August 5, 2008

Global Market Comments for August 5, 2008

1) Stocks finally noticed that crude has fallen $30 in a month.

2) Pawn shops are now a booming business, which see 60% of their income from scrap gold. EZCorp (EZPW) is up 95% this year, Cash America International (CSH) is up 78%, and First Cash Financial Services (FCFH) is up an amazing 165%. However, some states are gunning for the sector, enforcing new 36% interest rate caps.

3) July was the worst month in the history of the commodities market and rumors are abounding that some hedge funds have gone under. As a result yesterday's stars have become today's dogs and have fallen all the way back to February levels. Cabot Oil and Gas (COG) is down -44%, Chesapeake Energy (CHK) is down 39% and Noble Energy (NE) is down 30%. The same kind of moves are also being seen in the lead agricultural names with Mosaic (MOS) down -32%, Monsanto (MON) down -26% and Potash (POT) down 24%. These are stocks that take the escalator up and the elevator down. Look to buy these sectors in a few months.

4) With sky high fuel prices and choked freeways, rail travel is undergoing something of a renaissance. The current interstate highway system was built when the country had 65 million fewer cars, and it has been going downhill ever since. The average American rides a train 20 miles/year compared to 1,267 miles for the average Swiss. Expect the US figure to rise dramatically. Since almost all passenger rail systems are publicly owned by entities like Amtrak, the only way to play this is to buy Canadian rail car maker Bombardier (BBD.B), which built the BART cars. Rail freight is also surging. Buy Burlington Northern (BNI), Union Pacific (UNP), and CSX (CSX).

5) Foreign tourists are expected to pour $2 billion into New York City's economy this year as they rush to take advantage of the favorable exchange rate.

QUOTE OF THE DAY

'Work eight hours and sleep eight hours, but make sure they are not the same eight hours.' Boone Pickens.