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Doubtful for anything more than a short-term spike in the short-term,
certainly not 20 years out. Higher oil prices today will accelerate
further research into alternative fuels and methods such as fuel cells
(hydrogen based), perhaps combined with a rechargeable battery. OPEC is
shooting themselves in the foot. They should be pumping as much as
possible now and using the revenues to build their future economies
around something other than oil.
JW
-----Original Message-----
From: Gwenael Gautier [mailto:ggautier@xxxxxxxxxxx]
Sent: Monday, March 27, 2000 10:51 PM
To: JW@xxxxxxxxxxxx
Cc: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] FW: Watch closely to see what OPEC does next week
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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