JAPAN

Land of Rising Rates

Life is a see-saw, when one thing goes up, another goes down. Have you noticed the lastest move? Japan is going up, up and away.

Historically emerging markets have had a relatively negative corelation to the Japanese market. Indeed, small US stocks and emerging nation stocks tend to trade together and big cap US stocks and Japanese stocks tend to trade together. None of these relationships are perfect but they do exist.

Buy the basket! EWJ is a basket of Japanese stocks. It has made a nice move but I expect about 4 good years from this index. Buy big cap growth stocks in America, four more good years. Reduce your exposure to the over-heated markets.
ETF Investor
US Market BLog
Bill Cara

Continental Airlines Announces Daily Nonstop Service Between New York and Copenhagen, Denmark: Financial News - Yahoo! Finance

Continental Airlines Announces Daily Nonstop Service Between New York and Copenhagen, Denmark: Financial News - Yahoo! Finance

CAL continues to add international flights at a break-neck pace. The competition is virutally nil on many of these flights. Fuel is a bigger factor on international flights but the margins are fat.

One short term risk to CAL is that it might purchase NWAC or DAL. Even if such a deal is made, the purchase would amount to the assumption of debt in exchange for the carriers.

CAL has kept load factors high both domestically and internationally by shifting assests to international flights. One perceived risk to be very high is that new entrants will compete with CAL. This is a big joke. New entrants to the airline business have cost venture capitalist billions. There just are not many folks around who want to start up a company in this very competitive business. In past years, there was hope because new entrants started with much lower labor costs. After the restructurings, the surviving carriers have reduced labor costs dramatically.

Gulf Times Newspaper - Qatar, Gulf and World News - Finance & Business

Occidental just made its first shipment of Libya crude to the US. This is the first shipment since sanctions were placed on the country in 1986 in response to terrorism attacks.

The scale of worldwide oil production seems to be lost on most bloggers and investors. It is not good news that several rigs were severely damaged by Rita but a few out of 2700 active rigs worldwide is not as big a deal as it would seem.

With supplies already tight, the hurricane damage gives everyone a lot to talk about. It has been entertaining to read how "peak oil" has already been reached. "Peak oil" is the point at which oil consumed will always be larger than the amount of new oil discovered.

Yesterday, the Chair of Exxon and the King of Saudia Arabia tried to dispell the rumours about peak oil. King of Saudia Arabiasaid he expects the proven Saudi reserves to double as addtional areas are explored. Better still, the Chair of Exxon estimates that there are 7 trillion barrels of oil still to be discovered.

According to the Baker Hughes web site, the active rotary rig count dropped to around 480 in 1999 when oil dropped to $12 per barrel. The current count is approaching 1,500 with about 500 of those in Canada.

On the one hand, the billions of barrels locked-up in Colorado Shale is still not profitable to extract. However, the tar sands of Canada are now being developed. One excellent idea that is being floated by Total (a French oil company) is to build a nuclear power plant at the tar pits.

Few folks realize how much energy we waste when we produce and distribute energy. Misguided environmental policies have added and abetted incredible losses.

Take the California fiasco as a prime example. Powerplants are not built in California but power is transmitted to the state. This highly inefficient practice results in the extra buring of millions of tons of coal; just don't burn it in California.

The fear of nuclear power has resulted in the buring of 400 million tons of coal each year. Nuclear power is much cleaner than coal power.

Gradually we learn how to convert waste to economic use. For example, Shaw Carpet Mills has burried megatons of waste carpet fibers over many years. Recently the company learned how to use this material to produce energy to run the carpet mills. The key was in heating the fiber to a gaseous state such that the polutants could easily be filtered away.

The biggest waste product from power plants is heat. For this reason, it makes great sense to build a nuclear power plant where the heat could be used to extract oil from the tar pits of Canada.

The reality is that the earth is collecting more energy from the sun than we are using. As long as the sun shines, we will never run out of energy. We must learn not to waste millions of pounds of concrete and steel chasing wind mills when natural processes on our planet convert the sun's energy to hydrocarbons for us.

My best guess is that the price of oil will be down to $54 per barrel within a year. In the short run, it will be necessary for Americans to cut their use until recovery from the hurricanes is complete.

In the long run, we need to continue to become more efficient in our energy use. No need to worry over this as it is as much a part of nature as the process of decaying biomass producing oil. Markets do work! The use of electricity for lighting replaced oil lamps around the turn of the 20th century. The savings has been incredible. In the future we will drive cars that are powered by nuclear electricity. The nuclear power plant will not be in the car but the nuclear plants should be disperesed around the country (more so than the 108 nuclear plants already producing energy).

According to the Rydex Mutual Fund index, non-professional investors have dramatically overweighted oil in their portfolios. If you have more than 10% of your portfolio value in oil, you are overweight. I am underweight oil. I own a couple of very small interests in working Texas wells but, own no oil stocks.

I own no oils stocks because I believe we are close to a near-term peak in the price. The pain of higher prices is being felt around the world. Indonesians will see a jump of about 50% in the regulated price as of this coming Friday. China is regulating the sale of large vehicles and India is cutting their oil subsidy.

Meanwhile, oil producing nations are letting bids for new ground and water. The bids include our own back yard. Oklahoma, Alaska and the US property in the Gulf to name a few. Libya will let an area the size of Cuba next week. Russia, Libya, Mexico and hundreds of other nations are making deals with American firms. US technology has improved by factors of 1000. In the old days, wild-catters drilled many an empty hole. Today, American firms make detailed 3-D maps of millions of acres before drilling to where they know the oil will be found. The
Exxon chair estimates that there are 7 trillion barrels of oil to be found and the 3 trillion will be relatively easy to find.

With strong measures being taken on the demand side, around the globe, and with increased production around the globe, it is a matter of time before the price of crude comes down.

After two years of consolidation, the US stock market is about to boil over the top. When Google lets its contracts to build out the Google Net, the next round of capital spending will be underway. Many of the dreams folks had of the internet in the 1990's will come true over the next 10 years.

Check out the negative sentiment of consumers and investors as reported at Rasmussen Reports. You can see how negative the public has become. Investors should remember to invest when others are fearful and to be fearful when others are greedy.

The market needs one more big dose of "bad news" to kick start the next great stock market move. I can't tell you what the bad news will be. I hope it is not Stan! Rita has always been a name I have liked but not Stan. Wilma may be along before Stan gets out of the way. Again, these hurricanes have not been pleasant, however, they are not big enough to derail the greatest economic machine ever to exist. The US economy is strong. Greenspan used it to pull the rest of the world out of a mess and now he is tapping the brakes before we crest the top of the hill. It is time to get on board.

BUY THE BULL!

Oodle - The Search Engine for Local Classifieds

Oodle - The Search Engine for Local Classifieds

Oodle is a new seach engine for local classified ads. It seems that there are many folks trying to get out in front of Google; to take some business away or perhaps to set themselves up to be bought by Yahoo, MSFT, News Corp or Google

Oodle is pretty neat. It allows you to find what you want very quickly. This is another way the world is going to be a less wasteful (more productive) place. No need to buy new, when you can quickly find nearly new at half the price.

Oodle allows you to be pinged when a new item is listed that fits your search. Dealers love this feature.

You can expect Google to offer a similar service soon. It is clear that sooner or later EBAY and Google are going to be in head to head competion in many areas. Some have suggested that there will be 4 to 6 major players left standing in a few years. Combinations such as MSFT-AOL, Skype-EBAY, Yahoo-SBC, etc.

If you have seen a chart of newspaper help wanted advertising, it is not a pretty sight. Layoffs of staff and other cuts are in the works and a paper. The Google sidebar finds the news I want to read. Each day it gets smarter. Each day, it sends me several stories that I click as "send no more like this". My news is becoming more and more customized for me each day.

The local paper I read sends me a junk editorial page each day and sports articles from teams that I do not follow. I have not pulled the plug on my subscription yet but the day is drawing near.

Try Oodle and post a comment. I'd love to know what you think.

GOOGLE and NASA

John Battelle's Searchblog

Google does not want to waste any time on its computers. My guess is that Google owns at least 200,000 computers! This is based on the fact that at one time Google had 10 data centers and each center had about 10,000 computers. Since then it has been reported that Google is spreading out to 60 smaller data centers.

Google uses cheap, off the shelf computers, but its software is designed for "plug and play". Google can add another rack or a whole new data center and the existing computers find the new resources and put them to work.

The Google-NASA partnership makes sense. All these brains and computers working next to one another is pretty amazing. Ideas will flow.

I don't know the utilization rates at peak hours and off peak hours for Google's machines. However, even though Google helps searchers around the globe at all hours of the day and night, you can be assured that they do have peak and non peak hours. NASA studies can surely use this computing power.

Years ago, many data centers did banking, payroll and other "batch" processing at night. High powered users kept the computers busy druing the day. Somewhere, I read that Google can outrun high dollar servers by a factor of 30 at about 1/8th the costs. Why not let our space program in on some of this power and savings?
Other views:
Matt Asay
Global Chinese
Silicon Beat
Google Blog

Official Google Blog: Putting crowd wisdom to work

Google continues to look at ways to make the wisdom of the crowd work. Free markets work.

Right now, politician after politician has a plan to "correct the market"; how dumb. The collective wisdom of the market is smarter than any politician. Ideas such as windfall profits taxes or price controls do not work, except to temporarily win a few brownie points for politicians. In the long run, socialistic manipulation of markets lead to gross inefficiencies.

Markets are by no means perfect. Yesterday, Google dropped several dollars in price. It appears that the drop was disappointment over the Google press release. Investors have been waiting with baited breath to know how Google will spend several billion dollars. My belief is that the big annoucement will be the letting of a multibillion dollar contract to build-out a nationwide high speed fiberoptic broadband network.

LU Lucent and NT Nortel have both traded up in recent days. I would not be surprised if one of these companies benefits from the build-out. JNPR,the Juniper Network may also get a piece of the action. (GLW)Corning has traded down recently after a supper strong run.

Yesterdays announcement lopped a few billion off the market cap of Google. The company plans to build a million square feet of office space. I don't have a clue about the cost of space in silicon valley but it it is 100 per square foot, the cost will only be 100 million. Just a tiny piece of the spending Google is prepared to do.

Again, markets are relatively efficient. Burton Malkiel thinks they are very efficient. Warren Buffet and others disprove the EMH theory. Google is studying and using market based concepts to distribute information to the public as efficently as possible. Go Google Go.

A family member just did another Google Gulp! He watched Everybody Hates Chris, the UPN show that is being streamed by Google. He says he sees how the zillion channel TV is going to work. When Google builds out its network, the cost of streaming shows to you will be virtually nill and the revenues to Google will be huge! BUY THE BULL! Short term sentiment may take this market down a knotch but the expansion phase of the economic cycle is underway!

Other links for Google TV:
The Gadget Spy
buy google
Postronik's World
Science and Tech
Today's Top OpinionGordon's Tech

Free Wirless Internet in San Francisco!

Internet News Article Reuters.co.uk

Google has offered free wireless internet services in San Francisco. This could be the start of something big!

I have had about as much fun as I can stand dealing with Cingular the past couple of weeks. I purchased a new Treo 650 and paid an extra $39.99 per month for unlimited internet access. The set up has been a total mess and the help from several of the sales reps has been horrible. Some of the features are neat but there is an extra charge of $.25 per message every which way you turn.

Please, please, Google, please, offer free wireless in North Carolina as soon as possible! Just a few weeks ago, after dealing with Time Warner in Myrtle Beach, I said no company could beat Time Warner for horrible customer relations. I stand corrected. Cingular is where I am trapped for the next two years. I can only hope I don't have to deal with them much. Go Google, Go!