March 31, 2009

Global Market Comments for March 31, 2009
Featured Trades: (EBAY), (AAPL), (T), (VZ)

1) The migration of American business to online formats is accelerating, with over 1,000 new business being created every day. Internet advertising continues to go from strength to strength, and is one of the few growth sectors of the economy. The Interactive Advertising Bureau reported that online advertising grew 10.6% last year to $23.4 billion in a year when the total advertising market shrank from $132 billion to $125 billion. It now ranks as the third largest ad distributor in the US, after newspapers ($34.4 billion) and TV ($28.8 billion). Search advertising dominated, with 45% of the total. Video adverting was the fastest growing sector, up 123%. Display advertising managed 8% growth, even after the collapsing economy caused a very week fourth quarter.

2) 27 out of the 30 Dow stocks are currently profitable. The public perception is that all are losing money, and several are on the verge of bankruptcy.

3) Former Fed governor Alan Greenspan published some very sobering numbers in the Financial Times yesterday. Global stock market losses from the peak total $35 trillion. Half of that has occurred since the Lehman bankruptcy in September, effectively doubling corporate leverage in the last six months. No wonder banks are freaking out! Throw in real estate losses, and the world has lost a mind numbing $40 trillion in net asset value in two years. He opined that stock markets are close to turning, and that even a modest rally will have large positive effect on the economy. The only thing missing from the article was a mea culpa that the losses were all his fault.

4) All of the high grade paper used by the US Treasury to print money is bought by one firm, Crane & Co., which has been in the same family for seven generations. Last year the Feds printed 38 million banknotes worth $639 million. Although they have seen the recession cause the velocity of money to decline, recent reflationary efforts have spurred a big increase in demand for paper for $100 dollar bills. The US first issued paper money in 1861 to finance the Civil War, and Crane has been supplying them since 1879. The average life of a dollar bill is 21 months. Who said no one was doing well in this recession? M1, or notes and coins in circulation, is already exploding. Is this a warning of an imminent jump in inflation?

5) Symantec says that 15,000 to 20,000 new viruses are being created every day, forcing it to upgrade its software every five minutes. Google admits that one out of every 100 searches connects with a virus infected website. There is no prominent website that has not been affected, including, the President's grass roots organizing website. Many of these are created by Russian cyber gangs, where boys as young as 14 can earn up to $30,000 a year. There is no local enforcement in the former Soviet Union as the victims are predominantly 'rich' Americans. Software security experts are now warning of a coordinated global attack on the Internet on April 1.

6) Skype (EBAY) plans to release a version of its internet phone software for the iPhone (AAPL). The move, which will be announced tomorrow, brings Skype more directly into competition with AT&T (T) and Verizon Wireless (VZ). The software is free and allows iPhone users to call Skype users for free if they are in a Wi-Fi hot spot. Alternately, the user can call a landline for a small fee, usually 2.1 cents per minute. Skype COO Scott Durchslag said the move is part of a strategic push into the cell phone market.

EBAY.png picture by sbronte


'The stock market has predicted six out of the last zero recoveries,' says ultra bear professor Nouriel Roubini of New York University. He is forecasting a retest of the 666 level in the S&P 500, another 15%-20% in real estate, and a lot more foreclosures.