The Worldly Investor

The Incredibly Clumsy Hands of Government

2008-07-31T07:09:00.003-04:00

Great. The Fed is riding to the rescue of the banking sector once again.This is not the first time we've seen this. The Fed helped pull out Bear Stearns from the jaws of bankruptcy a couple of months ago. And now it is providing the investment banks with more emergency cash and loans. Do these banks deserve the largesse of the government? NO! They've been incredibly reckless in how they've

2008-07-31T07:08:00.000-04:00

Great. The Fed is riding to the rescue of the banking sector ... YET AGAIN.

Oil Prices Not Done Moving Up

2008-07-17T07:19:00.001-04:00

Has the oil bubble burst? Prices have fallen almost 10 percent from a high of over $147 last Friday. This morning crude is trading just north of $134. What happened?The dollar has had a couple of decent days. But it’s more than that. At least for a couple of days, the fear that U.S. economic problems will leak into Asia has spiked. The fact that European growth is also being taken down a notch or

Batten Down the Hatches for Inflationary Storm

2008-06-24T08:55:00.004-04:00

Oil rose for the third straight day as of yesterday. And this morning crude is again up -- posting a 0.4 percent rise.But yesterday was a rare occurrence. Not that crude rose. That is happening quite often these days. But that it rose at the same time that the dollar strengthened. This is the parting of the ways that I've been looking for: oil and the dollar no longer going in opposite directions

All Eyes on Jeddah

2008-06-23T17:17:00.002-04:00

Don't tell me this was the meeting that was going to turn the oil market around? Make crude shortages disappear ... put the fear into Nigerian "freedom fighters" ... get the piggish West to cut back on their outsized oil-consuming habits ... and get OPEC to reveal (and use) their heretofore hidden spare capacity to make more crude?What could have they been thinking?Saudi Arabia promised to up

Oil’s Race to the Bottom

2008-06-11T08:07:00.001-04:00

Appeared on Fox News this morning ... very early ... as in 6:10. Gulped down a cup of Java that seemed to clear my head. Then I gave viewers my take on the International Energy Agency’s report yesterday. I said that it’s a race to the bottom. What trend is getting worse faster – crude supply or crude demand? Crude supply is winning by a mile. Non-OPEC production is going down by 300,000 barrels

Oil’s One-Track Mind

2008-06-11T07:41:00.000-04:00

What don’t you get about oil? You can pretty much count on it following the price of the dollar these days. The dollar goes up, oil prices go down. The dollar goes down, oil prices go up. Yesterday, the dollar went up... So, obediently, oil prices dipped below $132. The market turned a deaf ear to news of an attack on a Nigerian oil security ship. It should have popped the price a bit but it

The Black Path of Destruction

2008-06-04T18:35:00.000-04:00

No sighs of relief here. The price of oil may be falling back a bit, but it’s still at toxic levels. Like hot lava wending its ruinous path after an eruption, there are certain sectors stuck like sitting ducks in oil’s widening trail of destruction. The airline sector is feeling the heat. Today, for example, United said it would ground 94 jets and lay off a thousand employees. Many other airline

Oil-Poor Countries May Be Better Off

2008-05-30T09:53:00.001-04:00

Maybe it’s not all speculation. The Wall Street Journal has an excellent article in today’s paper about how oil exporters are shipping less even with soaring crude prices. They’ve gone up about 80 percent over the past year.Our increasing oil dependency on Middle East sheiks drives Americans crazy. And there’s increasing evidence that high oil prices are driven by real global supply and demand

China and Katrina

2008-05-21T19:53:00.001-04:00

Remember when Katrina wreaked havoc in the Gulf of Mexico and put New Orleans under a wall of water? Employment took a hit. GDP growth took a hit. And the oil companies also took a hit.China’s devastating earthquake is having the opposite effect. China is coping with a big chunk of its coal and hydro-electricity capacity being knocked out. Oil companies should benefit from China’s greater

Deep or Shallow Recession?

2008-05-19T12:25:00.000-04:00

The early early news this morning announced an economy moving deeper into recession. It was based on a survey of economist belonging to the National Association of Business Economics. Later in the morning came the news that the index of leading U.S. economic indicators rose for a second month in a row. The rise was miniscule – 0.1 percent – but still a rise is a rise. Investors must hate getting

Better Late Than Never to Board Oil’s Gravy Train?

2008-05-08T09:00:00.001-04:00

I was on CNN News Radio yesterday talking about the oil sector. It was acting very strangely yesterday. Crude inventories were up, as was the dollar. Just one of these events should push the price of oil down. Both happening on the same day amount to an irresistible force. There’s no way oil prices should have risen yesterday, but they did. They came close to reaching $124, before falling back 50

ExxonMobil Has to Be Yearning for the Good ‘Ol Days

2008-05-02T11:40:00.002-04:00

I wouldn’t want to be running ExxonMobil. It announced a near-record profit yesterday of $10.9 billion. People are upset. At least, that’s what I heard on the 11 o’clock news last night. I usually don’t watch TV broadcast news, but I had just watched "Lost" and was too dog-tired to get up. So I stuck around for the typical two minutes of hard news and 28 minutes of drivel. Not surprisingly, they

Part 2: The Other Side of Verizon’s Success

2008-04-29T10:08:00.001-04:00

Yes, I like Verizon as an investor. But I’d like it even more if the company would stop rubbing me the wrong way.Incident Number One. From the very beginning, things didn’t go smoothly. It started when I mentioned to a Washington DC friend that I was researching Verizon and very close to making a recommendation. This friend happens to be one of the top executives working in Verizon’s DC office.

When the Going Got Tough, Verizon Got Going

2008-04-28T17:14:00.001-04:00

Verizon reported its first-quarter earnings today and it basically met expectations. Almost three years ago – when I recommended Verizon (to the subscribers of one of my trade services) – expectations were more mixed. And that’s putting it kindly. There were many more naysayers than believers in Verizon’s new technology – the FIOS fiber-optic network. Most pundits “out there” were saying that AT

The Eleventh Plague

2008-04-21T11:17:00.001-04:00

I was stuck in Florida over the week-end, thanks to a speaking engagement in Orlando. As a result, I missed the Passover Seder Saturday evening.I can’t remember the last time that happened. My good friends from Delray Beach, M&K, invited me to theirs Sunday evening. That was awfully nice of them ... considering they’re Irish-Catholic.When the mealtime banter turned to the state of the economy,

France Telecom Has Eyes on the Prize

2008-04-17T18:21:00.000-04:00

France Telecom is getting wacked. Word got out yesterday that it’s actively seeking to buy TeliaSonera – the highly profitable Swedish-Finnish telecom group. It dropped over 5 percent yesterday on the news and dropped another 5 percent today.What’s gotten investors all lathered up?After all, TeliaSonera has some nice exposure not only in the Nordic countries, but in up-and-coming markets like

Sin City Running on Fumes

2008-04-17T10:36:00.000-04:00

The media is staging a pity party for Las Vegas. You can read about all the great bargains from swanky hotels to Elton John concerts in an article (“Las Vegas Casinos Roll Out the Deals”) in today’s Wall Street Journal. Tuesday’s Forbes.com rolled out an article entitled “Fear and Layoffs in Las Vegas” on the same subject.Initially, the company's[MGM] mid-market resorts outside of Las Vegas were

Coke Model Didn’t Happen Overnight

2008-04-16T10:40:00.000-04:00

Corporate spin doctors have fallen in love with overseas assets and operations. That one factory in Krakow ... that single sales and distribution office in Amsterdam ... that small R&D operation in Hyberdad... all of a sudden are moving front and center in companies’ public pronouncements.But remember this: 99 percent of U.S. companies make a majority of their sales in the U.S. Even a huge

U.S. Growth Turning Sickly

2008-04-15T17:41:00.000-04:00

We used to go to hospitals when we’re sick. Now we’re going when we’re unemployed. That can’t be a good thing. The Wall Street Journal had a front-page article today on the rise of hospitals coinciding with the disappearance of factories: Factories Fading, Hospitals Step In.In pointing out the dangers of relying on hospitals as an economic growth engine, this is what the Journal said:There are

How Is JPMorgan Getting Away with This?

2008-03-17T08:59:00.000-04:00

And you thought last week was eventful?My only question on Bear Stearns' takeover is this: who is JPMorgan blackmailing in the Fed? Listen, Bear Stearns had serious problems. But it went under because nobody was willing to do business with it … not because its assets were worthless. It became a temporary pariah – shunned by lenders and clients alike. Its only recourse was to hoist the white

The Last Retreat Could Be a Douzy

2008-03-10T18:05:00.000-04:00

Another day, another 150 points down the tube. I read today that there’s no “there” to the economy. Well, not those very words. But the point was this. The forces that make the economy tick have left town. Tech – gone. Retail – gone. Housing – long gone. The financials – the last of them were kicked out today with the Bear Stearns rumors. The only sector left with a heartbeat? That would

Big Brother to the Rescue

2008-03-05T12:59:00.000-05:00

Can somebody tell Bernanke that he’s not President? It seems he’s developed an overreaching sense of responsibility for all of the country’s economic problems. It’s bad enough that he’s given up the fight against inflation. Now he wants to come to the rescue of homeowners who foolishly bet the real estate market would keep going up forever. As a result, a lot of them are “under water” – meaning

A Rude Awakening Is Coming

2008-02-22T14:11:00.000-05:00

Precious commodities, industrial metals, soft commodities, oil, gas – you name it – commodities are going up.To tell you the truth, I don’t understand. We’re at the beginning of a bigtime economic slowdown. And growth expectations are being ratcheting down with every passing week. Where the heck is demand coming from for these commodities? India? China?That’s the conventional wisdom of Wall

Mining Profits

2008-02-22T13:49:00.000-05:00

The flu hit me like a sledge hammer. I’m back up and running now, thank you. Two weeks is an eternity as far as the market goes. Lots of interesting things have happened – most of it portending continued bad times for the market. Before I get into some of this stuff, let me give you my thoughts on the latest with the possible BHP Billiton/Rio Tinto hookup. Last time we looked, China was doing