• AUD firms to 67.75c
• 10-year yields steady at 1.01%
• Aussie gold smacked down to $2207
• Bitcoin steady at US$8567
• US futures down 33 was over 300 down.
• Asian markets firm with Japan up 1.1% and China up 0.52%
• Greek 10-year bonds yield 1.466%.

STOCKS

• SLR +12.50% quarterly report.
• CYB +9.41% Brexit hopes.
• CIM +5.09% privatisation perhaps?
• HUB +3.40% FUM announcement.
• NWL -5.54% broker downgrade.
• NUF -4.14% ceasing to be a substantial shareholder.
• OPT -3.48% presentation.
• CUV -4.07% profit taking continues.
• ORA -2.25% book squaring.
• PO3 +18.18% OTC update. No liquidity though.
• FMG +4.14% extends buyback.
• SO4 +6.33% BFS results.
• DMP +2.66% investor day cheers.
• IFL +3.64% Perennial acquires remaining 42.4% stake.
• AFG +5.73% MOC +5.49% home loan activity highest in two years.
• ISX – responds to ASX query.
• RFG – trading halt pending capital raising at 10c.
• CLQ +3.70% Sunrise update.
• MHJ +19.30% trading update.
• Speculative stock of the day: Kallina Power (KPO) +30.00% written up as a buy this morning in newsletter.
• Biggest Risers: SLR, CYB, ILU, CIM, VEA, Z1P and PGH
• Biggest Falls: NWL, RMS, NUF, CUV, OPT, CDA and WGX

TODAY

• Latitude Financial (LFS) IPO has been price fixed at 200c, the lower end of the range of 200c to 225c.
• Polynovo (PNV)+0.79% in the press this morning as it was revealed that the CEO has sold 722,155 shares this year to meet a tax bill from options vesting. Why didn’t the market know about it until the Annual Report? Simple, he is not a director so does not have to disclose. He still owns 10.2m shares together with his wife, mainly through options vesting.
• Michael Hill International (MHJ) +19.30% report an 11.9% increase YoY in Q1 same-store sales in a trading update. Total store sales came in at $124.0m, up from $113.0m a year ago. Website sales are up 18.9%. The company said that the pressure on gross margin has started to ease, with early signs of positive movement and a slight recover from Q419.
• Retail Food Group (RFG) – The company has launched a $150m institutional placement and a SPP worth around $10m at 10c a share. EBITDA guidance in the range of $42m-$46m.The equity raising will be used to repay debt and strengthen the balance sheet. Existing senior lenders have also agreed to enter binding commitments to extinguish $71.8m of existing debt and provide a new $75.5m term loan facilty.
• Tabcorp (TAH) +0.83% appoints David Gallop to its board as a non-executive director. Gallop is the CEO of Football Federation Australia (FFA).
• Fortescue Metals (FMG) +4.14% extends its on-market share buy-back program for another 12 months until 10 October 2020. The company will look to buy-back up to $500m.

ECONOMIC NEWS

• Morgan Stanley’s recession indicator, which calculates the probability the US economy will fall into recession over the next 12 months, has dropped to just 11% which is its lowest level since April.
• According to the AFG Home Loan Index (AFG is the largest mortgage broker in the country) Home loan activity has rebounded strongly in the September quarter as figures revealed a record $15.7bn in lodgements in the three months to 30 September 2019. Volumes were up 21% the previous quarter and 11% on the same period last year. More than 29,000 mortgages were lodged, the highest in almost two years.

BOND MARKET

• 2 – year bond yields up 8bps to 0.69%
• 3 – year bond yields up 9bps to 0.70%
• 10 – year bond yields up 12 bps to 1.01%

ASIAN NEWS

• Indian billionaire Shivinder Singh was arrested by Delhi police in connection with fraud and the misappropriation of funds at a financial firm.
• Both Apple and Google have removed some apps in Hong Kong that protesters have been using including one that tracks the Police force.
• Protesters are considering scaling back their vandalism. Weekend fun and games approach. The protesters are concerned the violence has alienated some of its more conservative supporters.

EUROPEAN AND US NEWS

• All eyes on the mini-deal.
• European markets expected to open positively except UK which is looking at a small loss on the stronger pound.
• James Murdoch has bought a stake in Vice Media.
• James Dyson has cancelled his electric car. He said it was not commercially viable and he wouldn’t clean up with the project.
• Dozens of older Boeing 737s have been grounded due to cracked wings.
• Scotland are taking the World Rugby organisers to court to play their game. Grand Prix cancelled. England France cancelled.
• Big week for Brexit next week. Queen’s speech on Monday.

And finally …..my thanks to the king of Dad jokes Stephen Holland for his lovely work…Thanks mate

Terrible news. My old mate Dave is in hospital after being electrocuted, although he’s looking forward to being discharged soon…

Sad news : My mate and his brother have had to close down their archery business. They didn’t hit any of their targets in the first 12 months.

Crime update : Police have today confirmed they are on the lookout for a man with a chocolate bar in his hat who is connected with a string of burglaries on the Lower North Shore. Apparently there is a bounty on his head.

Statistically speaking, six out of seven dwarfs aren’t happy.

Clarence

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