Thursday, June 19, 2008

Well, It's a Start...

After the public is becoming more aware of what the economic costs of high oil prices are (look at airlines, FEDEX for example), we're starting to look at the causes. Yesterday I pointed out that the Chinese subsidy is hurting us because they are promoting excess use by keeping prices low. Well, today they announced they would raise prices. It's a start.

Everyone's convinced that we'll retest the March lows. It may happen, it may not. Most of the bullish talk I hear is the big opportunity in buying beaten up financials. You won't get that from me. I'm not buying them here. As I've said before, they may trade up 10% on short covering, but we've reached a point now where most of the panic is gone, but reality is setting in. That reality is that their earnings will be bad for awhile. And who'd excited about buying a stock that continues to get diluted by share offerings and dividend cuts? The only financial stocks I'm looking at are Goldman Sachs (GS) because they always figure out how to make money, and American Express (AXP), because of the strong brand, and a good portion of their business is card based, and look at how Mastercard and Visa have performed.

Those of us who still believe the global economy is strong (we appear to be shrinking by the day) got some good news as China's growth estimates were upped. I'm still a believer in materials and infrastructure-type names.

I've been trying to buy Swiss infrastructure company ABB (ABB) for weeks. It has been stuck in a trading range, and won't sell off as the market goes lower. There appears to be too many people jumping in, which won't let it get much under 30.

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