June 26, 2008

Global Market Comments for June 26, 2008

1) The president of OPEC predicted that oil would soon hit $170/barrel. Crude rocketed back up to $139, the top end of the one month's trading range. Traders piled in on the short side with tight $141 stops to play the range for the tenth time. You can buy the crude August $130 puts here for $2, which expire on July 17, and get a quick double if the price dips back to $135 and play the downside volatility expansion. Longer term players are buying the December 110 puts and hedging their gamma buy shorting the December $90 puts against them. The Dow fell 300 at one point on this latest crude spike.

2) Goldman Sachs put out a sell recommendations on General Motors (GM) and Citibank (C), triggering bankruptcy rumors for both widespread panic selling of autos and financials. GM fell to a 53 year low at $11.30, while C hit a ten year low at $17.

3) There are now ten million millionaires in the world, a third of which live in the US.

4) According to the National Association of Realtors, existing home sales in May rose a surprising 2.0% to a 5 million unit annual rate, indicating that the vulture investors are out there at the right price. The gross sales figure was down -15.9% YOY. The median sales price fell 6.3% YOY to $208,600. Prices are still falling the fastest in the West. The stock market could care less, and fell anyway.

5) Lennar Homes, the nation's second largest homebuilder, announced a Q2 loss of $121 million, greater than expected. The cancellation rate is sticking at a high 22%. The stock dove to a new two year low of $12.90, down from $60.