Same Old Song

Stocks fall, while oil rises. It seems like the stock is beginning to mirror the housing market: buy NOW, prices are low. This is a buyers’ market. From the opening bell stock prices headed down, not far into the red, but just outside of the black. Most of this can be blamed on Fed anxiety; every market expert is speculating on what the Federal Reserve will do in their Board Meeting tomorrow. For the casual investor - WHO CARES - the only thing that matters now is looking at P/E ratios and trying to find some last minute bargains.

The market is betting on a rate cut from the Fed when the central bank meets Tuesday; but investors are not completely sure what it will do and what it will say in its accompanying economic statement. Furthermore, with the major brokerages' third-quarter results yet to be released, investors are uncertain about how badly the summer's stock downturn, souring home loans, and credit squeeze will hit the banking industry.

Making matters worse, the mortgage crisis seem to be spreading across the Pond. Northern Rock PLC, Britain's fifth-largest mortgage lender, saw its stock plunge and customers withdrew billions of dollars after it issued a profit warning after hours on Friday and drew from emergency funds held in reserve by the Bank of England. That gave U.S. investors an added impetus to pare their stock holdings, particularly in the financial sector. The good news for us is that financials almost always bounce back; like car manufacturers and airlines.

60 Minutes
The former Federal Reserve Boss Alan Greenspan did his first interview, since leaving as the Chairman of the Fed, on 60 Minutes and he warned of a possible recession. The couples with job cuts from First Franklin and Merrill have investors jumpy.

The good news is that while looking at the bigger picture one will discover that the job rate is steady, and this may help contain the credit crisis to the "sub prime" market. However, be careful when asking your credit card company for a limit increase, and check for new terms as well. The lenders of last resort will begin to tighten their belts' as well.

Pay Less at the Pump?

OPEC Speaks
Even though the United States does not get the majority of its crude oil from the Middle East (only about 15% comes from Saudi Arabia), The USA does receive more than 50% of its crude oil imports from OPEC. With imports that high, its not hard to see why the US oil market is still has an indurate link to the OPEC cartel. It just a fact of life. The USA's largest crude importers are Canada and Mexico (both whom are non-OPEC countries), but they are followed closely by Venezuela and Saudi Arabia. Logistically, this makes sense, it is easier to ship form Canada then it is from Kuwait.

However, good news from from the sandy pond region today; Kuwait's Oil Minister, acting Spokesman for OPEC, announced today that OPEC would increase crude production by 500,000 barrels per day. This should ease oil futures and loosen up prices in about 30 days.

Another falsehood that many American's believe is that OPEC is made up of only Middle Eastern countries, this simply is not true. The countries that comprise OPEC: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, The United Arab Emirates, and Venezuela.

Today's Picks

VMWare Inc (VMW): Virtual is the new real, or so it seems. A quick chart and y
Apple (APPL): The new iPOD release was flawlessly timed, school has just started for the youth of America, and no teenage wants to be left behind. Expect to see sales surge - again - in the coming months. You have birthdays and holidays rapidly approaching.
Oracle (ORCL): Here they go again buying another company. I am not sure if they are good for competition or they stiffle it. But they bought a UK (Ireland) internet company for an undisclosed amount of money this week. Expect internations number to surge
Tullow Oil: There is more oil in Africa then everyone thought

American Elitism

Sometimes good ol American arrogance affects us all. Isn’t it odd that most Americans can only name 2-4 stock exchanges? Now we seem to think that our mortgage crisis, which will lead to an eventual recession, will affect the rest of the world’s markets. While CDO (collateralized debt obligations) defaults are at a high point, there are so many sectors to our economy that remain unaffected. Example: when Ford (F) was downgraded by S&P from AA to below “investment grade” , did the US car market plunge? Did prices drop? The “Market” is kind of like the Earth; no matter what we throw at it, the greater good always seems to win out. After an ice age, come the Grand Canyon and Great Lakes. CDO, CDO2, and other mortgage backed securities. That said, in the spirit if “buy low, sell high,” if you have some extra money look at things like Freddie Mac, Fannie Mae, and Wells Fargo. These are all companies that will see short-term dips, but each has what we at Landes refer to as FSP or financial staying power. Basically, over the long haul, these companies will bounce back into the black and see continued growth.
For the more immediate returns you will need to look places like: Tech, Pharma, and Blue Chips. There are some good values in small caps, but you have to look. One other place to look is at short term luxury goods and services, like restaurants. This short-week will see a lot of moving and shaking. I expect to see a lot of volatility, but all-in-all we will be up for the week. My suggestions are: NVIDIA (NVDA), Ultra Petroleum (UPL), and BP.I hate to say this but perennial disasters lead (one month later) to oil spikes. Oh yeah, BP will be pumping in Oman by 2011.