Washington, we have a problem
December 12th, 2008 by Lou Muddaris
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 8565.09 | -196.33 | -2.2% |
| NASDAQ | 1507.88 | -57.6 | -3.7% |
| S P 500 | 873.59 | -25.65 | -2.9% |
| FTSE 100 | 4388.69 | 21.41 | 0.5% |
| Nikkei 225 | 8720.55 | 60.31 | 0.7% |
| SPI Futures | 3649 | 28 | 0.8% |
| All Ords | 3,534.00 | -39.2 | -1.1% |
| Oil | 47.77 | 4.67 | 10.8% |
| Gold | 826.6 | 17.8 | 2.2% |
| Silver | 10.425 | 0.225 | 2.2% |
| Aluminium | 1525.5 | 63 | 4.3% |
| Copper | 3232.5 | 52 | 1.6% |
| Lead | 1031 | 60.5 | 6.2% |
| Nickel | 10610 | 1280 | 13.7% |
| Tin | 12250 | 250 | 2.1% |
| Zinc | 1084 | -6 | -0.6% |
Washington, we have a problem
Or as the song says "Put your hands up for Detroit". Either way the U.S Senate has rejected the House of Representatives bailout package saying it needs adjusting. Republican leader Mitch McConnell said "it wasn't tough enough and why should the tax payer subsidies failure". Hey, Mitch tell that to the estimated 1 million workers directly affected and the estimated 2.5 million related workers who will be unemployed (White House official estimates). Those $10,000 houses in Chicago just got a lot cheaper.
George Bush has publicly stated that "it's too big to fail" and would have devastating effects on the U.S. However, this is a very liquid situation so no doubt the Senate will reconvene and get this over the line even if it's the Republicans "harsher" terms. The bottom line is that GM has only enough money to last 2 more weeks.
More bad news
U.S. weekly jobless claims rose to 573,000 (worse than the expected 525,00) the highest level since 1982.
Dow Chemical laid off 5,000 workers; AT&T 12,000, Bank of America 30,000 over 3 years. Yesterday our economy lost 15,600 jobs for November it's certainly going to get much worse.
The U.S. Trade deficit ballooned to $57.2 billion (forecast $53.5 billion) as exports dropped by 2.2% (the price of the high USD) as the rest of the world stopped buying planes, cars, chemicals, and hot dogs. Also imports declined by 1.3% the lowest level since March. Yet, as we have witnessed the market ignores all this bad news; a sign of changing sentiment.
OIL
OPEC meets next Wednesday and will slash production. Boy, are these guys angry, even yesterday the conservative Saudi's said they will "significantly cut production", (the market reacted by taking oil 10% higher). By how much they cut is anybody's guess, with many analysts saying 2 million barrels per day, whatever the figure their target is $75 per barrel. We continue to favour buying oil stocks as per Tuesday's Fox report (Cale) with Santos and Woodside the stand outs.
Today we can expect a very quiet day as traders focus on festivities; indeed tonight is our Christmas Party!
The Definition of Optimism:
On a Sunday, an Investment Banker ironing 5 shirts.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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