Crikey

The market is down 164 at 11:30am vastly underperforming the 58 point drop predicted by the SFE Futures this morning. Financials down 4.0%  — major banks doing the most damage with the NAB dropping the index by 14 points  — is down 7.3% after their larger-than-expected heavily oversubscribed $3bn raising yesterday. CBA down 4.2%, WBC down 3.2% and ANZ down 0.8% as they contemplate the potential success of possible pre-Christmas capital raisings of their own. Resources are down 4.6%  — BHP and RIO down 4.4% and 4.1%  — despite the rise in commodities Monday in the US.

The Dow was down 73. Up 216 at best. Down 183 at worst. Main Points: Concerns over the financial position of US automakers burning through cash. One broker said GM is worth zero. The Chinese A$870bn stimulus package was quickly overlooked. Treasuries up. Gold up $12.30. Metals all up bar lead. BHP down 26c equivalent in the US despite rising 4.1% in ADR terms. A$ down 0.84% to 66.98c against the US dollar. Financials down 4.4%  — AIG up 8.8% on an additional $40bn bailout. Retailers down 2% as Circuit City files for Chapter 11 bankruptcy.

The AFR has a 10 page study on Executive Salaries. Most highly paid executives from the top include Murdoch ($28.65m), Alan Moss at Macquarie ($24.75,) and Phil Green at Babcock & Brown ($22.1m). They also list the fall in value of shareholdings of key executives. Andrew Forrest has lost $9.3bn, Kerry Stokes $1.538bn, Gerry Harvey $1.462bn to name a few.

Making the news today…

• Incitec Pivot (IPL) is in a trading until Friday  — it is preparing to raise capital.
• Asciano (AIO) is also in a trading halt after falling 59.8% to 69c on the back of Citi cutting its target price to 82c from 608c referring to “crisis of confidence”. They expect the company to make a loss for the next four years.
• Computershare (CPU) also struggling  — reaching a two year low  — after telling shareholders at its AGM that the strong US$ will erase its FY09 guidance. It expects underlying business growth of around 10%.
• Harvey Norman (HVN) said like-for-like sales fell 2.8% in the 28 days to November 9.
• Insurance Australia Group (IAG) says it is on track to meet earnings guidance and maintains a conservative exposure across is investment portfolio.
• Alumina’s (AWC) said it would cut production by another 350,000 tonnes a year after its JV partner Alcoa said it will cut production.
• According to the AFR, Foster’s Group (FGL) has decided against selling its wine unit at the bottom of the market.
• Coffey International (COF) has announced US$140m worth in international development contracts.
• Paladin Energy (PDN) has announced a 1Q loss after tax of $US4.7m.
• Becton Property Group (BEC) have seen increased redemptions and as a result have suspended both redemptions and applications for the Becton Diversified Property Fund (BDPF the Fund).
• CFX Retail Property (CFS) has given its September 2008 quarterly update and says it is confident of a FY09 distribution of 12.5c per unit.

Broker Stuff today…

• Plenty of broker research on the National Australia Bank (NAB) following their capital raising yesterday. GSJB Were were the only brokers to have a Buy recommendation, the rest are Underweight or Underperform.
• Orica announced their FY profit result yesterday  — Deutsche Bank cut their target price to 2800c from 3000c and maintain their Buy recommendation. According to their numbers, it is a stock trading at a 34% discount to their revised valuation and at 9.6x FY09 earnings estimate.
• ABN AMRO cut their target price on Macmahon Holdings (MAH) to 100c from 187c despite maintaining their Buy recommendation after growth guidance was cut to 10-20%.

Other stuff…

• The US Department of Agriculture cut its forecast overnight for Australian wheat production in 2008 to 20m metric tons from October’s 21.5m tons.
• The Dow Futures suggest a 32 point fall in on Wall Street tonight.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

For a free 21 day obligation free trial of the MARCUS TODAY newsletter (and no we won’t ask for a credit card number) please START A FREE TRIAL — you will receive two daily emails about the stockmarket, our MORNING EMAIL with all the stuff you need to know ahead of the trading day ahead and a DAILY EMAIL with all the midday events, news, comments and Ideas from Marcus and his Team.

You will also be given a password to the MARCUS TODAY website including access to all the emails as well as Educational, Entertaining and Researched Articles from Marcus and his Team and an archive where you can catch up on a whole week or month in just a few minutes. Or Browse at length. We are sure you will enjoy and profit from what we offer.