The market is up 5. The SFE Futures were up 25 this morning.
The Dow Jones closed up 214 overnight, closing higher for a third straight day. Google said it will acquire Motorola Mobility for $12.5 billion, a premium of more than 60% to its last closing price. German and French leaders are meeting tonight to discuss the European debt crisis but say jointly guaranteed eurobonds will not be on the agenda. The oil price was up $2.50 to $87.88 and gold rose $15.40 to $1756.40. The A$ is buying 104.85c up from 103.81c.
In the news today…
- The RBA Minutes are out — They considered a rate hike after higher than expected CPI numbers but they expect CPI to decline and combined with a strong A$, global market turmoil, subdued credit growth they left rates unchanged. Expect GDP growth of 3.25% instead of 4.25% (Government estimate). They are uncertain as to when the US and Europe will be able to address their debt issues. The general conclusion is that they retain a tightening bias but global concerns dominate.
- Westpac (WBC) — Disappointing Trading Update. They announced a 2% fall in 3Q cash earnings to $1.55bn, down from previous cash earnings figures and below expectations. The news initially sent WBC down 4.87% and the bank sector down as well. WBC now down 3.6%.
- OZ Minerals (OZL) H1 profit down 72% from a year earlier as they settled a class action lawsuit. Underlying H1 profit was $189.1m, down from $230.5m and below estimates. They said the outlook for copper and gold is strong for CY 2011. OZL down 2.3%.
- Macmahon Holdings (MAH) FY net profit down 97.2% to $1m due to writedowns and the wet season. They said their EPS of 0.1c were “an unacceptable outcome” but said they are “well placed to make a strong profit recovery in 2012”. MAH will pay no dividend after paying 3c in FY 2010. MAH up 3.5%.
- James Hardie (JHX) H1 profit down 99% fall due to adjustments for asbestos claims. Underlying profit excluding asbestos expenses and tax adjustments was down 3% to $39.4m. They said that the operating environment remained challenging. JHX up 3.4%.
- OneSteel (OST) — FY profit down 11% to $230.3m from $258m in FY10, and was slightly weaker than expectations. Declared a final dividend of 4c unfranked. OST decided to withhold earnings guidance due to market uncertainty. OST up 1.4%.
- Qantas (QAN) will cut 1,000 jobs as part of a 5-year strategic plan. The plan also includes orders for new Airbus aircraft and closer alliances with other airlines. QAN up 4.3%.
- Tabcorp Holdings (TAH) full year profit up 14%, to $534.8m. Revenue was up 6% in the year. They benefited from contract and licence wins which secure a long-term future. TAH up 1.9%.
- Echo Entertainment (EGP) reported full year underlying EBITDA of $376m, which is below expectations. EGP up 2.1%.
- Carsales.com Ltd (CRZ) reported full year net profit of $58.3m, up 35% from the prior year. Operating revenue was up 26% in the year. The company declared an interim dividend of 10.5c, fully franked. CRZ up 6.2%.
- Perpetual (PPT) expects to report full year underlying profit of $72.9m, in line with previous forecasts and broadly in line with the prior year. The company plans to close its Dublin-based international operation. PPT up 2.6%.
- AED Oil (AED) has appointed KPMG as administrators after they lost an arbitrated dispute with the owner of a floating production vessel for the Puffin field offshore Western Australia. “The administrators will be working on a potential re-capitalisation of the company and will be assessing the company’s financial position and ongoing funding requirements for its projects,” KPMG said.
- As part of a review to cut costs that it flagged earlier this year, Ten Network Holdings (TEN) has cut staff numbers by 12% and found annual savings of about $18m. TEN up 2.5%.
- GWA Group (GWA) full year profit was $63.4m, up 13% on the prior year. The result was in line with analysts’ estimates. The company expects FY12 underlying demand to fall 3-4%. GWA down 0.8%.
- Alacer Gold (AQG) first half 2011 underlying profit of $39.7m, thanks to a tax credit from its Copler asset. The result was better than Goldman Sachs’ estimate of a $8.5m loss. But EBITDA was lower than expected due to higher exploration and administration costs. AQG up 1.7%.
- Commonwealth Property Office Fund (CPA) has posted a 73% rise in annual net profit to $197.7m, and says they are “cautiously optimistic” about the office market in Australia over the coming year. Revenue was $373.2 million, up 26% from 2009/10. CPA up 0.6%.
QUESTION — I have a dilemma. I’m going on a month’s holiday tomorrow, and won’t have access to the Internet (i.e. Marcus Today) on a daily basis. Can you give me any indication or other relevant comment of when Marcus Today is likely to be going back into the market?
REPLY — Impossible question to answer, to name a specific date and time is to suggest we know the future which we don’t … but the guess from us is that short of doing some trades we are out of the market on a “Portfolio” basis for a while.
We are not going to paint ourselves into a corner of pessimism but the market ‘has talked’ in the last couple of weeks, gone through the lows of last year, triggered ‘disaster’ stop losses on a host of stocks and become extremely volatile which is never a positive.
To ignore the market’s message would be like ignoring the market in March 2008 and the comments from that time (“It was obvious”) ring loud now…
“It is obvious” that the market is buggered and this is not a time to bet your future on it. Even as a long term investor you have to time the market or you can lose years of returns in months (in the GFC you lost 13 years of positive average returns in 18 months). The puritans that say you can’t time the market are simply avoiding the responsibility for doing so which is the only real value you can add to clients as a financial professional. Anything else is hiding … hiding in the all too convenient clichés that “It’ll be alright in the end”.
Rather than invest on the assumption of a bull market trend that isn’t there the game comes down to picking the eyes out of individual stocks. Subscribe to Marcus Today to read more.
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