January 7, 2009

Global Market Comments for January 7, 2009
Featured Trades: (AA), (FSLR)

1) The market came back to Earth today, the Dow suffering the first down day of 2009. The guilty characters could populate one of those Agatha Christie mysteries where everyone did it except the butler. Take your pick: an ADP report showing 693,000 job losses, stunning crude inventory figures, bad Alcoa (AA) earnings, or spectacular budget deficit forecasts for this year. And on Friday economists are predicting Armageddon for the nonfarm payroll announcement. Of course, we knew all this was coming, but reality is still a bitch!

2) While the crash in global commodity prices, including crude, has been catastrophic for expensive alternative energy plans, it does have a silver lining. Spot prices for the polysilicon used in photovoltaic solar panels has dove from $500/lb to$50/lb since June, taking the cost of solar produced electricity down from $5/watt to $3/watt. This nearly makes solar competitive in high power cost states like California and Hawaii. Obama's yet to be announced solar initiative is expected to grow global solar power production from 3 gigawatts to 15 gigawatts by 2012. Buy Phoenix, AZ based First Solar (FSLR) at current distressed prices, after its 75% plunge.

3) President Bush had lunch with Obama and former presidents Clinton and Bush senior today. Wish I were a fly on the wall at that repast.

4) The Dept. of Energy's weekly inventory figures showed gigantic increases in every product, with crude up 6.7 million barrels and gasoline up 3.3 million barrels, causing crude to fall 15% to $42.90 at one point. To see these kinds of numbers in the dead of winter, when demand is normally strong, shows you the true extent of demand destruction. The financial crisis is spreading among oil producing countries, especially in the Middle East, and this will soon escalate into a political crisis. Heads will roll, literally. The real estate crash in Dubai is starting to rival our own. It couldn't happen to a nicer bunch of people.

5) Last week in Chicago I stopped by Obama's house on Greenwood Avenue and 50th street in up and coming Hyde Park to say hello. I was thwarted by two concrete crash barriers, 16 cop cars, and army of police happily pulling overtime. And this was the week he was in Hawaii! Every neighborhood bird nest, flagpole, and chimney sported video cameras, and Google Earth has wiped the block off the map. Instead, I settled for a visit to the delicious Valois Cafeteria, the president elect's favorite local diner, and his preferred bookstore at 57th Street Books. I managed to run into someone, who knew someone, who once babysitted Obama's kids. Need TARP money, a presidential pardon, a cushy ambassadorial appointment, or a juicy government contract? I'm now your 'go to' guy!