inflation monster raising its head

EU inflation jumped to 4% in June (that's the official version - the real inflation is far higher), reaching the ECB bechmark rate. That will bring a rate hike in the July meeting, which will not be enough going forward. The dollar will drop further and Euro will rise above 1.60 (I'll make a tech special on that later this week). I am sticking to my idea that oil tops short term at 146/8 and we see oil dropping back to the 100/110 area. The Bush administration has to throw strategic reserves on the market soon, since the public pressure and upcoming elections will make it inevitable for this administration to keep up their oil friendly attitude. I have no idea why he wants to install a defense shield of rockets in front of Russia while he lets them make a 'killing' and undermines the US economy. The Russians could not have done it any better in the sense of cold war strategy.

Coming back to the real problem, the core inflation - the most abused word of the FED and some other Goldilocks experts. Lufthansa ground workers want a 9.8% raise of wages and this is just the beginning. People cannot afford to loose buying power anymore, so the negotiations will be tough going forward in all areas and bring a negative momentum from a different angle to the overall inflation. This process cannot be stopped and will, over the next months and years, drive up the death spiral of inflation. People have been lied too enough and have been disinfomed by statistical tricks that regular people would be jailed for, but the governments can do things that single individuals are sentenced for. The point of pain has been reached with the so-called head-inflation numbers and the erosion of the phony wealth of their home and stock equity. Now they loose on all ends at the same time that's to much to deal with, which is another effect of Pluto in Capricorn - the bitter truth comes out from everywhere. The result will be higher wages to calm down the people but no higher productivity, so the money press will work overtime and the inflation game goes into full speed - the end will be disastrous.

technical outlook 30th june - more trouble ahead

The markets dropped sharply last week, with a strange occurrence - the VIX did not follow accordingly yet. Price action looks like capitulation, but the market seems to be to reluctant. Rydex Nova/Ursa jumped from .65 to .72 out of red alert territory and back down to .66. XBD closed below 150, which implies big trouble ahead still. NDX made a similar pattern as the SPX weeks before with a downside target of 1780/1800. We will likely start to develop intermarket divergence through July, while forming a temporary bottom. This is a strange decline and one of the old favorites and pathetic stories of decoupling markets is coming to an end quickly with China and India in crash mode. We are in a short US week and we might be in a strange situation since the new moon on Thursday might provide a short term bounce time frame for 1-2 weeks thereafter but a renewed bear-strike thereafter, since XBD needs to hit new lows as well targeting 135/40 and area NDX needs to test the 1780/00.

A good indicator will be VIX. We need to go to 30 to mark a medium term low, so a daily close above 25 will be the first indication but very likely this week. Nevertheless, the next week will be a plus week and we might even see this Thursday some shortcovering since the DOW will have with 2 lower closes from Friday an exhaustion price level short term.

Overall, much more downside will come within 1-2 years valuations will go back to single digit PE's. Just to give you a feel of the magnitude, XBD will be at 100 - best case - but before we will see the expected 3rd Q. rally - a sucker rally and the Tech sector might even make a new high I fundamentally do not understand why but that's what the price action tells me so far and many houses like Goldman push that idea.

oil - reason for war?

Its outrageous that OPEC says that oil could be at 150-70 this summer, but at the same time insists there is no severe demand out there. Now Mr. bush can show if he has any guts - that's the reason to send some aircraft carriers over and get some OPEC member presidents in a conference call to ask them if they are out of their freaking minds. That is what I consider a terrorist attack to threaten world economy with a hyperinflation.

The odds are still good we are topping out within 2 weeks, since if Misters Bush and Bodman have a common sense together its time to through the strategic reserves on the market - push oil below 100 and get the index funds out of the game. Its an easy trade to trigger the stops for the longs.

update technical for US markets and oil

The spx target 1300 will be extended to 1260/70, ndx broke out of a similar formation, as spx before, and has a target of 1780/1800. vix will brake out of a triangle pattern with target 28/30, with sox a leading component.

Oil has a consolidatian pattern and should breakout to the upside target 146/8.

capitulation in financials will mark the upcoming lows

Goldman is pushing financials lower, with sell recomendations after putting them as buys weeks ago. We needed a final capitulation and since we are in window dressing period everybody will get rid off them, if he holds still some and shorts will increase. We have to make a disctinction between BKX and XBD going forward, since I see technically and fundamentaly higher loss potential in the XBD medium term (6-12months). BKX target at 50 and XBD 110.
Short term the capitulation will produce slightly new lows in the BKX around 60 and XBD could even mark the 140 area during the sell off next days - leading to a short squeeze rally starting in mid July - but it will be a sucker rally afterall - a volatile and fiecre one.
The rydex has dropped to .66 which is red alert for shorts , the bulls are down to 33 and bears up to 39 in the Invvestor Intelligence survey and other instruments give also alaarm but its not a good time to start since the VIX which is crucial in this overall cocktail is far from signaling a low in the markets. The time frame calls for another 1-3 weeks as well plus some other indicators I will keep to myself - but its red alert and it will be volatile and happen when people are on holidays - thats the high price of this business - the time one has to invest.
Its only obscure to see this one day Sox driven rallies which falter the next day with a big gap to the downside - who is doing this crap?

News Blabber - Winning team?? for US Presindency

Obama is leading the Los Angeles Times poll by 15 points against McCain and still takes Mrs. Clinton as his running mate - not officially, but asking donors to bailout the $22 mil. campaign deficit of Clintons, it is a clear sign to me. I think its not a good idea to ask for such a donation. First of all, why should regular people bailout the Clintons, who have a net worth of at least $50 mil.? Secondly, she is a dangerous running mate, since she/them (Hillary & Bill) are involved with many lobbyists, which will dilute his campaign and his overall 'change' stance.

For Wall Street, it will be a tough president, since Obama will be rigid about their income generation and taxation. We can expect fierce support for McCain and his competence is the "war against terror" as the Los Angeles Times poll confirmed. This brings us into the dangerous situation that President Bush gets into higher gear to fight terror in the coming weeks and months to create a winning edge. Furthermore, Bush has to get the economy out of the headlines as best he can. He can achieve that by lower oil prices, which he will achieve, he has the tools at hand and the chart confirms we have a top soon (in the coming weeks).

Economically Obama scored competent in the Los Angeles Times poll, although I do not see why, except for the fact that people are sick and tired of the Republican/Bush administration. Well, I understand why that is. In any case, whoever becomes president, soon after the elections, we will be in a severe bear market, probably the worst in at least 50 years. The only difference will be that the taxation and the FED policy might change since the new president (likely Obama) will have to nominate 3 governors. The dollar will be turning trends with Obama and get stronger again.

Greenspan said today "the economy is on brink of recession". The USA is on brink of depression and in the midst of a severe recession. There is no point in denying it, it's part of an overall cycle and politicians should be jailed for lies, since it should be their duty to prepare people for the severe downturn. A credit crunch like this cannot just go away, since the banks are loaded with trash in their leveraged balance 'cheats' and the steep curve will be not sustainable with exploding inflation. As I noted in an earlier post, it's not far fetched to expect Bernanke to be fired in 2009.

He is not responsible for the mess, but he was chosen to provide the policy methods that he is implementing, which will worsen the situation. So far, part of the balances of the banks are contaminated but the cancer is spreading with a deteriorating economy and banks will not have sufficient capital to stay alive even after all the new capital they have right now. The estimations of Goldman and others are understating the situation. Especially the investment banks - a leverage of 10 is the highest, the best ones might be able to carry going forward. A leverage of 10 means you have a tolerance of error for 10% a leverage of 25 gives you 4%, which can wipe you out in negative cycles and rising volatility easily. The FED is trying to provide save leverage plays, since the rate cuts only served the banks, not main street, but they cannot keep it up. Almost 50% of treasuries are sold to non-US investors and they are loosing severe money with getting paid negative interest - plus a weak dollar. That's why US inflation is rising, since they raise prices in return. The US consumer is the big looser - he looses on every end - his money looses value, the goods he buys get more expensive, his savings loose value. That is the making of a big crash, since at a near point he will stop charging his credit card and stop consuming whatever he can afford. The unlucky ones have to quit paying mortgages, more people get fired and the death spiral keeps on turning.

Excerpt from Barrons roundtable:

Hickey: A witch's brew is hitting the economy, including the biggest housing-market collapse in U.S. history. Home prices are declining by 14%, year over year. Oil is $135 a barrel, up almost 40% since January. Food prices are soaring, unemployment is rising and wages are stagnant. Lending standards are tightening. Auto sales are plunging. States have a budget crisis. This combination of problems is unprecedented unless you go back to 1929.

This pathetic statistical definition of a recession is in anyway useless and unfaithful. It doesn't help anyone to lie to the people. That's like telling people on the Titanic that there is no iceberg. Only the ones who want to get out of positions and need to get some suckers take their positions or a desperate attempt to get re-elected. Actually, the next president of the USA will have the most unenviable job, since he has no chance to do any good within one term. He will have to deal with the toughest choices and almost no one will thank him for that. Is that the reason why Obama might become the first black president? Sometimes it seems too easy how he came from nowhere to being the candidate and, as the polls say, the next president.

This useless hype of the daily economic releases is my personal daily torture, everybody knows that the FED will not do anything before elections (except cut rates and that is, in the current scenario, not very likely). This new housing bill to reduce foreclosures is just a paper tiger. In the real world, its effect is relatively small to negligible.

The rumor of an attack on Iran yesterday was again one off those "testing the water" events but more serious things are going on in the background. I came along the following article by chance.

Excerpt from Reuters:

Aide: plot to kill Ahmadinejad thwarted at U.N. meet

TEHRAN (Reuters) - An adviser of Mahmoud Ahmadinejad said there was a plot to assassinate the Iranian president during a U.N. food crisis summit in Italy earlier this month, an Iranian daily reported on Tuesday.

It came a few days after Ahmadinejad, who often rails against the West, accused the United States and its allies of plotting to kidnap and kill him during a visit to neighboring Iraq in March.

It would be a surprise if they did not try, although its not the single person who drives the politics in Iran. However, an attack on Iran would light the fire under the whole Middle East region and only help the oil owners interest. In any case, Iran will retaliate and world markets will come to a full stop with all of the new security implications, which would be activated. That could start the depression globally and would come at a high price for the whole world. Who has the right to discriminate who may own nuclear weapons, since Pakistan, India and (I am sure) Israel own them. It's only a matter of time that second and third world countries own them as well. I do not support the idea at all, it is just common sense.

The contra-indicator

The Rydey Nova/Ursa Index is a contra-indicator and has reached red alert level to cover shorts. It can still slip lower and it's a bit to early to act.

Other contra-indicators are Goldman and Merrill, both called close to the last high for a rally and yesterday both turned around their calls - emphasizing that financials are a sell. Those are the new members of my contra-indicator list. We will see a bottom within 1-3 weeks and the downside is limited to 2-3% from yesterdays close. Especially financials will be the place to be on the long side, with airlines and other oil sensitive stocks. The rally will be a strong shortsqueeze, hence a trading position not an investment opportunity. The Congressional hearing yesterday confirmed that 37% of longs are index funds and we will soon see rising pressure to turn around the oil market. Technically, oil is about to have a top within 2 weeks with new highs above 140. The only thing which bugs me is the VIX in my scenario, since it shows too much reluctance and we should see a spike up to the 30 level, which does not fit the timing and magnitude of the bottom. If Vix would rise to 30, markets need to drop more than 2-3%. We will see a capitulation finish and again against the call of Goldman the SOX looks poised for weakness and a test of the gap area at 1850 should be seen within this down move for the NDX. Wednesday's FED announcement could be used to trigger the window dressing for 2-3 days, but its not the start of the overall turnaround.

technical outlook for week of 23rd june

Well, a tricky week is ahead since we are heading for window dressing, therefore we can expect good support in the 1300 SPX area for now, which was anyway the target area for this down move, but an extension to 1270 cannot be ruled out - more likely next week.

Have in mind this week has some unexpected events in store - due to the Uranus ( goes stationary) effect

The Dow has broken out of a trend chanel but runs into good support in the 11550/600 area. As you can see with the indicators we need to make slightly lower lows to confirm a bullish divergence - together with plenty other indicators we should have a bottom within 1-3 weeks and a strong short squeeze rally should follow in the July-November time frame. Oil is about to top out in the same time frame. Within this week and next week, expect a volatile bottom building process with the days around Thursday-Friday being updays closing the quarter with window dressing. BKX 60 level should also hold for now - XBD is poised to go lower, a good indicator is LEH which should find bottom in the 20/2 area we are at a 12 weekly combo count in LEH. We need to close this week lower to activate a low. We have a close eye on that and on oil which needs to go briefly over 140 to get the top..

Investment banks new trouble - analysts incompetence

Bloomberg analyzed 6000 calls of analysts for stocks and found out only 25% worked out, the rest were worthless - even a ape throwing darts makes better calls as a research WSJ did years ago was concluded, Ape's did even beat with a small margin portfolio-managers. All of these Ph.D.'s and MBA's do not produce any good for the average investor?? Over decades, actively managed portfolio's could by 80%, not even match the index which they had to track, but this guys earn salaries far beyond anything a hard working household can dream of to earn.

This world is out of any sane equilibrium, to pay for a man chasing a soccer ball (I love to see a good match) $100 mil. is just freaking crazy.

CEO's that loose substantial substance or bankrupt companies should sit in jails - not walk out with hundreds of mil. in bonus (that applies for most CEO's on Wall Street, since they simply gambled by gearing up the leverage), but it has become a bad habit in the corporate world in general and the politicians supporting them.

Goldman is making stranger and stranger calls going forward - at the low, the guy who replaced Abby Cohen said it would go lower before going higher - now at the high he just said the opposite. Both times he was dead wrong. What happened to the summer rally they called for at the end of May? Today they say underweight financial after a sharp drop after calling to overweight them at a temporary high. That's not even pathetic that's evil and most amazingly they are the guys outperforming the peers - definitely not if they follow their own calls.

CMBS (Commercial-mortgage backed securities) are now the new area of losses for banks, although the overall market is far smaller compared to the CDO market (they can drive some into chapter 11, again Lehman is one of the big players among them are Goldman, Merrill and Deutsche Bank which has a lot of LBO trouble ahead).

Excerpt from Bloomberg:

Lehman ranked among the biggest CMBS underwriters last year, managing or co-managing $48.2 billion of new securities, triple the amount in 2004, according to Commercial Mortgage Alert in Hoboken, New Jersey. Lehman now has $40 billion of CMBS, loans and other real estate investments on its balance sheet, more than twice the firm's stock-market capitalization.

Lehman also financed 23 residential developments, most of them in southern California, and a luxury high-rise built by Irvine, California-based developer SunCal Cos. Last October it teamed with Tishman Speyer Properties LP to buy Denver-based Archstone-Smith Trust, the biggest U.S. apartment real estate investment trust, for $13.6 billion.

Lehman's Losses

Lehman posted a second-quarter net loss of $2.8 billion, the first in its 14-year history as a public company, partly because of $900 million of losses on commercial mortgages and real estate investments. The firm marked its SunCal investments -- mostly senior debt -- to around 75 cents on the dollar and recorded a $350 million writedown on its Archstone stake, Lehman Chief Financial Officer Ian Lowitt told investors on a June 16 conference call.

Fuld played big to muscle himself into the top ranks and blew it and, as I said in an earlier post, time is short for him after he blew out two top managers. He bought some time for himself. The commitments from Blackstone and Greenberg are just stock lifting propaganda - sure they are not going bust like Bear Stearns with the FED financing there positions so far and new capital raised, but stockowners will get impatient if he can not turnaround the momentum soon. A takeover is problematic because the FED cannot offer another bailout package for the buyer and LEH has still too many toxic positions. I doubt that the sovereign funds keep throwing their money in to catch more falling knives.

The technical picture confirms though that we soon will have a short squeeze campaign coming up once the overall intermediate bottom is set, but that depends very much on the financial sector and should happen within 1-3 weeks.

unpredictible volatile 2 weeks ahead

Uranus goes stationary this week on the 26th in a pretty exact sextile to Jupiter. Uranus triggers unexpected and volatile energy and Jupiter exaggerates it - but overall it is beneficial for Tech, as you may have noticed in the last few weeks. They have this sextile now for a few weeks already and more weeks ahead to stay - only the stationary elevates the basic effect. So what can we expect?

First of all, rising volatility in the markets and nasty weather conditions, leading possibly even up to earthquakes (when Jupiter went stationary weeks ago we had the Burma flooding and Chinese earthquakes). That is essentially bad news for the basically dangerous regions like the Midwestern states of the US - Tornado's could get more destructive.

Markets should go into capitulation-mode and turn around as fast as they dropped. This fits with my assumption that we should hit bottoms within 2 - 3 weeks from a technical point of view.

For Obama, it means trouble since the Uranus is opposite his Mars and will bring aggressive forces up against him from unexpected positions. Something will drive him mad but it also triggers the US Mars in a T-square with the US Neptune. Neptune is correlated to oil and, since he announced to tackle oil speculation, he has won a new but powerful enemy.

Excerpt from the NYT:

Senator Barack Obama on Sunday proposed tightening the regulation of oil speculators in an effort to ease record high gasoline prices and address one of Americans' top concerns.

On the other hand, Obama is a supporter of the Ethanol or the Midwest - so he is polarizing.

Excerpt from NYT:

When VeraSun Energy inaugurated a new ethanol processing plant last summer in Charles City, Iowa, some of that industry's most prominent boosters showed up. Leaders of the National Corn Growers Association and the Renewable Fuels Association, for instance, came to help cut the ribbon — and so did Senator Barack Obama.

In the heart of the Corn Belt that August day, Mr. Obama argued that embracing ethanol "ultimately helps our national security, because right now we're sending billions of dollars to some of the most hostile nations on earth." America's oil dependence, he added, "makes it more difficult for us to shape a foreign policy that is intelligent and is creating security for the long term."

We are close to the SPX target of 1300/10 and 11750 DOW, but I will take care of that in a special tech analysis later today

The next level of the ( financial ) crisis

The crisis is intensifying against the phony calls, the worst is over -mortgage rates at nine month highs, monoliners substantially downgraded (although they should even trade at junk-level), foreclosure and bank-ownership of houses is increasing sharply. The problem for the FED is that in order to finance the rescuing of the banks, they had to make sure that the dollar stabilizes and therefore they needed to be serious about supporting the dollar. The money of sovereign funds would not come in without some kind of guaranties. The next effect to stabilize inflation is to turn around the weakness in the dollar, also in order to get a positive spin on stock markets and the election.

Excerpt from CNBC

Moody's Investors Service on Thursday stripped the insurance arms of Ambac Financial Group and MBIA of their AAA ratings, citing their impaired ability to raise capital and write new business.

The monoliners Ambac and MBIA have also been downgraded by Moody's. That will cost banks up to $60 bil, since they have to mark down all their mortgage-related bonds and derivatives accordingly. Citigroup was the only one to admit the consequences so far.

Excerpt from Bloomberg:

June 19 (Bloomberg) -- Citigroup Inc., the bank that's lost more than any other in the collapse of the mortgage market, fell in New York trading after predicting ``substantial'' additional writedowns and more losses on consumer loans. ``We will continue to have substantial additional marks on our subprime exposure this quarter,'' Crittenden said on the call, which was sponsored by Deutsche Bank AG. ``We may continue to see the magnitude of the marks decline, as the exposures that we have have declined.''

This remark does not describe the full impact, since it is not only effecting subprime products and the exposure that Citigroup was beyond $300 bil. with $44bil. of write downs. So far, it does not match any efficient level, which should be closer to half of its exposure, with foreclosures rising even faster and higher mortgage rates and the prospect of further falling house prices.

Excerpt from Bloomberg:

Poole, who turns 71 this week, led the St. Louis Fed bank for 10 years. He was previously chairman of the economics department at Brown University in Providence, Rhode Island.

``There's a lot of pain yet to come in the real estate sector,'' with house prices falling as much as 20 percent from current levels, Poole said. The Fed shouldn't be held ``hostage'' by a troubled industry that prevents it from raising interest rates, he said.

With higher mortgage rates and a weakening economy, it's hard to see how one gets new buyers into the housing market at all. The 15-20% further decrease in house-prices as Poole estimates seems to be realistic. After the elections, the FED will be forced to hike rates, since their beloved core-inflation is poised to rise sharply going forward. Demand for higher salaries will emerge now with the consumer hit very hard by the real inflation, which is far beyond these statistically cooked numbers. That is the inevitable spiral of inflation, once it's triggered, it's hard to control. At some point, we will see a small crash in Bonds when people realize that current levels are far from reality. That carries the next level of crisis in the banking system, since the way they did it in the early 90's to save the 'bankrupt' banks was to create a steep but stable yield curve, so the banks could earn the spread (they borrowed money at 2% and invested it with 4% - that does not sound like a big thing, however imagine for the $1 million you have you can borrow $20 mil and invest them at 4%. Year-end will show 40% profit on the $1 mil.) and with a big leverage, they could re-capitalize. That was a little incident, the last credit crunch - compared to what we are facing now, a different magnitude, one which is comparable to the late 1920's and it will lead to a market crash in the years 2009-2012.

Excerpt from CNBC:

A report on Wednesday showed rates for 30-year fixed rate mortgages -- which closely track the 10-year Treasury -- averaged 6.57 percent in the week ended June 13, up 33 basis points and the highest since July 2007.

The ignorance of most people is amazing but we are now in a stage which might be called a shock, since the ongoing events, which the Bush administration plays down so eagerly, are so severe that everyone's life will be impacted and changed dramatically within the next 2-3 years. This is not one of those cases which will just pass us by and life falls back into its old happy routine. It will take a whole generation to sort it out and the world will not be the same when we are done with it -- I hope for the better. We have reached the point of no return and soon the point of pain will trigger many events, which already are growing slowly. One of these is that the people will revolt against their governments, since those governments have not worked for their people anyway.

Interestingly, I received a video send by a friend, which is an ad for a carmaker - I think it shows the "Zeitgeist" we are heading for - its called 'Revolution'.

http://www.myvideo.de/watch/3805872/Dacia_Logan_Revolution_http_www_1ro_de

Astrologically, it is even amazingly exact on the day of the US elections. On this day, Uranus will be opposite Saturn, which we had last in the mid 60's - you might recall what happened around that time. This time is a bit different since Pluto will be in a T-Square soon after (2010) to both Uranus and Saturn - we had a similar position (in 1931/2) and we all remember the implications, from the depression up to WWII. The 'globalization' is over and we are heading for times of nationalism and the surge in military powers and conflicts. The different thing this time is that, according to the Mayan calendar, we reach the end of the 4th world (26000 year cycle) in order to enter the new 5th.

http://www.13moon.com/prophecy%20page.htm

Even if you even have real interest for the 'esoteric', just by common sense - not listening to the blabbering of the media (propaganda) - you come to the same conclusion. Like it says in an old famous song, "…there is some trouble ahead, ... let's face the music and dance...".

Crisis is always the chance for the better – it's a part of the whole cycle

technical update for US stocks/lehman

Lehman is about to bottom out - my call was for low 20's and we will get a intermediate bottom in the 20 area. Interestingly enough this spike moves indicate usually a follow-up move. The 20,25 low of 17th march should be the low within 2-3 weeks. This will mark the low for all the US market with the DOW heading for 11700 area and the SPX for our target of 1300/10 area. The BKX has made the minimum low requirement with a TD combo 13 around 63 but the bottoming process will take another 2-3 weeks for financials. Some indicators are already getting close to severe oversold levels with the Rydex Nova/Ursa dropping from .92 to .74. As soon as we are beneath .70 levels one should be alerted. Investor Intelligence bulls dropped to 36,3% and bears surged to 37,4% that is a yellow alert level in March the figures were far more extreme with 31 bulls and 44 bears, so we have some margin still left - other more technical indicators suggest similar results we are not in red alert territory yet. Oil which needs still another 1-2 weeks to top out confirms the scenario.

technical update for oil

Oil is in the final stage to make an intermediate top


Expecting a little blow-off, taking out some short positions above 140 within 1-2 weeks in a volatile manner. Tops tend to be harder to read than bottoms. Basically the characteristic is to wipe out a lot of short term traders either way and the down-move starts in a manner most people miss out on typically. We will drop toward 100 the next 3 months - remember the FED said everything is gonna be fine next quarter. 100-110 is after a 70$ surge the area of a 38,2% to 50% retracement. The Dollar confirms the picture with a stronger bias going forward, heading for 1.45-1.50.

oil , steals and the next president approval committee

I just heard energy secretary, Samuel Bodman, telling the same pathetic argument again supply demand tight, thats why oil is so high. So the 260 bil index fund money getting in the last years had no impact?? Mr. Bodman worked for Fidelity (a big mutual fund company for a long time) thats very obscure he was part of the early version of (index funds) - strange that he left in 87 (the crash year) - but he has more the making of an lobbyist and was taking into his position in Jan 2005 - why would Mr. Bush change secrateries before the bull market for oil got into a bubble gear?

http://en.wikipedia.org/wiki/Samuel_W._Bodman
From there, Secretary Bodman went to Fidelity Venture Associates, a division of the Fidelity Investments. In 1983 he was named President and Chief Operating Officer of Fidelity Investments and a Director of the Fidelity Group of Mutual Funds. In 1987, he joined Cabot Corporation, a Boston-based Fortune 300 company with global business activities in specialty chemicals and materials, where he served as Chairman, Chief Executive Officer, and a Director.

Supply demand are the same we had last year 84,7 mil. barrel demand to 85 mil barrel a day supply - only the price was around 70$. Misleading information to put it diplomatically has become the standard in the Bush administration - well actually its more a global experience to be honest. The 'nice' thing is to lift the offshore-drilling ban before he leaves office - a nice present for his buddies from Texas to make some 'little' extra money.

http://www.cnbc.com/id/25211297
JPMorgan Chase: We Got Bear Stearns on the Cheap
JPM's top investment banking executives conceded yesterday that their acquisition of Bear Stearns was worth far more than the rock-bottom $10 a share price they paid, but that the market turmoil is still taking a toll on investment-banking profits and may result in further layoffs, CNBC has learned.

JPM admitts that the purchase of BSC was a steal with help of the FED - that is a scandal by itself, since had the FED introduced the borrowing facility a few days earlier that would never have happened. The most amazing thing here is, in a congress hearing a few days earlier Bernanke said that it was not possible to open up that facility. The FED takes the hit for 29 bil. the 1 bil. JPM needs to pay in case of losses they make next year from operational profit. They sacked in something between 15-20 bil. in value .

The recent Bilderberger meeting was June 5-8 Chantilly, Virginia, United States

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=66442
Since a crucial election is on the agenda and the biggest financial crisis in 80 years its an appropriate place to gather and mingle. In the above link is a discussion if Obama secretively joined the Bilderberg meeting since he landed at Dulles airport which is 3 miles away from
the Westfields Marriott Hotel in Chantilly, where Henry Kissinger and David Rockefeller, among other globalists, are gathered for the annual Bilderberg Group conference.

excerpt

Additionally, a list of the conference's attendees was released and included James A. Johnson, who was named this week to the three-person team vetting possible running mates for Obama. Rampant speculation in the blogosphere says the Obama-Clinton meeting last night was held to arrange the New York senator as Obama's vice-presidential candidate.

Attendees at the Bilderberg conference included Secretary of State Condoleezza Rice, former Senate majority leader Tom Daschle and Ben Bernanke, the chairman of the board of governors for the Federal Reserve.

Hillary Clinton is no stranger to Bilderberg. Bill Clinton attended the 1991 meeting in Germany shortly before he was elected president. According to reports, he attended again in 1999 when the meeting was held in Sintra, Portugal, and Hillary herself may have attended the 2006 meeting in Ottawa, Canada.

"Why were we not told about this meeting until we were on the plane, the doors were shut and the plane was about to taxi to take off?" one reporter asked Obama spokesman Gibbs in a heated exchange caught on camera by CNN.

"Senator Obama had a desire to do some meetings, others had a desire to meet with him tonight in a private way, and that is what we are doing." Gibbs replied.

"Is there more than one meeting, is there more than one person with whom he is meeting?" asked another reporter.

"I am not going to get into all the details of the meeting." Gibbs replied.

Obama's spokesman explained the Clinton meeting was not planned in advance, and it was a last minute decision to attend.

The above mentioned Mr. Johnson (ex CEO of Fannie Mae who left in a scandal) was fired from the Obama committee because of another scandal involving favors from Countrywide.
excerpt from the NYT

Obama Aide Quits Under Fire for His Business Ties

http://www.nytimes.com/2008/06/12/us/politics/12veep.html?_r=1&scp=1&sq=johnson+obama&st=nyt&oref=slogin

http://www.atimes.com/atimes/Middle_East/EE22Ak03.html

read the article since mostly the next president is invited to the meeting first time, I am pretty sure McCain or Obama will be invited . It seems Obama was invited but in a not official way.

shocking (calls) - The Bilderberger myth part 1

After the aggressive call of RBS that the S&P 500 will drop 25% in the next weeks and Mr. Paulson's estimate that write-downs will be closer to $1,3 tril (close to world banks estimate of $1 tril.) but still not matching my call of $2 tril. Let's put it into perspective. The current $450bil. has destroyed the earnings of decades and, technically, most banks are bankrupt and only survive due to reluctant accounting allowance. The FED even borrows money for toilet paper, as long it comes from a bank and has a coupon (interest) on it.

http://en.wikipedia.org/wiki/Bilderberg_Group

Even more extreme things have been said less official, of which half have become true. In the following, some excerpts from an interview Mr. Estulin says that Kissinger has called for the oil price to go up to $120-150 (said before May 2005). Anyone by that time might have been called insane but, as a matter of fact, he turned out to be right. The second point of the Bilderberger, where Mr. Kissinger is one of the first and most important members, seems to have interest in throwing the world into a severe crisis, causing a financial disaster. Well, we are on the way to disaster, although the media ignores the facts and still Goldilocks' cheerleaders blabber the mantra of the last decade that the only way is up. We are in the most severe crisis since the depression - banks have caused trillions of losses up to now and the US administration makes the pathetic approach to save the day with throwing in $160 billion. If they had the same commitment to this biggest terrorist attack on the world economy they showed while hunting some evil Iraqi guys, it might look different now. The ignorance of the FED, Treasury Secretary (Summer/Paulson) and Bush put the system into the brink of depression.

Excerpts from

ALEX JONES INTERVIEWS DANIEL ESTULIN

Infowars.com | MAY 27, 2005

http://www.infowars.com/articles/interviews/estulin_daniel_05_27_05.htm

DE: I mean this is one of the most terrifying conferences I think in history at least the 13 years that I’ve been covering it. One of the biggest concerns that these people have is needless to say energy and you can expect over the next couple of years the price of oil to up to about $120 to $150 a barrel—

DE: Just a couple of things. Well first of all just to finish up on the stuff on the energy conclusion based on what these people are saying we can expect a severe downturn in the world’s economy over the next couple of years as they people try to safeguard the remaining oil supply by taking money out of peoples hands in a recession or worse a depression—

DE: Exactly. On page nine of that report, I think the second or third last paragraph of the page they’re talking about eliminating three billion people in the world and 100 million American’s before the end of 2050.

The last call is something cruising around now for years but current developments suggests it may occur in one or the other way. The cause for inflation, especially food inflation is exactly the reason why most wars occurred over the centuries .If food is not available for the broad masses they will revolt - the Chinese are very much aware of that, the western world takes it for granted that basic needs are covered with ample supply.
That might change easily since the newest generation of fertilizers is high- tech genetical or nano-technical developed fertilizer material and has a so called "killer- gen" engineered, which destroys the function after one harvest. if the original supplier does not deliver the next generation which carries the antigen no crop will grow on that soil and only the one specific can trigger the next crop growing. This stuff was delivered to second and third world countries for free by USAID and other so called multinational organizations. Basically if the producer decides to stop supply that country is screwed. The total control of basic food supply is arranged.

Africa's population is poised to be melted down by virus 'Aids' and other diseases, over time, which is also true for the poor regions of Asia - in the aftermath in cases like BURMA we might be looking for millions of deaths. Starvation will be a big issue coming up on top of what happens anyway only on a bigger scale. So there are plenty of 'natural' events and trends which might carry out this ambitions if they existed.

The decline RBS called for is not imminent - I still expect a Q3 rally and the decline they call for to come after elections. What will 'crash' 25% is oil in the next months since that will calm down peoples anxieties. Today is full moon on Pluto and that is always a moment of rising fear - that is exactly what we see right now and will work for a few days.

Turkey special - a manipulative 'Economist'

Beneath the headlines from the latest 'Economist' concerning Turkey and it is amazing that so many people from the EU commission take interest in the internal affairs of the Turkish Supreme Court. How would a 'journalist' working for a Rothschild dis-information media know what is good for any democracy, quoting such pathetic arguments like 47% have voted for the ruling AKP. More than half of Turkey lives in rural areas with a basic time frame life dating back 100 years. In those areas, we can barely speak of democracy at all since some 'warlords' decide what happens and who votes for whom. Women basically have no calls, just to do how they are ordered by family in these regions. The other half of the population, which lives in overcrowded Istanbul with 20 mil. inhabitants (70 mil. is the approx. total count) have a similar standard of education close to none. The systematic approach to get people voting in the rural regions is to buy their votes with some give-aways (that varies from rice, coal, to pardoning their abuse of the local electricity supply). The ruling party has cultivated a very religious state, which is the taste of rural people.

Excerpt from http://www.economist.com/opinion/displaystory.cfm?story_id=11535670

Turkey

A tragedy in the making

Jun 12th 2008
From The Economist print edition

The likelihood of a ban on the ruling party is growing. It would be a disastrous mistake

A constitutional crisis in Turkey would have grave international repercussions, too. It is hard to see how the EU could continue membership talks with a country that had banned its biggest party and its leaders. Opponents of Turkish membership would leap at the chance to stop the talks starting again. Renewed restiveness among Kurds could spill into northern Iraq: some Turkish generals say they would like to expand operations against Kurdish terrorists based there. And a crisis in Turkey would surely halt the hesitant first steps being taken towards settling the Cyprus dispute.

A substantial amount of MP's from the AKP have pending investigations or lawsuits, which cannot be progressed due to their immunity. The opposition leader has urged them to lift immunity since it also refers to the highest ranks - that has been true for Turkey in general over all parties and decades but if the EU takes any interest in supporting democratic standards that should move up in priority.

Instead the EU has members like Italy in its ranks, where democracy has become close to what it was it times of Ceasar - an empty facade. Berlusconi has left no grace to EU standards of democracy and even countries like Germany have deteriorated sharply in their standards with MP's more concerned about their next raise then dealing with the important issues like the biggest lie of the last government that retirement payments are safe. Most developed countries have a demographic problem, which will lead to disaster - big disaster - since the population is growing older with fewer births and their social security systems being inevitably bankrupt in a decade.

The EU parliament is a place of corruption, greed and unfaithful behavior. European Union MP's, which have double the salaries of German MP's hire family members for their staff because they have ridiculously high allowances. These people do not even show up for work. If you can stamp a card on Friday morning at 7 or 8 a.m you get an extra day of pay of a few hundred Euro for expenses and quite some MP's are not ashamed to do that before they head to the airport to fly back home shortly thereafter (one MP tried to illuminate that problem – I saw it on a German TV show it but was never taken notice of, up to that time).

Another example was the hype the produces before the last German election, the Economist glorified Mrs. Merkel as an iron-lady myth before her election, which is far from anything which can be called reality. On my count, I gave them a lot of chances to gather some inside information but you always start reading an article with high hopes and end up reading superficial blabbering and a manipulation attempt to sell their ideas..

The valuation trap

First of all, Goldman came in better than expected, but one should be aware of two crucial facts: investment banks can cook books better than anyone, since they have a lot of tier 2, tier 3 capital (valued with obscure prices) and off the balance sheet assets; and they can swap things away for a time (make them invisible). So Goldman had a positive momentum caused by rivaling Bear Stearns. Lehman problems, gaining plenty of their business and clients since other rivals like Merrill are also struggling, had a lot of Hedge Fund business coming their way in Prime brokerage and M&A and still yesterday (or in the last few days), they seem to have fired hundreds of VPs from investment banking. If the leader eliminates, then trouble is ahead. The other positive factor is that they are a leader in the commodity game and also picked up good business through the high interest and volatility. The same applies with a softer tone for Morgan Stanley, which is why the earnings expectations are a bit too low for both this quarter.

The valuation, which we hear so much of, is a bullshiting game, since a lot of parameters in statistical models have changed. Nevertheless, they keep referring to them and the worst part still is that the interpretation is dead wrong anyway. Beneath a valuation model based on inflation, thereby the inflation used over 60 years, is not the same inflation. As even Bill Gross from Pimco admitted, the Government does understate inflation, the model was changed two times. The last time under Clinton/Greenspan, understating inflation by 3% approx. to the official issued ones and, I believe, under Reagan it was downsized another 1-2 % - so real inflation is closer to 7-8%, which would suggest that PE average for the S&P 500 should be single digit. That would mean we had to shave off 1/3 of current value and bring us to an SPX around 900. That is for current earnings. However, we can expect dropping earnings going forward, so potential is towards 700 and that is pretty much where we are heading within 2 years, if the banking world survives as it is, which I doubt.

Excerpt from Barrons

But one of the many obstacles facing the stock market is that, by some key measures, it is close to what is known as "fair value."

In other words, stocks aren't supercheap, but they are not expensive either -- they are right about where they ought to be for some time to come. If those readings are accurate, investors should keep their hopes for a modest rebound.

"The market is pretty fairly priced," says Gail Dudack, a longtime market watcher and founder of Dudack Research Group.

The Standard & Poor's 500-stock index closed Friday at 1360.03, and most analysts see it ending the year between 1400 and 1500. While that would represent a gain of roughly 3% to 10% from here, an S&P at 1400 would be down between 4% and 5% for the year, and an index at 1500 would be up only a bit more than 2%.

The so called Fed Model also developed by Greenspan (very creative man) is also based 10 year US Treasury note - remember that is based on a totally undervalued inflation - and one year forward earnings of the S&P500. Based on authentic inflation it would make sense to a degree but the model would change dramatically with a 10 year trading at 8% interest, where it should be. Since everybody needs to do something for his retirement the investment funds are happy to invest according to that systematic approach since it also worked out for a while. The most pathetic thing also promoted by media was this core-inflation game - in the real world and thats the only thing that counts core inflation does not help you to pay off your higher bills. This brainwashing campaign was quite a nasty game since the purpose was to reduce labour cost by understating inflation thats a basic effect of globalisation. The buying bower was falling constantly but people, at least in America had the impression of rising wealth with stockmarkets and real estate markets gaining value. Now they have a double shock experience inflation explodes into heir face and the wealth they believed they would posses does not exist. Right now we are still in a phase of ignorance although the pain is spreading out.

The final effect of inflation is that stock markets tend to rise in the beginning, since inflation means ample liquidity, but on the other hand the current inflation is accompanied by a huge value destruction: house value; stock value; and buying value is destroyed (especially now with interest far below inflation - negative interest) and the never-seen mass destruction of money by banks in the mortgage meltdown. Currently, we are at $450 bil., but we are heading for at least $1 tril if not $2 tril. in bank capital. This by itself does not worry me but the value of savings from US households are at around $54 tril., down by $3-4 tril. from the top. I am afraid that we are heading for a more substantial losses in the years ahead. The FED allowed the banks to speculate excessively with leverages over 30 for investment banks and banks having funded the housing bubble, which Mr. Greenspan denies ever existed. It would take years and a great amount of pain to sort it out under normal conditions but in a cycle term we are heading for a depression.

http://www.investopedia.com/articles/03/112703.asp

After the major bear market plunges of 2000, 2001 and 2002, the model finally began to show the S&P 500 as undervalued. This occurred during the big swoon lower that started the summer of 2002 and continued into the month of October, as can be seen in Figure 2. But the rally of 2003 has made the S&P 500 considerably less undervalued than was the case in March this year (when the Fed Model showed the S&P 500 over 700 points undervalued). The S&P 500 remains, therefore, from a relative value perspective still a buy, according to the Fed Model. However, there are some underlying dynamics at work in the model's variables that lead to some interesting paradoxes.

Figure 1 - S&P 500 Fair value according to the Fed model's valuation Source: MetaStock Professional

The Midas touch - divirgence in the banks

Goldman has the midas touch, used to be the myth about Dick Fuld the CEO of Lehman who seems to have lost it. Goldman has done far better than all its peers so far and due to good infrastructure work at least as long as the Bush administration is at work they keep it. They have managed to spread their fomer top people around on very insightful places. Paulson is Treasury secretary , the man responsible for all capital market transactions at the FED is a former high ranking Goldman partner they have Governors and the top 3 men at Merrill are from Goldman's top ranks.
Its a bit the Rothschild way he
also was always ahead of the crowd then it came to information gathering he even bought the early Reuters to get the news before anyone else which gave him the winning edge. The advanced version would be to create the news - a real good movie about that is 'Wag The Dog' with Dustin Hoffman and Robert De Niro.

The BKX made the new lows as expected and even broke below the 70 support , which it might try to retest these days but the XBD turn around at the 150 support before retesting the lows which was a bit short of my assumption so far. We will have a bit of strength the next days with a lot of manipulation in the expiration week since tons of puts on banks are due which need to be erased.

We are in a tricky situation right now with mixed signals but the market was so oversold that it keeps rising even on bad news which was triggered by Tech and Broker/Bank stocks on Friday. NDX outperforming to the upside is positive momentum - I expected an upside turn into this week but the magnitude is a bit stronger than I thought. I need to see a neutral weekly close to be confident on the 1310 target SPX - but some astrological influences are quite confusing right now. The Friday/Monday turn was triggered by a SUN/Venus square to Uranus which is indeed suggesting sudden volatile turns in markets. We are heading for a full moon with Sun opposite Pluto before on Wednesday Venus will be opposite Pluto which is rather unpleasant energy.

GS and MS earning today will support the upside with no negative surprises I assume. GS has a better balanced book than all its peers for now and MS made plenty money with raising the money for all the broke banks over 300 bil. and both have a strong commodity department which is still booming.

All together we should have a weaker second half of the weak usually if the bear trend is accurate the 4th day should not be exceeded as upside counts and Wednesday is likely to be weak with today staying strong but not like the last two trading days. A basically volatile comes from Uranus going stationary on 26th of June in sextile to Jupiter exaggeration of volatility and natural events like earthquakes are likely.

The next point is from a cycle and fundamental point of view the time for falling markets is running out slowly. End June- early July is the time a new bull campaign should start slowly. The first step is to stop the inflationary momentum by turning the oil around - which right now the dear friends of the Bush family , the Saudi Arabian Kingdom is trying to initiate. Second part is to strengthen the Dollar but the ECB (Europe's central bank) is jeopardizing that by signaling rate hikes thats why Bernanke is countering that effort by signaling the same ambition and the market priced it in already it seems. I doubt they raise rates before election but they will create urgency and inflation is in full rising momentum. We will be in a very volatile triple witching week which should be neutral at the end with a weaker week thereafter.

Have a good week

oil and other fortunes - part 1

King Abdullah (Saudi Arabia) is one of the 5 richest people on this planet - people like Buffett and Gates are far below in the hierachy although the Forbes magazines famous list does show different. A simple math exercise will prove them wrong. The cost to get a barrel to the ship will cost him around 20 $ ( thats a generous assumption)

http://www.gravmag.com/oil.html#seven

"Production cost" includes a world-wide average of US $7.35 per barrel in finding costs, $3.57 per barrel in lifting cost (what it takes to operate a producing well), and $1.00 in production taxes per barrel. 2003 numbers from EIA.

According to that figure, its more like 12$ but lets stick to 20$ since the quality of Saudi oil is getting poorer (higher Sulphur component) and right now they sell it above 130$ that gives him a margin of 110$ times 9,5 Mil. barrels a day makes a profit of 1045 Mil. or rounded down 1 Bil. Dollar a day. Keep it up for a month and you made 75% what Buffett made over his life in a month.J.R. Ewing a fictive figure from a TV show would have done anything for that?!

Now the supply and the demand are pretty much unchanged since last year around 84,5 Million barrel a day demand and 84,7 supply last year the price was oscillating around 70$ and now we reached the double price level and still the media propaganda machine keeps repeating its the physical demand moving prices up

Excerpt NYT

Plan Would Lift Saudi Oil Output to Highest Ever

Saudi Arabia, the world’s biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.

King Abdullah has called a meeting to address the causes of the oil price rally

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia.

Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.

While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.

Well suddenly the OPEC who never saw a reason to rise the output - why should they , they make a killing was supported by the US government who were eager to raise strategic reserves in this stampede rally, has the interest of the world at heart. McCain is the first Republican to admit that there is a sort of market manipulation, Pickens the famous oil speculator is calling for higher prices and joins the mantra that the demand is driving prices - keep in mind this man is investing double digit Bil.Dollars in alternative energy (wind ) and that only works out if prices stays above 100$.

To put it into a different perspective the current price at 130$ make it a 4 Tril. a year industry for the raw material (just oil - natural gas is a second line of interest). In the following an older statistic just to give an idea how much it adds up until it reaches retail - for the sake of it lets assume an average 60% in costs or financial interest ( USA - varies to the upside in the most countries due to higher taxes) on top and we are at 6,5 Tril. - the GDP of America 2007 was 13.84 Tril.

Well in history that was enough of a motive to start wars and the reason why the Arabic sovereign funds are throwing money at bankrupt US banks is partly a kickback - the banks created the idea of index funds which doubled the crude price making a difference of 2 Tril. in profits the financing ( new capital for banks) of 300 Bil. - so far is a small price. It will only come at a high price for the US taxpayer since the cost for the Iraq war will easily exceed 1 Tril. plus the not random cost of living will have a severe impact on their average lifestyle.

Compared to 1981, inflation adjusted-prices today are 27 cents CHEAPER than the $3.11 all-time high (inflation-adjusted) gasoline cost in March 1981. For one example of a 1979-2005 inflation-adjusted and nominal price chart for gasoline,

actually I had here a graph showing the composition of gasoline but instead it showed a guy jerking off - another sign how evil and pervert this world has become http://www.gravmag.com/oil.html#seven - the link which is responsible for this graph- I am sorry for this discomfort

Finally one can say the Iraq war paid handsomely for some people and in an historic perspective, if the Ottoman empire (Turkey is the leftover) would still exist they would made a fortune these days commanding over 50% of the oil exploration but it seems to be dangerous to mess with Rothshild's. They offered the Ottoman emperor once to let go off all he owed them in order to get Palestine what he dismissed and the empire ended in disaster within a short time.

The other big oil player Russia had also an interesting timing in an historic context and here we also will find some of the richest people even not mentioned officially - with the latest one being ex-President and current Prime Minister Putin. He is said to have stocks worth of 40 Bil. $ in some Lichtenstein Holdings. During the crucial times when the communism collapsed the man in command was Yelsin and his family owns incredibly riches (not mentioned in any lists) which was organized by his daughter Tatiana, she made an Abramowitsch - who was a nobody - to whom he is today and as in many cases just created. He started out at 'Runican' a swiss oil broker and had suddenly some cheap amounts of oil at his hand which Tatiana (she might be in the secret richest top 5 list as well) organized for him. The Yelsin's made a simple transfer of money out of the Russia by selling to their outside outlets ( companies founded outside with their people sitting in there to make fortunes for them) oil far below market price so all they needed to do to sell it at market price.

Over 50% of the richest Billionaires in Russia have a Jewish orign and its striking that they got in control of this big fortunes so quickly. Basically it seems we have two powerful groups in Russia which are fighting for power and some had to flee like Abramovich after Khaidarkovoskiy (owner of Yukos) was crashed by the Putin group for his ambitions in politics and the power balance was changed. That Abramovich owns the soccer club Chelsea and spends this insane sums to form this high profile team is said to be part of his life insurance strategy. He got so much attention through this and popularity in Britain that any assassination attempt would be to obvious and he belongs to the Yelsin group http://www.netstudien.de/Russland/jelzin.htm Although it is said he brought Yelsin to power ( a conglomerate with Beresowski, Tschubais, Gussinski ,Mamut and Abramovich) supported his reelection in 1996. Oil at 11$ the barrel in 1998 was a reason for the collapse of Russia's finances and caused a worldwide collapse of financial markets triggered by the break down of LTCM ( a hedge fund which had invested in various credit strategies based on normalising yield curves) gave the Putin group momentum - who was in the beginning also supported by Yelsin in exchange for his obscure Immunity deal. Basically all Billionaires acted out the same simple way which all second tier or third world countries do they get big companies or deals from the state more or less for free ( basically stealing) in obscure schemes working together with parts of the administration.

strange things are going on

First off all whats going on with American tomatoes?? Contamination - means no proper burgers anymore - is someone undermining the US way of life?

In one way or the other, a rigid regulation about market manipulation in commodities has to come with the next administration since Mr. Bush will veto any attempt during his ruling. But more importantly short term to prevent, we will see in Q3 falling oil prices anyway in order to prevent tougher regulation but more so to get the voters in a better mood to vote for McCain. To achieve that oil respectively gasoline prices need to drop and the stockmarket to rise. Thats why the Bush administration is suddenly supporting a strong Dollar to turnaround commodity prices temporarily and give the stockmarket a boost. I am confident they will be successful in turning the markets around for the time July-November. Worst case they use the strategic reserves and they have a good argument since they do it to the benefit of the people??

The technical picture shows the bottom should come early July and confirms that fundamental scenario plus as I have stated earlier its more fun to get markets up with a lot new shorts in there since the first part is to squeeze them out the second part is to deliver some fundamentals to get the hesitating long only funds and retailers to jump on board. For everybody still long that will be a present to get out - actually the last exit to get out on decent levels. We have a good chance to get close to the highs or even exceed them slightly in Q4 but that we will address when its due, for now the bear campaign has still a bit to go.

Excerpt from NYT
They are being blamed for high gas prices, soaring grocery bills and volatile commodity markets, and lawmakers are lashing out at market regulators for not cracking down on them more vigorously.

“You study it, but you don’t act against this incredible increase in speculation,” Senator Carl Levin, Democrat of Michigan, complained to a senior official of the Commodity Futures Trading Commission at a recent Senate hearing. “Unless the C.F.T.C. is going to act against speculation, we don’t have a cop on the beat.”

Just this week, Senator Joseph I. Lieberman, the Connecticut independent, said he was working on a proposal to ban large institutional investors from the commodity markets entirely. The same day, the Bush administration endorsed another Senate proposal to create a new federal interagency task force to investigate commodity speculation. At least four public hearings have explored the topic in just the last two months, and Senator Lieberman will hold another session on June 24.

Shows like CNBC have geared up into propaganda machines with a mission to dis-inform people. 'Cramer' has such a poor track record with his calls or this chief Goldilocks cheerleader 'Kudlow' on a trading floor they would not exist anymore lacking any positive performance. On the other hand seeing the calls of the so-called experts isn't any better - remember around the highs Goldman Merrill and UBS called for the big summer rally. What the hack do they think a journalist is - they could at least try to be one and not talk like hysteric chickens who switch their opinion every week to the taste of the week. One week Goldilocks the next week ultra-bears.

The challenging part is one has to manage to listen to them and not to listen to their blabbering at the same time- little bits and pieces of information can be fished out.

The Biggest disappointment of the week comes from Obama
excerpt from NYT

Jason Furman, 37, became the economic policy director for Barack Obama's presidential campaign in June 2008.

In some Democratic circles, his appointment was seen a sign that Mr. Obama will not stray too far to the left on economic issues. Before joining the campaign, Mr. Furman was at the Brookings Institution, where he was head of the Hamilton Project, a centrist, pro-trade economic research group founded by former Treasury Secretary Robert Rubin and affiliated with the Wall Street contingent of the Democratic Party.

Mr. Furman said that he would consult Mr. Rubin as well as Lawrence Summers, another Clinton-era Treasury secretary, and former Federal Reserve Vice Chairman Alan Blinder. The Obama economic team also includes two advisers who are further to the populist left: Jared Bernstein of the Economic Policy Institute and James Galbraith, a University of Texas economist and son of the late John Kenneth Galbraith.

Read More...

In an interview with Bloomberg, Mr. Furman said:``My key mandate, which came directly from the senator, is to bring him a diverse set of voices and ideas, because that's the kind of debate he likes to hear to make up his mind about his economic agenda."

Mr. Furman has advised several Democratic presidential candidates in recent campaigns. But many Democrats are not fans of his because he is known as a defender of Wal-Mart, which, he argues, helps more than it hurts poor Americans. His writings on the subject include a 16-page article released in 2005 titled, "Wal-Mart: A Progressive Success Story" and a debate with Barbara Ehrenreich in Slate in 2006 criticizing the more aggressive tactics of the anti-Wal-Mart movement.

Mr. Furman attended Harvard and the London School of Economics and received a doctorate in economics from Harvard. He worked as an economist in the Clinton administration and at the World Bank.

This guy is a protege of Rubin, current chairman of Citi's board and responsible for one of the biggest financial disasters ( so far they only show 40 Bil. of losses but the real figure is closer to 200 Bil. with upside momentum) and technically a bankrupt bank. Mr. Rubin is an ex-CEO of Goldman and was Treasury Secretary for President Clinton. If they are so smart why did they not see the real estate collapse coming - which was obvious. That is no indication of the 'change' maxim Mr. Obama prides himself of going after. Do not get me wrong I support the idea but I have less confidence except for one thing. I have checked out the birth chart from Obama and one of his character features is that he can pretend to be someone he isn't. Following a old wisdom (was it Sun Zu ? - The Art of War) be close to your friends but even closer to your enemy. But why would he elect a guy like Johnson as an aid - he starts off with a lot of contamination. From an astrological point of view whom ever you hire under Merkur and Neptun retrogade is not the real deal anyway (delusion, lies, phony energy).

Excerpts from NYT

Obama Aide Quits Under Fire for His Business Ties
CHICAGO — James A. Johnson, the consummate Washington insider whom Senator Barack Obama tapped to head his vice-presidential search effort, resigned abruptly on Wednesday to try to silence a growing furor over his business activities.

Mr. Johnson’s departure deprives Mr. Obama of decades of experience and access to Washington’s power elite. Mr. Johnson has been a fixture in Washington political and legal circles for three decades, and he led the vice-presidential search team for Senator John Kerry, the Democrats’ presidential nominee in 2004.

His resignation, at the start of a general election contest in which the candidates have pledged to run issue-based campaigns, came after days of intense scrutiny from the news media and attacks from Senator John McCain and Republican Party officials over mortgages Mr. Johnson, a former chief executive of Fannie Mae, received on favorable terms from the Countrywide Financial Corporation, the mortgage company that was a central player in the subprime lending crisis. Mr. Johnson also faced questions about his role on compensation committees that awarded large payouts to corporate executives.

As chief executive of Fannie Mae, the government-sponsored organization that guarantees mortgages for millions of homeowners, Mr. Johnson earned a lucrative paycheck, even by private-sector standards. In 1998 alone, he earned $21 million, according an analysis by federal regulators.

After Mr. Johnson left in 1998, Fannie Mae was caught up in an accounting scandal in which federal regulators found that the company had manipulated its earnings to provide large bonuses for Fannie Mae executives.

While Mr. Johnson was not implicated in the accounting scandal, federal regulators said he had created a culture of arrogance at the company that contributed to its fall from grace.

In Mr. Johnson’s tenure at Fannie Mae, he became close to Countrywide, the hobbled mortgage lender now at the center of the subprime mortgage crisis. Countrywide was Fannie Mae’s largest mortgage provider, which brought Mr. Johnson into contact with Angelo R. Mozilo, Countrywide’s chief executive.

Through that relationship, Mr. Johnson received three home mortgages totaling at least $2 million at rates that appear to be lower than the prevailing mortgage rates at the time. When the story about the personal mortgages broke in The Wall Street Journal last weekend, Mr. Johnson’s business relationships began to draw greater scrutiny.

In addition, Mr. Johnson served on the boards of a number of corporations that were at the center of a furor over excessive executive compensation, a subject that has been not only a campaign cause for Mr. Obama but also the subject of major legislation he introduced in the Senate to rein in such high-dollar pay packages. Mr. Obama’s “Say on Pay” legislation calls for greater shareholder oversight of executive compensation.

Perhaps the best-known case was Mr. Johnson’s board seat at UnitedHealthcare, a Minneapolis company where he headed the compensation committee. In that position, he oversaw and approved executive pay packages that have since come under fire, even becoming symbols of corporate excess and greed.

again a strange choice of Mr. Obama

Politics was always a dirty game - one has to deal with the realities as they are - but it seems politics are so filthy these days that you can only choose between this kind of guys?? Although I like the show 'West Wing' which shows how nice it could be with honest people - reality is different. Lets see who his running mate is going to be.

Pimco (one of the biggest fixed income managers) has stated on two occasions that the US government understates inflation - thats true but not new and their top adviser Mr Greenspan had an crucial role in setting that up.