May 13, 2008

Market Comments for May 13, 2008

1) New high in crude at $127. Natural Gas hit $11.70, and is now selling at a 47% discount to crude on a BTU basis.

2) You can now buy a home ethanol distiller for $7,000 after rebates. The EFuel 100 Microfueler will convert 70 pounds of sugar into 5 gallons of ethanol per day at a cost of $1/gallon. For details go to www.efuel100.com. This will enable thousands of consumers to become bootleg rum distillers, driving the ATF nuts.

3) Fluor announced stellar earnings, with 60% coming from overseas. They are doing a huge business converting US refineries to take heavy crude from Canadian tar sands. Customers are making capital investment budgets based on crude permanently staying above $40-$50/barrel.

4) According to long term Kondratieff charts, interest rates are going to rise for the next 30 years. When we are in the assisted living facility we will be able to thrill the youngsters with tales of 4.75% 30 year fixed rate mortgages and 1% teaser rates.

5) China has become a net importer of coal for the first time in 5 years, due to snow storms and rising crude prices.

6) The National Association of Realtors said the median home sold for $196,000 in April, down 7.7% YOY. The biggest hit nationally was in Sacramento, down 29.2%.?? The numbers are artificially low because of the almost complete absence of jumbo loans for more expensive homes.

7) US coal exports are expected to rise to 79 million tons this year from 59 million tons last year, thanks to the weak dollar and rising energy prices. The US is the Saudi Arabia of coal with a 250 year supply in the ground.

THOUGHT OF THE DAY

Down 23% from its high last year, BRIC country India is worth a good look. Earnings are expected to grow 20%/ year for the next 3-5 years and can be bought for 12 X earnings. India will soon have the world's largest population. The interesting plays there are in IT and financials. Among the negatives: persistent terrorism, poor infrastructure, and the lack of domestic energy supplies. The Bombay India Sensex 30 index futures just started trading in Chicago creating an easy entry vehicle for hedge funds. See $BSN.

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