The ASX 200 flopped around closing down 29 at 6631 as miners and banks weakened and defensives rose. The Dow Futures were up 80 points following the electoral college votes and a near certain Biden victory. The Big Bank Basket fell to $149.35 despite good news from APRA on dividends in 2021. CBA dropped 1.0% and WBC fell 0.5% with insurers and other financials steady out of the limelight. Big miners in trouble today on iron ore price falls and the coal issues with BHP falling 2.2% and FMG down 3.1%, the coal stocks under pressure following a solid run in the face of mounting issues. WHC dropped 5.88% and NHC down 2.7%. Elsewhere energy stocks ran out of juice with WPL down 2.1% and STO off 2.7%. Defensives though on the rise led by CSL up 1.2%, WOW down 0.3% and WES unchanged. In tech, XRO hitting the highs up 2.4% and APT closed unchanged after late sell off. The All-Tech Index fell 0.26%. In corporate news, MSB hit the skids down 15.20% on a Phase III endpoint not being met. Not for the first time with this one. Uranium stocks came off the boil despite production cuts in Canada due to CV19 and the founders exited stage left pursued by a bear in PPH . APX down 2.5% after a broker downgrade. AYS up 2.7% after a bid from WAM. DOW up 2.3%, to sell its open-cut mining business to MLD for $175m. MLD to raise $75m to fund the acquisition. JMS unchanged on its trading update. Plenty on the economic front both here and in China. Weekly consumer confidence rose 1.7%, matching the prior week’s gain, with most of the subindices registering improvement. RBA minutes reaffirmed previous comments. Rates are not rising for some while and RBA will do whatever it takes. In China, industrial production increased by 7% whilst iron ore was once again under pressure. The 10-year yield fell to 0.96% and the AUD steady at 75.30c. Asian market saw a little weakness with Japan down 0.3% and China down 0.3%.

Today’s Highlights

  • ASX 200 down 29 to 6631
  • High 6654 Low 6628. Narrow range again.
  • Big Bank Basket down to $149.35
  • All Tech down 0.26%
  • Dow Futures up 80 points.
  • Gold steady at AUD$2435
  • 10-year yields slip to 0.96%
  • AUD slips to 75.12c
  • Bitcoin kicks higher to $19459
  • Asian markets slip with Japan down 0.3% and China off 0.3%

STOCKS

  • WOW -0.26% ACCC flags issues with PFD.
  • RFG -6.59% ACCC takes action against company.
  • WGX -5.58% incident at Big Bell.
  • VRL – scheme gets tick.
  • ESR -14.78% traders moving on.
  • LFG +16.67% rang the bell on new IPO.
  • SFX +21.88% FIRB says yes to Yansteel.
  • TEK +5.26% AGM copmments from Waislitz.
  • PDN -10.00% Canadian production cuts fail to cheer.
  • SLX -9.29% uranium trade over?
  • DBI -5.45% not a great time to list in retrospect.
  • PCG +4.29% FUM statement.
  • SMR +9.35% bucks the coal issues.
  • PSQ +4.60% smiles all around.
  • Speculative Stock of the Day: Legacy Iron Ore (LCY) +150.00% following an ASX price query. Company noted excellent testwork at Mt Cella.
  • Biggest Winners: LFG, EBO, ERA, PPC, RWC, ORE and AD8.
  • Biggest Losers: MSB, CRN, PDN, CHN, YAL, MMM, ELO and LTR.

TODAY

  • APRA notes an improvement in the economic outlook and stability in financial markets. Will no longer hold banks to a minimum level of earnings retention. Adds the onus will be on boards to carefully consider the sustainable rate for dividends, taking into account the outlook for profitability, capital, and the economic environment.
  • Laybuy Group Holdings (LBY) +2.81% Launches beta testing in the US with selected retailers. Full rollout expected across the US in April 2021. Announces collaboration with Prezzee to enable Pay in 6 for gift cards at a variety of stores across Australia and the UK. Notes Tap to Pay has been successfully released in New Zealand following the successful launch in Australia.
  • WAM Capital (WAM) +0.89% Launches a bid for amaysim Australia (AYS). The AYS board unanimously recommends shareholders accept the offer.The offer is conditional upon shareholder approval of the sale of amaysim’s Mobile business to Optus. Each AYS shareholder may elect to receive either: 1 WAM share for every 2.7 AYS shares, representing 83.32c of implied value. Cash consideration of 69.5c per AYS share or a combination of cash and scrip. Due to associated costs, the AYS final distribution is now expected to be in the range of 6.5c-12.5c/share vs previously guided 7c-13c/share.
  • Ampol (ALD) -1.80% Welcomes the government’s 1c/L refining production subsidy.Notes itis currently undertaking a review of the Lytton refinery and will defer a decision until the review is complete.
  • Jupiter Mines (JMS) – Q3 profit $36.1m vs quarter-ago $51.1m.Production (tonnes) 925,652 vs quarter-ago 840,469. Revenue $156.5m vs quarter-ago $154.1m. EBITDA $51.2m vs quarter-ago $76.5m. Cash balance $122.6m vs quarter-ago $100.4m.
  • ANZ (ANZ) -0.91% Enters into a joint-venture with European-based payments leader Worldline to provide its small business, commercial and institutional customers in Australia with access to technology for fast, reliable and more secure point-of-sale and online payments. The venture involves ANZ and Worldline forming a newly created merchant acquiring group, with ANZ holding a 49% interest. ANZ estimates completion of the transaction will increase its Level 2 CET1 capital ratio by ~5 basis points. The transaction is expected to be completed in late 2021. ANZ said the earnings from the joint venture could be nominal in the first few years as the joint venture is established.
  • Downer EDI (DOW) +2.29% To sell its open-cut mining business to MACA for $175m. Downer will receive over $200m in cash proceeds, $175m as well as ~$30m from the unwinding of working capital balances. Downer remains in discussions with a number of parties in relation to the other parts of its mining portfolio, namely Open Cut Mining East, Underground, and the Otraco tyre management business.
  • Woolworths (WOW) -0.26% ACCC expresses concerns over WOW’s proposal to acquire 65% of PFD Food Services.
  • Galaxy Resources (GXY) -4.81% Completes $38m retail entitlement offer at 170c/share with a 66% take-up.
  • Retail Food Group (RFG)-6.59%The ACCC alleges that Retail Food Group acted unconscionably and engaged in false, misleading and deceptive conduct when it sold or licensed 42 loss-making corporate stores to incoming franchisees between 2015 and 2019. Commences proceedings in Federal Court.

ECONOMIC NEWS

RBA Board Meeting Minutes – For the full details Click here

  • Members noted that global economic activity had bounced back faster than anticipated in the September quarter, but the tightening in containment measures in the December quarter had resulted in a loss of economic momentum.
  • Members noted that housing prices in a number of advanced economies had been surprisingly resilient this year, and some economies had seen a notable increase in housing prices in recent months.
  • Expectations for GDP growth in the September and December quarters had been upgraded over the preceding month, and employment had also recovered faster than anticipated. At the same time, members noted that there continued to be a significant amount of spare capacity in the labour market and the economy more generally.
  • Members noted that conditions in the domestic housing market were improving but uneven. Regional housing prices had increased by more than those in capital cities since the onset of the pandemic.
  • Members noted that the recovery in the labour market was more advanced than expected, with employment having grown strongly in October.
  • Despite these positive developments, members noted that the unemployment rate had ticked up in recent months and that broader measures of labour underutilisation remained high. Hours worked were around 4% lower than before the pandemic.
  • Since the start of the year, the Bank’s balance sheet had increased by around $130bn. Authorised deposit-taking institutions had drawn down $84bn of low-cost funding through the TFF and had access to a further $105bn under the facility.
  • Given the outlook for both employment and inflation, members acknowledged that monetary and fiscal support will be required for some time. The Board remains committed to not increasing the cash rate until actual inflation is sustainably within the 2 to 3% target range.

THE BOTTOM LINE

The Board reaffirmed the existing policy settings, namely:

  • a target for the cash rate of 0.1%
  • an interest rate of zero on Exchange Settlement balances held by financial institutions at the Bank
  • a target of around 0.1% for the yield on the 3-year Australian Government bond
  • the expanded Term Funding Facility to support credit to businesses, particularly small and medium-sized businesses, with an interest rate on new drawings of 0.1%
  • the purchase of $100bn of government bonds of maturities of around 5 to 10 years over the 6 months following the Board meeting on 3 November 2020.

-Upshot is rates are not rising for some while and RBA will do whatever it takes.

Consumer Confidence

  • Weekly consumer confidence rose 1.7%, matching the prior week’s gain, with most of the subindices registering improvement.

ABS figures

  • Australian Bureau of Statistics shows that more than three quarters of payroll jobs lost to mid-April had been regained by the end of November. Payrolls rose 0.4% in the fortnight to November 28.
  • The payrolls data collected from the Australian Taxation Office showed a rise in payrolls in every state and territory except South Australia, which suffered a short-lived lockdown in that fortnight. The largest increases were seen in Tasmania, up 1.1% and NSW up 0.6%.

BONDS

COVID – 19 NEWS

  • Singapore will start a new travel lane for “business, official and high economic value travelers” that will allow people to come to the city-state without quarantine for short-term stays.
  • Moderna was informed by the European Medicines Agency that pre-submission talks of its Covid-19 vaccine candidate were unlawfully accessed in a cyberattack on the regulator.
  • New York is moving toward a second full shutdown if Covid-19 cases and hospitalizations continue at their current pace, Governor Andrew Cuomo said.
  • The switch to tier 3 rules from tier 2 in London and parts of southeast England will see pubs, bars and restaurants closed, except for serving takeaway meals. Theaters and museums will also shut to the public.

ASIAN NEWS

  • China’s industrial production increased 7% year-on-year in November, up from 6.9% in October.
  • Retail sales rose 5%, up from 4.3% in October. Consensus forecasts had been for a gain of 5%.
  • Fixed asset investment, or spending on infrastructure, rose 2.6% in the year to November compared to 1.8% in the prior month.
  • Property investment increased 6.8% in the year to date compared to 6.3% in October.
  • China’s jobless rate fell to 5.2% from 5.3% in October.
  • The central bank continued to provide ample liquidity to support the recovery, injecting 950 billion yuan ($145 billion) of one-year cash via the medium-term lending facility

EUROPEAN AND US HEADLINES

  • London hits Tier 3 and heads into Xmas lockdown. New strain emerges too just to complicate things. Xmas is cancelled too in Germany.
  • Bill Barr resigns. Biden gives speech in electoral college vote. Trump all but gone.
  • 262 days since the last relief bill passed in US.
  • EU and YUK continue to talk. Talk is cheap though. Fish remains an issue.
  • The Incredible Shrinking Stimulus – Now down to US$748m. Remains spilt in two seems the best option for success.
  • Nation State attacker hits US Intelligence services.
  • Trump hits Turkey with sanctions.
  • Can’t stretch too far but Lyrca maker defaults on its US$153m bond.
  • SpaceX is discussions for new funds valued at US$92bn. Last raise of US$1.9bn  in August.
  • Cleveland baseball team drops its Indian name. But not until the end of next year.

And finally…..

Truths + Rules Of Life

There are three things that cannot be easily hidden, the Sun, the Moon, and the Truth. Here are Two Truths and 5 Rules of Life:

SIMPLE TRUTH 1:

Lovers help each other undress before sex.

However, after sex, they always dress on their own.

Moral of the story — In life, no one helps you once you’re screwed.

SIMPLE TRUTH 2:

When a lady is pregnant, all her friends touch the stomach and say, “Congrats.”

But, none of them comes up to the man – touch his penis and say, “Good Job.”

Moral of the story – Hard work is rarely appreciated.

FIVE RULES TO REMEMBER IN LIFE:

1. Money cannot buy happiness – but it’s far more comfortable to cry in a Porsche than on a bicycle.

2. Forgive your enemy – but remember the buggers name.

3. If you help someone when they’re in trouble – they will remember you when they’re in trouble again.

4. Alcohol does not solve any problems – but then, neither does milk.

5. Many people are alive only because it’s illegal to shoot them.

BONUS RULES:

Condoms do not guarantee safe sex! A friend of mine was wearing one when he was shot by the woman’s husband.

I think all Politicians should wear uniforms. You know, like race car drivers, so we could identify their corporate sponsors!

Also, all Politicians should serve only two terms, one term in office and one term in prison

Clarence

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