April 23, 2008

Market Comments for April 23, 2008

1) In Q1 Toyota surpassed GM as the world's largest car maker for the first time. It sold 2.2 million units, 200,000 more than GM. Toyota has sold more than 1 million Priuses since its launch in 2002. In the meantime, GM leads in Hummer sales. GM stock has dropped from $42 to $18 since October.

2) Yahoo's (YHOO) Q1 earnings came in at $0.11/share on $1.25 billion in revenues, in line with expectations. The DOJ has said that it is concerned about a potential tie up between Yahoo and Google. ??Microsoft will probably raise its bid to cash by Saturday and bring an end to this sorry mess.

3) $150 billion in sub prime loans have been written off so far.

4) Apple (AAPL) earnings came in much better than expected. The company is seeing 55% earnings growth with only 30% revenue growth, producing great earnings leverage. Earnings are growing at 10 times those of the rest of its industry in the US and three times the global growth rate.?? It sold 10 million I phones in the last year which is less than 1% of the global cell phone market of 1.1 billion units. It sold 2.3 macs during the quarter. Apple also announced new software aimed at business users of I Phones. I recommended the stock as a strong buy in February at $120. It traded at $170 today, up 42%.

5) Rough rice hit a new all time high of $25 per hundred pounds, up from $10 last year. Walmart (WMT) has announced nationwide rationing of rice. The average American eats 20 pounds a year of rice compared to 150 pounds by the average Asian. Thailand is the world's largest exporter of rice, shipping 9 million tons, or $4.5 billion worth last year.

6) Joke of the day: The credit crisis is now so severe that the only thing still holding a AAA is the Auto Club.

7) Pulte Homes announced dreadful Q1 earnings.

8) The two year Treasury note yield now is only 3 bp less than the Federal funds rate of 2.25%, an important indication that risk taking is returning to the market. A month ago it was yielding 100 bp less.

9) Vietnam is a country worth looking at. The Ho Chi Minh index has fallen from 1100 to 500 in the past year, despite the country bringing in an economic growth rate of 8%. It is one of the few early stage emerging markets with a tradable stock market.