Crikey

The market has started the week down 4. Much in line with the 7 point fall the Futures were predicting this morning.

The Dow Jones closed up 59.9 on Friday – It moved in a 189 point range and finished the week up 3.01% on news that the US Treasury had moved closer to developing a plan that will hopefully result in easing the subprime mortgage problem. Federal Reserve Chairman Ben Bernanke also signalled interest rates might be cut at next months meeting on December 11. Financials dominated the headlines once again and put on 3% to register its best week in four years. It was a volatile but positive week for the three major indexes; the Dow Jones, the NASDAQ and the S&P 500 finished 2.5% to 3.0% higher. Despite this week’s gains, November was a bad month for markets - the Dow Jones and the S&P 500 fell 4.4% and the NASDAQ got hit the hardest losing 7%.

BHP up 7c to 4305c and RIO up 24c to 14543c. Metals mostly up on Friday, Zinc up 3.3%, Copper up 1.7% and Nickel 0.5%. Aluminium down 0.2%. Zinifex down 11c to 1433c. Oil price down $2.86 or 2.7% to $88.60 - its lowest level in more than a month – on speculation OPEC will increase crude supplies for only the second time this year. Woodside down 47c to 4802c. Gold down $13.10. Newcrest down 90c to 3286c. It announced this morning a JV deal with two Japanese companies to explore for copper and gold in the Namosi region of Fiji.

A couple of economic numbers have done for the market this morning.

• The TD-Melbourne Institute measure of inflation for November has come in at +3.4% on the year taking the market down a peg, above the upper end of RBA’s 2-3% zone. RBA likely to keep rates on hold but inflation will remain the key theme after the new year.
• Australia registered its biggest monthly deficit on record after its merchandise trade deficit increased to $2.98bn in October against $1.92bn in September. Exports fell 3% while imports increased 2%. Macquarie call the deficit a “Big Surprise”. Welcome to the Treasury Mr Swann.

In the news (not much to hang the hat on):

• PBL has de-merged into Crown (CWN) and Consolidated Media Holdings PBLDA today - As of this morning PBL is trading as Crown (CWN) and Consolidated Media Holdings (PBLDA). Crown has started up 35c to 1420c and Consolidated Media Holdings unchanged at 395c. One Merrill Lynch analyst last week valued Crown at 1518c a share and CMH at 461c, ABN AMRO values CMH at 413c and Crown at 1467c. The 300c cash and confirmation of holdings statements will be sent out to existing shareholders on 14 December.
• Oxiana (OXR) has announced plans to spend about US$178m to lift copper production at its Sepon mine in Laos by around 33% resulting in copper production capacity at the mine rising to 80,000 metric tons a year by 2010 from 60,000 tons currently. Work will begin right away on the expansion and is expected to be completed in the 4Q of 2009. OXR down 4c to 389c.
• Babcock & Brown (BNB) announced this morning its European Infrastructure Fund closed with total commitments of EUR2.17bn, slightly better than its initial target of EUR1.5bn. They said the fund will look for further investments in energy, water and transport sectors. BNB down 23c to 2570c.
• MFS Ltd (MFS) has acquired a 30% stake in FindisNet Ltd., a Hong Kong registered company with a Chinese financial distribution business. MFS up 12c to 499c.
• Transpacific Industries (TPI) announced it has completed its refinancing with a $2.35bn underwritten syndicated facility and also reaffirmed its earnings guidance for the 2008 financial year. TPI up 32c to 1132c.
• According to the The Age newspaper NZ billionaire Graeme Hart could team up with Amcor (AMC) and create a JV to challenge the dominance of Richard Pratt’s Visy. Amcor are not commenting. JV expected to be announced within months. AMC up 13c to 698c.
• Companies going ex-dividend include AGP, ALL, HNG and NEM. Great Southern Plantation (GTP) and PNN go ex divi tomorrow.

I had lunch the other day with some “old” people (that’s to say older than me) – they got quite heated suggesting the stockmarket was one of those places where they couldn’t ask questions for fear of looking like an idiot, that the industry assumed a level of knowledge they didn’t have and that they invested in stocks a mere vapour of knowledge. Despite that many of them had accounts and would deal on line… presumably… in ignorance. One of them did not in fact know what a dividend was and when I suggested everyone knew it turned out the rest of the table needed an explanation as well. The point one of them couldn’t grasp for instance was “Why would a company pay a dividend if it didn’t have to”. Surely they would keep the money for themselves. Some logic in that.

There might be some value in coming down a level then. If the oldies don’t appreciate it then your kids certainly will – in the MARCUS TODAY newsletter today is an explanation of the concept of “shares’ – where it they came from and how the stockmarket came about. “Once upon a time there was an Elizabethan Seaman…”

MARCUS TODAY – “Inform, Explain, Educate, Entertain”.

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