July 10, 2008

Global Market Comments for July 10, 2008

1) Walmart reported better than expected earnings as the rebate checks worked their way through the system, taking the stock market up 150. Also helping was Dow Chemical's (DOW) takeover of Rohm & Haas (ROH) for $15 billion, a massive 73% premium.

2) Lehman Brothers (LEH) continued its free fall today, down another 17% to $16.30. The rumors of insolvency are flying. If true it would define the next bottom in the market. Pimco's Bill Gross, the largest bond manager in the world, said that he continued to trade with Lehman as a counter party and hold Lehman debt. The stock rallied. Government backed Freddie Mac (FRE) fell a breathtaking 32% to $6.80, down from $65 a year ago.

2) According to the National Insurance Crime Bureau, the most stolen car in the US last year was the 1995 Honda Civic, followed by the 1991 Honda Accord and the 1989 Toyota Camry. An American vehicle could only reach the number four slot with the Ford F-150 pickup. Apparently the quality of American cars is so poor that nobody wants to steal them.

3) Bearish sentiment in the stock market has hit a nine year high.

4) Russia has surpassed Germany as the largest car market in Europe. Who knew? The best way to play this? Indian auto maker Tata (TTM), the largest mass producer of low priced cars in the region.

5) Another good way to play Brazil is to buy small business jet manufacturer Embraer Empressa (EMJ). The stock has dropped from $50 to $25 while its order backlog has leapt from 34 to 52. And you have the long play on the Brazilian real.

6) 50% of the world's economies now are seeing double digit inflation.

7) Crude jumped $7 to $142 in the last 30 minutes of trading on essentially no news, quickly dispatching a 150 point rally in the stock market. The cheapest gas in my neighborhood is now $4.49.

8) Marriott (MAR) reported poor earnings for the US and great earnings for overseas. Looks like Q2 earnings are setting up for the same pattern we saw in Q1. It's all about foreign earnings.