some shorts buying back, page-29

re: shorters wpl egoli ching 30000 july I have been away all day so I dont know if this has been posted but its of egoli today upgrading wpl from sell to hold on pullback from $50 to $40 but the july downgrade number for ching could be the reason for the hdr shorts hanging round , our only hope is for a Uganda suprise or guyanne farmin to a major to trigger short covering rally.




ABN-AMRO: In the words of Smokes… “Back up the truck!”
13/06/2006

Good morning, Ideas: BHP Trading Idea WPL No longer looks over-valued ABS No surprise in negative news Resources Commentary SPI Commentary

US US markets picked up from where they left off last week, another 100pt decline for the Dow followed the 50pt fall on Friday. Investors caution remains centred on inflationary concerns ahead of PPI and CPI data due later in the week, few are willing to pick bottoms at this stage. Elsewhere, the S&P fell 1.3% and the Nasdaq down 2% and well into negative territory for the year.

Eco - Out on Friday night, the Trade Balance number for April slightly better than expected at -$63.4bln vs -$65bln. Import Prices MoM +1.6% vs +0.7% expected and YoY +8.3% vs 7.4% expected and last months +5.9%, doing little to extinguish inflationary concerns. Last night the monthly budget for May -$42.8bln vs -$39.0bln.

Eco - In what has been a recurring theme over the past month, another Fed President managed to spook the market with a selection of inflationary phrases. Last night it was Cleveland's turn, President Sandra Painalto in a speech to group of broadcasters said inflation exceeds her "comfort level". Not to be outdone, the Dallas President said there was come "angst" about inflation amongst his Fed colleagues.

Currency - The greenback fluctuated over the weekend, but overnight with inflation firmly on the agenda, the USD index pushed oderately higher. Of most interest was the move versus the Euro, the USD stringing together its 6th consecutive day of gains on speculation the Fed will opt for the 17th straight rate rise.

Financials - Lehman Brothers down 5.5% and the S&P100's worst performer, despite beating market expectations with results. Whilst the 2Q figure was higher than forecasts, analysts were focused on the QoQ decline, interpreting the dip on 1Q numbers as a sign brokerage earnings were past their best. Elsewhere, Merrills down 3.5%, Goldmans off 3.3% and JPM finished 1.3% lower.



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Media - Walt Disney down 1.5% after a handful of brokers said the opening weekend for their latest animated offering Cars, was below expectations. Adding to woes two brokers downgraded from "buy" to "hold" arguing the stocks valuation looks stretched at current levels.

Homebuilders - More talk of inflation and more selling amongst in US building space, both in Aggregates and the Hombuilders. Martin Marrietta amongst the hardest hitt down 5.2%, Florida Rock fell 4.1%, Vulcan 2% lower and the Homebuilding sector down 2.5% on heavy volume.

Europe

The FTSE share index closed 34 pts or 0.6% lower on Monday, it was pressured by weak telecoms and bank shares as investors nervously eyed the week's pproaching batch of inflation figures. On friday the FTSE rebounded to be up 93pts led by oil and miners. the ECB also raised rates as expected to 2.75% from 2.5% on friday. In Europe markets fell on ongoing concern for higher interest rates overshadowed optimism of potential M&A activity. The CAC was off 0.9% and the DAX down 1.25%.

Telcos - Vodafone was the day's biggest loser in the FTSE 100 index, down 2.5%, with some dealers pointing to an additional listing of shares in the group as having a dilutive effect on the share price.

Banks - Lloyds TSB fell 0.9% and Barclays lost 1.5% as investors continue to fret about inflationary pressures pushing up interest rates, which in turn could deter borrowing and trigger bad debt problems. The US decision on Wed is going to be a focus for all markets.

Airlines - British Airways was up 1.5% (top % gainer) was in demand as crude futures fell a dollar a barrel as the first tropical storm of the Atlantic season looked set to miss oil facilities in the Gulf of Mexico.

Medical devices maker - Smith & Nephew up 0.6% percent on speculation U.S. firm Bristol-Myers Squibb could be interested in a bid. Retailer - GUS closed up 0.6% on talk that U.S. p rivate equity groups were mulling an offer for theowner of retail chain Argos and U.S. credit checking firm Experian. Both Smith & Nephew and GUS declined to comment.

Eco - The European Central Bank increased its benchmark interest rate for the third time in six months, while the Bank of England kept its rate unchanged for a 10th month.

Trading Idea:

BHP – In the words of Smokes… “Back up the truck!” The Big Australian is of almost 16.5% from its high of A$32.00 on 11 May 06. During the same period the ASX 200 is only off about 8.6%. We all know how solid this company, its management and its cashflows are. The fundamentals remain sound as we view the current hammering as sentiment based.

At current levels we reckon its time to look at the fundamentals again and buy, buy, buy! The stock was off 89.7 cents in the ADR’s over the long weekend, closing at an A$ equivalent of A$25.83.

This is your chance folks….get long!



Stock specifics:

WPL – No longer looks over-valued


ABN AMRO Research has upgraded WPL from Sell to Hold based on the recent share price plunge. The stock is now 18% below its all time high of A$49.09 on 19th April.

It should be noted however, that we maintain a price target for WPL of A$38 which we believe factors in full development values for Pluto, Browse and Greater Sunrise LNG projects.

We continue to see production dramas at Chinguetti with production falling as low as 30,000bopd by July August, although we believe that new wells could boost this production back to 60,000bopd by year end if all goes to plan.

It is also worth noting that the current plunge in the share price has occurred during a time when oil prices have been extremely high.

We re-iterate that our move to a hold is based on a significant pullback in the share price, rather than any change in the fundamentals of the company. We see WPL as a solid company, but it remains fully valued at these levels