The market has been falling since opening this morning and is accelerating…down 190. We are in the grip of fear there is no doubt. It is UUUUgly. The SFE Futures predicted a 79 point fall in the market this morning.
Today I sat through the most negative morning meeting in the last four years….short of distributing 6 foot lengths of rope it was pretty clear that life as we know it has now ended. I remember Andrew Bell of Bell Securities in a morning meeting in April 2000 (right at the top of the tech boom) saying “I’ve been in this industry a few years and I can tell you, it doesn’t get to look any better than this. Stop and take a breath. Remember this”. His timing was impeccable. I’m not sure today’s morning gloom quite matched that moment, I can imagine much worse, but it’s coming. We are closer to the bottom that’s for sure.
The story goes that JP Morgan sold out ahead of the 1929 Crash because a shoe shine started giving him stock tips and JFK’s grandfather Joseph Kennedy locked in multi million dollar profits ahead of the 1929 Crash because an elevator operator gave him a stock tip. If the same holds true today then when the 3AW radio jocks start talking about the fall in the stockmarket instead of AFL, you know it must be near the bottom (near….but not yet).
The Dow Jones was down 167 moving in a 280 point range and closing down for the fifth consecutive session.
Resources are doing it tough today…BHP down 56c to 3264c and RIO down only 15c to 8285c. Both BHP and RIO down in ADR form overnight, 5.8% and 3.3% respectively. Metals all down overnight, Copper down 1.4%, Zinc down 2% and Aluminium 0.4%. Nickel up 3%. Zinifex down 37c to 1475c. Oil price up 96c to $73.36 after the National Hurricane Center said there could be a major hurricane by Thursday. Woodside down 107c to 3907c. Gold unchanged at $679.70 in the US overnight.
The market has officially had a “Correction” as of last night….down over 10%. Resources down 15.73%…underperforming. Banks down 7.2%….proving their defensive qualities.
Heaps going on today:
- Australian Stock Exchange (ASX) down 110c to 4390c despite announcing NPAT more than doubled.
- CFS Retail Property (CFX) have announced an 84% increase in FY07 NPAT and MFS Ltd (MFS) also announced they have withdrawn from takeover talk with the company. CFX up 3c to 216c, MFS up 16c to 421c.
- The battle for CSM continues – Consolidated Minerals (CSM) down 4c to 336c, their board has rejected the takeover offer from Territory Resources (TTY) and have instead recommended the 330c all cash offer Pallinghurst.
- Allco Finance Group (AFG) announce they have no direct exposure to the US sub-prime assets and that Allco’s “white-label mortgage platform Mobius is not affected by the issues associated with US sub-prime mortgages”. Announcement hasn’t done much good for the share price, down 19c or 2.5% to 750c.
- Macquarie Bank (MBL) and Publishing & Broadcasting (PBL) have agreed to buy 66.2% of German online real-estate advertising group Immobilien Scout for 357m Euros. The acquisition still requires regulatory approval. MBL down 75c to 6593c and PBL down 40c to 1700c.
- Sigma Pharmaceuticals (SIP) getting smashed today…again – down 18c or 10% to 148c after announcing CFO John Cullity has resigned and will leave the company at the end of the month. The stock is down 38% in the last 3 months.
- Nightmare listing continues – RAMS Home Loans (RHG) down another 65c or 48% to 70c today, the stock has market has trashed the stock since listing at 250c a share. Investors have lost 65% of their initial outlay. The vendors made off with over $695m. If they had waited two weeks the listing probably wouldn’t have gone ahead. Some of the prospectus statements look a bit hollow suddenly.
- The US$ has fallen 6.2% against the Yen since the credit crunch started. It has promoted talk of the Yen Carry Trade unwinding. Why not…we have Armageddon….bring on Apocalypse.
I’m not buying until Bruce Willis arrives with the drill rig.
I have a few articles in the Marcus Today newsletter today. One of them is a list of all the ASX 200 stocks and their numbers (PEs and yields) listed in order of how far they have fallen from the top. Amazingly BHP has been the best performing resources stock in the fall. Financial engineering stocks (MBL, BNB, AFG, MFS, CGF) have been the worst hit along with small resources.
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