From the street in my town:

My significant other, who manages a small retail store in the local mall, told me last night that the manager from the local Exxon station, who was shopping in her store, told her that gas (as in gasoline, which is now selling for $2.10/gal) prices will continue to decline through the November election, dipping to just under $2.00 where we live. Then when voting is over, will escalate to a ‘FIXED� stable price of between $3-to-$5 depending on what part of North America one lives in.

There you have it traders, a scoop from the deep south of the USA.

C. Note--Not to sound skeptical, but do you really think that the manager of a gas station is going to have a (the) real scoop? It appears more likely that he is making a divination of expected prices.

Leisa:

Some of the so called 'NEWS' links posted here, using some kind of authority, have less foundation and gut feel than the source I have cited IMO ;)

While I do not know enough about Oracle, I get the sense that we may have several pre-announcements like the one we heard from Yahoo.

The next few weeks will be interesting -- Some will focus on the rear mirror view and point to still healthy profits, but the key at this point in the cycle is the forward looking view. As Bill has pointed out, we may start to see worsening results from financials. Anecdotical evidence point to a change in trend, but a small one at this point. The deterioration will take several quarters to unfold.

Oil will provide some offset in the next few weeks.

MS just came out beating estimates. However, the enf of quarter was Aug 31, just like Amaranth (when it was $9B). Does anyone know how much MS had in Amaranth? Minds are wondering...

"Thai Coup could be good for economy, Markets..."

http://www.marketwatch.com/News/Story/Story.aspx?

Well it's sure hard to swim against this optimism! Bad news is good news- to the extreme.

Are we entering silly season?

tradesman

tradesman, we're already deep into the season if you ask me. <8)

Anyone else thinking of playing w ORCL today?

Shorts covering gold this morning?

Will today be another dumb "buy" anything day - it all goes up - oil stocks and gold stocks on short covering - tech on momentum - financials on Fed speak?

Or will it be sell the news?

I'll trade today with the flow - but close at the end of the day - cause FedX will either confirm or reverse todays action... IMO

tradesman

Oracle is a funny company. Larry Ellison has financed his lavish lifestyle by borrowing against his stock holdings. Is this similar to Michael Jackson borrowing against his Beatles catalog rights?

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/01/31/MNG62H06991.DTL

Ellison's 2000 budget:
"1) Life Style -- annual $20m
2) Interest Accrual -- annual $75m
3) Villa in Japan -- $25m
4) New Yacht -- $194m -- over 3 yrs
5) America's Cup -- $80m -- over 3 yrs
6) UAD -- 12m over 3 yrs."

I wonder if the 2006 lifestyle budget has increased?

http://en.wikipedia.org/wiki/Larry_Ellison

Well that was pretty obvious - run to high again - so sold - wait for oil report now...

... is anyone else feeling dizzy??

;-) t4k

Seriously, is this what it looks & feels like just before a crash? Either it really is different this time, or we're close to one heck of a shorting opportunity in equities. Would appreciate opinions from the more experienced among us.

"It seems to me that a global economy in retreat (North America, Europe and Japan) is one that will soon negatively impact on corporate profitability. And we know what that should mean."

beg to differ, currently Europe especiially the big economies (Germany, France, Itally) are in an upswing long not seen, even the job situation improves in Germany. So domestic demand in Europe will rise, classic upturn: first exports rise (nearly done that), then investments (currently running) and then the consumer (just starting).

t4k - I feel the same way...

Problem is traders like to lock in on a trade (sell energy - buy tech) and will keep this going on as long as they can - until as Bill says they begin focusing on the reason for oils decline.

If oil falls into the mid to low 50's this trade could continue taking NASDAQ up to test its recent high.

Short term trading - I would be inclined to short here - but I won't today on a Fed day - as the market just gyrates too much for my liking

Also if the market takes a hit today - and people short - they may have to reverse tomorrow if Fedx earnings "surprise".

So I am going to trade the Fedx reaction tomorrow - as the way I see it - Fedx will either confirm or reverse - the recent move.

Also, if Ben still has to play up inflation - he can't let gold and oils collapse today - I see a few technical signals in the leading indicators AEM and FCX for the golds - and left alone - the gold stocks should rally a bit - that is should - but as we have seen - what should happen in the gold stocks - has not been happening - esp. if oil goes lower.

tradesman

T'man-

Thanks for your insight on Fedx & transports.

I find the best thing to do on Fed days is play golf or ski, depending on the season.

Searching for chain-mail gloves to catch XLE...

t4k

Amaranth had a large holding in S. In August S took a hit on negative news on subscriber growth and dropped (RSIs (7) sub-30 across the board).

Recently Amaranth had some margin calls no doubt and I surmise selling in S.

Now I notice S has inched up the last 8 days or so to resistance at the 50 day SMA. Watching to see if a breakthrough or resistance holds.

Disclosure: went long S in Aug

Jansing,

So is oil consumption going up in Europe?

Re MS

According to SEC filings by June 30 Morgan Stanley had 2300 millions in Amaranth, through the MS Institutional Fund of Hedge Funds.

Jansing,

It's good to have an educated opinion that differs from the general flow of opinion on this blog. Gives us a different perspective.

I do agree with you - European economies are on the upswing. The Asians, including Japan are not doing too bad either. The US however, is undoubtedly in a [rapid] decline.

Will US corporations be able to generate decent profit growth despite a US slowdown? I suppose that depends on wether they can generate enough profits from their overseas operations to offset the drop in profits in domestic operations. This in turn depends on what percentage of the S&P profits are from overseas and where the dollar will be headed.

I suspect however that a large share of profits of most S&P companies are based on domestic sales and even if the overseas profits go up, they will not be enough to compensate for the drop in domestic profits. Smaller companies or ones with greater domestic exposure will suffer more.

Lower profit outlook = lower stock prices.

I suppose if you want to be in the US equity market, it would make sense to own companies with high overseas sales. I do not have names but if anyone else does, feel free to share.

Global Growth Downgrades Continue

This comes from BCA Research - I find their research to be generally spot-on.

10:48:00, September 20, 2006

The latest ZEW expectations surveys point to a further slowdown in growth ahead.

The ZEW survey of analyst expectations for the euro area and the global economy slipped again in September. The global indicator is now near past cyclical lows, with the U.S. component notably weak. The euro area measure also continues to fall, which is in marked contrast to other surveys that indicate momentum remains strong. While the global economy is clearly cooling, the ZEW measures overstate the pace of the deceleration. However, the weakness of the euro zone reading calls into question the ability of the region to de-couple from U.S. and global trend. Bottom line: the developing global growth slowdown will be broad-based, with all major regions moderating.

http://www.bcaresearch.com/public/index.asp
link to above citation

C.NOte...point taken!

Regarding market action v. my perception of reality (that reality being that the economy is a sick patient)...one of us needs some medication.

My assesment of european economics is mainly based on anecdotal evidence, which are later confirmed by the data :) (mostly)

As you can see in the charts, europe is (was?) currently on the upswing. Some experts (like IFO-chief Sinn) say we are at the top now. Some data point to a deterioation of the situation in this moment (ZEW, IFO-Index). But we do not have a trend reversal yet.

It depends in my view mainly on the reaction of the US-Consumer to the "housing-bubble-burst" story.

If we have a severe decline in the US-economy, for sure NOTHING in Europe or Asia will stand against that, and then stocks will tank. But if the slowdown is not so hefty in the US, well Europe and Asia are currently more healthy than in the last 5 years (at the top) but maybe we will even see better conditions IF europe and asian consumer-spending picks up and US-spending hold the line. We will see. The equity market seems to speculate in this direction for the moment.

Be carefull out there guys :)

Cound be some truth in that Bca report - why haven't the euro stocks been rallying on falling oil and rising US dollar? Either the US rally has been a big fake out - or could it be slowing economy? - and Americans aren't buying euro goods. The US dollar index is trade weighted 50% euro is it not - or am I wrong on that?

If the US sneezes - everyone else still has to catch cold - the global economy isn't "global" enought yet IMO - and is still US centric.

The chart for the UK FTSE looks uninspiring -
the last time it had similar technicals - it just grinded nowhere for 1 year.

---

A new nominal high for the S&P today ahead of a Fed meeting - this is crazy - this is either the greatest sucker rally in a while - or someone at the Fed has really really loose lips...

tradesman

Heh... FOMC virtual ditto of last meeting, down to Lacker's lone dissenting vote. My screens show a non-reaction from markets either way. Probably because this statement was oh-so-expected.

VIX: May 10 close = 11.78 .. currently = 11.60

tick tick

t4k

anyone else hear crikets chirping after today's Fed announcement?

IMO, a flat to rising gold price + lower oil prices + rising stock market = outperformance of precious metal miners.

Long miners and waiting to purchase more.

just my $0.02

I am thinking of selling some puts on OIH, XLE. Too early? Any opinions welcome.

OIH Jan 07 110 @ $4.30
XLE Dec 47 @ 1.10

jragusa-is this an opening transaction? Looks to me like the OIH has just made a massive top and it's move measures to 90. XLE is coming into support but looks vulnerable to the downside-vols have expanded some but not enough to compensate for the perceived risk. I would be extremely careful and wait for some sort of an attempt to hold and rally before I considered selling naked puts. These indices and oil stocks had a very large price appreciation over the past few years and once the momentum shifts often the resulting decline lasts longer and goes further than expected IMO.

Another 1/3 $ down will get you back to the mid June N.Gas and drilling rig lows.

jragusa,

I think starting/adding to long positions in XLE and OIH right now is a good idea. But I don't think I would open any short-dated options. The downtrend could easily persist through December/January. Taking a longer term view, diversifying into hard assets while they are out of favor is a good move. Unless you have a perfect timing model, buying a fraction of whatever % allocation you decide you ultimately want in oil/gold is the best way to ensure a decent cost basis.