Gustav

With the disposition of a potential hurricane 'Gustav' the markets are in a flurry of market activity, but it is more of uncertainty. Wall street is glued to the weather channel or accuview weather.

Analysts believe that the energy, insurance and real estate will be negatively affected. Just based on the past history of Katrina's affect of the market, we can draw the conclusion that it is more likely that the market will respond similarly to the market's during Katrina.

Specifically, looking at the companies who will be most affected; Shell, Haliburton, AllState, and Waste Management.

Beginning with Shell (NYSE: RDS.A), they have already shut down some offshore facilities and moving the mobile facilities as much out of the way as possible. With more than 25% of the United States Domestic Oil and Gas Production in the area forcasted to be affected, it's a no brainer that the respective energy producers will be negatively affected.

With potential destruction imminent, and Bloomberg just claiming that Hurricane Gustav's destructive power could be comparable to Katrina, its safe to surmise that the insurance sector will take a hit. Historicaly, the AllState Corporation's stock price fell by five points due to the aftermath of Katrina and should anticipate a similar drop. It would be wise to look at State Farm insurance as well.

The largest name in the Energy service industry is hands-down Haliburton Corp. (NYSE:HAL). Once Gustav lays down the wrath to the energy platforms in the area, servicing and repairing the damaged energy facilities. This is just the type of bread and butter business Haliburton and it's share holder thrive on.

Finally, Waste Management as it did will with Katrina will be heavily contracted to clean up the mess which Gustav will undoubtedly leave behind.

So In a nutshell, just to save on time, looking at October Calls of HAL and WMI seem to be a prudent direction to take, and October Puts on RDS.A and ALL.

Remember that the above suggestions are to just nudge you in the right direction to research and are purely my opinion. Please consult your Investment Advisor before making any investment decisions. Investing involves risk.

Contrary to the news and speculation of Gustav, Oil is currently down on a higher US dollar driven by higher than expected GDP results.

Water, Water Everywhere.... International Importers Take a Drink?

I wanted to wirte this post regarding a Quebec think tank view on exporting Canadian fresh water to the rest of the world (meaning the USA), and I just wish to clarify the under-valuation of Water as a commodity. Perhaps you have heard of water being "the new oil" and the speculation of being priced higher in 10 years in equivalent barrel volumes of oil. Perhaps this may be or perhaps not. Let's look at this from a different perspective, rather not as a commodity speculator, but as a consumer. In Canada, a liter of regular gas averages around $1.20; where as a 500 ml bottle of water at individual retail prices can find you anywhere between $1-3 depending on brand and purchase location. That is a massive difference between the two commodities and there is one major and obvious difference between them; a human cannot physically live without water.

Retailing the precious, life-giving commodity at those prices is a tremendous opportunity and the price can only go up from here.

Another point is with recent developments by the Japanese automakers regarding hydrogen fuel-cell such as Honda's FCX Clarity, the new use for water will drive prices up further.

I fear i am rambling on now, so I will leave you with my favorite water ETF's:

- PowerShares Water Resources (ETF) (Public, AMEX:PHO)

- Claymore S&P Global Water Index ETF (Public, AMEX:CGW)

CIBC.....

Rather than compose a very obvious post on this financial institution's write downs of US assets, I'm just going to link you an article in the Report on Business this morning. Do enjoy.

http://www.reportonbusiness.com/servlet/story/RTGAM.20080827.wcibc0827/BNStory/Business/home

Freddie And Fannie Of Course! Thornburg Who?

The obvious debacle over Freddie Mac and Fannie Mae have indeed lead the media in the recent credit crisis craze. The anticipation of government bailouts of the two dwindling lenders has driven Wall Street to drive the stock's down to ridiculous lows. The lows currently are still much better than the anticipated value of Fannie and Freddie post government bail out: Zero Equity.

What seems to have been forgotten or rather deferred away from the media's attention is Thornburg Mortgage. Not only did the company's stock plummet to all time lows from $.75 to $.21 in a matter of days, but it did so weeks before Fannie and Freddie. Thornburg taking a massive dive to the low of $.17 closed Tuesday up $.09 to a market price of $.49. There has been very little media commentary regarding this mortgage lender and yet such a profound recovery has occurred and looks to continue it's crawl back to a respectable price.

Tuesdays recovery can be attributed to a better-than-expected earnings report due to sale off assets and new accounting procedures. In focus, Thornburg reported $412.3 million, or 84 cents per share, compared to the $78.1 million, or 66 cents per share in the previous year.

My bottom line is, and although Thornburg isn't even in the same weight class as Freddie and Fannie, perhaps the Thornburg story is a good model for the two lenders to follow and not allow the Fed to bail them out, and let the market refinance them. At least that way, it gives the investors a better chance to retain their investments rather than wipe them out without a chance. We shall see.

Keep an eye out for Thornburg (NYSE:TMA)

Your Guess Is As Good As Mine....

Looking for comments and insight to my readers oppinions on what is going on with Spot Gold.....

A Dragon's New Fund: O'Leary Global Equity Income Fund (TSX:OGE.UN)

Some how, I missed the IPO offering and release of one of my favorite Business icon's, Kevin O'Leary. After discovering the fund today, I am very excited and pleased with the results of this new fund. The fund is in fact an Income Trust, and although Canadian Income Trusts have significantly lost their luster in the past 3 years, I still find them to be a solid investment as they have proven themselves to be very stable and low risk. The O'Leary Global Equity Income Fund is comprised of primarily global investment opportunities directed by Stanton Asset Management as well as the O'Leary Fund Corp. Both of the aforesaid parties will manage the fund by identifying international income-generating investments, as well as other capital appreciation opportunities. The security currently trades in the $12-14 range and can be found on the TSX under OGE.UN. Released August 19, 2008

Looking forward to tracking the growth of this new fund.

Options Action: Wells Fargo and Suntrust Bank

It seems that two of America's top financial institutions are not going to prevail from the so called 'credit crisis' plaguing so many Americans unscathed. At least this is not more news on Mac and Mae; but Wells Fargo and Suntrust Bank.

It seems that investors we're very shaky on the earnings reports released this week of Wells Fargo and Suntrust. The market responded to this by trading the firm's down Monday. They responded significantly in the Put contracts driving volume alerts for the derivatives in various months.

The most action was being exercised by hedge funds positioning themselves with bear put spreads of Fargo and Suntrust. Bear put spreads are the simultaneous purchase of a put option with a higher strike price and the sale of another put option with a lower strike price.
The strike prices being exercised were within the October $30 and $45 range.

I Forecast Thunder in September and October. Possibilites Of A Storm Now?

With the recent release of the new 3G iPhone and the more recent release of the Blackberry Bold, RIM's performance over competitor, Apple has been very accommodating to investors of RIM and Option traders who have Put's on AAPL.

Apple's 3G woes did not just end with network technical difficulties, but a recent lawsuit of the misrepresentation of its recent Mobile's capabilities have investors driving the price down further.

For the record, the new iPhone and the new Blackberry Bold, although amusingly similar in appearance, are not exactly comparable products. It would be like 'comparing steak and lobster' as Canada's National Post described the competing phones this morning.

Although both utilize the 3G wireless connection enabling users with much faster connection speeds, the Blackberry is not touch screen, and is aimed at business class and upgraders where as the iPhone is more suitable for media-centric users. Still investors of RIM drove the stock and calls up this week, and not even Palm's 'Blackberry Targeted' new handheld could persuade investors otherwise.

Based on the market results, it is a safe bet that RIM will be pushed up even more in September and October as a result of the official announcement of the Blackberry Thunder (Now known as the Storm), RIM's first touchscreen operated phone. It is RIM's response to the popular iPhone. No news yet of the media capabilities of the Storm, but based on the Bold's new capabilities, the Storm looks promising.

In summary, it looks promising to buy September and October Call's of RIMM and take a look at the options of the Rogers, Verizon, and AT&T, the initial Blackberry Wireless Providers in North America.

When Will Gold Be Golden? Oil?

Earlier this week, the markets were teased with a micro-rally of gold and oil. Gold closed back down as the greenback rebounded against the euro on Friday. Oil also dropped significantly as a result.

Scanning the media in both broad casted and print mediums, there is a clear division of the opinions where Gold and Oil will be going. By the years end, I have heard the opinions that oil will bottom out at $80.00/barrel or top out at $200.00/barrel. Gold is a lot more tougher to identify bottoms or peaks. I have ultimately decided that based on what I have hear from analysts in the media, no one has any clue where Gold is going to go. People give there educated guess shrouded in market lingo, but no definitive targets.

My personal opinion for Gold and Oil is that it is more likely that Gold and Oil will rise in price as the cost of production for each commodity constantly rises.

The facts are that all the oil and gold has been relatively easy to extract from the earth. It has all been surface level resources. All future deposits are deeper and much harder to extract, thus the cost of production will rise and add on the the market price.

This is a very obvious and simple fundamental look at the futures of these commodities but it gives investors a much better understanding and idea how to position themselves.

With this information, my favorite gold plays are definitely GLD and DGP. GLD is a spot gold ETF and DGP is a double long gold ETN. For a long-term speculative play, the January Option Calls look to be solid.

With regard to Oil, I like the the producers and the refiners, long term calls seems only rational. Especially with Billy and Warren touring the Northern Oil Patch, and Newfoundland beginning to turn the gears forward.

Schwab September Call's Are Up On Close.

Today, there was an unusual open interest in Charles Schwab (SCHW). We saw unusual volumes and open interests on the Spetember 22.50 and 25 Call's Contracts. CNBC's Fast Money also acknowledged these trades on the Popular Show. It seems that an unidentified swiss firm was positioning around these derivitives. At the bell today, these contracts were closed up 21% on the 22.50 and 50% on the 25 contract.

The world renound securities firm was up today on news of the WTO deal being urged forward.