Global Market Comments for June 16, 2008
1) Crude jumps to a new intraday high today of $139.89, up $6.60. A fire in the North Sea took 150,000 barrels/day of production off the market. Natural gas finally hit a new high of $13. Then crude dropped $7. The big fireworks this week are going to be in the crude options pits, where the options expire on Tuesday, and the futures expire on Friday. These dates could mark a top in crude prices.
2) Only 6% of the US work force is now going to work wearing a tie.
3) The dollar had its strongest week against the euro in three years last week, moving from $1.58 to $1.53. Clearly, the potential for lower euro interest rates caused by a rapidly weakening economy is the main driver now. Look for this to spill into the other markets. The two year Treasury note market had its worst week in history last week, while the 30 year bond market had its worst week in 25 years. Please see my earlier recommendation to sell 30 year bond futures at 120. They hit 111.
4) The California Supreme Court's recent decision to permit gay marriages is creating a 'gay boom' for the state's beleaguered economy. Over 100,000 happy couples are expected to tie the knot, generating a $684 million impact on the economy. The epicenter for all of this will be San Francisco. Local wedding planners are seeing a sudden tripling of business as long waiting couples are spending up to $15,000 per wedding.
5) Local Segway dealers are seeing business jump by 50% this year. People are buying the $5,000 two wheeled electric vehicles in order to save money on gas on short commutes.
6) The three highest paid executives in 2007 where John Thain at Merrill Lynch ($83.1 million), Leslie Moonves at CBS ($67.6 million), and Richard Adkerson at Freeport-McMoran ($65.3 million).
7) Last week's storms destroyed 10%-15% of the US corn crop. This is pulling up the prices of other foodstuffs.