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Sound analysis. I concur.
Gram.
FROM GWENN.
>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
>
>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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