Global Market Comments for August 12, 2008
1) Oil pipelines are exploding in Georgia and Turkey, new wars are breaking out, and crude still goes down. The suddenly unloved commodity is clearly gunning for the 200 day moving average at $107, and broader support kicks in at $100. Texas tea has suddenly become the red headed step child of the market.
2) The Olympic coverage has given a huge boost to McDonald's (MCD), a major sponsor. The stock has jumped to an all time high of $67.
3) With the Beijing games underway, efforts are accelerating to complete construction of the 2012 London Olympic Park. The one square mile site in the east London slums of Lower Lea Valley have seen cost overruns push the budget from $6.8 billion to $18.6 billion.Â The neighborhood is so bad that 'when you take the tube out there, life expectancy declines with every stop,' said one staffer. A profusion of undiscovered WWII bombs, a stone aged cemetery, and a toxic waste dump have also caused delays. The collapse of the UK real estate market has frustrated plans to resell the Olympic Village as a condo development. The last time the British attempted a major project like this, the 2000 Millennium Park, multi billion dollar losses resulted.
4) Gold medal winning Michael Phelps eats 12,000 calories/day in order to swim five hours/day. If he eats any less than that he starts to lose weight. By comparison, a Marine in combat needs 5,000 calories, you and I get by on 3,000 calories, and your typical vegetarian eats maybe 1,500 calories. Warnaco Group (WRC), inventor of the revolutionary Speedo LZR Racer swim suit worn by Phelps, which it developed with NASA, has seen its stock rocket 42% from $38 to $54 in the past month. Speedo has promised Phelps a $1 million bonus if he breaks the Mark Spitz gold medal record. Speedo is offering the $550 stitchless swimsuit free to all Olympic athletes, and has flown in 3,000 to Beijing to meet demand.
5) Gold collapsed by $36 yesterday to $810 as margin calls force speculators to unwind longs. See my earlier comment that gold will 'roll over and die'.
6) Two thirds of all US companies paid no income tax from 1998 to 2005.
7) GE owned NBC Universal has earned over $1 billion in advertising from 3,600 hours of Olympic coverage . The company paid $894 million for exclusive broadcast and online rights to the games. Over two billion people are believed to have watched the opening ceremony.