And finally a quiet night!

September 11th, 2008  by Lou Muddaris

Closing Data

Dow Jones up 38 @ 11,268	NASDAQ up 18 @ 2,228	Gold down 23.6 @ 752.65
Oil down .57 $102.66	FTSE down 49 2 5366	Silver down .54 @ $10.70
Copper up 15 @ 6,866	Lead up 30 @ 1,786	Zinc up 33 @ 1,729
Aluminum up 24 @ 2,578	Nickel down 4 @ 18,431	Tin down 175 @ 18,410

SPI up 15 @ 4928

And finally a quiet night!

The Dow Jones rising only 38 points can be considered a comatosed market after the recent wild swings. The Lehman saga drags on with the company announcing that they will report a $3.9 bln 3rd Q loss and intend to raise funds by selling their U.K commercial real estate division, their majority holding in their investment management division, their holdings in mortgage backed securities and just for good measure are slashing their dividend pay out….apart from that things are just fine. Their shares were sold again, it does beg the question of Lehmans “Exactly when, who to and at what price?!”

Interestingly we finally saw a bounce in the U.S energy and resource sector despite oil and commodity prices falling. Investors are now maybe seeing value in these oversold stocks or more likely, as we highlighted in yesterday’s Market Fox Report, this sector has been hammered over the past few days by distressed Hedge Fund selling.(when those guys sell you get out of the way) which leads us nicely into our recommendation of BHP.

BHP

We have seen the likes of BHP and RIO crash over 20% in the past week alone, something not seen in a very, very long time. Adding to the recent share price pressure was the fact that the Norwegian Finance Ministry announced it had sold its $1 billion stake in RIO on “grossly unethical conduct”. RIO has been allegedly dumping 230 tonnes of trailings via its Grasberg operation into the rivers of Papua New Guinea….we could always respond by boycotting their roll mop herrings.

Such “false” selling along with the distressed Hedge Fund selling offers a good entry level for BHP. On Tuesday we recommended buying BHP circa $37.20 as a long term hold on the basis the selling down from $42 was over done. We stay with this view as holding BHP is compulsory in any portfolio; any company making $15bl a year and expected to make $25 bl next year is worth holding! Not to mention if its take over of RIO succeeds it will be the 3rd largest company in the world which in itself would ensure fund managers increase their holdings.

Breaking News

The Reserve Bank of New Zealand cuts rates by a very surprising 50bp (expected only 25bp) saying it sees slowing economic growth and tighter credit…..Love ya’ work!

Other things

1. At 11.30 today we see Australian employment data which can affect our market. We are expecting the unemployment rate to rise to 4.4% from 4.3% with full time employment rising by 5,000.
2. Tonight the U.S sees their weekly jobless claims data.
3. Hurricane Ike is heading towards the oil producing Gulf of Mexico from where the U.S receives 23% of its oil. Last time hurricane Gustav had no impact on oil prices despite shutting down production for a few days.

We should have a quieter day with a firmer bias led by BHP and the bigger than expected Kiwi rate cut.

Have a good day.

Quote of the day

“A Freudian slip is when you say something but mean your mother”

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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