July 21, 2008

Global Market Comments for July 21, 2008

1) Crude is dead. Traders are now gunning for $120. The general consensus for commodities is that we go down for the forseeable future, and then go back up again.

2) Internet users in China are expected to increase from 250 million to 900 million over the next 5-10 years. The majority will access the net via cell phones, where gaming is the dominant application. Expect huge growth at the four horsemen of the Chinese internet sector. Baidu.com (BIDU), Netease (NTES), Sina (SINA), and Sohu.com (SOHU). All of these have just had major sell offs.

3) Just to illustrate the amount of BS is in the press about the severity of this economic downturn I have pulled out some interesting statistics:

Time Period 1929-1932 2005-2008
Unemployment Rate 25% 5.5%
Bank Failures 4,000 14
Dow Jones Performance -89% +3%
Home Foreclosures 25% 3%

4) Bank of America (BAC) announced better than expected earnings. The stock has now doubled in six days, from $18 to $36. If you absolutely must own a bank, this is a good one.

5) Looking at the whole commodity universe, natural gas has been the most severely punished in this sell off, plunging from $13.50 to $10. If we get through the hurricane season without a major storm hitting gas facilities in the Gulf it could drop to the $6 handle where it would be a screaming buy. However, tropical storm Dolly is now threatening, and some companies have started precautionary evacuation of their offshore rigs.

6) MF global has seen its stock jump 86% from $3.50 to $6.50 today because it successfully rolled over the bulk of its short term debt. The stock was down 88% from its IPO price a year ago of $30.

7) An appeals court threw out the $550,000 fine against CBS for Janet Jackson's 'wardrobe malfunction' at the Super Bowl.

8) Only 1% of economists believe that we will see negative GDP growth in the second half. We won't know sure until March. I think they are being wildly over optimistic.