July 24, 2008

Global Market Comments for July 24, 2008

1) A $3 pop in crude sent stocks down 200 points and bonds up a point. We are not out of the woods yet.

2) Want to get rid of that barbed wire around your bicep, or your ex wife?s nickname? The tattoo removal business is booming, where laser treatments can run into the thousands of dollars. More than 50 million Americans have tattoos and 20% of them regret it. The Google of tattoo removal is Cynosure (CYNO), which has jumped from $19 to $23 in the past month. Also in this space is Palomar Medical Technologies (PMTI), up from $9 to $13. This is great news for that guy at Lompoc who had F*** tattooed across his forehead in Germanic script. What an interview killer!

3) Existing housing sales for June came in at -2.6%, or a 4.86 million annual rate, a ten year low. An amazing 40% of all sales came from foreclosures.

4) At the peak of the housing market in 2005 credit creation was $1.2 trillion. This year it is running at a $400 billion rate. Mortgage rates are at a five year high, and are higher now than when the Fed first started cutting interest rates a year ago. That is called a credit crunch. Something you don't hear about in the media is that new banking business is now the most profitable in its history. The good news is that credit creation during recessions historically bottoms out at the $400 billion level. Conventional 30 year mortgages are now at 7% and jumbos 8%.

5) Weekly jobless claims skyrocketed to 406,000, up 34,000, the highest figure in three years.

6) The Hurricane Dolly miss has hammered natural gas again, from $13.50 to $8.90, down a gob smacking 35% in two weeks. This unwind is happening so fast that we are only $1 away from entering 'buy' territory. This is how gas trades. This extreme volatility makes it the best contract to be right about, and the worst one to be wrong about. Traders will tell you that it always takes the stairs up, but the elevator down.

7) What is the difference between an actuary in England and one in Sicily? The actuary in England can tell you how many people die over the next three years. The one in Sicily can tell you how many will die in the next three years and who they are!

8) Facebook has seen subscribers grow from 40 million to 90 million in the past year. Now that the company is offering Spanish language pages it is growing at one million new subscribers a week. In interviews, founder Mark Zukerberg looks like a kid who loves the technology, but is overwhelmed by the business side of things.