|
Today's Market WrapUp 11.13.2007 Mon Tue Wed Thu Fri Barbera Archive Who's Zoomin' Who? This week we maintain the approach of throwing a spotlight on that which is obvious to market observers, but which remains somehow oddly removed from broader public discussion. Last week, I pointed out the extreme declines in the Financial Sector, which hint strongly at a building banking crisis. Bank after Bank, Financial after Financial, we see price implosions, huge write downs, denials, and statements affirming a grand confidence that all is “contained.” Do the good folks on Wall Street really believe we are all this naïve? One has to wonder. And what about those ‘kindly’ politicians who are running for elections next year? Can they really believe that Inflation is as quiescent as we are told to believe? How stupid do these people really think we are? It gets me upset to even hear the words “Core Rate” or “Ex Food and Energy.” Those words should be stricken from the linguistic database, as who really believes that inflation is below 4%? In the words of the great Aretha Franklin, -- Mr. Bernanke – 'Who is Zoomin Who?' Just look at the charts that follow and ask yourself, is it at all conceivable that Inflation isn’t really scorching red hot? Almost every CRB Sub-Index is making new all time highs and the few that aren’t are pretty darn close, and that includes Textiles which have been held back courtesy of the Peoples Republic of China, How long does that remain once the Yuan Revalues? Lie to me Ben, Lie to me – the charts sing a different song…
While this is not a political endorsement, I have to admit it was really refreshing to see Congressman Ron Paul take on Ben Bernanke the other day. For the benefit of those of you who didn’t see or hear any of it, Congressmen Ron said a lot of things most of us have been writing and ranting about for months, if not longer. Here’s a small sample of some of the best lines: Ron Paul to Benrnake: “Instead of looking at the prices – the consumer prices, which nobody in this country really believes - we need to talk about the distortion, the mal-investment, the misdirection, the bad information that is gotten from artificially low interest rates. In many ways, some people refer to you as a price-fixer, you know, because you fix interest rates. The market is powerful and usually overwhelms and does come into play, but when the Fed fixes an interest rate at 1%, that is price fixing.” Ron Paul to Bernanke: The bubble has been burst. We saw what happened after the NASDAQ bubble burst. We don’t ask how it was created. And then we a housing bubble and it’s deflating and it’s spreading. And yet, nobody says, “Where does it come from?” And what is the advice that you generally get, and that is, ---inflate the currency. They don’t say, ---“Inflate the currency.” They don’t say, --- “Debase the currency.” They don’t say, --- “Devalue the currency.” They don’t say, “Cheat the people who have saved.” They say, “Lower the interest rates.” But they never ask you, and I don’t hear you say too often, “The only way I can lower interest rates, is I have to create more money. I have to lower the discount rate. I have to make it generous. I have to increase reserves. I have to lower the interest rates and fix the interest rates, over-night rates.” The only way you can do this, is by increasing the money supply. I see this as the problem that we don’t want to talk about. Ron Paul to Bernanke: “When we create money out of thin air. We have no savings and yet, there’s so-called “capital”, there’s money available, but it comes from what you have to do and the pressure is put on you. So, I think we have to get back to the very fundamentals of where this problem comes from. The bubbles occur when we have this mal-investment and the creation of new money.” Ron Paul to Bernanke: How can you do this and pursue this, the policy you have, without further weakening the dollar. There is a dollar crisis out there and people’s money is being stolen. People who have saved, they’re being robbed. I mean, if you have a devaluation of the dollar at 10%, people have been robbed of 10%. How can you pursue this policy without addressing the subject that, somebody is losing their wealth because of a weaker dollar and it’s going to lead to higher interest rates, and a weaker economy. -- If you’re retired and elderly and you have CDs and their cost of living is going up no matter what your CPI says. Their cost of living is going up and they’re hurting and that’s why people in this country are very upset. To that end, it is all about Currency Debasement with the really big lie coming in the form of Export Growth? Note to anyone who hasn’t been asleep under a tree for the last 25 years, the US Manufacturing Base has been EXPORTED, and as a result, since we don’t make many things here anymore, a lower currency will NOT help the Balance of Trade Improve because most of the heavy industry is now somewhere else. There is NO DOMESTIC MANUFACTURING BASE to FALL BACK ON in lieu of rising Import Prices. Textiles, China, footwear, China, auto tires, China, -- the list goes on and on. No wonder Commodity prices just continue to rise. Yes, it may be true that from time to time we see declines in items like Crude Oil or Gold, but the advance in commodity prices has been and remains relentless. Just look at the chart of Crude Oil over the last few weeks. What do we see? We see new all time highs in prices accompanied on the heels of new all time highs in weekly MACD, which is Bullish Upside Momentum, -- a 9 Week RSI near +90 -- a sign of HUGE upside momentum -- and prices trending or “walking” up the one year upper Bollinger Band? There is no inflation; what a crock!
Above: Weekly MACD surging to new all time highs for Crude, this argues prices are just starting a NEW advance…
Above: Crude Oil and the 9 Week RSI, above +90 recently = huge upside momentum…higher prices still ahead even if short term correction has a bit further to go. With sincere apologies in advance for the mini-rant, where Oil is concerned I note that Sentiment on Large Speculators is moving back up to very bullish levels. This is important because these folks, the hedge fund community, have been quite correct in there calls for Oil over the last few years. Note they have been appropriately Bullish at major lows and grown more cautious as prices advanced and ultimately spiked.
In my view, with the evidence for Global Peak Oil growing with each passing month, the odds are very high that Crude Oil is already in a Cycle Degree Wave Three advance. Assuming Wave Three equals the height of Wave One, we are staring down the barrel of $200 Crude Oil over the next two years -- Con Te Partiro to the SUV.
Stocks moved sharply higher on Tuesday with the S&P 500 gaining 41.87 index points to close at 1481.05, a gain of 2.91%. The Dow Jones Industrials also gained, surging 319.54 index points to end at 13,307.09, a gain of 2.46%, while the NASDAQ Composite gained 87.53 index points to end at 2671.66, up 3.39%. The 10 year Bond ended at 4.26%, up .05 basis points, while both Oil and Gold moved lower, nearby Dec. Gold finishing down 5.90 at $801.80. That’s all for now, Frank Barbera Copyright © 2007 All rights reserved. CONTACT
INFORMATION |
