2001 All Over Again
One thing about the stock market that resembles 2001: a lot of volatility, with deep drops followed by rallies that almost but didn't quite close the gap.
Look at yesterday - following a major fall on Friday, the markets did not rally Monday
1. NASDAQ continued its drop (another -0.6%)
2. Dow rose just under 0.6%, not a rally
3. S&P did not move (it rose 1 point)
4. Declines outnumbered advances
5. Down volume was 2:1 vs. up volume
6. New Lows vs. Highs were 4:1
7. Markets traded at higher than average volumes, indicating a broad based move
Meanwhile Bernanke is continuing the tough talk about inflation, but that's all it is imho.
1. Economy is still too shaky to talk rate hikes
2. Unemployment problems are getting deeper and going global. The largest temp agency, Manpower, said that hiring plans are falling to 2003 levels. For all countries in the G7 (most of the world's economy), only 30% of companies surveyed will be hiring. http://www.reuters.com/article/ousiv/idUSN0930367520080610
What is interesting is that the hiring is slowing not crashing. This is the same consistent tune across all economic indicators. I'm reminded of the story about a frog in a hot pan. Put a frog in a hot pan, and he'll jump out. But put a frog in a cold pan and gradually heat it, and the frog stays put.
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Where are the bright spots? Mining and coal.
According to the recent trade figures for April and the hiring data, only mining is strong. Thank you China and petro-dollar countries.
Look at yesterday - following a major fall on Friday, the markets did not rally Monday
1. NASDAQ continued its drop (another -0.6%)
2. Dow rose just under 0.6%, not a rally
3. S&P did not move (it rose 1 point)
4. Declines outnumbered advances
5. Down volume was 2:1 vs. up volume
6. New Lows vs. Highs were 4:1
7. Markets traded at higher than average volumes, indicating a broad based move
Meanwhile Bernanke is continuing the tough talk about inflation, but that's all it is imho.
1. Economy is still too shaky to talk rate hikes
2. Unemployment problems are getting deeper and going global. The largest temp agency, Manpower, said that hiring plans are falling to 2003 levels. For all countries in the G7 (most of the world's economy), only 30% of companies surveyed will be hiring. http://www.reuters.com/article/ousiv/idUSN0930367520080610
What is interesting is that the hiring is slowing not crashing. This is the same consistent tune across all economic indicators. I'm reminded of the story about a frog in a hot pan. Put a frog in a hot pan, and he'll jump out. But put a frog in a cold pan and gradually heat it, and the frog stays put.
----------------------
Where are the bright spots? Mining and coal.
According to the recent trade figures for April and the hiring data, only mining is strong. Thank you China and petro-dollar countries.
posted by Andrew at
6:43 AM
5 Comments:
Hi Andrew,
Thank you very much for bringing up MVL for our attention. Since you mentioned, it went up more than heading down. Suddenly today, it jumped up $2.45. What is your opinion for MVL for near term ? And through your magic ball, what is the opinion for MVL by end of January 2009 ?
thanks
your faithful fellower
MVL shot up today because another movie is being released this week: THE HULK.
This is actually the sequel but it has better actors (Liv Tyler, Ed Norton, Tim Roth, William Hurt). More importantly, it is produced by MVL so they get the profits. It will all depend on word of mouth: even the first Hulk movie earned $100M and it was a stinker.
True fans started reviewing it today and they love it.
Figure breakeven is around $200M, which they could do with a decent storyline. Add in DVDs and the potential is for another $50M net profit on top of Iron Man.
Ands remember - all costs have already been accounte dfor - except for marketing, the profit is pure upside.
I own shares but not the calls - my buy price wsa always too low. I think MVL hits low $40s by January because I suspect the IRON MAN DVD will shatter DVD sales records.
Also, MVL has a TV cartoon show coming out. And then an IRON MAN sequel. And Video games. They really are doing well.
One negative is that there are delays to some of their movies for 2009. And the PUNISHER sequel is supposed to be bad.
Another negative is that their licensing will be hit hard by a consumer spending downturn. But that pales in comparison with the DVD sales.
It is very likely that EPS will double in 2008 due to IRON MAN.
Hi Andrew,
1) any reason for mining & coal trending up ?
2) if economy behavior looks like 2001, do you remember when 2001 economy and stock market start recovering ?
thanks
I remember your comment on DUG and that it could be a buy later.I got in at 27.8 few days back and have been surprised to note that inspite of oil supply concerns, DUG has managed to stay above my buy price. My theory is that with oil getting pricey the refiners XOM/COP etc (all part of DUG) will get hurt, even if crude itself goes higher. Additionally with the stock market tanking, the wave will sink these guys too. Comments ?
Hi Andrew,
I notice that the bulk dryship stock (like drys, gnk, etc..) are tanking now.
Do you think that they are good buy ? especially that you mentioned coal has a footing. How much coal is exporting worldwise ?
The bulk dryship definitely will be used for shipping the coal.
Any thought on that ?
thanks
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