The market is down 110. The SFE Futures suggested a 100 point fall in the market this morning.

The Dow Jones fell 249 points on Friday – It moved in a 278 point range and finished nearly 2% lower on the back of lingering credit market concerns and an unexpected fall in payroll figures. In a sign that the economy could be in trouble, the Labor Department reported payrolls fell for the first time in 4 years, down 4,000 compared to the 110,000 rise economists had predicted. Homebuilders and financials closed lower, Bear Stearns fell 3% after Bank of America Securities cut their recommendation to neutral from buy on concerns mortgage market losses will reduce earnings. In takeover news, the Wall Street Journal reported the Dow Jones & Co. must pay Rupert Murdoch’s News Corp. $25m in costs if either company decided to terminate their $5.28bn merger agreement, and that the company held talks with 21 potential buyers but none could match News Corp’s $60-a-share offer. Traders are expecting the Federal Reserve to cut interest rates when they meet on September 18 as they pushed the yield on the two-year treasury to its lowest level since 2005. All three major indexes finished the week more than 1% lower, the S&P 500 fell 1.4%, the Dow Jones lost 1.8% and the NASDAQ lost, down 1.18%.

Resources are all deep in the red today. BHP down 127c to 3849c (went ex dividend 33c today) and RIO down 230c to 9870c. Citigroup upped their target price on RIO to 10600c from 10300c and maintained their BUY recommendation after upgrading their 2008 and 2009 NPAT outlook by 5%. Metals all down on Friday, Zinc and Copper both down 1.8%, Nickel down 1.2% and Aluminium 0.9%. Zinifex down 29c to 1610c. Oil price up 35c to $76.70 for the fifth straight session and hit a 5 week high on speculation that OPEC won’t raise production. Woodside down 54c to 4609c. Gold up $5.10. Newcrest down 17c to 2482c.

Not a good start to the week of course…a sea of red on the screens. Lot of economic numbers this week but not a lot else. The main event is the FOMC meeting next week (18th September) although there are suggestions they may just cut by 25bp this week as well. Not a lot happening on the company front. Just Group has results on Wednesday. If they are anything like the rest of the retailers this results season they will be good. The main market issue has morphed from sub-prime, to credit crunch and now to recession. The market has started pricing in lower growth.

  • Macquarie Bank (MBL) made the most of Russian President Vladimir Putin being in town for the APEC meeting and signed a cooperation agreement with Russian state corporation Vnesheconombank. The deal will strengthen their global expansion ambitions which could include MBL providing advisory services and financing for the Russian group. MBL down 149c to 6990c.
  • Macquarie Media Group’s (MMG) $1.26bn offer for Southern Cross Broadcasting (SBC) has been recommended by SBC directors. Their independent expert said the offer was fair and reasonable and in the best interests of shareholders. The 1741c-a-share deal involves 1705c in cash plus a 36c a share special dividend. MMG down 9c to 437c and SBC down 2c to 1749c.
  • National Australia Bank (NAB) has followed the ANZ strategy and taken a 20% stake in the Union Trust & Investment Bank in China. While the CBA and WBC have been busy building their domestic fund management divisions, both the NAB and ANZ have looked in the UK and Asia respectively for growth options. The 20% stake also indicates a cautious approach to expanding into China. That aside the focus today is on the unexpected weak jobs data in the US Friday, hence NAB down 97c to 3804c (underperforming the rest of the sector by the way).
  • ANZ Banking Group (ANZ) has been ranked the most sustainable bank globally in the Dow Jones sustainability Index (DJSI) for 2007. Hasn’t done much for the share price though, struggling along with the rest of the market and down 41c to 2801c.
  • Asciano (AIO) announced this morning that following media speculation no agreements had been signed yet with Rio Tinto (RIO) and Xstrata to carry coal from their mines to the ports of Dalrymple Bay and Gladstone. AIO down 7c to 868c.
  • Lihir Gold (LGL) up 5c to 339c on what appears to be technical buying. The stock shot up 9% last week and is up 17% in the last 12 month. Gold price up at multi year highs and looking like the safe haven asset in the face of a falling US$ and the unwinding of the Yen Carry Trade.
  • Four Fed Governors give speeches tonight…everyone is hanging on any Fed indication at the moment.
  • A heap of companies going ex dividend today – ABS, AMP, APE, AQP, BHP, CCV, CNB, COA, IRE, LEI, OST, SEK, TTS, WAN.

We have an article in the newsletter today on Market Timing and Indicators – provoked by the mention of the “Hemline” index in the morning meeting which relates the Dow Jones to the length of skirts. It seems you can make more money reading Vogue than you can the Wall St Journal. We include one fail safe, 100% accurate predictor applicable to all markets. But you’ll have to go to the Marcus Today newsletter and sign on for a free trial to get it.

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