Captain's Blog, Stardate: 8/28/08
(Day 17,761 of the journey) Oil prices have fallen - an aberration, or the beginning of a significant reversal?
(Fortune) -- WHERE ARE WE? An interesting point in time right now. The dollar has climbed while commodity prices (i.e., OIL), have fallen. The question is: Are these aberrations, small counter-moves only temporarily interrupting a much larger trend? Or are these moves a significant reversal? In the case of the dollar, I would be surprised if the dollar makes a major sustained move higher.
But let's focus on commodities, specifically oil. I read an interesting piece, "States of Dependence" by Glyn Vincent in Columbia University's alumni magazine the other day. In it Columbia professor Geoffrey Heal makes the point that demand for oil is incredibly price inelastic, noting that we are basically using as much oil today with prices over $110 a barrel as we did in 1998 at $10 a barrel. In 2003, the average American family spent 4.8% of its income on energy expenses, this year it will be closer to 15%. Of course we are beginning to change our behavior. In March we drove 4.3% fewer miles - or 11 billion miles less - than we did in March 2007.
But this is such a global story right? All this lessened demand is mitigated by increased usage in China and India etc. Sure if the economy crashes the price of oil will fall, but by how much? By half, absolute max.
APPLE: The company continues to amaze. I have a hard time understanding how Steve et al even keep up. With product development, partnerships and deals, design, etc. It's unreal. One litmus test: At one news Web site, I counted some 50 stories listed as being about or relating to Apple (AAPL, Fortune 500) over the past 24 hours. Examples: "Russia Vimpelcom says to sell Apple iPhone in Russia" and "Orange Admits To Capping iPhone 3G Speeds" and "Apple iPhone ad banned in the U.K." and "iPhone security flaw exposes private data" and "Apple bans a comic book, firestorm ensues."
Now I mostly picked controversial headlines just to show the degree of difficulty in which the company operates. There were all manner of flattering stories as well. The point is that Apple has to be on top of all these issues. How daunting. But of course, the company keeps on keepin' on. Check this out from Bruce of Mill Valley: " In my four meetings with tech companies in the last week, each meeting now starts with five minutes of 'stupid iPhone tricks'....where everyone shows off their latest apps. It's the new icebreaker... Replacing weather and sports. Today, I was treated to the 'disco mirror ball' app." How does a company year after year churn out THE IT consumer product? Answer: By having Mr. Man at the helm.
BOOKS: "Backstage Passes and Backstabbing Bastards," by Al Kooper is very simply the best rock and roll book I have ever read. Also check out "Confessions of a Counterterrorism Agent" by old high school buddy Fred Burton. Dude is serious! Also "Havana Nocturne: How the Mob Owned Cuba and Then Lost It to the Revolution," by T.J. English (Love him. He wrote "The Westies.")
Over the past two weeks I have found a $20, a $1 and a $5. All I need is to find a $10 and I will have hit for the low currency cycle... A big shout out to another old high school hombre, Tom Mars, the GC at Wal-Mart....
What if you were at a hedge fund and you told me your fund had stopped doing business with Lehman and that your fund was also short LEH? Kind of reminds me of the old Stevie Wonder tune: "Talking Book."... Ever listen to Rodriguez "Sugarman" old tune!... Saw "Boeing Boeing" (Broadway show) the other night. Loved it. The plot is a bit been-there-done-that. But the acting is AMAZING: Christine Baranski. Gina Gershon, Mark Rylance, Kathryn Hahn and Mary McCormack, and my main man David Whitford's brother Brad Whitford... How do you Friend a broken heart?.... Tune of the day: Ebay by Weird Al... First night of college football, Yeah!!! Remember I told you about Georgia's Knowshon Moreno. He's electric....