The Week Ahead

December 15th, 2008  by Antony Ganzitti

Closing Data

	current	change	%
Dow Jones	8629.68	64.59	0.8%
NASDAQ	1540.72	32.84	2.2%
S P 500	879.73	6.14	0.7%
FTSE 100	4280.35	-86.93	-2.0%
Nikkei 225	8235.87	-484.68	-5.6%
SPI Futures	3672	135	3.8%
All Ords	3,452.00	-81.7	-2.3%
Oil	46.27	-1.5	-3.1%
Gold	820.5	11.7	1.4%
Silver	10.23	0.03	0.3%
Aluminium	1466	-59.5	-3.9%
Copper	2982	-250.5	-7.7%
Lead	982	-49	-4.8%
Nickel	10210	-400	-3.8%
Tin	11505	-745	-6.1%
Zinc	1042	-42	-3.9%

That’s two weeks in a row now that Friday’s events have gone against what one would expect as normal.  The previous week saw US non-farm payroll numbers hit their worst level in 34 years, and the market rallied.  On Friday, news came through early in the day that the proposed auto bailout had not passed through the Senate.  This saw Dow Jones futures plummet 300 points, and force our market into sell-down mode late Friday afternoon.  But, by the end of the session, the Dow rallied to close the day 64 points higher.

It seems that all the bad news we can throw at the market has already been priced in. 

There is still a ray of hope for the beleaguered auto industry.  The Bush administration said it was considering using funds from the existing $700 billion TARP (Troubled Asset Relief Program) to aid auto makers.  Market observers around the world are divided about whether the appropriate solution is in fact to rescue GM, Ford, and Chrysler, or to let them go under.  The industry in the US has been in turmoil for many years now.  It needs a revamp and it obviously needs to find a new solution rather than relying on a formula which proved profitable in the first half of the 20th century.  Did someone say green cars???  Biofuels???  Now there’s something to ponder.

The week ahead sees the US Federal Reserve meet for the last time this year.  The current benchmark Fed rate is 1% and many expect to see this slashed to 0.5% at the conclusion of the meeting on Wednesday.  Aahhh.... 0% interest rates..... a.k.a. Japan.  Economic stats out this week are November industrial production, US Consumer Price Index, housing starts, and weekly jobless claims.  Goldman Sachs and Morgan Stanley also release quarterly reports this week, with Goldman widely expected to post its first quarterly loss since going public in 1999.

Our local ASX200/XJO index is expected to open higher by roughly 100 points this morning, with the SPI futures December contract (which expires this week) trading at a 110 point premium to the physical.  News out this week in Australia is quite limited with RBA minutes from their December policy meeting due out tomorrow.

Macquarie (MQG) is reportedly eyeing a bid for the Australian operations of Citigroup Inc’s retail stockbroking and wealth management unit, Citi Smith Barney.  The Australian Financial Review reported NAB is also interested in the business which has around 430 staff and booked a net profit of $21.4 million last year.

The financially stricken Centro Properties (CNP) is expected to receive a lifeline today, with financiers and bankers likely to allow it more time to repay its debts, a Sydney Morning Herald report stated Monday.  The group’s lenders are understood to be supportive of the company’s plight and see its survival as a bellwether of just how well the Australian and US economies will be able to resist recessionary pressures.  CNP is the second-biggest retail landlord in Australia and in the top 10 in the US.  It has about $2.3 billion of debt that must be rolled over or paid for by close of business Monday.

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

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