April 18, 2008

Market Comments for April 18, 2008

1) Today was the day of Google (GOOG), which saw a rise of $95 to $545, creating $30 billion in new market capitalization. This is the largest one day market cap increase in history, not including IPO’s. The Dow broke out of it’s three month trading range to the upside, rising 229 points. Let the melt up begin!

2) Please read the story on natural gas on the front page of the Wall Street Journal today. It outlines some of the arguments I have been giving you since January. Finally, some of my ideas are getting recognition in the press. Gas hit a new high for the year of $10.70 today. Crude hit $117. I’m seeing $4 gasoline in my neighborhood.

3) Rough Rice prices have gone parabolic, soaring from $10 to $24 in the last six months. This is going to become a major international political issue. When 70% of your income goes to pay for food, as it does for the poorest quarter of Africa and Asia, there is no room for a 100% price increase.

4) Fact of the day: 50% of S&P 500 earnings now come from international sales.

5) Vale do Rio Doce (RIO), the largest iron ore producer in Brazil and the world’s second largest mining company, is a stock to watch at $37. It is a triple play on the global commodities boom, the Brazilian economy and the country?s currency, the Real. This is what US Steel is telling you when it runs from $55 to $160 in six months. The only problem is that RIO has already risen 350% in the past year.

6) Russia is making moves to create an OPEC of natural gas producers. It already has a near monopoly on supplying gas to the EC. It is now building a pipeline from Nigeria to Libya to increase supplies. Buy Gazprom (OGZYP).

7) Today was equity options expiration day and my April 1200-1450 S&P 500 short strangle recommendation expired out of the money for the fourth month in a row. Your four week profit on this trade would have been 5% of your capital. Closing at 1,396 today, the index didn’t even come close on the strikes this time.


This week’s earnings surprises have confirmed what I have been telling you all year, that is, if you take out financials and housing the US economy is booming. All of a sudden the glass went from being half empty to half full.