The market is up 75. It has been up 83 at its peak. The Futures suggested a 50 point rise in the market this morning.
The Dow Jones was up 35. Traded in a 339 point range. It was down 234 at its worst and up 105 at its best. Initial falls in the market followed the $16.6bn default of a Carlyle bond fund and weaker than expected retail sales numbers. The Carlyle bond fund has had $400m of margin calls in the last week and lenders are seizing its assets. The headline stock of Carlyle Capital Corp in Amsterdam fell 88%. An S&P report saying banks have already disclosed the majority of their write-downs caused a turnaround in financials and the market. The Financial sector was down 4% at one point. The market down 234. Fannie Mae up 9.2%. Freddie Mac up 7%. The report saw an increase in expected write-downs to $285bn from $265bn and said “the end of write-downs is now in sight for large financial institutions”. There are $1.2 trillion of subprime loans in the US. Retail sales down an unexpected 0.6% against forecasts for a 0.2% gain. The immediate conclusion was that the US was already in recession. The consumer has been the powerhouse of the US economy accounting for 2/3 of GDP.
- Both BHP and RIO up in ADR form overnight, 0.6% and 2.9% respectively.
- Metals mixed overnight – Copper down 0.2%, Aluminium down 0.3%, Nickel up 0.9% and Zinc was unchanged.
- Oil price up 35c to $110.21 as the US dollar continued to weaken against the Euro and other currencies.
- Gold up $13.30 to $993.80. The price reached $1,000-an-ounce level in the U.S. this morning.
- Bonds down with the 10 year yield up to 3.54% from 3.44%.
In the news today…
Interesting comments from RIO – RIO making headlines with comments from Sam Welsh the head of the iron ore division that a US recession would knock 1% at most off Chinese GDP growth which is running at 11% and that a US recession will not therefore affect the resources sector. 90% of the growth in iron ore has come from China. He also commented that India is “approaching the same take off point China reached in 2002-03”. All good news for the whole iron ore sector to hear one its most important managers so upbeat. RIO up a big 415c or 3.3% 12865c.
- The RBA governor Glen Steven has given a speech and talks about inflation hitting 4.0%. With that tone we can forget the prospect of interest rate cuts.
- There was talk in the AFR this morning that Sinister is set to launch a $1.2bn hostile bid for Midwest Corp. They have announced the bid this morning. The paper suggested the offer will have to be above the 560c a share level, given MIS already rejected a similar approach in December last year. The bid is at 560c… a 35c premium to the last traded price. MIS up 31% to 545c.
- Foster’s (FGL) – The UK government’s 2008 budget included an 14 pence per bottle or 10% increase in wine duty compared to a 4% rise last year. UBS Warburg say it’s going to be difficult to handball the extra cost onto consumers. FGL down 2c to 503c
- Workers at BHP Biltong’s (BHP) Colombian nickel mine of Cera Mats are ready to talk after two weeks of strike. The union leader told the Newswires, “We are ready to negotiate”. BHP up 106c to 3744c.
- AGL Energy’s (AGK) partners have signed a coordinated development and operating agreement for the liquefied natural gas project in Papua New Guinea. AGK down 18c to 1098c.
- Billabong presented to analysts yesterday but didn’t provide a trading update. They did say its US business was experiencing positive trading trends. UBS maintain their BUY recommendation and 1508c target price. BBG up 7c to 1209c.
- Pan Australia’s (PNA) MD told Bloomberg yesterday the company has received a few takeover approaches, but nothing concrete. Were’s have a BUY recommendation and 130c target price, 40% above current share price. PNA up 4c to 94c.
- Macquarie Media Group (MMG) has sold 19 regional radio licenses in Australia for around $34.5m, some voluntary, 15 were required to be sold due to its takeover of Southern Cross Broadcasting. They will use the funds to grow the company or pursue capital management initiatives. MMG down 12c to 377c.
- Gerry Harvey sees value Harvey Norman’s (HVN) share price. He bought 2m shares or $7.78m worth yesterday at around 389c. He now owns 170,996,898 of them. Price down 50% from its record high of 725c. HVN up 5c to 368c.
- Gaming sector – The Victorian government announced ATM’s will be removed from gaming venues by the end of 2012. Crown Casino will be exempt. TAH down 1c to 1453c and TTS down 3c to 335c.
- Dow Futures up 8 at the moment.
In the MARCUS TODAY newsletter today we have all the usual PE’s and YIELDS on the ASX 200 and a lot more of the stories and research and ideas doing the rounds. We also have an article telling you how to earn a 400% return per annum.