September 5, 2008

Global Market Comments for September 5, 2008

1) The August unemployment rate rocketed from 5.7% to 6.1%, a five year high. The monthly non farm payroll rose an unexpected 84,000. Traders were out there from the get go, selling stocks with both hands, taking the Dow down 150 points. Bond yields are flirting with all time lows. Blood is flowing in the streets once again as the stock indexes approach new lows. This is bound to feed into the election. Short McCain.

2) Suntech Power (STP), the largest solar module manufacturer in the world, seems to be the one solar energy company that is best poised to get its margins under control, crucial in the face of steeply falling oil prices. The Chinese firm has already dropped from $90 to $33. In China, farmers are jumping from the first century to the 21st, converting from ox power to solar, in one go.

3) The unique thing about this housing downturn is the huge number of new homes that were bought by speculators with no money down, never lived in, and then foreclosed. This enormous new inventory is collecting dust, for sale at big discounts, and hammering the public homebuilders. Hovnanian (HOV) just announced a Q2 loss of $202 million. The stock has plunged from $45 to $4.50. Eli Broad, billionaire retired founder of Kaufman & Broad, believes that the market won't recover for another 2-3 years.

4) According to Dr. Levitsky of hallowed Cornell University, intensive mental activity, like mathematical calculations, Scrabble playing, or stock picking, can burn off excess calories. The bad news is that it is only about 20 calories/day, the equivalent of one M&M.

5) Regional airports are getting pummeled by the airline crisis, with departures at Oakland airport down 19% YOY. Carriers are either consolidating down to the single largest airport in an area, like SFO, or just plain going bust and walking away from substantial bills and leases. Many smaller local airports are now no longer served by any airlines after communities spent millions to upgrade and service them.

6) The US consumes 25% of the world's energy, but owns only 3%. This is a problem.

7) Of the 3.3% in GDP growth seen in Q2 2008, 3.1% came from international trade.