April 30, 2008

Market Comments for April 30, 2008 1) The Fed cut the discount rate by 0.25% to 2%. Crude sold off $5, and most other commodities had substantial falls. 2) The Bank of Japan held rates steady at 0.5% where it has been for 13 years. This is why the yen is the world's major carry currency. It also shows the futility of today's Fed action. Bernanke is taking lessons on … [Read more...]

April 29, 2008

Market Comments for April 29, 2008 1) Fears of a strong dollar have triggered a broad sell off across all commodity classes. The Saudi oil minister said that if the dollar rises 10%, as I believe, it will trigger a $40 sell off in the price of crude. He may be right. 2) There can be little doubt where the earnings came from in Q1, 2008. Companies that receive 50% or more … [Read more...]

April 28, 2008

Market Comments for April 28, 2008 1) Natural Gas jumps to a new post Katrina high of $11.40. Crude fell. The Atlantic hurricane season starts in four weeks. The stock market is dead, waiting for the Fed news. It was a good day for a multistrategy approach. 2) Continental Airlines pulled out of its merger with United (UAUA) three days before the announcement. After an … [Read more...]

April 25, 2008

Market Comments for April 25, 2008 1) There is a growing consensus that the euro has peaked for the year at $1.60. The currency ($XEU) is a strong short against the dollar at these levels. If the Fed doesn't cut interest rates next week you can expect the euro to collapse and stocks to soar. Commodities have started a major sell off with the exception of Natural Gas, … [Read more...]

April 24, 2008

Market Comments for April 24, 2008 1) Europe is seen as being 12-18 months behind the US economic cycle and they could well be cutting interest rates later this year. This will cause the euro, crude, gold, and Treasuries to fall sharply and the dollar, global stocks, junk bonds, munis, and sub prime loans to rise. Who knows, even real estate might start to recover. This is … [Read more...]

April 23, 2008

Market Comments for April 23, 2008 1) In Q1 Toyota surpassed GM as the world's largest car maker for the first time. It sold 2.2 million units, 200,000 more than GM. Toyota has sold more than 1 million Priuses since its launch in 2002. In the meantime, GM leads in Hummer sales. GM stock has dropped from $42 to $18 since October. 2) Yahoo's (YHOO) Q1 earnings came … [Read more...]

April 21, 2008

Market Comments for April 21, 2008 1) Another bail out, this time for National City, for $6 billion, one of the many weak links in the banking system. The stock has fallen from $37 to $6. This is becoming a recurring Monday morning event. Bank of America (BAC) disappointed on earnings and the Dow fell an anemic 24 points on the news. 2) The Caterpillar (CAT) guidance says … [Read more...]

April 18, 2008

Market Comments for April 18, 2008 1) Today was the day of Google (GOOG), which saw a rise of $95 to $545, creating $30 billion in new market capitalization. This is the largest one day market cap increase in history, not including IPO's. The Dow broke out of it's three month trading range to the upside, rising 229 points. Let the melt up begin! 2) Please read the … [Read more...]

April 17, 2008

Market Comments for April 17, 2008 1) There was a major sell off in the bond market today. Since Monday the 30 Treasury futures have fallen from 120 to 116. This is a huge move. A normal leverage ratio for this trade is 5:1, so a short on Monday would have yielded a 20% return. As you know, I have been pounding the table about shorting bonds for months. 2) Natural gas … [Read more...]

April 16, 2008

Market Comments for April 16, 2008 1) All of the economic news was bad today, but all people wanted to hear about was the upbeat guidance from Intel, and they took the Dow up 256 points.  Intel is predicting gross margins this year of 53%, great if they can do it. Almost 80% of their earnings come from Asia. The CPI came in at a hot 2.4% YOY, and housing starts were down … [Read more...]

April 15, 2008

Market Comments for April 15, 2008 1) Crude hit an all time high today of $114 on the back of a storm which closed oil export ports in Mexico, a report of falling oil production in Russia and an exploding oil pipeline in Nigeria. There was big buying today of the August $140 calls! 2) March PPI came in at a hot 6.9% YOY. We are heading into a period of prolonged high … [Read more...]

April 14, 2008

Market Comments for April 14, 2008 1) Retail sales were up 0.2% in March, better than expected. Don't pop the champagne corks yet. Most of the increase was due to higher fuel sales due to higher prices. The market was on hold today due to the imminent release this week of earnings by Intel, IBM, Ebay, Google, and Merrill Lynch. 2) The Wachovia Bank bail out was … [Read more...]

April 11, 2008

Market Comments for April 11, 2008 1) GE was the bad boy today, announcing earnings 10% less than expected, totally blindsiding the street, which had been expecting a gain of 10%. Outraged analysts were screaming for Jeff Immelt's head on a platter, claiming he mislead them only a month ago. Most of the shortfall was on the financial side caused by the collapse of … [Read more...]

April 10, 2008

Market Comments for April 10, 2008 1) Walmart (WMT) and Dupont (DD) announced better than expected earnings today, prompting a mini short covering rally. The Dow was up 55 points. 2) Huge buyers have emerged in the Crude August $120 calls. Watch out above! 3) As I expected, the Bank of England cut interest rates by 25 bp. The European Central Bank will follow soon … [Read more...]

April 9, 2008

Market Comments for April 9, 2008 1) Weekly crude inventories showed a decline of 3.2 million barrels, 5 million barrels less than expected. Prices jumped to a new all time high of $112.30 barrel while the Dow fell 49 points. Gasoline at $4/gal is imminent and may see $5/gal before this is all over. 2) A consortium of three private equity firms, Apollo, TPG, and Blackrock … [Read more...]

April 8, 2008

Market Comments for April 8, 2008 1) Earnings announcements started with a resounding thud today with Alcoa (AA) coming in worse than expected. 'Less than expected' will be the most commonly heard expression on Wall Street for the next four weeks. The Dow fell 36 points. 2) The market is starting to take the view that the Fed rate cuts are over, or that there may … [Read more...]

April 7, 2008

Market Comments for April 7, 2008 1) The big news of the day was the Washington Mutual (WM) bail out. The troubled bank will receive $5 billion in financing through the issuance of high yielding common and preferred stock to a private equity fund. The stock soared 35% on the news in a market that closed unchanged on the day. 2) A lot of opposition is building in … [Read more...]

April 4, 2008

Market Comments for April 4, 2008 1) Non farm payrolls came in at -80,000, much worse than expected. Earlier months had big revisions downward. The biggest loser: construction at -50,000. The unemployment rate jumped from 4.9% to 5.1%. It was the most brutal report since September, 2005. As I predicted, the economic data continues to be horrific. Futures are now showing a … [Read more...]

April 3, 2008

Market Comments for April 3, 2008 1) Two days of Bernanke testimony in Congress come to a close. These are like watching the most brilliant professor in the school give a lecture and the Q & A is done by only the dumbest students in the class. Listening to Alan Schwartz, the CEO of Bear Stearns, outline what happened was heartbreaking. 2) Apple is completely sold out … [Read more...]

April 2, 2008

Market Comments for April 2, 2008 1) A $7 dollar rise in crude to $105 from the Monday lows put the stock rally on hold. This despite a near record 7 million barrel weekly increase in crude stocks announced this morning. Go figure. The Fed also hinted that it may pause its interest rate cuts to give time for its existing measures to work. 2) Jumbo lender Thornberg … [Read more...]

April 1, 2008

Market Comments for April 1, 2008 1) UBS announced $19 billion in sub prime write offs and a $15 billion equity infusion. Their illiquid toxic waste will be spun off into a separate entity. My old boss, chairman Marcel Ospel, will retire in shame. This is what sparked the 391 point rally on Wall Street. Total sub prime write offs now exceed $200 billion. 2) Lehman's … [Read more...]