thursday thunder, thrashing and threats, page-14

Am I the only one in Australia that thinks this is ridiculous?

To change PMs halfway through a term (and at the end of it too) because the party is concerned about losing the upcoming election CANNOT be good for the markets.

Look, the best thing the markets can hope for is for Gillard to call an early election and lose anyway, which hands the government back to the Libs, and maybe then we'll see some solid buying.

By the way, the word on the street is that Gillard has 60 out of 116, so it looks like Krudd is gone.

I mean in any other country, this would have been tumultuous at best and terrible at worst, setting up the local markets for a trouncing. Unbelievably, the instability of our own Parliament is actually going to benefit our markets today, which lends the argument that our beloved XJO is an anti thesis of capitalism (funny how in the papers one elder parliamentarian commented that Gillard was actually a communist).

With her background in industrial law, we can expect a left wing Labor approach, should she indeed come into power. Stronger unions, higher minimum wages and maternal/paternal leave will be on her agenda. The RSPT will have to be changed no doubting that. Whether or not she will scrap the idea altogether, or restructure it to fit the whims of the mining circles, and yet deliver a positive budget in time to have any sway in the election remains to be seen.

But lets look at things from a third party point of view for a minute (China's?)

So, we've been dealing with an Australian government that is PRO foreign investment (read Chinese buying assets) because he speaks the language, understands the culture and is supportive of the whole international conglomerate ideal. And yet, he tries to stymie everyone but lumping a resource tax. Pretty smart actually...entice Chinese to invest and then bill them for it.

But now, with Gillard comming in, the Chinese will be looking to negotiate and deal with the following:-

a) A woman (no sexual disrespect here, just a cultural observation and one to be mindful of, as to how China and most parts of the world still view their women)
b) An industrial lawyer (who would have principles in keeping jobs in Australia instead of sending them to China)
c) In line with the concept of minimum wage and decent working conditions, something the Chinese find to be...troublesome.

The economics of it all are frightening. Any relationship between Australia and China cultivated from Rudd's apparent embracing of their culture, language and mentality will be shot to pieces, by the appointment of a female, single, Welsh industrial lawyer to run a country trying to find a way to replace all the money HER OWN PARTY spent on pokie handouts, rubbish insulation installation and more credit to first time home buyers who really can't afford anymore than 250 bucks a week for rent.

Early election please, and kick them out. Let's get those that know how to run a country back in quick smart, and then Buymax will see his 6000.

You may think the new regime calls for reinvestment into the mining stocks, but the party is still the same. The party line is, "...we're broke, and we need to find cash, and we don't have Telstra, so lets grab BHP/RIO/FMG/MMX/MGX et al" up to last night.

Last night the party line went to "...we're gonna lose this election, lets change PMs, restructure the RSPT so we don't lose face, and proceed with an election that hopefully we will win, so we can restructure the RSPT next term to what we originally wanted, and the mining guys get conned for about six months..."

Talbot would be laughing at this moment. No doubt Forrester, Tinkler et al are splitting their sides as I type this.

Anyway, in short - Index is going to go for a run, but the post caucus high will be it, for I fear the US is about to roll over.

Last night's housing was utter rubbish. The worst in God knows how long. As someone said, BDI is making newer lows daily, and copper's about to break levels. Oil inventories were surprisingly up, so consumption is reduced, despite it being the driving season in the America.

Be interesting to see how the Hang Seng fared overnight, seeing as it ran up to its highs which was achieved when the SPX futures was at 1130. SPX has fallen 40 points since, and the Hang Seng is holding its post yuan revaluation premium, which really beggars belief.

Anyway, short seems to be the bias, except in australia and the XJO, which I tend to think with everyone thinking the same way and over focusing on the RSPT and its projected ammendments (if any!!!!) will lend a slight premium to the market for a while, before crumbling and fading by day's end. I would be looking to short the XJO in strength, but the problem is it could be alot stronger for alot longer like Daft Punk. The fade in the afternoon will be a sight to behold I suspect.

And a word of caution with regards to end of year ramping. I've only ever seen ramping happen two or three times in the last few years on the last few days. Most of the years the run up actually began a week or two earlier, and just maintained its level throughout the month, before either tanking or rallying in July. 4500 seems to be a magnetic level, and there's a case to be made for this to be just chop between 4450 and 4550 until June 30th.


There is no feeling like calling the markets right, and not seeing results. Hang Seng, you suck. Apologies for the long rant, but lots to get off my mind this morning over coffee.