July 11, 2008

Global Market Comments for July 11, 2008

1) Crude lept to a new high, $147.50, even though one of the Iranian missiles fired yesterday was found to be a Photoshop creation. It then closed at $144.30.

2) Bernanke saved the day today, announcing that Fannie Mae (FNM) and Freddie Mac (FRE) would have access to the emergency discount window. The two were down 40% at their lows. FNM closed down only 23%. Without the Fed move, the Dow was headed for a down 500 point day.

3) American Airlines is stripping the paint off of its aircraft. At 400 pounds per plane the troubled airline hopes the weight saving will cut $12 million/year in fuel costs across the fleet. Ultra lightweight decals will show the company logo. Look for US airlines to be mostly metallic colored from here on, until carbon fiber takes over.

4) The University of Michigan consumer sentiment index for June came in at 56.6 vs. 56.4 in May. This is surprisingly stable, given how sour the mood is out there.

5) The latest industrial production figures show that Germany’s economy is about to fall off a cliff. There is no way the Polish economy will be immune from such a slowdown. Europe’s economy could be lagging a US entry into a recession by 12-18 months.


A gem from Berkshire Hathaway’s (BRK/B) Warren Buffet about big banks’ involvement in sub prime derivatives: ‘It’s poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end.’ By the way, Buffet’s much vaunted stock is down 25% from its October high, worse than an index fund for the same period.