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Tricom Today Australian Stock Report 9-4-09
The SFE Futures suggested a 45 point rise in the market. BHP and RIO mixed in ADR form overnight BHP down 0.31% and RIO up 4.58%. (BHP closed at the equivalent of 3178c, up 36c yesterday’s close.) Metals all up overnight – Copper up 0.48%, Zinc 1.48% and Aluminium 1.15%. Nickel up 0.64%. Oil price up 0.5% to $49.37. Gold up $2.60 to $885.90. Bonds down with the 10 year yield up to 2.8596%. A$/US$ down 0.08% to 70.98c.
Nasdaq outperformed on the hope that a recovery in business spending will boost technology stock’s profits. IBM up 2.5% and Qualcomm up 2.2%. Security regulators voted to seek public comment on five proposals to curb
shortselling. Chrysler’s chairman said the government’s May 1 deadline for completing a deal with Fiat is “ample time”. Homebuilders up – Pulte Homes made a bid for Centex Corp from $1.3bn which would create the largest US homebuilder. Centex up 19% and Pulte down 10.5%. Bloomberg data suggests EPS across the S&P500 will fall 37% this quarter and another 30% next quarter. Juniper Networks preannounced quarterly results that were inline with expectations and the company’s prior forecasts.The market is up 22. The SFE Futures suggested a 45 point rise this morning. All sectors bar telecom and healthcare up. Property leading the way – up 2.9%. Banks mixed – NAB down 1.4% and CBA up 1.4%. BOQ down 4% on 1H results. Resources up – BHP and RIO up 1.3% and 1.5%. Major gold stocks down despite the $2 rise in the gold price.
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Financials Wipeout
In the first chart below we highlight a ratio of the S&P 500 to the S&P 500 Bank group going back to 1940. When the ratio is rising, the financials are getting weaker relative to the S&P 500 as a whole. As shown, the ratio is currently as high as it has been over the entire time period, meaning the banks are as small as they’ve been relative to the overall index. Where we go from here, nobody knows, but the financials are pretty much getting wiped off the investment map.
Below we highlight the percentage declines from peaks of various asset class busts in the last decade. Prior to the declines that financials, oil, and homebuilders are seeing currently, the only recent comparison for the current generation of investors was the Nasdaq bust from 2000-2002. As shown, the Nasdaq went down 78% from its March 2000 peak to its October 2002 low. Following the bursting of the Internet bubble, many investors didn’t think they’d see a similar bust for decades. But the current declines in financials and homebuilders have now eclipsed those of the Nasdaq, and oil has also gone down just as much.
Oil’s decline of 77% from July 2008 to its low in December was the fastest bust of the group, while homebuilders have gone down the most and for the longest period of time. Since July 2005, the homebuilders are down a whopping 87%! And the S&P 500 Financial sector is down 81%, which isn’t as bad as the homebuilders, but given the fact that it didn’t go up nearly as much as the homebuilders, it’s probably worse.
Source: Bespoke Research
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