Archive for the ‘Oil’ Category

Notes From Underground: Be Very Afraid Of Jerome Powell and His Printing Press

October 3, 2017

Over the past 15 months, I have made light of Fed Governor Jerome (Jay) Powell because of his answer to a question I had asked him at a symposium presented by the Chicago Global Initiative. I asked Governor Powell, “Who guarantees the balance sheet of the ECB?” Without hesitating, Powell said, “THEY HAVE A PRINTING PRESS.” If this is his answer to issues of debt overhang I will be closely watching the precious metals if Powell actually became Fed Chairman. Janet Yellen has proven far more competent than Jerome Powell would be under any top of stressful central bank situation.

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Notes From Underground: When I Have Something to Say Sir, I’M GOING TO SAY IT NOW (Phil Ochs)

February 3, 2016

The markets are in turmoil and it gets the mind to thinking: What could possibly have caused today’s reversal in the stock market and the long end of the BOND MARKET? The market seemed like it was on the edge of a complete risk capitulation. The dollar was dropping, bonds all over the world were in rally mode and the precious metals were finally finding some technical strength as the GOLD (in pure dollar terms) had finally rallied through its 200-day moving average. Even the SILVER was able to synchronize with the GOLD and break out of three months of resistance. (The silver 200-day is at 15.13, still a bit above its closing price.) The global stock markets were cascading lower as the Nikkei and German DAX took out their lows made the night of the BOJ’s surprise move to a three-tiered negative interest rate policy.

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Notes From Underground: “A Single Spark Can Start A Prairie Fire” (Mao, 1930)

January 11, 2016

You don’t have to be a weather man to know which way the wind is blowing, or so says Bob Dylan. As long as all things are emanating out of China it may be the time to dust off the sayings of Mao for as the talking heads are reminding us daily: “The East Wind Is Prevailing Over the West” in all things financial. THE PROBLEM FOR ME IS I DON’T ACCEPT THAT VIEW AND AM IN THE CAMP OF FORMER DALLAS FED PRESIDENT RICHARD FISHER that all roads lead to the FED and certainly the European Union for providing the tinder for a financial prairie fire. There has been so much volatility during the first six trading days of the year it is difficult to get a handle on what is  algo-driven non-fundamental and what may be the commencement of a change in previous momentum trades. Today I will go through a list of POTENTIAL SPARKS TO IGNITE THE  FLAMES OF A FINANCIAL FIRE so that we can be aware of what constitutes  a genuine change in momentum:

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Notes From Underground: The Fed’s Dilemma

January 7, 2013

The Fed’s policy has painted itself into a proverbial corner. A ZEROHEDGE piece shows that in the age group of 16-55 there has been a loss of 2.7 million jobs during the previous few years, while in the 55-69 age group there has been a gain of 4 million jobs. This has been a recurrent theme of Notes From Underground during the last two years. The FED‘s policy of financial repression has resulted in an outcome that its beloved models failed to predict. The baby boomers haven’t been able to retire  because their saving plans have been undermined by the zero interest rate policy. Zerohedge shows that debt-ladened college graduates are unable to find jobs and thus are struggling to repay education loans. Recent college grads are forced to live at home and are not creating new households.

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Notes From Underground: U.S. to be the Top Energy Producer (Then Fiscal Compromise is a No Brainer)

November 12, 2012

The Financial Times headline played up the report from the International Energy Agency (IEA) that by 2017 the U.S. will become the world’s largest energy producer. The use of fracking and other newly developed technologies has enabled the exploitation of previously uneconomic carbon deposits. In 1974 I sat in an economic geography class in which the professor claimed that the U.S. was full on shale oil and gas and its development was merely a matter of price. Being a know-it-all about the Club of Rome studies on the limits of growth, I entered into a lively debate with the prof about why he was wrong and the effects of the energy crisis was going to lead to the demise of Kapitalism. If I could remember his name I would send an appropriate apology.

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Notes From Underground: OIL–A CONJECTURE

March 21, 2012

Before I take a few days hiatus (well deserved) and with the world in a more “serene” state, it is a good time to contemplate the recent news out of the GULF REGION. In a story in yesterday’s Financial Times, “Saudis battle to calm oil fears,” it seems that the Saudis have consigned 11 VLCCS to send a total of TWENTY-TWO MILLION BARRELS of crude to the U.S. This is an interesting development as high U.S. gas prices are seen to be an issue in the upcoming presidential election.

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Notes From Underground: HIGHER OIL … Greasing the Skid or Lubricating Liquidity

February 23, 2012

Sorry, couldn’t resist the obvious. Many MOONS ago if OIL PRICES were rising the BOND MARKET WOULD BE GETTING SOLD, EQUITY MARKETS WOULD BE STRUGGLING AS IT WAS FEARED THAT THE FED AND OTHER CENTRAL BANKS WOULD BE RAISING RATES TO STEM THE FEAR OF INFLATION. WHAT A DIFFERENT WORLD IN WHICH WE INVEST. As oil prices head higher, the bonds and equities both rally as did the PRECIOUS METALS.  SO WHAT DYNAMIC MAY BE AT WORK?

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Notes From Underground: When I have Something to Say Sir I Am Going to Say It Now! (Phil Ochs)

November 8, 2011

Yes, all the news about Prime Minister Berlusconi is pure puff and nonsense. The Italian economic situation will not change one iota when Silvio steps aside and, in fact, I would argue that the situation will become more volatile. Italy has seen so many governments come and go since the end of WORLD WAR II that it must be the role model for Japan. Mr. Berlusconi may be a scoundrel but the markets and the Italians know what they have and it seems that Berlusconi the known is better than what may come next. If the present government falls there is a possibility that a more leftist coalition will be formed and it is doubtful if it would be prone to pass an AUSTERITY plan.

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Notes From Underground: A Market Pregnant With Fear Suffers A Contraction From A Confusing Headline

October 25, 2011

The global markets are on tenterhooks waiting for the European leaders to come to some definitive plan of action to secure the European banking sector and provide relief to the problem of sovereign solvency issue of the so-called PIIGS. This problem has plagued the financial landscape since January 2010, when the Chinese SWF failed to buy a Greek 25 billion euro bond offering. When China didn’t fund Greece, the spotlight was directed to the European debt markets and the result has been a steady decay in the value of the sovereign debt of the European peripheries. After previous crisis meetings to stem the debt crisis, the time has come for the EUROCRATS and their political leaders to provide a program that has some genuine credibility.

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Notes From Underground: The Debt Wars Are Getting Stale–Each Day Positions Harden

July 26, 2011

The seriousness of the U.S. DEBT CIRCUS cannot be overstated but evidently not from a market perspective. U.S. Treasuries have continued to be well bid as many investors still run to the TREASURY market in times of uncertainty. Besides the “rush” to safety in the BONDS, the FED has so badly perverted the market’s pricing mechanism that it is very difficult to determine the genuine impact of the Washington default countdown. European sovereign debt has been trashed during the last 20 months as there was no real central bank support to the market as the EFSF was a late comer to the scene and was provided with meager provisions.

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