The ASX slipped slightly after its meteoric run yesterday. The index fell 2 points to 6847 as WBC fell on fresh APRA capital requirements taking 0.85% off the stock. Dow futures down 9 points. Banks were mixed on the WBC news with ANZ up 0.1% on its AGM, a far more restrained affair than the WBC one last week. Healthcare stocks came in for some profit taking as CSL gave back 0.1% although the rest held up. Miners were better in places, led by BHP up 0.5% although S32 down 1.4% and NCM falling 1.7% as NST tapped the market for a large capital raise to buy a 50% share in the Super Pit. Some modest rises in energy stocks with WPL up 0.7% and CTX up 0.7% as the Canadian suitor may be given access to the books this week.  In corporate news, FCL rose 10% after an AGM update and APE rose 1.8% after coming clean on staff underpayment issues. LYC had 6.2% shaved off the share price after Malaysia refused to allow any processing increase in 2019. On the economic front the RBA left the door wide open for a February rate cut as it released its minutes today following the downgraded MYEFO update yesterday. 10-year bond yields fell to 1.16%. Meanwhile in Asia but Japan and China firmed with the Nikkei up 0.4% and the CSI up 1.2%.

• ASX 200 slips 2 points to 6847. Average volume.
• High 6871 Low 6839.
• Banks mixed WBC down on APRA news.
• Miners stronger. Healthcare weaker with CSL leading lower.
• Industrials consolidate after huge run.
• WTC under a ‘cavalry’ attack again.
• 10-year bond yields 1.16%
• AUD slips to 68.67c
• Dow futures down 9 points.
• Aussie gold firms to $2150
• Bitcoin down to US$6864
• Asian markets better with Japan up 0.4% and China up 1.2%

STOCKS                                               

• PME +1.70% broker upgrade.
• WTC -2.42% another broker with question marks. Bucephalus the broker in question. He was Alexander the Great’s horse.
• WOR +0.58% UBS retains buy rating.
• SIG -2.52% broker downgrades.
• JIN -3.28% selling resumes.
• VUK -6.34% follows UK listing lower.
• RLT +20.00% helium discovery. Could be hot air.
• PRN -2.06% UBS downgrades.
• LYC -6.20% no increase in Malaysian processing limit.
• MSB +0.79% advanced chronic heart failure trial surpasses primary endpoints.
• SGP +0.42% distribution
• FCL +10.00% AGM chairman’s address.
• APE +1.78% statement on employee’s underpayment.
• SIQ -7.12% Macquarie downgrades.
• LLC +0.67% Goldman Sachs upgrades
• Speculative stock of the day: Nothing on any volume today.
• Biggest Risers:
• Biggest Falls: SIQ, VUK, LYC, WGX, NIC, PNV and ING

TODAY

• Northern Star (NST) – The company has announced it is buying 50% of the Super Pit in Kalgoorlie for $800m. The deal will be funded by an institutional placement for $765m and an SPP for $50m plus $480m in debt. The placement will be conducted at 900c. The acquisition will be immediately accretive to Northern Star on an EV/Reserves, EV/Resource, P/NAV basis and EPS in its first full financial year of ownership. The company also provided an operations update with existing Australian operations performing well within previous guidance, producing 158,707oz at an AISC of A$1,250/oz in the September quarter, 2019. Australian operations are forecast to produce 165,000oz to 175,000oz in the December quarter, 2019. As part of the Super Pit deal, NST also has an option to acquire Newmont’s power business in WA for fair market value.
• Lynas Corp (LYC) -6.20% Unsuccessful in obtaining Malaysian regulatory approval to increase lanthanide concentrate processing for CY19. Now expects total NdPr production for CY19 to be similar to CY18. Lynas said the processing limit resets on January 1 and it intends to reapply for an increase in calendar year 2020.
• Westpac (WBC) -0.85% APRA imposes an immediate increase in WBC’s capital requirements of $500m, reflecting the heightened operational risk profile of the bank. APRA will also initiate a review program focused on Westpac’s risk governance.
• A.P. Eagers (APE) +1.78% Identifies anomalies in its payroll system resulting in $4.5m in underpayments. The company has self-reported to the Fair Work Ombudsman. Approximately 6,200 employees have been impacted over a seven-year period.
• Iluka Resources (ILU) -1.14% To be hit with a $US290m impairment change and a US$115m write down in deferred tax assets following a review into the carrying value of its Sierra Rutile operations.
• ANZ Bank (ANZ) 0.12% Expects the increase in home loan applications in H2 to continue well into 2020. Notes a strong balance sheet and good cost control will be vital to protect shareholders’ long-term interest. Repeats confidence it can meet the higher RBNZ capital requirements without having to raise new capital from shareholders.

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ECONOMIC NEWS

RBA Minutes click here

• Members noted that there had been little change in the economic outlook since the previous meeting.
• Globally, financial market conditions had been more positive.
• Labour market conditions had been broadly unchanged.
• Low growth in household incomes continued to be a source of concern for the consumption outlook.
• Available evidence suggested that more stimulatory monetary policy had been working.
• Reasonable to expect that an extended period of low-interest rates would be required in Australia to reach full employment and achieve the inflation target.

ANZ-Roy Morgan Weekly Consumer Confidence Index (December 15): -0.9% to 108 points.

• The RBA Bias index – suggest two more rate cuts to come in 2020.

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BOND MARKET

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ASIAN NEWS

• Taiwan’s stock market has hit 12,000 for the first time since 1980.
• Xi says keep calm and Carrie on. 100% behind his HK CEO. Xi praises her courage.

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EUROPEAN AND US NEWS

• Bitcon has fallen to its lowest level since May. Crypto has been under pressure as China clamps down on the instruments including arrests in June for a suspected pyramid scheme and last month’s notices to clean up crypto companies.

• Boeing will halt 737 Max production in January. No layoffs expected.
• Congress is close to approving a US$1.5 trillion funding package to fund government and avoid a shut down.
• Impeachment vote looms in US. Russian collusion delusion.
• Alan Greenspan on CNBC tonight with predictions for 2020.
• Boris will legislate to ban any extension of Brexit negotiations to finish at the end of 2020. Hard Brexit then becomes an option.

And finally……………..

 

My son Luke loves that we chose Star Wars characters as an inspiration when naming our kids. His sister Chewbacca and his brother Boba Fett are less amused.

 

Two elderly ladies, Mabel and Evie, meet at a café for a nice cup of coffee and a cake.

After a while, Mabel peers closely at Evie and says, “Evie, it looks like you have a suppository in your ear!”

“What?”

“It looks like you have a suppository in your ear, Evie!” says Mabel a bit louder.

“Oh,” checks Evie, “you’re right! Drat, well, at least I know where my hearing aid is now.”

 

The guy who gives out food at the prison canteen asks: “Eat here or take away?”
–
The prisoner frowns: “Not funny, Marlon! Not funny at all!!”

 

Job interviewer: “And where would you see yourself in five years’ time Mr. Jeffries?”
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Me: “Personally I believe my biggest weakness is in listening.”

 

Give a man a fish and you will feed him for the day.
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Teach a man to fish and he’s going to spend a fortune on gear he’ll only be using twice a year.

Clarence

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