resinman
06-15-2006, 04:20 AM
Was going to do this in the BJC but money and markets are political or they are used in that sense at times.
Gold just cratered $200 an ounce in less than 30 days -- what does that tell us?"
This is a letter from a stock speculator,,,This is the most likely scenario for the short term in the markets and the USA economy..Anyone holding onto certain stocks should feel some relief from the scenario.
If it truly is an indicator of future inflation, the Fed is done.
2) The gold move was in a speculative bubble and was, in fact, NOT an indication of anything other than it was a beautiful chart that sucked in every momentum trader in the universe.
3) When you see a chart look like a teenager who just swallowed his Dad's Viagra , that ballistic rise is going to come back to earth just as quickly -- it's just a matter of when.
4) No one has figured out how dramatic an impact the new commodity Exchange-Traded Funds really have on commodity prices, especially in a commodity like gold that does NOT have huge trading supply.
5) Brutal Ben is still in control of the markets, not gold prices.
"Has the Fed has told us that they are willing to throw the U.S. economy under the proverbial bus to contain inflation to the Bernanke 1.5%-2% range, and that if they can contain inflation everything else will take care of itself?"
Yes, and they will hold the markets hostage until they quit with the rate hikes. But if Fed Chairman Ben Bernanke believes his own rhetoric that lower commodity prices will take the edge off of future inflation rates, he just got his wish. The May CPI core index number of 0.3% inflation WILL be the high-water mark for inflation this year.
"Is this global liquidity mop-up done?"
Not yet, but it is slowing. The Bank of Japan did send an ugly message on May 10 with its buy back of billions of yen from the markets. And with other central banks removing cash from their monetary systems, we DID see a pop in the global liquidity bubble.
But just this week the Bank of Japan stopped the mop-up and actively started putting cash BACK into the system -- is it a coincidence that the meltdown stopped this week? I think not.
"Why did crude oil only correct less than 10% and U.S. natural gas prices actually rose 10%, while the rest of the world's commodities collapsed? Why did oil for delivery in January 2008, 2009 and 2010 stay above $68? Why did natural gas for delivery in January 2007 stay above $10, while gold collapsed?"
Because you cannot run your car on gold. And oil is a global market that consumes 84 million barrels a day, moving to 130 million barrels a day by 2030. No matter how you argue the energy price question, you have to include 2 billion new consumers of oil (China and India) to your spreadsheet model.
And listen, oil accounts for 98% of the fuels used to run cars, trucks and jets. China adds 5,000 new vehicles to its road A DAY, and India is up to almost 2,500 new vehicles a day.
With existing conventional oil and gas fields producing 2%-3% LESS each month than a year ago (yes kids, that's called depletion), and unconventional oil fields coming on slower than the increase in consumption, oil prices mostly reflect true demand, not the hot money chasing gold.
And if you actually look at the concurrent economic metrics in the world economy (not the lagging indicators like inflation or GDP), you do NOT see a significant worldwide collapse -- you see just the opposite:
Airline travel is stronger than last year.
Trucking shipments are stronger than last year.
China and India's GDPs are stronger.
Capacity utilization is stronger than last year.
Employment is stronger than ever in the world ... not just in the U.S.
The global economic headwinds of ...
Slowing monetary growth (i.e., central bank liquidity)
Higher interest rates for those who pay interest based on prime rates or 10-year T-bills
Attractiveness of owning cash versus stocks
A slowing rate of U.S. consumer spending growth, and overall U.S. GDP
... does make for slowing rates of overall global growth, but not a collapse.
"Will the Fed overshoot rate hikes and create a recession? Is not the inverted yield curve (2-year bonds yielding slightly more than 10-years) telling us that a slowdown is ahead?"
Yes, a slowdown IS ahead, but not a recession. I can tell you this now because we have concluded our economic surveys for Q2 and a recession is not even close. However, 2.5%-2.75% GDP growth is.
"So what should I do with my money?"
1) Go bargain hunting in energy services -- they are 20%-25% oversold.
For our ChangeWave Investing subscribers, we are loading up on energy services stocks. I have instructed our more-advanced subscribers in our Inner Circle program to buy calls and sell put options on many of these stocks to crank up their returns with leveraged plays.
2) Buy secular growth stories, not cyclical.
Look at the success of the VeraSun Energy IPO today. Ethanol is a secular growth story doubling in growth within the next three years no matter how the economy does, short of mass recession. RFID technology, with mandated growth from $500 million to $5 BILLION in the next three years is another secular growth play. Likewise for renewable energy technology -- solar power and fuel cells. The conversion to silicon-based light from the Edison light bulb is another.
The point here is for you to reboot your portfolio to take advantage of the back-to-square-one market hysteria we received from the hedge fund and ETF-lead panic meltdown.
You need to do something NOW before cooler heads come to their senses, look outside their bunkers and see that there were huge bargains created in this global equity meltdown. I guarantee that once the shock wears off, they will be buying the best of the best, hand over fist.
It's that magic moment when investors get a few days to lock-and-load -- please do not miss this out of fear and loathing for stocks.
Just as I wrote during the first week of March in this very same WaveWire, "We can't overlook these gifts we get from the performance-based hedge funds who indiscriminately throw every winning stock overboard like a sinking canoe -- it's the reality we live with as investors in the 21st century.
"All you can do is take advantage -- that's what capitalism is all about
If you miss this gift, you will miss the easiest 20%-40% profits you ever made in stocks.
so if the sell off has scared anyone the future is brighter than we think,,,we are in the infancy of ethanol related stocks and solar
resinman
Gold just cratered $200 an ounce in less than 30 days -- what does that tell us?"
This is a letter from a stock speculator,,,This is the most likely scenario for the short term in the markets and the USA economy..Anyone holding onto certain stocks should feel some relief from the scenario.
If it truly is an indicator of future inflation, the Fed is done.
2) The gold move was in a speculative bubble and was, in fact, NOT an indication of anything other than it was a beautiful chart that sucked in every momentum trader in the universe.
3) When you see a chart look like a teenager who just swallowed his Dad's Viagra , that ballistic rise is going to come back to earth just as quickly -- it's just a matter of when.
4) No one has figured out how dramatic an impact the new commodity Exchange-Traded Funds really have on commodity prices, especially in a commodity like gold that does NOT have huge trading supply.
5) Brutal Ben is still in control of the markets, not gold prices.
"Has the Fed has told us that they are willing to throw the U.S. economy under the proverbial bus to contain inflation to the Bernanke 1.5%-2% range, and that if they can contain inflation everything else will take care of itself?"
Yes, and they will hold the markets hostage until they quit with the rate hikes. But if Fed Chairman Ben Bernanke believes his own rhetoric that lower commodity prices will take the edge off of future inflation rates, he just got his wish. The May CPI core index number of 0.3% inflation WILL be the high-water mark for inflation this year.
"Is this global liquidity mop-up done?"
Not yet, but it is slowing. The Bank of Japan did send an ugly message on May 10 with its buy back of billions of yen from the markets. And with other central banks removing cash from their monetary systems, we DID see a pop in the global liquidity bubble.
But just this week the Bank of Japan stopped the mop-up and actively started putting cash BACK into the system -- is it a coincidence that the meltdown stopped this week? I think not.
"Why did crude oil only correct less than 10% and U.S. natural gas prices actually rose 10%, while the rest of the world's commodities collapsed? Why did oil for delivery in January 2008, 2009 and 2010 stay above $68? Why did natural gas for delivery in January 2007 stay above $10, while gold collapsed?"
Because you cannot run your car on gold. And oil is a global market that consumes 84 million barrels a day, moving to 130 million barrels a day by 2030. No matter how you argue the energy price question, you have to include 2 billion new consumers of oil (China and India) to your spreadsheet model.
And listen, oil accounts for 98% of the fuels used to run cars, trucks and jets. China adds 5,000 new vehicles to its road A DAY, and India is up to almost 2,500 new vehicles a day.
With existing conventional oil and gas fields producing 2%-3% LESS each month than a year ago (yes kids, that's called depletion), and unconventional oil fields coming on slower than the increase in consumption, oil prices mostly reflect true demand, not the hot money chasing gold.
And if you actually look at the concurrent economic metrics in the world economy (not the lagging indicators like inflation or GDP), you do NOT see a significant worldwide collapse -- you see just the opposite:
Airline travel is stronger than last year.
Trucking shipments are stronger than last year.
China and India's GDPs are stronger.
Capacity utilization is stronger than last year.
Employment is stronger than ever in the world ... not just in the U.S.
The global economic headwinds of ...
Slowing monetary growth (i.e., central bank liquidity)
Higher interest rates for those who pay interest based on prime rates or 10-year T-bills
Attractiveness of owning cash versus stocks
A slowing rate of U.S. consumer spending growth, and overall U.S. GDP
... does make for slowing rates of overall global growth, but not a collapse.
"Will the Fed overshoot rate hikes and create a recession? Is not the inverted yield curve (2-year bonds yielding slightly more than 10-years) telling us that a slowdown is ahead?"
Yes, a slowdown IS ahead, but not a recession. I can tell you this now because we have concluded our economic surveys for Q2 and a recession is not even close. However, 2.5%-2.75% GDP growth is.
"So what should I do with my money?"
1) Go bargain hunting in energy services -- they are 20%-25% oversold.
For our ChangeWave Investing subscribers, we are loading up on energy services stocks. I have instructed our more-advanced subscribers in our Inner Circle program to buy calls and sell put options on many of these stocks to crank up their returns with leveraged plays.
2) Buy secular growth stories, not cyclical.
Look at the success of the VeraSun Energy IPO today. Ethanol is a secular growth story doubling in growth within the next three years no matter how the economy does, short of mass recession. RFID technology, with mandated growth from $500 million to $5 BILLION in the next three years is another secular growth play. Likewise for renewable energy technology -- solar power and fuel cells. The conversion to silicon-based light from the Edison light bulb is another.
The point here is for you to reboot your portfolio to take advantage of the back-to-square-one market hysteria we received from the hedge fund and ETF-lead panic meltdown.
You need to do something NOW before cooler heads come to their senses, look outside their bunkers and see that there were huge bargains created in this global equity meltdown. I guarantee that once the shock wears off, they will be buying the best of the best, hand over fist.
It's that magic moment when investors get a few days to lock-and-load -- please do not miss this out of fear and loathing for stocks.
Just as I wrote during the first week of March in this very same WaveWire, "We can't overlook these gifts we get from the performance-based hedge funds who indiscriminately throw every winning stock overboard like a sinking canoe -- it's the reality we live with as investors in the 21st century.
"All you can do is take advantage -- that's what capitalism is all about
If you miss this gift, you will miss the easiest 20%-40% profits you ever made in stocks.
so if the sell off has scared anyone the future is brighter than we think,,,we are in the infancy of ethanol related stocks and solar
resinman