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I admit a certain bewilderment at the market's behaviour today: I never expected the post-bailout orgasm to last, but it's hard to believe that it only lasted 25 minutes of the Australian session.
After all, the Tycoon's Whores of the US Congress are a lay down misère to pass Wall Street's biggest-ever tax-funded payday. I seriously doubt that the market reaction we've seen thus far represents a manifestation of the old 'Buy the rumour, sell the news' mantra - after all, the market is now dominated by people who are dumber than a bag of offal (even hedge funds are now staffed almost entirely by people who behave like small spec futures traders... late onto any trend, buying tops and selling bottoms... that's why so many hedge funds have blown up lately).
Perhaps Strayan market participants are anticipating a Wall Street hissy-fit since they haven't got exactly what Goldman's Trojan Horse (Mr Hankie) demanded. Apparently the deal (at the moment) is that they only get half of the $700 bill up front.
The fact is, this bailout is going to cost waaaaaaaaaaaaaaaaaay more than the $700 bill that is claimed.
As I said when the political class first started with the claim that the cost of the subprime meltdown would be "between $50bn and $100 bn"... the $700 claimed bailout price tag is bullshit.
I said at the time (look in the archive) that the cost of the subprime mess would be at least a trillion and a half. At the moment (ignoring Fannie and Freddie, Lehman, AIG and Merrill) the total writeoffs have run to about $650 bill... so we are almost halfway there. If you include Fannie and Freddie, the total cost balloons to about $5 trillion, because its assets are now worthless.
This latest bailout will, when all is said and done, cost about half of one years US GDP. that is, about $6 trillion. And it's not important whether you believe me or not, because you just know I am going to yell "I told you so" when it turns out that I'm right.
So thus far, the US whiz kids have generated a transfer of problems from the market to the government, totalling - eventually - a year's worth of US GDP. That signals the beginning of a process that can only end in a US default on its sovereign debt.
The US dollar is already losing its reserve status - slowly, but surely - and once that is gone the end game will be stunningly quick. The one thing that stands in the way of a more rapid unraveling, is the gutlessness of Moody's and S&P when it comes to rating US government debt: they are too chicken to declare openly that the US can never make good on its debt.
Think of the US as a company. It has 'revenue' (the taxes extorted from taxpayers) of a couple of trillion dollars. It has a negative operating cash flow - even on a cash basis - so think of that as negative EBITDA.
Once you add in accruals for the promises it has already made (pensions, and so on) its annual loss is four or five trillion dollars.
And it has recently acquired a dog of an asset - the loan book of Fannie and Freddie - and is about to write a cheque which in the fullness of time will amount to twice its annual revenue.
If you were a credit analyst and you had such a company in front of you, it would rate C- (at best)... junk, and bad junk at that.
And it wouldn't matter how many cruise missiles or battleships or trained killers it had, the thing would be obvious as a candidate for disappearing from the pages of history (as the Ayatollah Khomeini once said of Israel, and which was repeated by Mahmoud Amedinejad, deliberately mistranslated by MEMRI and flogged as evidence of the Iranian's malevolent intent).
Major Market Indices
The broad market - the All Ordinaries (XAO) - dipped reasonably hard, registering a loss of 95.4 points (1.93%), finishing at 4839.2 points. The index hit an intraday high of 4980.2 at 10:24 am, while the low for the day was 4818.5 - set at 3:03 pm Sydney time.
Total volume traded on the ASX was 946.6m units, 41.6% below its 10-day average. The ASX's daily listing of all stocks included 1230 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 334 issues rose, with volume in rising issues totalling 299.1m units; decliners numbered 611 counters, and between them they traded aggregate declining volume of 511.8m shares.
Of the 496 All Ordinaries components, 114 rose while 284 fell. Volume was tilted in favour of the losers by a margin of 1.9:1, with 213.69m shares traded in gainers while 409.34m shares traded in the day's losers.
The Index that forms the cash basis for the SFE's Share Price Index Futures - the S&P/ASX 200 (XJO) - registered a loss of 97.4 points (1.99%), closing out the session at 4807.4 points.
| Name | Close | +/-(%) |
|---|---|---|
| All Ordinaries | 4839.20 | -95.40 (1.9%) |
| ASX 20 | 2765.80 | -57.30 (2.0%) |
| ASX 50 | 4745.40 | -101.40 (2.1%) |
| ASX 100 | 3918.80 | -82.00 (2.0%) |
| ASX 200 | 4807.40 | -97.40 (2.0%) |
| ASX 300 | 4797.00 | -97.20 (2.0%) |
| ASX Mid-Cap 50 | 4721.10 | -85.50 (1.8%) |
| ASX Small Ordinaries | 2573.60 | -35.10 (1.3%) |
The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - was taken to the woodshed somewhat, sliding 57.3 points (2.03%), closing out the session at 2765.8 points.
The 21 stocks which make up the index traded a total of 85.73m units; 5 index components rose, with rising volume amounting to 29.04m shares, while the 14 decliners had volume traded totalling 50.97m units. The major percentage gainers within the index were
- AMP (AMP), +$0.09 (1.31%) to $6.97 on volume of 3.4 million shares;
- Woolworths (WOW), +$0.27 (0.96%) to $28.37 on volume of 1.5 million shares;
- CSL (CSL), +$0.24 (0.63%) to $38.50 on volume of 685 thousand shares;
- Telstra Corporation (TLS), +$0.02 (0.48%) to $4.22 on volume of 19.6 million shares; and
- Foster's Group (FGL), +$0.01 (0.18%) to $5.67 on volume of 3.8 million shares.
On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:
- Rio Tinto (RIO), -$5.5 (5.45%) to $95.50 on volume of 1.9 million shares;
- Suncorp-Metway (SUN), -$0.47 (4.5%) to $9.98 on volume of 5.7 million shares;
- BHP Billiton (BHP), -$1.6 (4.46%) to $34.24 on volume of 11.7 million shares;
- QBE Insurance Group (QBE), -$1 (3.68%) to $26.20 on volume of 2.7 million shares; and
- Westpac Banking Corporation (WBC), -$0.83 (3.46%) to $23.15 on volume of 4.6 million shares.
At the other end of the market-cap spectrum lie the denizens of the ASX Small Ordinaries (XSO) which , while still dropping overall, did significantly better than its large-cap counterpart. The Small Ords registered a loss of 35.1 points (1.35%), closing out the session at 2573.6 points.
Among the stocks that make up the Small Caps index, 50 index components finished to the upside, and 126 closed lower for the session. The 208 stocks which make up the index traded a total of 305.07m units: volume in the 50 gainers totalling 142.02m shares, with trade totalling 130.18m units in the index's 126 declining components. The major percentage gainers within the index were
- Centro Properties Group (CNP), +$0.02 (23.53%) to $0.11 on volume of 66.4 million shares;
- Rubicon Europe Trust Group (REU), +$0.00 (16.67%) to $0.02 on volume of 6.4 million shares;
- Centro Retail (CER), +$0.02 (11.54%) to $0.15 on volume of 11.5 million shares;
- Felix Resources (FLX), +$1.00 (5.56%) to $19.00 on volume of 327.4 thousand shares; and
- IBA Health (IBA), +$0.04 (5.41%) to $0.78 on volume of 2.6 million shares.
In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):
- Silex Systems (SLX), -$0.71 (15.71%) to $3.81 on volume of 285.3 thousand shares;
- Allco Finance Group (AFG), -$0.04 (14.29%) to $0.21 on volume of 3.6 million shares;
- Marion Energy (MAE), -$0.07 (11.71%) to $0.49 on volume of 613.3 thousand shares;
- Admiralty Resources NL (ADY), -$0.01 (10.96%) to $0.07 on volume of 29.1 million shares; and
- Straits Resources (SRL), -$0.29 (9.7%) to $2.70 on volume of 2.2 million shares.
Index Changes
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XAO | All Ordinaries | 4839.2 | -95.4 | -1.93 | 683.8m |
| XFL | ASX 50 | 4745.4 | -101.4 | -2.09 | 182.8m |
| XJO | ASX 200 | 4807.4 | -97.4 | -1.99 | 471.7m |
| XKO | ASX 300 | 4797 | -97.2 | -1.99 | 618.4m |
| XMD | ASX Mid-Cap 50 | 4721.1 | -85.5 | -1.78 | 142.5m |
| XSO | ASX Small Ordinaries | 2573.6 | -35.1 | -1.35 | 293.1m |
| XTL | ASX 20 | 2765.8 | -57.3 | -2.03 | 84.2m |
| XTO | ASX 100 | 3918.8 | -82 | -2.05 | 325.3m |
Market Breadth
| ASX20 | XTO | XJO | XAO | XSO | Market | |
|---|---|---|---|---|---|---|
| Advances | 5 | 22 | 49 | 114 | 50 | 334 |
| Declines | 14 | 72 | 131 | 284 | 126 | 611 |
| Advancing Volume | 29m | 71.4m | 187.1m | 213.7m | 142m | 299.1m |
| Declining Volume | 51m | 246m | 317m | 409.3m | 130.2m | 511.8m |
GICS Industry Indices
Among the 11 industry indices, 3 registered an advance for the session, the remaining 8 lost ground.
The best performing index was Information Technology (XIJ), which added 13.7 points (2.67%) to 527.2 points, which has only two components. Today they traded a total of 2.12m units; the lone rising index component had volume amounting to 1.51m shares, while sole declining stock traded 0.61m units. The gainer was Computershare (CPU), +$0.28 (3.11%) to $9.29 on volume of 1.5 million shares.
Second in the index leadership stakes was Telecommunications (XTJ), which gained 5.6 points (0.39%) to 1427.2 points. This index only has three stocks and today they traded a total of 22.33m units. Two index components rose, with rising volume amounting to 20.34m shares, while sole declining stock traded 2m units. The gainers were
- Singapore Telecommunications (SGT), +$0.05 (1.89%) to $2.69 on volume of 707.3 thousand shares; and
- Telstra Corporation (TLS), +$0.02 (0.48%) to $4.22 on volume of 19.6 million shares.
The bronze medal for today goes to Healthcare (XHJ), which climbed 10.1 points (0.11%) to 9266.8 points. The 9 stocks which make up the index traded a total of 8.67m units; 3 index components rose, with rising volume amounting to 1.46m shares, while the 6 decliners had volume traded totalling 7.22m units. The major percentage gainers within the index were
- Ramsay Health Care (RHC), +$0.20 (1.94%) to $10.50 on volume of 303.3 thousand shares;
- Ansell (ANN), +$0.23 (1.92%) to $12.24 on volume of 468.4 thousand shares; and
- CSL (CSL), +$0.24 (0.63%) to $38.50 on volume of 685 thousand shares.
The worst-performed index for the session was Materials (XMJ), which dipped 505.1 points (4.15%) to 11652.5 points. The 45 stocks which make up the index traded a total of 116.48m units; The 31 decliners had volume traded totalling 99.04m units, and 9 index components rose, with rising volume amounting to 9.24m shares, The major percentage decliners within the index were
- Straits Resources (SRL), -$0.29 (9.7%) to $2.70 on volume of 2.2 million shares;
- Onesteel (OST), -$0.4 (7.52%) to $4.92 on volume of 4.1 million shares;
- Kingsgate Consolidated (KCN), -$0.37 (7.05%) to $4.88 on volume of 339 thousand shares;
- Murchison Metals Ltd (MMX), -$0.11 (7.01%) to $1.46 on volume of 1.4 million shares; and
- Fortescue Metals Group Ltd (FMG), -$0.38 (6.35%) to $5.60 on volume of 5.6 million shares.
Just missing out on the wooden spoon was Utilities (XUJ), which slid 83.9 points (1.78%) to 4619.5 points. The 10 stocks which make up the index traded a total of 31.57m units; The 5 decliners had volume traded totalling 18.1m units, and 4 index components rose, with rising volume amounting to 5.36m shares, The major percentage decliners within the index were
- Babcock & Brown Infrastructure Group (BBI), -$0.02 (4.23%) to $0.34 on volume of 12.3 million shares;
- Babcock & Brown Wind Partners Group (BBW), -$0.05 (4.17%) to $1.15 on volume of 4.7 million shares;
- AGL Energy (AGK), -$0.46 (3.36%) to $13.22 on volume of 658 thousand shares;
- Envestra (ENV), -$0.01 (1.45%) to $0.68 on volume of 269.6 thousand shares; and
- Hastings Diversified Utilities Fund (HDF), -$0.02 (0.79%) to $2.52 on volume of 159.6 thousand shares.
Third-to-last amongst the sector indices was Industrials (XNJ), which slid 81.8 points (1.77%) to 4533.9 points. The 32 stocks which make up the index traded a total of 74.43m units; The 21 decliners had volume traded totalling 63.97m units, and 6 index components rose, with rising volume amounting to 6.13m shares, The major percentage decliners within the index were
- Boart Longyear (BLY), -$0.11 (8.11%) to $1.19 on volume of 17.1 million shares;
- United Group (UGL), -$0.86 (6.34%) to $12.71 on volume of 544 thousand shares;
- Hills Industries (HIL), -$0.23 (5.32%) to $4.09 on volume of 91 thousand shares;
- Macmahon Holdings (MAH), -$0.09 (5.04%) to $1.70 on volume of 2.4 million shares; and
- Virgin Blue Holdings (VBA), -$0.02 (5%) to $0.38 on volume of 10.9 million shares.
Sector Indices
| Code | GICS Sector | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XIJ | Information Technology | 527.2 | 13.7 | 2.67 | 2m |
| XTJ | Telecommunications | 1427.2 | 5.6 | 0.39 | 22m |
| XHJ | Healthcare | 9266.8 | 10.1 | 0.11 | 9m |
| XSJ | Consumer Staples | 7177.2 | -33.3 | -0.46 | 21m |
| XDJ | Consumer Discretionary | 1639.9 | -23.3 | -1.4 | 34m |
| XEJ | Energy | 17068.1 | -258 | -1.49 | 27m |
| XPJ | Property Trusts | 1430.5 | -22 | -1.51 | 136m |
| XXJ | Financials ex Property Trusts | 5056.9 | -88.9 | -1.73 | 81m |
| XNJ | Industrials | 4533.9 | -81.8 | -1.77 | 74m |
| XUJ | Utilities | 4619.5 | -83.9 | -1.78 | 32m |
| XMJ | Materials | 11652.5 | -505.1 | -4.15 | 116m |
All Ordinaries Major Movers
All Ords Volume Leaders
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| CNP | Centro Properties Group | 0.11 | 0.02 | 23.53 | 66.4m |
| ADY | Admiralty Resources NL | 0.07 | -0.01 | -10.96 | 29.1m |
| OZL | OZ Minerals Limited | 1.70 | -0.03 | -1.73 | 24m |
| TLS | Telstra Corporation Limited. | 4.22 | 0.02 | 0.48 | 19.6m |
| TAL | Tower Australia Group Limited | 2.83 | 0.11 | 4.04 | 17.3m |
All Ords Percentage Gainers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| CNP | Centro Properties Group | 0.11 | 0.02 | 23.53 | 66.4m |
| REU | Rubicon Europe Trust Group | 0.02 | 0.00 | 16.67 | 6.4m |
| CEG | CEC Group Limited | 0.25 | 0.03 | 13.95 | 50.7k |
| CER | Centro Retail | 0.15 | 0.02 | 11.54 | 11.5m |
| KMN | Kings Minerals NL | 0.17 | 0.02 | 9.68 | 170.4k |
All Ords Percentage Losers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| KBC | KeyBridge Capital Limited | 0.44 | -0.24 | -35.07 | 7.2m |
| TMR | Tamaya Resources Limited | 0.01 | 0.00 | -22.22 | 12m |
| GRR | Grange Resources Limited. | 1.33 | -0.37 | -21.76 | 220k |
| SLX | Silex Systems Limited | 3.81 | -0.71 | -15.71 | 285.3k |
| AFG | Allco Finance Group Limited | 0.21 | -0.04 | -14.29 | 3.6m |
