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“There is no present or future. Only the past happening over and over again” |
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- Eugene O'Neill
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Over the course of the past quarter two material barometers in the financial sector have been breeched. The price of oil that had yet to reach and close consistently in excess of $100 a barrel, it is now a daily occurrence and recently hit a high of $127. The greatest difference over the past few years or so is that we have moved from a supply-led market to a demand led one. OPEC’s spare capacity twenty years ago was approximately 10M barrels a day, today it is 2.5M barrels. The safety margin used to insure price stability has eroded with no relief in sight. Oil demand is up dramatically especially in India and China where both countries’ economics are flourishing. So thus, with supply limited and increasing demand, the stigma of $100 barrel oil has evaporated. Worldwide efforts to stem the reliance on oil is increasing including alternative energy measures, deep water drilling and increased exploration for new resources. To date, experts agree that approximately 1 trillion barrels of oil has been produced and it is conventionally understood that approximately 2 trillion barrels are left in the world’s resources. Both consumer reliance and producers have to work in concert to stem the tide of this price increase.
In addition to the price of oil exceeding and remaining in excess of $100 a barrel, the price of gold finally exceeded the vaulted $1,000 an ounce barrier capping a one year, 50% meteoric rise. The demise of the dollar as the world currency barometer as well as the general, historical feeling that gold is the only reliable source of value in a dangerous environment has led to this increase. Again it was the speculators that help prop up the price of gold, working in conjunction with other factors such as the aforementioned dollars’ depreciation, negative interest rates and surging inflation. As the price of gold continues to remain ambulant and technological changes allow for increased mining capability and capacity, the economics of this precious commodity continue to look higher, albeit it has recently settled in the $850-900 range.
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“It is better to offer no excuse than a bad one.” |
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- George Washington
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Despite the looming housing slump, inflation fears, record oil and gold prices, there are still several areas that are holding up well in this admittedly different economy. Health Care, certain Technology Industries, Mining, Food Production Companies’ and multi-national companies with a high percentage of their sales overseas are benefiting from the strong demand abroad and the weak dollar. Certain commodities that have increased dramatically such as the price of corn and soy are benefiting the farming industry. Many companies that have large cash positions on their balance sheets, such as Microsoft, IBM and Intel, each of whom have $15B apiece can also benefit through acquisitions, international expansion and strategic partnerships. The energy sector, not surprisingly with gas at $4.00 a gallon, as well as alternative energy companies are struggling just to keep up with demand. Finally, the economies of certain countries, such as China continue to expand at double digit growth rates. China’s middle class is growing at record pace and recently the World Bank concluded that China’s $5.33 trillion dollar net worth is now second only to the United States and also surpassed Japan as the second largest car market in the world.
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"What makes the desert beautiful is that somewhere it hides as well.”
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- Antoine de Saint-Exupery
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We are please to welcome to WP’s corporate consulting clientele list the following new members from this past quarter: ReoStar Energy Corp. (“REOS,” Fort Worth, TX); BAXL Holdings, Inc. (“BXLH,” Bethel, CT); PING Mobile (Los Angeles, CA); GoIP Global (New York, NY); R China, Inc. (Uniondale, NY); Nano Synergy (Pompano Beach, Florida); Big City (New York, NY); and Lorus Therapeutics, Inc. (Toronto, Canada).
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“Better to do something imperfectly than to do nothing flawlessly”
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- Robert Schuller
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Recently and over the past quarter we continued our recent proclivity for funding companies out of China that trade, or will trade on an American Exchange (e.g. Amex, Bulletin Board). We raised and closed private placements for the following two companies: Tianjin Yayi Industrial Company, Ltd, and Beijing Yanchu Gas Technology Company, Ltd. Tianjin Yayi was set up in 1994, and went into the professional field of producing and selling goat milk in 2001. Tianjin Yayi Industries is a leading manufacturer that produces goat milk powder, and liquid goat milk in China. Weinan Milk Goat Dairy Industry, a wholly owned subsidiary of Tianjin Yayi, is the base of supplying the raw materials. Tianjin factory is mainly responsible for the production and packaging. There are 3 brands and 8 series of products and the products are sold in 20 provinces in China with a fresh milk processing capacity of 80 tons per day. Beijing Yanchu, located in Beijing, China, is one of the leading companies engaged in natural gas distribution and distribution system construction. The Company focuses primarily on LGN distribution, operating natural gas supply system and providing stable and dependable natural gas. Its two main revenue sources include natural gas distribution and installation and connection charges collected from residential users. The company has exclusive distribution rights in both Beipiao and Jianping, serving a total of 23,000 residential users and 11 industrial users. Finally, the Company continues to focus on their goal of becoming the largest LGN supplier and distributor in China. Information on both of the aforementioned companies and press releases are available upon request.
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“The good life, as I conceive it, is a happy life. I do not mean that if you are good you will be happy; I mean that if you are happy you will be good.”
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- Bertrand Russel
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On April 1st of this past year, we at Wellfleet Partners celebrated our 10th year anniversary. Over the past decade, so many friends and business associates were responsible for our accomplishments, there are simply too many to acknowledge. However, there are two in particular that I would like to thank. Over the past eight years, Michelle Lee Cona, and subsequently Marissa Basile, has been this author’s right hand. Without each of their dedication, hard work, support, and sunny dispositions we could not have been as productive and effective as we have been. I thank each of them for their loyalty, and friendship. Finally, this author, whom has founded three professional financial service companies, always does so on April 1st, in honor and memory of his late father, Aaron Lew, whom would have been 89 this year, always in our hearts and minds. My sincere appreciation to every one for your continuing patronage and friendship.
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"As for the future, your task is not to foresee it but to enable it."
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- Antione de Saint-Exupéry
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