October 20, 2008

Global Market Comments for October 20, 2008

1) China's third quarter GDP slowed by 12% to 9%, the slowest since 2003. Copper imports, a reliable leading indicator, have almost completely halted. Stocks rose 413 to 9,265. The November S&P 500 1,000 calls I strongly recommended at $22 last week hit $60 today.

2) US job creation for the past eight years was nearly zero, while the Federal deficit doubled from $5 to $10 trillion. That is $10,000,000,000,000.  Since January 900,000 jobs have been lost, raising the unemployment rate by 1.2%. It is the worst record since the Great Depression.

3) The route in the bond market over the past two weeks has been mind boggling, as investors considering the inflationary impact of the bail out. The 30 year Treasury plunged from 124 to 112, while spreads on junks bonds have widened to a precipitous 1,500 basis points. Investment grade 'Baa' paper is yielding 9.5%. This is despite seeing the most deflationary, rapid and bond friendly collapse in commodity prices in history. Such is the price of running the global printing presses 24 hours a day. Please recall my recommendation for a core short in the 30 year Treasury bond.

4) There is a futures market where you can bet on the outcome of the election. Right now Obama is ahead on McCain by 84% to 16%. I am a buyer at 84%.

5) Another screaming buy here is the Russian stock market (RTS), which has dropped 74% from 2,500 to 667 since in three months. Half of the index is in energy stocks. It is a way to buy crude through the back door at $20/barrel.


'If you want to live like a republican you should vote democratic because they are best at managing the economy', Bill Clinton.


What is the difference between a big hedge fund manager and a pigeon? A pigeon can still put a deposit down on a new Ferrari!