Morning Market Report, Nov 23, 2007

The market is up 5 – quiet day with not much going on. The SFE Futures suggested a 7 point rise. Some hesitation to do much ahead of the Federal Election tomorrow… not that it should be that price sensitive either way. All any government have to do in the current Australian economic momentum is not interfere….not stuff it up. This little link has been going around the market this morning – Property For Sale

WALL ST CLOSED FOR THANKSGIVING DAY

Resources down today…BHP down 25c to 4019c and RIO down 29c to 12848c. Metals mixed overnight, Copper up 0.8%, Nickel down 2.9% and Aluminium down 0.8%. Zinc was unchanged. Zinifex unchanged at 1474c. Copper has been really been out of favour recently, down 23% in the past 6 weeks and is now at an 8 month low. Oil price down $1.11 to $97.46 and traded in thin volumes because of the Thanksgiving holiday. The price was pushed lower by a report showing an increase in OPEC oil exports. Woodside up 58c to 4756c. Gold up $11.85 in the UK. Newcrest up 45c to 3330c

Flinders Diamonds (FDL) closed up 790% yesterday with 1.9 billion (yes Billion) shares traded after announcing they had identified a new iron ore target of 325m up to 390 million metric tons in the Pilbara next to Fortescue’s 1bn ton Solomon resource unveiled last week. The stock is up another 23% today to 11c. (460m shares traded) They say “The upshot of that independent review of our own Pilbara ground has outlined the large 325-390 million tons target which, if confirmed by drilling, would provide a company-making project for FDL”. One of the thoughts is that they are a bid target now for Fortescue Metals. Not for the faint hearted. You are all responsible adults. Caveat Emptor. Let the buyer beware. Good Luck in there. We have written it up in the newsletter today with some comparisons to other target ore bodies and their valuations and what that would mean for the FDL price.
Publishing & Broadcasting shareholders have voted in favour of the proposed de-merger – 99.995% in favour. PBL will now be split into two separately listed companies, Consolidated Media Holdings (CMH) and Crown. PBL shareholders will get a share in each plus 300c cash. Were’s values Crown shares at 1477c and CMH at 472c (making 1949c plus 300c cash = 2249c). PBL now 1934c. Shares in PBL will cease trading on November 30 with Crown and CMH to begin trading on a deferred settlement basis from December 3. In a good sign for PBL’s NASDAQ listed JV Melco PBL just over 2.4m people visited Macau last month, a 22.1% rise on last year. Visitor arrivals this year is up 22% from last year. PBL down 11c to 1934c.
JB Hi-Fi stands to gain market share from Icon Digital Entertainment who own the “Sounds” music stores in New Zealand, after it was placed in administration. JBH had four stores in NZ and is looking to open a further 10 to 15. Were’s maintained their BUY recommendation on JBH and 1550c target price. JBH down 11c to 1516c.
Spotless (SPT) announced this morning it expects a much better second half to the year. Chairman Peter Smedley told shareholders at the company’s AGM that they should “continue to expect Spotless to deliver a significant but progressive improvement in financial performance during 2008”. SPT down 4.6% this year but up 11c today to 434c.
Healthscope and Symbion Health are in a trading halt. HSP are bidding $2.8bn for SYB with the deal being blocked by Primary Healthcare. SYB are waiting on a tax ruling on the bid. SYB last traded at 408c and HSP at 543c.
Timbercorp (TIM) up 5.4% to 165c after Were’s upped their recommendation to HOLD. TIM has been a huge disappointment this year, down 47% compared a 15% rise in the All Ords. They have a 214c target price. Intelligent Investor recently declared Timbercorp a BUY.
It is Black Friday tonight in the US. This is the day that officially starts the Christmas buying season and a weekend in which some stores see 25% of their annual turnover as they advertise sales. With the state of the housing market at the moment you might imagine the sales turnout has the potential to disappoint rather than please.
There are 71 companies holding AGM’s today.
UBS Warburg have upgraded QBE to a BUY with a target price 16% above the market price. QBE up 82c to 3167c.
AWB is ex dividend 4c and has fallen 9c. Despite some hope that the recent results might mark the bottom for the stock there remains a fair bit of broker scepticism.
The other company going ex dividend today is St. George Bank (SGB) – 86c. SGB down 133c or 3.8% to 3405c.

We have an article in the MARCUS TODAY newsletter today looking at the Three to One ratio. The market falls three times faster than it rises. We fear a loss three times more than we want a gain. We are three times more fearful than we are greedy. It manifests itself in a number of ways in the market and in a 4½ year long bull market it is even more relevant than ever. There are a lot of profits to hold onto. People will sell first, ask questions later. Expect sharp drops, its in the nature of the beast.

We also have a list of the CHEAPEST stocks in the ASX 200 and those with the HIGHEST YIELDS along with a comment on what happens if the market keeps falling. We are now down 7.5% on the ASX 200 this month, down 517 points. The momentum is set. How much further can it fall and where would that leave some of our preferred stocks?

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