The market is down 4. The SFE Futures suggested a 3 point rise in the market this morning. There are no corporate events. No economics. In fact nothing to laugh at all.

The Dow Jones was down 8 – It moved in a relatively large 189 point range, was up 136 at one point and closed down for the second consecutive session on concern that interest rates are on the way up and losses in hedge funds and bonds associated with subprime mortgages would get worse. Underwriter of mortgage bonds, Bear Stearns, fell to a 9 month low on speculation that hedge fund losses are greater than previously forecasted and after one Merrill Lynch analyst said they may soon have to save another struggling hedge fund. Newly listed private equity group Blackstone closed 7.5% down in its second day of trading, catalyst being profit taking and concerns that buyout deals would dry up if interest rates were lifted. In takeover news, Rupert Murdoch told the Bancroft family that he would guarantee editorial independence of The Wall Street Journal if News Corp acquired Dow Jones & Co., and Tiffany & Co. closed 4% higher on talk it might be the next takeover target. The NASDAQ closed down 0.5%.

Resources mixed today…BHP up 1c to 3495c and RIO down 46c to 9805c. Metals mostly up overnight, Copper up 0.5%, Nickel up 3.7% and Aluminium up 0.9%. Zinc down 0.6%. Zinifex up 2c to 1890c. Oil price down 2c to $68.83 on news of refinery outages. Woodside down 29c to 4590c. Gold down $2.30. Newcrest up 22c to 2376c.

All eyes will be on the FOMC meeting in the US this Wednesday and Thursday. Although they are expected to leave rates unchanged at 5.25% the fear is that they will voice new inflation fears suggesting a rise later in the year. Two months ago the “rhetoric” was suggesting a fall. The Bond market provided some light with yields down from 5.14% to 5.08%. 30 year bonds fell from 5.25% to 5.20%. Our market has been in and out of positive territory all morning. Banks and utilities all doing well today.

  • Fortescue Metals (FMG) down 32c to 3558c after announcing they’re upping their project expenditure for the Pilbara iron ore project by 4% to $2.57bn to guarantee there would be no further delays. Despite three cyclones, FMG looks like their on target for their first shipment mid-May 2008.
  • Both Tattesall’s (TTS) and Tabcorp (TAH) staying in the positive today after their recent falls ahead of the Victorian smoking bans that are set to come into effect on 1 July. A few brokers are maintaining their sell recommendations on both companies saying smoking bans, licence renewal costs, slot machine levy increases and lack of acquisition opportunities are likely to push their prices lower. TTS up 2c to 483c and TAH up 4c to 1750c.
  • Foster’s (FGL) CEO Trevor O’Hoy told the AFR that they are not interested in splitting the company’s operations into separate beer and wine companies. Fosters has been a consistent underperformer of the All Ords – see the chart in the newsletter – you really have to wonder why it would sit in your long term portfolio. One day someone will do something with the big brand name and change the trend. The stock already has about 100c worth of bid speculation in it…and probably deserves it. FGL down 2c to 648c.
  • Downer EDI (DOW) down 9c to 721c after announcing this morning it was part of a consortium that had won a 3 year wastewater contract in Auckland worth NZ$50m. Their bit is to construct new storm water and wasterwater pipes. Share price is up nearly 6% since last week.
  • AGL Energy (AGK) isn’t the easiest stock to understand – but they have a presentation at a UBS conference today which gives a snapshot of the company and have confirmed earnings guidance of $321m for this year. The price is up 12c to 1545c.
  • Credit Suisse upped their target price on Incitec Pivot (IPL) to 7615c from 6565c after raising their FY07-FY08 earnings estimates by 3.3%-10.8%. They are a believer in “stronger-for-longer” fertilizer prices globally. The share price is up 216% in the past 12 months. IPL up 209c or 2.9% to 7299c.
  • Babcock & Brown Infrastructure (BBI) up 3c to 174c after saying they have lodged a revised takeover offer for NorthWestern Energy despite having their initial bid knocked back by the Montana state regulator.
  • Australian Wheat Board (AWB) has recently hit an 11 month high on the back of good rainfall in QLD and NSW. Share price unchanged at 422c.

We have an article in the newsletter today explaining the seemingly but not very complex world of “volatility”. The ASX 200 volatility has been rising for the last couple of years.

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