We had the banking crisis now it's the commodity crisis
September 4th, 2008 by Lou Muddaris
Overnight the Dow Jones swung 12 times in and out of positive territory as traders digested mixed signals. The positives were falling oil and commodity prices and the CEO of the U.S giant Home Depot Corporation (think Bunnings x 1,000) who said they are seeing signs of a bottoming out in the housing sector. The negatives were the Fed's "Beige Book" (self descriptive) which reports monthly on the state of the U.S economy which showed the economy slowed further in August citing firms were pulling back on hiring new staff but wage pressures were moderate. The markets are eagerly awaiting Friday's key U.S unemployment report, which although a lagging indicator, is the single most important statistic, indeed the last 6 months have showed unemployment rising, which, if taken alone technically shows the U.S has/is going through a recession...but remember markets are forward thinking!
Another Skeleton
One of the world's largest Hedge Funds yesterday announced the closure of its commodity managed funds. The U.S based Ospraie Management with over $3 billion under management, said it had lost 38.6% this year and 27% in August alone and was no longer operating in this sector. This partly explains why commodity prices have spectacularly collapsed, as no doubt along with others they have liquidated their entire portfolios. Rest assured there will be other casualties, indeed even the Investment banks will have some exposure; e.g. Lehman held 20% of the Fund along with Credit Suisse. Maybe we are being cynical, but is this the sign of a commodity rebound!? =Talking of "Mega Funds", the CEO of QIC (Queensland Investment Corporation) said he believes commodity prices are going one-way...down. Now when you have over $80 billion under management the likes of Doug McTaggert are worth listening to. Doug is renowned for his outspoken views so it was no surprise to hear him also opine that,
Western Australia would be "crucified" because of its reliance on mining and Queensland will benefit as tourism accelerates due to the "inevitable collapse of the Aussie dollar". We like this guy.
QUOTE OF THE DAY:
"When a man is in love or in debt, someone else has the advantage"
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
Disclaimer
The material in “Market Fox” (newsletter) is of a general nature only and neither purports nor is intended to be regarded as advice. No consideration has been given or will be given to your investment objectives, financial situation or needs. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk. Not all risks can be or will be explained in the newsletter. Previous results are no indication of future results. Actual results achieved in the market can vary considerably. The Directors and Representatives of Freeman Fox Ltd and their associates may hold securities in the companies presented.
The research made available in this newsletter is for your private use only and it is protected by applicable copyright laws and other applicable intellectual property right laws. You may not reproduce, distribute, disseminate, broadcast, sell, publish, circulate or give for free, any of the materials made available to you in this newsletter without first seeking the prior written consent of Freeman Fox Ltd.
Freeman Fox Ltd is not required to update any of the content made available in this newsletter, including but not limited to any research commentary, forecasts, recommendations or other analysis in this newsletter. Therefore, for the avoidance of any doubt, material made available in this newsletter may not be accurate after the date of publication or the date on which it is displayed in the newsletter.
To the extent permitted by law, Freeman Fox Ltd and their respective directors, officers, employees, contractors and agents disclaim all responsibility to you for any loss, liability, claim, expense (including but not limited to legal costs and resultant defence or settlement costs) or damage whatsoever, whether direct, consequential, special, incidental, punitive or indirect (including but not limited to loss of profits, trading losses and damages that result from delay, loss or inconvenience) arising out of or in connection with the content of the newsletter and/or any omissions from the content whether in contract, tort (including negligence), statute or otherwise and even if Freeman Fox Ltd has been advised of the possibility of such damage or loss.
If you require assistance in relation to your personal investment situation, contact an authorised representative of Freeman Fox Ltd.