Markets Live: Miners maul market 2:13pm: Think gold has lost its luster? Wait until the precious yellow metal starts trading below $US1000 an ounce - a five-year low. At those levels, pushing sub-$US1,000, gold prices may augur the end of this current bull run, according to analysts at Bank of America. "A sudden gap lower in the gold price to below $US1000/oz should coincide with the final thrust higher in stocks, both indicating capitulation of the "stubborn bears," the end of the "melt-up" and the next opportunity to get tactically bearish. We increasingly fear next year's highs in stocks come early," Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, said in a note published Friday. A "significant chunk" of analysts and traders responding to a Reuters survey that published this weekend have predicted gold will fall below $US1000 by the end of the year. The precious metal has seen renewed selling pressure linked to central-bank stimulus, which has rallied the dollar. Too much hubris: In the build-up to that call, Hartnett noted how risk has been resuscitated in the last two weeks by central-bank rhetoric and action, such as from the Bank of Japan and the European Central Bank. To him, that signals "market psychology is shifting from fear to greed, from the wall of worry, to the beginning of hubris." Investors have way too much hubris, or extreme self-confidence that US growth and quantitative easing will ride to the rescue for markets and normalization of QE in 2015 will have no negative consequences, he warned. And he adds that even though the "newbie bulls" are spewing triumph, "1000 on the S&P 500 was a much better entry point into the liquidity trade than 2000." Returns can stay positive into 2015, providing the US continues to grow along with global earnings, but investors should expect lower returns than in recent years. In the short term as well, risk assets can keep rising as central-bank policy and data cause investors to reduce their cash as the year ends. The near-term "pain trade" will be higher government bond yields rather than lower stocks. But gold is where you'll get that big "hubristic tell," he said. Read more at MarketWatch. Gold Photo: Supplied 1:48pm: The local market is trading near the day's lows, as miners and energy plays continue to weigh. You've definitely got a level of nervousness about the resources sector. Pretty much the whole sector is falling off there," says Angus Gluskie, portfolio manager at White Funds Management. An improving US economy would mean a stronger dollar, while weaker commodity prices going forward would make resource investors even more cautious, he said. Economic activity is improving, Japan's improving, US is improving, overall there is progress. So, there is still an underlying positive trend as we get into the New Year. BHP is down 1.8 per cent, Rio has lost 1.1 per cent, Santos 2.4 per cent, Origin 2 per cent and Woodside 1.1 per cent. Fortescue has dropped 3.9 per cent to $3.04, after earlier briefly dipping below $3 for the first time this year. 1:29pm: It's a strong day around the region after Wall Street hit record highs overnight, but the local market is once again defying the trend: Japan (Nikkei): +0.8% Hong Kong: +0.6% Shanghai: +1.25% Taiwan: +0.1% Korea: +0.2% Singapore: +0.15% New Zealand: +0.4% ""The rally in the US market looks sustainable, supported by strong earnings growth,"" says Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management. ""US stocks aren't cheap but they're nowhere near bubble valuations. There's a little bit of a tailwind for Asian equities given that the region's economic growth slowing. People are hoping for more monetary easing in Asia, particularly in China."" 1:25pm: The bounceback in the Australian sharemarket following a flirtation with a correction has come as no surprise to technical analysts who believe support for high-yielding stocks, such as the big banks, hold a floor, but also a ceiling, on the ASX. Australia is running a two-speed market characterised by low interest rates and sub-trend growth in the economy, says Nick Radge the director and head of trading and research at technical analysis investors Chartist. He added the only real interest in the market is for high yield dividend paying stocks, such as the big banks and Woolworths. If you strip those, maybe top 50 stocks, the rest of the market has really been trading sideways for a number of years. If investors are exposed to that smaller cap part of the market, they're probably a bit disappointed," Mr Radge said. Rather than the wind-back of the yield trade, which many analysts were predicting, lower for longer interest rates and a lack of growth conviction on other sectors, will likely see the current market conditions continue to prevail, Mr Radge said. "We saw a huge capitulation in the US market, which drove global markets down," Mr Radge said. US hedge funds, heavily leveraged to energy, began to sell of their portfolios in the sector as the price of oil plunged to multi-years, Mr Radge said. As the ASX dropped, mutual funds and funds management stepped in and picked up bargains. There is a lot of support around the recent low, just above 5100, but there are few tailwinds pushing the market past its recent high, just over 5500, StockRadar technical trader Richard Lie said. Technical analysts see further support for high yielding stocks. 1:04pm: Treasurer Joe Hockey has declined to deny independent analysis indicating a $51 billion hole in his budget, blaming tumbling iron ore prices for putting pressure on the bottom line. Speaking on Adelaide radio station 5AA on Tuesday, Hockey was also keen to keep consumer sentiment buoyant before Christmas, ruling out any immediate savage cuts to the budget in a bid to tackle the widening deficit. "Iron ore prices are between 30-40 per cent less than they were when we first made our forecasts in the budget, that has a direct impact on our budget bottom line, there is no doubt about that," Hockey said. I am very focused on maintaining economic momentum in Australia in the Christmas period and beyond [so] we are not going to turn our mid-year budget into a mini-budget, we are not going to go down the path of trying to make up lost ground immediately. Looking at a big black hole in the budget ... Joe Hockey Photo: Ken Irwin 12:58pm: Document management group Recall Holdings said it has increased its loan facility by $250 million to provide more firepower for acquisitions. The company, which was spun out of logistics giant Brambles in December last year, has acquired five businesses for a combined $31 million since the start of the 2015 financial year. In a statement to the ASX on Tuesday, Recall said its focus on acquisitions continues. The acquisition pipeline continues to strengthen and is a key component of the strategy to accelerate sustainable profitable growth. The company also said it is "exploring strategies to maximise shareholder value through alternative corporate structures." This includes possible conversion to a real estate investment trust in the United States. Recall's major listed peer, US giant Iron Mountain, recently converted its structure to a REIT. The REIT structure allows Iron Mountain to pay out considerable dividends at better tax rates. "Recall will assess the costs and benefits associated with implementing various structures," the company said. Recall is holding its general meeting in Sydney this morning. Its shares are 1 per cent higher at $6.10. 12:37pm: Alibaba sold about $US2 billion worth of goods on the e-commerce giant's websites within the first hour and 12 seconds of its annual shopping festival, November 11 or 'Singles' Day'. Alibaba did $US3.1 billion in business in half a day during last year's festival, equivalent to what it sold in the full day in 2012. Half of the $US2 billion gross merchandise volume this year was sold within the first 18 minutes after the "11.11 Shopping Festival" opened, the company said. The sale, which the company claims is the world's biggest 24-hour online sale, began in 2009 when 27 merchants on the company's Tmall.com site offered deep discounts to boost sales during an otherwise weak period. This year's festival is global, reaching shoppers in more than 200 countries, the company said. Turning 11.11 into $$$$ - 'Singles' Day is a roaring success for Alibaba. 12:26pm: Macquarie Group is the largest fund manager in Australia and the 52nd largest in the world, followed by the Commonwealth Bank and then NAB/MLC, according to the latest analysis conducted by Towers Watson and US-based magazine, Pensions and Investments. However, the investment vehicle established by industry funds, IFM Investors, has been rising up the fund manager ranks and now runs seventh behind the big banks, AMP and Queensland-based institution, QIC. While the overall thrust of the Towers Watson research served to point to a 12 per cent increase in assets managed by the world's largest 500 fund managers to $US76 trillion in 2013, it also served to put the scale of Australia's major managers in context. Macquarie Bank had $331 billion in assets under management, followed by the Commonwealth Bank ranked 90th with $187 billion, NAB/MLC ranked 118th, AMP Capital ranked 122nd, Westpac Banking ranked 159th, QIC ranked 180th and IFM Investors ranked 229th. In terms of global scale, Blackrock was ranked number one, followed by Vanguard Group, Allianz Global Investors, State Street Global and Fidelity Investments. 12:07pm: Sydney's house prices continue to soar, posting a 2.7 per cent rise for the September quarter - nearly three times that of Australia's other cities Melbourne, Brisbane, Adelaide and Hobart all rose just 1 per cent by comparison, according to the ABS's Residential Property Price Index. Sydney's roaring housing market was also, by far, the strongest performer in the 12 months to September, increasing 14.6 per cent. By comparison, Melbourne and Brisbane rose just 6.9 per cent and 6.7 per cent respectively. 11:51am: George Weston Foods is eyeing Goodman Fielder's leading share of the $2 billion bread market after posting its best results in four years and entering a new era of growth that could include acquisitions, joint ventures and partnerships. "Our ambition across Australia and New Zealand is to be the leading bakery business - if that means the market leader, we're more than happy to sign up to that," said George Weston chief executive Andrew Reeves. "Goodman Fielder is certainly the market leader in packaged bread - I'd like to think over time we could wrestle leadership in that segment," Mr Reeves told The Australian Financial Review in an exclusive interview on Monday. George Weston, which owns Tip Top, Burgen and Abbott's bread, is the second-largest player in the fresh loaf market with 34 per cent compared with Goodman's 42 per cent. Mr Reeves plans to boost product innovation and invest more in marketing while strengthening relationships with the major retailers to take share from Goodman and private label brands, where sales are rising after Woolworths cut the price of white sliced house brand bread to 85¢ a loaf. George Weston's plan to turn up the heat on Goodman will come as unwelcome news to Singapore-based edible oils company Wilmar International and Hong Kong investment company First Pacific, whose $1.3 billion offer for the company has been delayed until early 2015 by regulatory approvals. Business conditions have jumped the most on record, but confidence continues to wane. 11:37am: Business confidence continued to wane in October, although operating conditions surged, according to a survey by National Australia Bank. The current level of the main confidence measure is the lowest since before last year's federal election, after which it surged to 12 on the resounding victory of the coalition. 11:26am: Compared with its Big Four peers, National Australia Bank has been on the nose with the market years. From boardroom ructions and a trading room scandal through to the terrible and varied costs of its British banks, NAB has been running fourth. But now Charlie Aitken is buying NAB, specifically recommending his Bell Potter clients swap some of their Suncorp shares for NAB. One of the perennial equities games is rotating bank holdings. At any given moment, bank analysts will tend to have buy recommendations on a couple and be neutral or (rarely) worse on the others. As market consensus builds on the "best" banks, their share prices become expensive, the not-so-good banks start to look cheap, analysts change their recommendations and the game starts again. It's a living. Aitken has done well by looking beyond the Big Four, particularly by having Suncorp on his high conviction list as a total return contrarian investment. "But with our financials analyst TS Lim downgrading his recommendation to "hold" this morning after our $15.00 price target was hit, I am also going to recommend taking some profits in SUN and rotating to another out-of-favour Australian financial, NAB," Aitken told clients in his Ringing the Bell missive today. Aitken went more strongly overweight on Suncorp just three months ago, swapping out of Bank of Queensland to the other Brisbane-headquarter bank and insurance company upon the surprise resignation of the BoQ CEO. That swap worked, SUN shares outperforming BoQ both on price and dividend. "Now it's time to lower SUN weightings, but I am not tempted by BoQ, I am interested in a big 4 bank that is currently cheaper than the regionals," he writes. "I realise NAB has been a chronic underperformer but there are clear signs "the lost decade" is ending under new CEO Andrew Thorburn. Thorburn appears to be moving at pace to reduce the P/E drags and sector discount around NAB's neck, the main two being the UK banking exposure and underperforming MLC wealth management unit. This is good news, but the market is still dubious of his ability to execute. Interestingly, while the market in terms of P/E rels, price to book ratio and dividend yield is dubious of Thorburn's ability to execute the NAB turnaround/cleansing, my contacts in the banking sector are not. In fact, those that have worked for Thorburn or been in charge of him, unanimously say he has the talent and drive to get this done," Aitken says. So Bell Potter now says NAB offers the strongest prospective earnings per share and dividend growth in the Australian banking sector over the next two years, but it's the cheapest of the banks and is offering the highest yield. The are signs NAB's 'lost decade' is ending under new chief Andrew Thorburn. 11:16am: In 1929, a businessman and economist by the name of Jerome Levy didn't like what he saw in his analysis of corporate profits. Its half-dozen analysts attach a 65 per cent probability of a worldwide recession forcing a contraction in the US by the end of next year. That call runs counter to the forecasts of Morgan Stanley and Goldman Sachs Group. The two banks posit an expansion that has plenty of room to run. 11:03am: More on rising inequality: The wealth gap between the haves and the have-nots in the US is approaching record levels, according to a paper by Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics. The top 0.1 per cent (consisting of 160,000 families worth $US73 million on average) hold 22 per cent of America's wealth, just shy of the 1929 peak - and almost the same share as the bottom 90 per cent of the population. Source: The Economist / E. Saez & G. Zucman 10:58am: New figures highlight the favourable conditions for banks - with the share of home loan borrowers falling behind on their mortgage payments falling to a seven-year low. Standard & Poor's said arrears rates for "prime" housing loans fell to the lowest level since 2007 in September. Loans in arrears by 30 days or more fell by 11 basis points to 0.98 per cent, slipping below 1 per cent for only the second time since 2005. The figures are compiled by analysing the loans underlying $130.3 billion in residential mortgage-backed bonds, a key funding source for smaller lenders. It comes after the big four banks' domestic profits were enhanced by lower charges for bad and doubtful debts in the latest half. 10:51am: Looks like our more bearish readers are on the right track: Poll: The sharemarket has rebounded strongly from its early October lows, rising four straight weeks. Will the rally continue this week? Yes, we'll see a rise of more than 100 points to take the ASX200 to a new 2014 high. Some rises this week but not enough to take the benchmark index to a new year's high. Flat week: we'll see some up and down but at the end of the week there will be no major movement in the ASX200. That's it for the rally; this week will end in red. Total votes: 902. Poll closes in 3 days. 10:43am: iCar Asia is seeking to raise $21 million in a placement through Bell Potter Securities and Baillieu Holst. iCar shares went into a trading halt this morning as its brokers went about finding investors for the placement. It's understood Bell Potter and Baillieu were seeking to sell about 19 million shares at $1.10 each to raise $21 million. The offer was priced at a 9 per cent discount to iCar Asia's last close of $1.21. The raising comes after iCar Asia announced it had bought Thai online car classifieds business One2Car Co Ltd. iCar said it paid $16.7 million for the acquisition and entered into conditional agreements to buy the company after market on Monday. iCar has a handful of automotive websites in Malaysia, Indonesia and Thailand. Its major shareholder is Patrick Grove's Catcha Group, which also stakes in owns iProperty Group and iBuy, while carsales.com also has a 22.9 per cent stake. 10:29am: China and Russia on the weekend signed a framework agreement to accelerate the huge 30bcm/yr Altai gas pipeline with a firm contract due to follow in the first half of 2015, following hot on the heels of May's massive "Power of Siberia" pipeline supply deal. This second potential deal provides added competition to an already crowded LNG market, Macquaries says: Compared to the Power of Siberia, Altai benefits from existing Western Siberian production and a shorter pipeline route making this a significantly cheaper and faster development - cost estimates vary from $US14-$US18bn (v $US75bn for Power of Siberia) with first gas expected in 2020. 30bcm/yr is ~23mtpa in LNG equivalent terms (equal to Australia's current production) and equates to ~19% of current Chinese gas demand. While there has been no mention of price, we expect the ~$US9.8/mmBtu agreed on the Power of Siberia to set a strong precedent. Notably this is a significant discount to the ~$US16/mmBtu China currently pays for its LNG (excluding the Guangdong contract with the North West Shelf). China is looking increasingly well supplied over the medium term. Consequently China may look to LNG more for short term flexibility rather than the longer term contractual commitments required by Australian producers to underwrite expensive projects. Only the fittest to survive: With ~80mtpa of US LNG exports and up to 68bcm/yr (~50mtpa) of Russian pipeline exports expected by 2025, unsanctioned Australian projects are being pushed up the cost curve at an alarming rate. Indeed, our demand/supply forecasts suggest that only 1-in-20 unsanctioned projects targeting the 2020 market will be required (although this rises to 1-in-5 by 2025 and 1-in-3 by 2030). Accelerating drift to marginal cost: With too many projects targeting finite (albeit growing) demand, we continue to believe LNG prices will ultimately be determined by the marginal cost of supply. Incorporating this new pipeline supply would see our 2025 LNG demand forecast fall by ~3% to 445mtpa lowering the marginal cost of supply by 4% to ~U$11.40/mmBtu (DES). Australia's market window firmly closed: Along with US exports, Russian pipeline volumes will compete with unsanctioned Australian LNG projects further supporting our view that Australia's market window has closed. This suggests new local projects will be undercut by international competitors while existing projects will see downward pricing pressure at re-negotiation time. Macquarie rates Woodside an 'underperform', with a $38 share target. "Recent comments suggest Coleman is already starting to feel the pinch of falling LNG prices," the bank's analysts say. Santos on the other hand is an 'outperform' with a $15.50/sh target, as is Oil Search with a $10.25 target. The scale of the Russian pipeline supplies makes them very competitive versus LNG. 10:22am: Shares struggle early, with the a bounce in the banks offset by weakness among miners. The ASX 200 and All Ords are both down a couple of points after retreating rapidly from an early rally, at 5522.3 and 5499.4, respectively. BHP and Rio are around 1.3 per cent lower, while gold miners are giving up yesterday's gains - Newcrest is 5 per cent down. Energy stocks are also down. The banks are providing support, however, and indeed all sectors aside from resources-related ones are in the black in early trade. 10:03am: Citi Group has slashed its iron ore price forecast for the next two years to $US65 a tonne, from about $US80, and has reduced the "fittest of the iron ore plays" FortescueMetals Group to a "neutral" from "buy." Citi has also slapped a "sell" on Pilbara juniors it considers to have become risky plays - Atlas Iron and Mount Gibson, from a "neutral" rating. Atlas Iron's share price target is now a measly 14¢. Just two years ago, the great white hope of the Pilbara had a market capitalisation of $1.9 billion. Supply continues to surge but high-cost capacity is falling out of the market more slowly than expected, Citi says. Analysts at Citi have combed through the iron ore "plays" in Australia - those outside king pins Rio Tinto and BHP Billiton. Citi analysts said they had "been bearish on iron ore but not bearish enough" - and have cut forecasts for the current quarter to $US78 a tonne, from $US87. Notably, Citi is now tipping $US65 for the next two years, a huge paring on the $US80 a tonne put for 2015, and $US78 a tonne for 2016. But a rebound is tipped for 2017. Fortescue is deemed "by far the fittest of the iron ore plays" and best placed to weather the price rout - thanks to its falling costs and the longevity of its assets but will be hit by lower cash flow and onerous debt repayments. Citi has slapped a neutral on FMG and reduced the target price to $3.20 a share, from $4.50, and a buy. But analysts are confident the "third force" in the Pilbara will enjoy sufficient liquidity to meet "debt repayments." 9:53am: More than two-thirds of Apple's iTunes earnings outside North America are not taxable in the group's Luxembourg holding company, tax documents obtained by the Australian Financial Review show. While the tech company pays less than 1 per cent in Ireland on sales of its iPhones, iPads and computers, most of its revenues from the sale of music and films outside the US flow to a Luxembourg company, iTunes Sarl, the AFR reports. Documents obtained in a massive leak to the International Consortium of Investigative Journalists show how Apple accounts for its growing earnings from digital content. Related-party charges account for 66 per cent of earnings for iTunes Sarl, the AFR reports. While the accounts show iTunes paying much more tax in Luxembourg than companies such as Amazon, the iTunes accounts do not break out other revenue from Apple digital content, which would reduce its tax rate. The ICIJ's 'Lux leaks' have revealed how hundreds of Australian and multinational companies have used Luxembourg to reduce their global tax - sometimes to below 1 per cent. Many of the secret deals were done through accounting firm PricewaterhouseCoopers. The ICIJ will continue publishing the names of companies mentioned in the leaks this month. Read more at the AFR. More than two-thirds of the money Apple's iTunes makes outside North America goes through the group's Luxembourg holding company where it is not taxable. Photo: Mashable Qantas chief executive Alan Joyce. 9:40am: Qantas boss Alan Joyce is not clear of turbulence yet, writes BusinessDay columnist Elizabeth Knight: Forecasting how much longer Qantas boss Alan Joyce would remain in his job has been something of its own cottage industry, an insider recently quipped. The chief executive that most predicted could not withstand the dire losses his airline has sustained could perversely be more likely to leave in 2015 - if you hold to the latest theory that he would remain only until the red ink dried up. But Joyce said on Monday that he wasn't going anywhere until his three-year transformation strategy was complete and probably beyond that. If one takes the start of this year as Qantas' strategic kick-off, this means that he will remain for a minimum of two years, assuming he has the blessing of the board and the major shareholders. Although we have only seen the first glimpse of profits following the $2.8 billion loss in financial year 2014, the airline industry has a new saviour - the fuel price. Undoubtedly the structural changes that Joyce is in the process of making will remove $2 billion in costs, but in addition Qantas is now feeling the aid of the hefty tail wind from the falling fuel price. Just the smell of cheaper fumes has moved the stock price over two weeks from $1.28 to $1.71. 9:30am: Net profit at fertilizer giant Incitec Pivot has slumped 33 per cent to $247.1 million, despite a strong performance from its Moranbah ammonium nitrate plant in Western Australia. The result was dragged down by $109.2 million worth of writedowns. Earnings before interest, tax, depreciation and amortisation increased by 15 per cent to $97.5 million to $742.7 million. Managing director James Fazzino said the fact that the company boosted its Australian dollar earnings in its three markets was "a great result in these challenging markets." Writedowns have hit Incitec's bottom line. Photo: Bloomberg. 9:23am: US stocks advanced, with the S&P 500 index extending an all-time high, as investors watched corporate results and speculated the economy is strong enough to withstand a global slowdown. Time Warner Cable and Comcast dropped at least 4 per cent after President Barack Obama called for rules protecting an open internet. The S&P 500 rose 0.3 per cent to 2,038.3 for a fourth day of gains. The Dow Jones climbed 39.8 points, or 0.2 per cent, to 17,613.7, a record after five straight advances. "The numbers in the third quarter showed a steady economy, we continue to have oil below $US80, consumers feeling confident, low interest rates, and that's a combination that works well for stocks," Mark Kepner, an equity trader at Themis Trading, said. Central banks have also been quite accommodative in what they've been saying and it seems to be working. Last week's rally "celebrated the fundamentals" as earnings and economic data point to "sustainability" of the expansion, John Stoltzfus, Oppenheimer & Co. chief market strategist, wrote in a note to investors. Stoltzfus raised his year-end target for the S&P 500 to 2080 from 2014, implying a 2.4 per cent gain from Nov. 7. The median target of strategists in a Bloomberg survey was 2,040. Cisco Systems and Wal-Mart Stores are among S&P 500 companies that report earnings this week. Of those that have posted results so far, 80 per cent beat estimates for profit and 60 percent topped sales estimates, according to data compiled by Bloomberg. "There is no downward pressure and people are waiting for another leg upwards," Herbert Perus, head of equities at Raiffeisen Capital Management, said. One of the triggers could be the company news out this week with quarterly figures from Cisco and Wal-Mart. 9:17am: Local stocks are set for a positive start after Wall Street gained further from record highs amid broadly upbeat global sentiment and ahead of business confidence and house price data. SPI futures 13 pts, or 0.2 per cent, at 5553 AUD at 86.20 US cents On Wall St, S&P 500 +0.3%, Dow +0.2%, Nasdaq +0.4% Spot gold drops $US26.40 to $US1151.57 an ounce Brent oil down $US1 to $US82.39 per barrel Iron ore broadly flat at $US75.80. Australia: NAB business survey, ABS home price index, both at 11:30am AEST; RBA head of domestic markets Chris Aylmer speaks. Incitec Pivot annual profits Recall Holdings annual general meeting Melbourne APN Outdoor shares to debut on ASX today after 12pm after raising around $329m in IPO Port Hedland tugboat workers to accept Teekay offer, MUA says, averting threat of strike action Suncorp cut to hold from buy at Bell Potter, price target $15 Goldman Sachs has upgraded Alumina to "neutral" on the back of its commodities team's revised forecasts for a calendar year 2015 alumina deficit and price of $US373 a tonne after reviewing the supply/demand balance. CIMB has kept an "add" recommendation on Downer EDI and dropped its target price to $5.15 a share from $5.60. "Like a salmon swimming furiously against a strong stream of water, DOW continues to internally manage elements in a very difficult operating environment," the broker said. Modular park owner Tasman Lifestyle Continuum has shelved plans for an initial public offering after a lukewarm response from institutional investors saw the float priced well below industry benchmarks. 9:17am: Good morning and welcome to the Markets Live blog for Tuesday.