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My take:
Oil will be over $100 in 20 years from now.
why? because unless we stop burning it stupidly instead of finding
cheaper energy sources, one day it will start becoming a rare precious
raw material.
Now that's just an opinion, mind you.
Gwenn
JW wrote:
> FYI...
>
> JW
>
> -----Original Message-----
> From: James Smith [mailto:JSmith@xxxxxxxxxxxxxxxxx]
> Sent: Monday, March 27, 2000 5:38 PM
> Subject: Watch closely to see what OPEC does next week
>
> If OPEC decides in their meeting next week to
> supply sufficient amounts of oil to the markets
> oil could continue its plunge toward $20.10,
> which is first monthly support on Nymex
> Crude (basis the May contract)...setting
> in place a Higher Low off which the next leg
> of the longerterm bull market in oil will begin
> that will lead to $40/bbl or higher.
>
> But nobody will care about the longerterm
> view on oil next week if OIL is plunging to
> $20. A plunge in oil would certainly give yet
> another boost to stocks and could explain
> why the S&P will continue to a blowoff rally
> into late April.
>
> If the markets perceive that OPEC is not going
> to supply enough oil or that it is not going to
> arrive soon enough, you could see Crude
> move quickly above $30 again. This would
> put downard pressure on US bonds, which
> incidentally suffered a nice reversal on
> Friday. But I doubt that the Treasury is finished
> manipulating the yield curve. Obvious
> inflation just makes the manipulation more
> difficult, but not impossible...at least not
> on the short-term basis. It does underline
> how important this OPEC meeting is.
> I suspect the administration will put very
> heavy pressure on OPEC to supply adequate
> amounts of oil.
>
> Remeber it was the Clinton adminstration
> that coined the election phrase,
>
> "Its the Economy Stupid!"
>
> I have often wondered if this phrase
> would come back to haunt the administration.
> April may not be the cruelest month, but May
> certainly will be.
>
> Stocks are somewhat mixed. The DOW
> still needs to see closing New Highs before
> we can confirm a strong rally into April.
>
> The Nasdaq 100 (jun) closed today above
> 4800 which suggests a move higher, but
> I would still like to see the Composite close
> above 5200 to confirm a blowoff into April
> for the Nasdaq. The Nasdaq rallied
> strongly Friday morning but gave up a
> lot of its early gains. Again, its best to wait
> for a close above 5200 on the Composite
> to confirm a move higher into April.
>
> Can the S&P move higher into April while the
> Nasdaq moves lower? Sure why not?
> We've seen this just recently as investors
> re-discovered "value". I'm not saying
> this will happen, I'm saying it is possible
> (if the Composite fails to close above
> 5200 soon).
>
> The S&P (june) has given the
> strongest performance this week of the
> three stock markets, by closing above 1500
> and racing ahead. As worried as traders
> were on Friday of yet another rate hike,
> if OPEC comes thru with plenty of oil,
> rate hike fears will disapate quickly and
> the party will continue.
>
> With regard to BONDS, the month of
> APRIL is a "DIRECTIONAL CHANGE"
> month. A strong rally into this timeframe
> with bonds now yielding less than 6%
> leaves them vulnerable to a sudden
> correction which will lead to longterm
> rates over 7%
>
> Again, market manipulations are very
> very dangerous. They always end with
> someone getting hurt....usually the taxpayer,
> small investors, and people on a fixed income.
>
> It is important to see the Treasury's
> actions for what they are. This short-term
> political gambit guarantees higher inflation
> down the road. Helping Gore get elected
> in November may be the Adminstration's
> highest priority, but at what cost to the
> economy?
>
> It is also important to see the link between
> the Bureau of Labor's fiddling the numbers
> (PPI & CPI) and the administration's efforts
> to keep longterm rates lower.
>
> If they don't fiddle the numbers on CPI and
> PPI, investors will demand higher returns on
> longerterm notes and bonds. This would
> somewhat negate the Treasury's efforts
> to manipulate longterm rates lower. We
> certainly can't have that!
>
> Why should the adminstration want lower
> longterm rates? .....to keep mortgage rates
> lower. A lot of the off-the-run bonds that
> the Treasury is eagerly buying up are closer
> in maturity to the 10 year note. Mortgages
> are priced off the 10 year.
>
> If you can keep mortgage rates artificially
> lower it will help the housing market which
> is a key component to the economy.
>
> If 1% of the people own 40% of the stocks
> then a crash in the Nasdaq may not hurt
> the economy as much as you might expect.
>
> But given that over 60% of families own
> their own home and have the vast amount
> of their savings tied up in their house,
> what do you suppose would happen to
> consumption (which incidentally is 2/3rds
> of the economy), if the housing market
> suddenly peaked and began a wicked
> decline on the back of higher rates?---Oops!
>
> Sublimal message:
>
> "Its the Economy Stupid! And more
> specifically, its the Housing Market Stupid!"
>
> Can the adminstration keep this game going
> into November? -----No way!
>
> Some have argued that because Central Banks
> and govts can maniuplate the gold
> market and because they can manipulate the
> statistics off which all the financial markets trade,
> that there is no reason to believe in cycles.
>
> It is precisely this "arrogance of modern man"
> that guarantees greater volatility in the very
> cycles he wishes to deny.
>
> You are never going to get government to
> acknowledge the validity of cycles because
> doing so is tantamount to acknowledging
> the limitations of a government and its power.
>
> The prudent investor will not stand in the
> way of a market that is being actively
> manipulated, but it does present opportunities
> at the right moment.....to a student of cycles.
>
> It is my view that current manipulation of the
> yield curve will not last thru the month of April.
> Again the month of April is a "Directional Change"
> month for BONDS.
>
> For those of you on a fixed income or of limited
> means, I strongly advise you to get a car that
> is fuel efficient. Any further sell-off in oil is going
> to be temporary. Pay down your credit cards,
> pay down your debts.
>
> Do not buy a Suburban, Expedition or any of
> the other urban assault vehicles unless you
> can afford to pay $200 or more to fill it up.
>
> Also note that if you paid $40,000--$50,000
> for your tank you may not be able to sell it
> for $10,000 in just two year's time.
>
> That has to be one of the worst trades going.
>
> Just as the Japanese were ready in the 1970's
> with their economy cars, how ironic that they are
> just now coming out with hybrids that get 60-70mpg
> at precisely the right moment.
>
> Has Detroit learned nothing from their own history?
>
> Those who do not learn from history.....
>
> Economists may argue that oil represents less
> than 3% of GDP nowadays, whereas it represented
> over 10% of GDP in the 1970's.
>
> That's gotta be one of the dumbest arguments
> around. Again they are arguing against cycles
> without even realizing it.....because if you go back
> a bit further (before the 1950's, 1960's & 1970's) you would
> also find that oil was less than 3% of the economy.
>
> Just because oil is of less important to our economy
> now doesn't mean it will stay that way. When Oil prices
> move to $40/bbl and higher over the next few years, won't
> that percentage of GDP relationship also change?
>
> Until Fuel Cell vehicles become the primary means
> of transportation, their argument makes no sense whatsoever.
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