RE: [Vo]:The (possible) oil peak rolls on
Hi all, This is the first time I post on this message board, so please be gentle =) I just wanted to provide an outside view on the rising oil prices. To me it seems like the value of $ has been dropping and if you look at the increased price of oil and compare it to the falling value of the dollar the two do seem to correlate very nicely... If I buy oil in SEK or Euro the oil prices has almost stood still... So are oil prices really climbing or is the dollar falling? Regards Andreas -Original Message- From: Robin van Spaandonk [mailto:[EMAIL PROTECTED] Sent: den 21 april 2008 00:23 To: vortex-l@eskimo.com Subject: Re: [Vo]:The (possible) oil peak rolls on In reply to Taylor J. Smith's message of Sun, 20 Apr 2008 17:58:37 +: Hi, [snip] I'm sure if lemmings could talk, they would have very good reasons for marching into the ocean. [snip] Apparently that film was a fake. Lemmings don't actually march into the ocean. It seems only humans are that stupid. ;) Regards, Robin van Spaandonk The shrub is a plant.
RE: [Vo]:The (possible) oil peak rolls on
collapsing dollar: http://finance.yahoo.com/q/bc?s=CLK08.NYMt=5d $177/barrel as of this morning...similar trends with other commodities [EMAIL PROTECTED] wrote: Hi all, This is the first time I post on this message board, so please be gentle =) I just wanted to provide an outside view on the rising oil prices. To me it seems like the value of $ has been dropping and if you look at the increased price of oil and compare it to the falling value of the dollar the two do seem to correlate very nicely... If I buy oil in SEK or Euro the oil prices has almost stood still... So are oil prices really climbing or is the dollar falling? Regards Andreas -Original Message- From: Robin van Spaandonk [mailto:[EMAIL PROTECTED] Sent: den 21 april 2008 00:23 To: vortex-l@eskimo.com Subject: Re: [Vo]:The (possible) oil peak rolls on In reply to Taylor J. Smith's message of Sun, 20 Apr 2008 17:58:37 +: Hi, [snip] I'm sure if lemmings could talk, they would have very good reasons for marching into the ocean. [snip] Apparently that film was a fake. Lemmings don't actually march into the ocean. It seems only humans are that stupid. ;) Regards, Robin van Spaandonk The shrub is a plant.
Re: [Vo]:The (possible) oil peak rolls on
Andreas wrote, If I buy oil in SEK or Euro the oil prices has almost stood still... So are oil prices really climbing or is the dollar falling? Howdy Andreas, You peeked ! One must understand that in order to enjoy watching the Wizard of Oz, one must accept the rules of the game... do not look behind the curtain or the wizard will be exposed, That is like a novice being invited to sit in at a game of monopoly.. It must be explained to the novice that the play money is real or the game holds neither virtue nor advantage. Think about the Federal Reserve system. If we didn't have it, we would need to invent it. Problem is as always, people get fat and lazy with riches. The Fed was only designed to survive a single generation, after that who cares. However , the first law of the Dime Box saloon's professor of the P.T.Barnum distinguished chair of financial theories is based on proven evidence that .. the strong take it away from the weak and the smart take it away from the strong. Those poor dumb Chinamen never should have let Marco Polo past the gate of the great wall cuz when Marco came back with the formula for pasta... well..that got the Mafia started and Marco opened his first internet spagetti house fronted by a gangster named Robin, as in Robin Hood.. conspiracy theorists link Marco and Robin.. why not? no self respecting robber would be dumb enough to share with the poor, just ask ole Mugabe down at the hood. Gosh ! Andreas , didn't yo mamma teach you nuthin, Richard
Re: [Vo]:The (possible) oil peak rolls on
[EMAIL PROTECTED] wrote: Hi all, This is the first time I post on this message board, so please be gentle =) I just wanted to provide an outside view on the rising oil prices. To me it seems like the value of $ has been dropping and if you look at the increased price of oil and compare it to the falling value of the dollar the two do seem to correlate very nicely... If I buy oil in SEK or Euro the oil prices has almost stood still... So are oil prices really climbing or is the dollar falling? The Economist had an article on this just a few days ago. This question is harder to answer than it seems. Like many questions where one would like to find a sound bite answer, there isn't one. It's not trivial to define the value of the dollar. There's more than one way to measure inflation. However, the two most common measures, which use the consumer or producer price indices, incorporate the price of oil in the definition of the value of the dollar -- and that's circular when we're trying to determine the cost of oil! In fact, the total fraction of world income spent on oil is still substantially smaller today than it was back in the early 1980's, which probably explains why markets in the developed world have mostly not shown all that much impact from the high oil prices as yet. On the other hand, in my personal opinion oil is heading for $200/bbl, probably within a year. Once it gets that high it will have passed all previous peaks no matter how they're measured, and I think we're going to see some severe consequences. Anyhow here's the relevant text from the Economist's article, which is brief: * *Crude estimates* Apr 17th 2008 From The Economist print edition *The price of oil has soared to a new high, hasn't it?* A CASUAL observer might be forgiven for thinking that the oil price reached a new record, of $115.07 a barrel, on April 16th. And so it did, in nominal terms. But by other measures, oil is not quite as expensive as it seems. That, in turn, may go some way towards explaining why demand for oil continues to rise in many countries, despite prices that would have been unimaginable just a few years ago. Michael Lewis of Deutsche Bank has come up with several different ways of comparing past and present oil prices. The first step is to account for inflation. But what measure of inflation is most suitable? If historic prices are inflated in line with America's producer-price index, the previous record, struck in the early 1980s, would be the equivalent of $94 in today's money—a level exceeded some months ago. But if the consumer-price index were used instead, oil would need to climb to $118 to hit a record. But an adjustment for inflation, however it is measured, takes no account of the growth in Western consumers' incomes over the years. Back in 1981, the annual average income within the Group of Seven countries would have been enough to buy only 318 barrels of oil. To set back Western consumers by the equivalent today, Deutsche Bank calculates, the price of oil would have to rise to $134 a barrel. By the same token, the American government reckons that energy ate up its biggest share of Americans' disposable income in 1980: 8% compared with about 6.6% now. To drive spending on energy to the same level again, says Deutsche, the price of crude would have to rise to $145. Spending on oil as a share of global output, which is about 3.5%, also peaked in 1980, at 5.9%. Other things being equal, oil will not swallow as big a share of the world's GDP unless the price reaches $150 a barrel.
Re: [Vo]:The (possible) oil peak rolls on
On Fri, Apr 18, 2008, Edmund Storms wrote: I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. 4. The fed generated inflation will reduce consumer spending. 5. Loss of jobs will reduce consumer spending. Consumer spending determines the profit of companies. So, why then is the stock market going up? Hi Ed, One approach to this question is to view stock market performance as extrinsic, a symptom of something else. Stalin ordered the economist Kontratieff (Kondratiev) to prove that capitalism had a one-way ticket to destruction. Instead, Kondratieff proved with data that capitalism has ups and downs. For this, Stalin sent him to Siberia. Alan Greenspan, who, in Age of Turbulence, says we are in Iraq for the oil [and not to produce it] reveals himself as a fan of Joseph Schumpeter, which makes Greenspan a believer in Kondratieff -- which goes far in explaining the actions of the Federal Reserve during the current Kondratieff trough war. Greenspan's winking at the sub-prime loan business shows his confidence that nothing can derail the upswing, displaying the genius of the Bush administration in being able to have an apparent recession and a war at the same time. (Who just profitted from the recent run on Bear Stearns?) The Kondratieff Wave averages about 55 years. Of course shorter and longer cycles are superimposed on it. The problem with Schumpeter's attribution of the Kondratieff Wave to an innovation cycle is the same problem associated with the positive correlation between ice cream sales and the number of drownings: correlation is not causation. This is made clear by the correlation of the K-wave with a war cycle: 1794, Ohio, The Battle of Fallen Timbers 1846, Oregon, Fifty-Four Forty or Fight Mexico, Remember the Alamo 1898, Havana Harbor, Remember The Maine 1950, Korea, Better Dead than Red (1953 -- The U. S. overthrows the government of Mohammad Mossadeq in Iran.) 2001, New York City, Twin Towers, Bring our enemies to justice, or bring justice to our enemies (2003 -- The U. S. overthrows the government of Saddam Hussein in Iraq.) The above are all K-wave trough wars, hearalding the start of an economic upswing. Then there is always the downside, the bitter wars: 1812, Beginning of the end of the Napoleonic Wars 1861, End of slavery in the United States, A house divided against itself cannot stand. 1914 (to 1945), This war lasted 31 years, similar to the Thirty Years War (1618 - 1648) in savagery and fanaticism (from trench warfare slaughter to the death camps) -- End of the state system formalized by the Congress of Vienna in 1815 1964, Vietnam, End of the struggle in south-east Asia for the remains of the Japanese, French, and British empires 2018 - 2023, Start of the next war of bitterness. Can we avoid this appointment in Samarra? At their last meeting did Putin tell Bush that he would use force to defend Iran, or did they just have a good laugh? Were the Russians able to turn bin Laden on us without much objection from the White House? Or was this a especially savage move in the Great Game? In any case, the Kazakh War of 2020 will be no joke for the American people. So I can't answer your question. This is sort of the lemming theory of history. I'm sure if lemmings could talk, they would have very good reasons for marching into the ocean. Jack Smith
Re: [Vo]:The (possible) oil peak rolls on
In reply to Taylor J. Smith's message of Sun, 20 Apr 2008 17:58:37 +: Hi, [snip] I'm sure if lemmings could talk, they would have very good reasons for marching into the ocean. [snip] Apparently that film was a fake. Lemmings don't actually march into the ocean. It seems only humans are that stupid. ;) Regards, Robin van Spaandonk The shrub is a plant.
Re: [Vo]:The (possible) oil peak rolls on
Edmund Storms wrote: While I agree with much of what you say, Richard, I don't think stock trading needs to be gambling. It is too easy to evaluate reality and choose stocks that always make money, at least for awhile. Its rather like counting cards in 21, which moves the odds away from chance. However, in both cases, the count of the cards needs to be faithfully known and used. Most investors loose the count, so to speak. When this happens, chance takes over and the house (the big stock traders) always wins. In general I can't disagree with what you're saying, Ed, save for one thing: The consistent winners are not the big stock traders, they're the brokers. Traders, who attempt to make money by trading a stock or commodity, all are taking on some risk. Brokers, on the other hand, are not. On every trade, some broker somewhere wins, because the broker gets a fee whether or not either party makes money on the trade. In a very similar vein, most trades are actually made on behalf of mutual funds of one sort or another (hedge funds are just another kind of mutual fund) and the mutual fund managers skim off a fee amounting to something on the order of 1% of the total wealth of the fund every year; for a fund with billions invested in it, that's a lot of money. Mutual fund managers can't lose, even if they mis-manage the fund so badly that it goes bust; their income has little or no dependence on their ability to pick winning stocks. (There's the occasional high-profile lawsuit, of course, such as the one which just ended with a 20 year sentence over outright fraud in managing the Bayou fund, but that's pretty rare. Only someone who was mentally impaired (and greedy) would think the kind of fraud perpetrated in that case was necessary. The managers would have made out OK even without it, and would have stayed out of jail... their problem was they were too stupid to pick investments which even broke even, all they could do consistently was lose money, and that eventually drives away your clients, so they decided to cook the books in order to stay in business.) Arbitrageurs also win consistently, but again, they're not really trading, they're just taking advantage of a loophole in the market: when two different financial vehicles which represent the same underlying object have different prices, an arbitrageur will buy the cheaper one and sell the more expensive one. They can't lose that way. That, by the way, is the mechanism which keeps, e.g., short-term futures prices and commodity prices in very close step. The professional money managers -- and professional brokers in general -- have, with few exceptions, shown themselves consistently unable to outguess the market. It appears that they suffer from a herd mentality which makes it difficult for them to see which stocks are undervalued -- they're mesmerized by the stocks which are popular among their peers. Consequently, when they're acting as traders, they don't come out any better than anyone else. It's only when they find some niche which involves /no/ risk, like acting as a floor trader (who makes money on the offered/asked spread), that they come up consistent winners. In this way, the market is a lot more like a horse race than it is like 21. In 21, you're playing against the dealer, and if you play well enough, the dealer loses. In a horse race, you're playing against other bettors, /not/ the house. The house doesn't bet; it just skims off a percentage of the take. That's exactly how the market works; the big boys get their money no matter who wins or loses. Granted there are exceptions -- Peter Lynch, for example, consistently outguessed the market, and got higher fees as a result, but he still wasn't gambling with his own money. And venture capitalists sometimes make out very well by gambling in stock of not-yet-public companies. But I'd be hard pressed to think of anyone who got or stayed rich by gambling in common stock of public companies using his own money. The concern I raise is that the count, using the 21 analogy, is getting very out of contact with reality. When this has happened in the past, the market has always corrected rapidly. My question was asked to see if any of you sense the same thing. This is important to anyone who owns stocks because if such a correction occurs, all stocks, even the good ones, will go down a lot. Its always better to get out of the game before the house goes broke and can't buy back the chips. Ed R C Macaulay wrote: The difficulty in understanding the stock market has it root in not recognizing exactly what it is. The stock market is a legal form of gambling. It IS the great game ! Of the gambling casino parlours in the great game.. commodities are the roulette tables. The players at this table operate similar to a duck hunter pulling the trigger today at a duck that will fly over months from now, hoping the
Re: [Vo]:The (possible) oil peak rolls on
R C Macaulay wrote: A share of stock.. any stock is only worth what you can sell it for. It used to have some relationship with a company's net worth and/or assets and keyed to the dividend paid each year. NO MORE.. few dividends are paid out anymore FYI: Median dividend yield for all stocks covered by Fidelity's online brokerage this evening is listed as 3.14%. Fidelity's stock screen finds 1085 stocks paying 5% or greater. It finds 489 stocks paying dividends of 8% or greater, and 299 are available paying 10% or greater dividend yields. Not bad, considering that savings account interest rates are in the ballpark of 3% just now.
Re: [Vo]:The (possible) oil peak rolls on
becuase the stock market has nothing to do with long term income of individual companies. Companies are rewarded on the stock market for doing things that hurt them, suck as firing people and raising prices. The stock market is based on making as much as possible with as little investment and overhead as possible. Companies that invest back into the company and continue growing their business, pay less profit to shareholders, and thus are worth less on the stock market. On Fri, Apr 18, 2008 at 12:56 PM, Edmund Storms [EMAIL PROTECTED] wrote: I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. 4. The fed generated inflation will reduce consumer spending. 5. Loss of jobs will reduce consumer spending. Consumer spending determines the profit of companies. So, why then is the stock market going up? Ed Stephen A. Lawrence wrote: The government office concerned with such things has predicted that oil prices will average about $101/bbl this coming year, if I recall correctly. Commodities traders don't seem to agree. As I write this, May crude oil contracts are going for $116.82/bbl. That's up $4 in the last four days. Sorry if this seems boring or off topic, but I'm finding this run-up in oil prices fascinating/horrifying. It's presumably driving the food price problems, of course. And in turn, the oil price run-up is no doubt driven in part by the nascent recovery in the U.S. stock market (which may very well sputter again, of course, due in large part to the run-up in oil prices). Leading indicators blipped up in March, for the first time in months, despite the stock market still being down. Ratios of coincident to lagging and leading to lagging are still both down, though, for whatever that's worth. Here's the text from the first page of the March leading indicators report: == [begin quoted text] • The leading index increased slightly in March, following five consecutive monthly declines. Money supply (real M2)*, index of supplier deliveries (vendor performance) and the interest rate spread made large positive contributions to the index this month, offsetting the large negative contributions from initial claims for unemployment insurance (inverted), building permits and stock prices. During the six-month period ending in March, the leading index declined 1.6 percent (a -3.3 percent annual rate), and the weaknesses among its components have been very widespread. • The coincident index also increased slightly in March, following a decline in February. Industrial production contributed positively to the index in March, more than offsetting the decline in employment. Despite this month's gain, the six-month change in the coincident index has fallen to - 0.1 percent (a -0.2 percent annual rate) from September 2007 to March 2008, down from 0.6 percent (about a 1.1 percent annual rate) in the six-month period through December 2007. In addition, the weaknesses among the coincident indicators have been very widespread in recent months. The lagging index continued to increase in March, and as a result, the coincident to lagging ratio continued to decrease for the third consecutive month. • Since the middle of 2007, the leading index has been declining while the coincident index, a measure of current economic activity, has also deteriorated in recent months. In addition, the weaknesses have also become more widespread among the components of both indexes. Meanwhile, real GDP growth slowed substantially to 0.6 percent in the fourth quarter of 2007, down from 4.9 percent in the third quarter and an average of 2.2 percent, annual rate, in the first half of 2007. The current behavior of the composite indexes suggests economic weakness is likely to continue in the near term. -- That which yields isn't always weak.
[Vo]:The (possible) oil peak rolls on
The government office concerned with such things has predicted that oil prices will average about $101/bbl this coming year, if I recall correctly. Commodities traders don't seem to agree. As I write this, May crude oil contracts are going for $116.82/bbl. That's up $4 in the last four days. Sorry if this seems boring or off topic, but I'm finding this run-up in oil prices fascinating/horrifying. It's presumably driving the food price problems, of course. And in turn, the oil price run-up is no doubt driven in part by the nascent recovery in the U.S. stock market (which may very well sputter again, of course, due in large part to the run-up in oil prices). Leading indicators blipped up in March, for the first time in months, despite the stock market still being down. Ratios of coincident to lagging and leading to lagging are still both down, though, for whatever that's worth. Here's the text from the first page of the March leading indicators report: == [begin quoted text] • The leading index increased slightly in March, following five consecutive monthly declines. Money supply (real M2)*, index of supplier deliveries (vendor performance) and the interest rate spread made large positive contributions to the index this month, offsetting the large negative contributions from initial claims for unemployment insurance (inverted), building permits and stock prices. During the six-month period ending in March, the leading index declined 1.6 percent (a -3.3 percent annual rate), and the weaknesses among its components have been very widespread. • The coincident index also increased slightly in March, following a decline in February. Industrial production contributed positively to the index in March, more than offsetting the decline in employment. Despite this month’s gain, the six-month change in the coincident index has fallen to - 0.1 percent (a -0.2 percent annual rate) from September 2007 to March 2008, down from 0.6 percent (about a 1.1 percent annual rate) in the six-month period through December 2007. In addition, the weaknesses among the coincident indicators have been very widespread in recent months. The lagging index continued to increase in March, and as a result, the coincident to lagging ratio continued to decrease for the third consecutive month. • Since the middle of 2007, the leading index has been declining while the coincident index, a measure of current economic activity, has also deteriorated in recent months. In addition, the weaknesses have also become more widespread among the components of both indexes. Meanwhile, real GDP growth slowed substantially to 0.6 percent in the fourth quarter of 2007, down from 4.9 percent in the third quarter and an average of 2.2 percent, annual rate, in the first half of 2007. The current behavior of the composite indexes suggests economic weakness is likely to continue in the near term.
Re: [Vo]:The (possible) oil peak rolls on
I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. 4. The fed generated inflation will reduce consumer spending. 5. Loss of jobs will reduce consumer spending. Consumer spending determines the profit of companies. So, why then is the stock market going up? Ed Stephen A. Lawrence wrote: The government office concerned with such things has predicted that oil prices will average about $101/bbl this coming year, if I recall correctly. Commodities traders don't seem to agree. As I write this, May crude oil contracts are going for $116.82/bbl. That's up $4 in the last four days. Sorry if this seems boring or off topic, but I'm finding this run-up in oil prices fascinating/horrifying. It's presumably driving the food price problems, of course. And in turn, the oil price run-up is no doubt driven in part by the nascent recovery in the U.S. stock market (which may very well sputter again, of course, due in large part to the run-up in oil prices). Leading indicators blipped up in March, for the first time in months, despite the stock market still being down. Ratios of coincident to lagging and leading to lagging are still both down, though, for whatever that's worth. Here's the text from the first page of the March leading indicators report: == [begin quoted text] • The leading index increased slightly in March, following five consecutive monthly declines. Money supply (real M2)*, index of supplier deliveries (vendor performance) and the interest rate spread made large positive contributions to the index this month, offsetting the large negative contributions from initial claims for unemployment insurance (inverted), building permits and stock prices. During the six-month period ending in March, the leading index declined 1.6 percent (a -3.3 percent annual rate), and the weaknesses among its components have been very widespread. • The coincident index also increased slightly in March, following a decline in February. Industrial production contributed positively to the index in March, more than offsetting the decline in employment. Despite this month’s gain, the six-month change in the coincident index has fallen to - 0.1 percent (a -0.2 percent annual rate) from September 2007 to March 2008, down from 0.6 percent (about a 1.1 percent annual rate) in the six-month period through December 2007. In addition, the weaknesses among the coincident indicators have been very widespread in recent months. The lagging index continued to increase in March, and as a result, the coincident to lagging ratio continued to decrease for the third consecutive month. • Since the middle of 2007, the leading index has been declining while the coincident index, a measure of current economic activity, has also deteriorated in recent months. In addition, the weaknesses have also become more widespread among the components of both indexes. Meanwhile, real GDP growth slowed substantially to 0.6 percent in the fourth quarter of 2007, down from 4.9 percent in the third quarter and an average of 2.2 percent, annual rate, in the first half of 2007. The current behavior of the composite indexes suggests economic weakness is likely to continue in the near term.
Re: [Vo]:The (possible) oil peak rolls on
Short answer: Because the stock market is not really going up ;-) Yes, it may look at first glance like there have been some small increases in the market, in terms of its listed valuation in $US ... ...but thanks to the continuation of the Bush record budget deficits, in terms of real worth on an international standard, such as gold for instance, the stock market has lost over half its value since Bush took office. cough, cough ... actually the market has lost most of that real value since he started his second term... Jones Original Message From: Edmund Storms I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. 4. The fed generated inflation will reduce consumer spending. 5. Loss of jobs will reduce consumer spending. Consumer spending determines the profit of companies. So, why then is the stock market going up?
Re: [Vo]:The (possible) oil peak rolls on
Edmund Storms wrote: I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. Yes, and increasing energy prices are what may very well kill the bull for good this year. We shall see. I think it's significant that news stories about oil still talk about demand much more than they talk about supply -- it's as though most observers haven't yet absorbed the fact that supply is not going to respond to increased demand, no, not this time... 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. That's already happened, stocks have already fallen as a result, and stock market investors try to drive very far ahead on the road. The housing mess is already fully factored into stock prices, or so it appears; in fact some building stocks have actually been showing signs of going up again. As an outrageously out-on-the-end-of-the-bell-curve example, Comstock Homebuilding, http://www.comstockhomes.com/, is up almost 40% **today**. (If you'd bet the wad on Comstock yesterday you' be grinning today, that's for sure -- but yesterday they looked like going bust; you just never know.) 4. The fed generated inflation will reduce consumer spending. But injecting money into the economy stimulates spending, it doesn't restrain it, and in fact the increase in the money supply is one of the elements pushing up the leading indicators. (Looks like M2 is the one they use, don't ask me why; when I was in school it was M1, M1, M1, nobody cared about M2 or M3.) Inflation favors borrowers, it favors spenders, it favors people who buy today and don't wait for tomorrow. 5. Loss of jobs will reduce consumer spending. Yes, but job loss *usually* comes late in the downturn, and the stock market tends to turn up long before the employment data, because all the players are trying to outguess each other and get there first. So, reduced employment may actually encourage investors to get back into the market. The stock market leads the job market, typically by a number of months. Consumer spending determines the profit of companies. So, why then is the stock market going up? It goes up in advance of the changes in company profits. ** But wait, we need a caveat here: Anyone who listens to investment advice from me should have his head examined. ** OK with that said, let's move on: Last Friday, GE reported weaker results than expected and the market went down like a rock. It looked like a panic, and against a backdrop of skyrocketing oil prices, things looked very black indeed. That's how it usually looks at the market bottom, of course. This week, in stark contrast, a whole raft of companies reported earnings results, and they were all awful. In response, the market ... went up. Everything's heading up this week; it looks like spring. As I mentioned, even some homebuilding stocks are coming back from the dead; even the *airlines* are apparently bouncing back a bit. Of course, it could be just an upward blip before the *real* crash, or it could be that the market has turned the corner. Anyhow after seeing the market showing a little life, I dug out the leading indicators report and was surprised to see that the leading indicators had gone up this month, in spite of the stock market going down over the last few weeks (the market is one of the biggest items in the leading indicators, IIRC). There are other straws in the wind: Congress is about to pass a rescue package, which normally happens only after the need is gone. (I learned that in a management class I took a long, long time ago -- Congress's inability to act fast enough to do any good in battling a recession is so consistent, it's included in standard curricula dealing with business cycles.) Jobs data finally are showing rising unemployment, which usually happens not long before the market starts to recover (employment's a lagging indicator). So, my personal conclusion is that the market's heading up again, or if not just yet, it will be, real soon now. I'm not unique; I figure if I think it's heading up, probably a lot of other people do too, and some of them trade commodities. And if they think the market's turned the corner, they'll start bidding up oil, too, since a rising market will inevitably boost demand even farther. (Whatever time to refer back to that Caveat I mentioned, up above...) One last point: A war is very pro-business, because it injects cash into the economy at the same time that it drains consumer goods from the economy. It's very difficult to have a recession *and* a war at the same time. Bush has managed it, but even he
Re: [Vo]:The (possible) oil peak rolls on
Correction - not even half as they say... Way more than half of the value of the US stock market has been lost in the last few years. Thank you W, and thank you neocons for the most disastrous US Presidency since WWII. Like a bumper sticker seen recently: Never Thought I'd Miss Nixon - today's gold price - $950/oz. In April 2003, gold was as low as $325/oz If you had a $million stock portfolio back then, you would have lost almost 2/3 of its real value in international terms.
Re: [Vo]:The (possible) oil peak rolls on
On 18/4/2008 3:56 PM, Stephen A. Lawrence wrote: Edmund Storms wrote: I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. Yes, and increasing energy prices are what may very well kill the bull for good this year. We shall see. I think it's significant that news stories about oil still talk about demand much more than they talk about supply -- it's as though most observers haven't yet absorbed the fact that supply is not going to respond to increased demand, no, not this time... IMO I think the oil industry is worried that demand will peak before supply peaks as the cost of alternatives drops. harry
Re: [Vo]:The (possible) oil peak rolls on
Yes Jones, the market has dropped from its recent record high near 14000, but presently it has gone up from slightly below 12000 to now near 12800 while all kinds of bad things are becoming perfectly obvious. Someone must be buying stocks without any concern about the real world conditions. I know that the market can be random and differences in opinion can caused reasonable variations, but the rise over the last 6 weeks makes no sense. All Hell is breaking loose that only the insane would ignore. Is this the weeding out effect just before the crash? Ed Jones Beene wrote: Short answer: Because the stock market is not really going up ;-) Yes, it may look at first glance like there have been some small increases in the market, in terms of its listed valuation in $US ... ...but thanks to the continuation of the Bush record budget deficits, in terms of real worth on an international standard, such as gold for instance, the stock market has lost over half its value since Bush took office. cough, cough ... actually the market has lost most of that real value since he started his second term... Jones Original Message From: Edmund Storms I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. 4. The fed generated inflation will reduce consumer spending. 5. Loss of jobs will reduce consumer spending. Consumer spending determines the profit of companies. So, why then is the stock market going up?
Re: [Vo]:The (possible) oil peak rolls on
Thanks Steve, this is a very nice summary. However, even I, a nonbusiness student, can see the flaws when the logic is applied to the present situation. When the business cycle turns around, it is because some basic money making process is improved. In the process, consumer demand goes up because people have the money to spend, which causes a self-reinforcing process. All the factors in place now are also self-reinforcing, but in a negative way. I fear that this is the start of the crash that occurs when the supply of ignorant people runs out and no one is left to buy stocks. Ed Stephen A. Lawrence wrote: Edmund Storms wrote: I'm confused. Perhaps someone on this list has the answer. Everyone who has discussed the issues here seems to agree to the following: 1. Increase in energy cost will drive up food and other commodity prices, which will reduce consumer spending. Yes, and increasing energy prices are what may very well kill the bull for good this year. We shall see. I think it's significant that news stories about oil still talk about demand much more than they talk about supply -- it's as though most observers haven't yet absorbed the fact that supply is not going to respond to increased demand, no, not this time... 2. Increased cost of personal transportation will reduce consumer spending. 3. The collapse of the housing market will reduce consumer spending. That's already happened, stocks have already fallen as a result, and stock market investors try to drive very far ahead on the road. The housing mess is already fully factored into stock prices, or so it appears; in fact some building stocks have actually been showing signs of going up again. As an outrageously out-on-the-end-of-the-bell-curve example, Comstock Homebuilding, http://www.comstockhomes.com/, is up almost 40% **today**. (If you'd bet the wad on Comstock yesterday you' be grinning today, that's for sure -- but yesterday they looked like going bust; you just never know.) 4. The fed generated inflation will reduce consumer spending. But injecting money into the economy stimulates spending, it doesn't restrain it, and in fact the increase in the money supply is one of the elements pushing up the leading indicators. (Looks like M2 is the one they use, don't ask me why; when I was in school it was M1, M1, M1, nobody cared about M2 or M3.) Inflation favors borrowers, it favors spenders, it favors people who buy today and don't wait for tomorrow. 5. Loss of jobs will reduce consumer spending. Yes, but job loss *usually* comes late in the downturn, and the stock market tends to turn up long before the employment data, because all the players are trying to outguess each other and get there first. So, reduced employment may actually encourage investors to get back into the market. The stock market leads the job market, typically by a number of months. Consumer spending determines the profit of companies. So, why then is the stock market going up? It goes up in advance of the changes in company profits. ** But wait, we need a caveat here: Anyone who listens to investment advice from me should have his head examined. ** OK with that said, let's move on: Last Friday, GE reported weaker results than expected and the market went down like a rock. It looked like a panic, and against a backdrop of skyrocketing oil prices, things looked very black indeed. That's how it usually looks at the market bottom, of course. This week, in stark contrast, a whole raft of companies reported earnings results, and they were all awful. In response, the market ... went up. Everything's heading up this week; it looks like spring. As I mentioned, even some homebuilding stocks are coming back from the dead; even the *airlines* are apparently bouncing back a bit. Of course, it could be just an upward blip before the *real* crash, or it could be that the market has turned the corner. Anyhow after seeing the market showing a little life, I dug out the leading indicators report and was surprised to see that the leading indicators had gone up this month, in spite of the stock market going down over the last few weeks (the market is one of the biggest items in the leading indicators, IIRC). There are other straws in the wind: Congress is about to pass a rescue package, which normally happens only after the need is gone. (I learned that in a management class I took a long, long time ago -- Congress's inability to act fast enough to do any good in battling a recession is so consistent, it's included in standard curricula dealing with business cycles.) Jobs data finally are showing rising unemployment, which usually happens not long before the market starts to recover (employment's a lagging indicator). So, my personal conclusion is that the market's heading up again, or if not just yet, it will be,
Re: [Vo]:The (possible) oil peak rolls on
There is also a contrarian philosophy that seems to work for some investors: Buy when everyone else is dumping like terrified rats leaving a sinking ship. Often, when certain stocks seem to be tanking and headed for the worst, that's exactly the time when contrarians begin investing. Sometimes, it works for them. Does it pay to be a contrarian under the current circumstances? I suspect If I actually was a dedicated contrarian I wouldn't answer that questions. Trade secret. Considering the recent run up, I suspect some traitorous contrarians may have fessed up. ...or perhaps we're just witnessing another pump and dump scheme on a grand scale. Speculation is cheap. Regards Steven Vincent Johnson www.OrionWorks.com www.zazzle.com/orionworks
Re: [Vo]:The (possible) oil peak rolls on
In reply to Edmund Storms's message of Fri, 18 Apr 2008 15:59:08 -0600: Hi, [snip] Yes Jones, the market has dropped from its recent record high near 14000, but presently it has gone up from slightly below 12000 to now near 12800 while all kinds of bad things are becoming perfectly obvious. Someone must be buying stocks without any concern about the real world conditions. I know that the market can be random and differences in opinion can caused reasonable variations, but the rise over the last 6 weeks makes no sense. All Hell is breaking loose that only the insane would ignore. Is this the weeding out effect just before the crash? Ed Everyone knows that the market always goes up and down rhythmically. Therefore investors try to guess when it is bottoming out. All the news over the last few months has been about the sub-prime crisis dragging the market down. That should finally have worked its way through the markets by about June-July, so investors are looking for the markets to bottom soon. Some apparently think that is already happening, and are starting to reinvest the money the got from selling high. That pushes the market up a bit and gives others the confidence to follow suit. This will result in a short term rise, until the real recession caused by wasting a trillion dollars in Iraq starts to bight. Then there will be a strong bear market in the medium term. True recovery may have to wait a couple of years, and may only come on the back of some decisive new technological development. ..so much for my prognostications. Regards, Robin van Spaandonk The shrub is a plant.
Re: [Vo]:The (possible) oil peak rolls on
The difficulty in understanding the stock market has it root in not recognizing exactly what it is. The stock market is a legal form of gambling. It IS the great game ! Of the gambling casino parlours in the great game.. commodities are the roulette tables. The players at this table operate similar to a duck hunter pulling the trigger today at a duck that will fly over months from now, hoping the duck will fly into the shot pattern. The original purpose of this parlour was to provide a way for farmers to insure next year's crop, or any commodity against sudden drop in market price below the cost of production. Oil speculators turned the crude oil market into a whore's market some 20 years ago when they begin trading crude futures. China got into the game 2 years ago by buying up strategic metals and stuff and such. Few can grasp they may actually be holding food grains commodity futures hostage. Wall Street is a private club where membership costs real money and the game is controlled by the house. A share of stock.. any stock is only worth what you can sell it for. It used to have some relationship with a company's net worth and/or assets and keyed to the dividend paid each year. NO MORE.. few dividends are paid out anymore and the value to the owner of a share is based on anticipating a share will rise like WalMart did. 25 years ago or a Google share. In today's world a share has a inverse relationship to the big buyers of stocks and bonds.. who are they?? pension trusts, insurance and banking.. but the largest holders of stocks and bonds are the shadows people of the hedge and derivitive outerworld ( similar to the underworld except no laws are ever made against the shadows) Little money received from an IPO actually goes into a capital account since it's another parlour in the great game and the money goes to the promotors in the form of both appreciation of share price and share set asides for founders. It comes as a great shock for Joe citizen to read an actual PL statement ( nearly impossile to fathom) to learn that a publically held stock corporation is in debt up to their eyeballs from the sale of BONDS , not common stock. It is possible for a corporation to survive for years without ever showing a profit.. just sell more stock and issue more bonds. Example.. Krispy Kreme, Starbucks, Home Depot, Lowes. What really surprises many is WalMart. Never to ever give a sucker an even break.. GE is the biggest , richest corporation on earth and a look see into many large corporate structures show a few ex-GE cadre .. like Home Depot.. ever wonder why?? GE morphed from a manufacturer under Jack Welch into a strange new capital corporation. Their fingerprints and DNA are across the world and behind the China trade and WalMart. Consider Goldman-Sachs and Merrill-Lynch.. when the 1st qtr 2008 reports were due.. speculation was G-S and M-L and Citi-Bank would look like Bear-Stearns on paper but the guys that print the paper can put anything on the paper they wish and BINGO.. G-S et al came up smellling like roses while Bear Stearns wound up in the tank and fished out by JPMorgan. Hmmm.. Now the plot thickens and the really serious poker players are placing their bets. It's sorta amusing when ya think about it It's all monolopy money to them since they print what they need. The world's greatest game of all .. If you're big enough, tough enough, smart enough to buy into the game.. they don't squeeze you out.. but invite you in.. unless.. unless .. you don't play the game by the rules.. OR.. they make an example of you.. like Enron.. go straight to jail and do not pass go... occasionally one of the players must be reprimanded , like Bear Stearns.. and gets a get outa jail free card but forfeits his cards for the hand. After all... one cannot be a gentleman and cheat at cards in the great game. So if Edmund Storms has difficulty reading the face cards.. it's because he is a scientist and not a stockbroker. Never play the other man's game. Fun stuff.. all that money and never enough.. ole Solomon lived the life too and wrote an amazing book on the subject in his later life. The poor simp chased his tail and tail to no avail .. grin Richard
