World Markets 101

Notable Quotes from Financial Gurus

Alan Greenspan – “Housing will bottom sometime in the first half of 2009…”, “home prices no where near a bottom…” - Bloomberg

Boone Pickens – “Oil may hit $110 a barrel, but it will not go below $100 a barrel” - CNBC

Mohamed El-Erian – “…weakness will accelerate…”, “The U.S. is headed toward 6% unemployment…”, "We now have three balance sheets all coming under pressure at the same time: housing, consumers, and the financial sector.”, “Inflation is going to be a bigger factor over the next three years, firms must raise capital or sell assets, assets are sold for fire sale prices, resulting in eventual capital raises which cause them to raise their cost of capital to clients.”, “ Fasten your seat  belt and don’t put yourself in a position where you will have to be a forced seller.” – Bloomberg, CNBC & Advisor Perspectives

Martin Feldstein  -  ``Market pressures over time are going to put downward pressure on the dollar…'', ``A more competitive dollar has been the driving force in keeping gross domestic product expanding.” , “U.S. will fall into a recession, how bad it is dependant on home price declines.” – Bloomberg

Marc Faber – “Commodities will decline in the second half of 2008”, “Commodities have peaked because the world is now in a recession, which will reduce demand” – Bloomberg

Jim Rogers – “The fundamentals for commodities are astoundingly good and the bull market has a long way to go.'', “The U.S. will have the worst recession since the 2^nd world war.”

George Soros – “It is inconceivable that we come out of a recession by the end of the year.” -Bloomberg

Bill Gross – “The Fed will not hike rates anytime soon, inflation concerns will abate.”, “The 3^rd quarter may be okay, but there is risk in the 4^th quarter of 2008 and the 1^st quarter of 2009 as the rest of the world economies also slow, but how bad it is, is dependent on home prices.”, “Deleveraging will continue to have negative affects.”, “Freddie and Fannie will need to be bailed out…”, “Long term we are bears on the dollar, but the dollar will outperform in the near term as other economies falter.” -CNBC

U.S. Taxpayers to Subsidize Lattes?

Yes, you read that right, congressional democrats are introducing a bill that would halt the planned closure of some 600 unprofitable Starbucks stores.  Representative Pelosi’s bill would subsidize the money losing stores using millions of U.S. taxpayer dollars.

Repesentative Pelosi states that the 12,000 baristas at risk of losing their jobs “can’t just walk out of Starbucks and get a job at a grocery store or a factory.”  Mentioning that many of them cannot speak English and would need “ESL classes and cultural training to learn how to relate to ordinary Americans and function in society.” She goes on to say “America has become a cold and desolate place where corporations cut unprofitable activities to focus on increasing the bottom line, and returning value to shareholders. When Democrats retake the White House next year, we will reverse that trend.” Thanks Nancy, I’ll look forward to having my 401k gains reversed too.

Good Bye Cell Phone Contracts, Hello Expensive Phones

Ever wonder how Apple can make money selling the iPhone 3G for $200 a phone? Apple would lose money on iPhone sales at $200 without AT&T to subsidize the cost of the phone.  Luckily for Apple, AT&T is more than happy to subsidize the cost of the ever popular iPhone 3G because they can recoup the cost of the subsidy by locking those lucky enough to get an iPhone 3G into a 2 year contract.  However a California judge today ruled that early termination fees that penalize cell phone users when they break their contract early are “illegal”.  Of course the carriers will appeal, so enjoy that $200 iPhone 3G while it lasts.