Food inflation--It's not going down anytime soon.

U.S. Corn Crop May Drop 10% as Rains Harm Yields, USDA Says

“Inventories are projected to fall to a 13-year low.”

http://tinyurl.com/5kbxd3

Good crop yields from soggy fields will require a 'miracle,' expert says

“After touring farmland, Pedersen said he saw corn plants that were yellow from lack of sun, an uneven height of the corn stand, a lot of weeds, and signs that soil has been compacted by farmers planting fields that were too wet.

Some of the soybean fields Pedersen saw were under water, other fields had soybean leaves coated with silt, and other bean plants had rotten stalks from standing in too much water. He predicted that 10 percent of the soybeans will need to be replanted.”

"Weeds will cost us a lot of yield, and the wet fields set the stage for insects and disease to come in later," Pedersen said. "There are many, many issues we are dealing with."

http://tinyurl.com/5ea7pn

bought a few July $155 puts on the FXE with the hawkish comments from BB on inflation.

BOC held steady.

Bernanke attempts to talk up the dollar...again.
looking to scale back into gold if it bounces back from todays lows, otherwise will consider re-entry around $850

Colin Twiggs has the June 10 post up

http://tinyurl.com/54qccl

[Bill Cara note: Can we nail it down that Colin opines from his chart reading that Gold will not break below $850? Just asking.]

For those of you following the transports, Ryder has made a lower high and rolled over. This one is way above the 200 day moving average.

The Russians slowly moving in to Venezuela?? interesting

Peter Hambro steps outside Russia with Rusoro buy

http://tinyurl.com/564bga

Russia's largest miner buys into Rusoro in Venezuela!

Lima-based US banker/blogger reports:

"Peter Hambro Mining, Russia's largest gold miner, is buying 14% of Rusoro (RML.v), the Russky/Canuck miner operating in Venezuela, at $1.25, a 25% premium to yesterday's close. Total price tag is U$80m. This shoots down all that "Nasty Venezuela is going to nationalize all the gold mining industry" talk started by anti-Chavez newspaper "El Nacional" last week."

Otto also has detailed, positive commentary on developments in Ecuador's forthcoming mining legislation.

http://incakolanews.blogspot.com/

All this means is that Chavez needed a nuclear superpower to keep us at distance while he implements his Hitlerian fascist-totalitarian policies. We should have blasted that little monkey to Kingdom Come when we had the chance according to the principle of the Monroe Doctrine.

Oh yeah, we should go to war with a soveriegn nation for THEIR resources.....oh, wait a minute......THAT was supposed to give us $20 BBL oil in Iraq.

Oh yes, let's turn our dollar to dirt with another short sighted shot to the foot.

how to make sense of country risk?

Is Venezuela high-risk? If you're a "western company", yes. But when a major Russian gold miner buys into a Russian-founded, Russian-operated "Canadidan" junior operating in Venezuela, maybe that's safe!

And maybe a bet upon who might end up developing las Cristinas and las Brisas?

Shares of Rusoro are up .07 to 1.07 today.

(I have no position.)

Hey, Shark, cool your jets!

Chavez has been elected, always with higher than US turn-out and higher than US majorities. According to well-placed Venezuelan friends, Chavez holds perhaps 10-15 political prisoners. When I am in Caracas, I hear LOTS of people openly crticizing the government. Sunday, Chavez exhorted the FARC to lay down their arms and release all hostages. Chavez is not a dictator, and does not operate a totalitarian sate, although bull-headed US policies could help this come about.

The Monroe Doctrine is not a sacred, sanctioned global policy, but a remnant of 19th century gunboat diplomacy which does not work too well anymore. Countries just don't appreciate being invaded or occupied by colonial powers any more. And, if Algeria, Vietnam, Iraq or Afghanistan are any indication, they will fight the invaderrs to the bitter end ....

There are a lot of things NOT to like about Chavez. or about trends in Venezuela. Bt, maybe it's better for the US accept that some countries just refuse to fit into the US mold, and deal with it !

Monroe doctrine??? Give me a break, our warmongering is ruining our country.

Since HB&B are now proven liers, I can't see how anything except their demise would be permissable. Even if there were a way to remove conflict of interest, they would do their best to circumvent, creating more of the same under similar circumstances.

Immediately, is when sell-side must begin to tell the truth and take positive corrective action simultaneously. They must come clean publically. I mean look, the FED and HB&B continue to lie! This "pile of lies" downward spiral will continue as long as this perception remains.

Once the trust is broken, I wonder how these thieves could earn it back ever again.

what a win-win situation for the Fed and Treasury Sec. simply talk about a strong dollar, and the possibility of a small raise later in the year,
and even threaten intervention and it gets a nice boost, while gold takes a hit.

jawboning seems to be working for the moment. and news releases are abound about how the spectre of rising rates will save the dollar. is that is it takes? a few commnets about a possible rate increase in 6 months... would a 1/4 point really be so dollar supportive????

Well said Jock. Any of us could hang our hat on some doctrine and do whatever we wanted if we abandoned common sense and democracy.

Something like "I don't like how MikeNYC manages his sock drawer, so I'm seizing it (at gunpoint of course) in order to manage it under MY free enterprise system....(read MY corrupt system) to benefit me. It's the Craig doctrine.

I expect a great deal of resistance and expense to subdue the evil and corrupt ruler of the sock drawer, which should be open to drilling by Kaimu and myself, but someone said Mike has one WWII potato gun and some yellow sponge cake, and is conspiring with his neighbor to get yellow pound cake, so he'll have to go.

Please read this with the humor intended.
Mike's sock drawer is completely safe from the Craig doctrine.

gettin long a little dcr with a frog-tight stop.

Interesting flag / pennant / wedge / whatever you call this triangle forming all morning on the S&P & DJIA

Financials are up...

Venezuela - Time will tell, but at this point I believe Chavez has no intention of allowing mining craters and highways in the Amazon, They've got enough oil to feed themselves.

We wrote a few posts ago about how the market would have to prove itself after the Memorial Day holiday and May month-end by pushing higher. It did not and actually moved down the last few trading sessions.

Now the number of very stong stocks has collapsed today and the number of very weak stocks has jumped dramatically. Since the number of very weak stocks is now much greater than the number of very strong stocks, it suggests that the market's upside is capped and the downside is once again in play.

JW
http://www.2globalmarkets.com

Thomson Financial reports: India's gold imports slumped over 59% year-on-year in May, as high prices dented demand for the yellow metal in the world's largest consuming nation.

Suresh Hundia, president of the Bombay Bullion Association told Thomson Financial News that the country imported around 28 tonnes to 32 tonnes compared with 69 tonnes a year earlier.

Fourth-quarter 2007 jewellery and investment demand in India came in at 71.1 tonnes and 31.0 tonnes, respectively - half the levels seen in the first quarter of 2007.

Mike's sock drawer is completely safe from the Craig doctrine

Yeah, but are minds are not safe from it. You Death To America rants are getting old.

Chickenpookie - is Chavez really "green"?

I don't think Chavez' blocking of strip mining is really due to his environmental sensibilities. Military men DO rather tend to mar the landscape with their bombs!

It's more like Chavez wanting HIS people and friends to benefit from mining, rather than yankees.

Death to America rants? Lol

can you define one of those for me?

and did you actually read what craig said about democracy?

There's the triangle breakout, looks like XLF lead the S&P up. If the SPX doesn't stall out here, looks like we continue up to test 1370?

This passes as logic?

Not invading Venezuela (or other nations) is "death to America?"

Tell me it's too much coffee.
Probably not Venezuelan coffee.

How SCHWEEEEETTT it I$....

GG - buying back

Thanks Fatty, I thought I was being as American as possible.

Whether someone is tired of what I write or not, it's MY AMERICAN RIGHT to do so.

It's hilarious that some fools would use the same means as those they accuse of being "dictators" to stifle free speech. The best example of hypocracy.

YEEEEEEEEEEEEEHHHHAWWWWWWWWWWWWWW!!!

anyone else get in on that dcr party?

WOW! Nice move Shark!

I've spent some time thinking of clever rebuttals, but all I'm left with is the comment from Casey: To ignore me is to pay the greatest compliment. The humility keeps me out of my greatest sin, ego.

Thanks...don't think this things done for the day nuther.

I guess Shark just got off the DCR----ollercoaster

BTW, FYI: My paternal family name is English. Captain English commanded one of the first three vessels to come to "America". My Aunt is a "Daughter of the American Revolution" as is my daughter. My maternal relatives came through Ontario, Canada where one of my great Uncles was in Parliament. My mothers direct family moved to Vancouver and then So. Cal. where they became citizens. And to top off my revolutionary anti-Americanism...I'm an Eagle Scout.

That's got to earn me a spot on the terrorist list along with guys named "Zeto".

Any takers on GFI? New lows.....or are we waiting?

funny...actually I did sell into the frenzy, will re-buy at opportune moment

I just read the following article: http://tinyurl.com/42m2sq

In it the writer appears to lay the case that backwardation and contango are the best measures to trade gold. Is anyone aware of a website that charts contango or backwardation or is anyone using this as a trading mechanism?

ALOHA !!

Just so you can see how versatile the US FED in its strategy to combat inflation look at this list of past FED comments on inflation.

The FED is famous for TALK! Add the latest BernankeSpeak to the list going back to 2005!

READ ON:

Thursday, May 01, 2008
Your Lying Wallet

From the Federal Reserve's statement on Wednesday, when it cut interest rates yet again:

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.

Keeping in mind that individuals and businesses use these forecasts for planning purposes, let's revisit the Fed's previous predictions about inflation:

March 18, 2008: "The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization."

January 30, 2008: "The Committee expects inflation to moderate in coming quarters"...

January 22, 2008: "The Committee expects inflation to moderate in coming quarters"...

December 11, 2007: "Readings on core inflation have improved modestly this year"...

October 31, 2007: "Readings on core inflation have improved modestly this year"...

September 18, 2007: "Readings on core inflation have improved modestly this year"...

August 7, 2007: "Readings on core inflation have improved modestly in recent months."

June 28, 2007: "Readings on core inflation have improved modestly in recent months."

May 9, 2007: "Inflation pressures seem likely to moderate over time"...

March 21, 2007: "Inflation pressures seem likely to moderate over time"...

January 31, 2007: "Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time."

December 12, 2006: "Inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."
And excerpts from some of Bernanke's past speeches and testimony:

7/19/06: "FOMC participants project that the growth in economic activity should moderate to a pace close to that of the growth of potential both this year and next. Should that moderation occur as anticipated, it should help to limit inflation pressures over time...the economy should continue to expand at a solid and sustainable pace and core inflation should decline from its recent level over the medium term...our baseline forecast is for moderating inflation."

11/28/06: "Core inflation is expected to slow gradually from its recent level"...

3/28/06: "Core inflation, which is a better measure of the underlying inflation trend than overall inflation, seems likely to moderate gradually over time."

7/18/06: "With long-term inflation expectations contained, futures prices suggesting that investors expect energy and other commodity prices to flatten out, and pressures in both labor and product markets likely to ease modestly, core inflation should edge a bit lower, on net, over the remainder of this year and next year."

Polls show that inflation worries Americans more than jobs, the stock market, or declining house prices. This Fed has proven itself either willfully deceptive about inflation, or incapable of forecasting it. And some want to give even more authority to this bunch? The only thing the Fed needs more of is congressional oversight.

posted by The Cunning Realist

Allen

Did you sell?

Ok I am confused today...

I was about to think gold would bounce up today but realize it should bounce down since BernankeSpeak was in play.

OK I am turning the trading off today... not the time to play when you are looking ahead rather than in the now... Bigger fish are playing in the pool today and stirring it up.

I hate it when in your guts you know which ways things should bounce, but the mass market

sorry i cut off my last line in frustration. It hurts seeing the manipulation being so blatant and yet people just follow it as a herd.

QT: still holding. Not enough gain given the China news. I have the "feeling" that if we get more weakness in either US or China economic news, FXP will jump considerably higher than it is today. Did you sell?

Craig, I'm shocked to hear that you are directly associated with Zeto. Are you guys going to attack my sock drawer too?

dcr back on

I hear ya Casey. Just powering down the monitor and heading outside.

slowly accumulating dgp

both guns

Feels like one of those day where we might just keep running into the close - I think 1380 on S&P is entirely possible today.

No worries Allen, your sock drawer is safe, at least with me. :>) You're democratically elected, right? LOL.

The fact the Dow is being held up today by the financials and the likes of GM doesn't give me a lot of confidence that the 12200 dike won't break. I've closed all of my remaining longs except msft which I picked up monday. It seems to have excellent support around $27.30, but if the dike breaks, I'll be out quick.

out for now

DCR party? congrats, shark...right now it's exactly one cent above my basis...;)

Thanks Craig. I'm relieved. My mom's side were also loyal DAR members, although I must admit I've visited the Middle East before...

I know we've covered this ground before, but it is amazing that FXP is up only about 2.6% after SSEC drops 7.73% and HSI 4.21%.

jeremy
DGP looks interestin

2nd

what is your opinion?
or wair untill gold goes under 850?

Chavez - It's not that I think he's green really, it's more like he adores popularity and Amazon preservation is the PC thing to do.

under water on everything I got today
SKF/VLO/SUN/TSO

vinod- holding off on DGP for now...

one more time for dcr...is 3 the charm?

allen & craig, at least you guys aren't Brandon Mayfield, a lawyer from Portland.

the guy (an Islam convert) was watching the news back in 2004 when the spain train bombings occured. two weeks later he gets a knock on the door at his office and the FBI arrests him. No charge, (they arrested him as a "material witness," no charge necessary! thank you 9/11!) no contact w/family, limited access to legal counsel. He's held for two weeks before he was released. His family didn't know where he was. What a nightmare.

Poor guy's story is all here:
http://tinyurl.com/6heupo

Flat on DXD from yesterday...

up $1 on FXP after a month underwater!

I am still holding until Friday to see what happens with the CPI. 85% cash

2nd
very good call on CAF today
I got out at 39.00 was in at 38.10

3rd time not looking like the charm

Advancing
Declining
volume vent heavyly in to declining in last 15 minutes

Russell 2000 is cracking today, losing the uptrend with rising volume in IWM. This confirms the top in all indexes for me.

[Bill Cara note: The Russell 2000 small cap index recently set a lower high in the Bear market correction and is now headed back down to a lower low, which will take IWM back to 2005 prices. Just think how badly those Buy-and-Hold investors must feel like. The only traders making money in this Rolling Bear were sophisticated, and possibly market insiders at HB&B. Mom & Pop is still being told this is a Bull market.]

has this old dog got one more run left in em?

LEH has cracked 27

[Bill Cara note: When LEH hit the Bear stearns fan on March 17, there was a very temporary panic, which sent the stock fown to $20.25, but the stock opened and closed that day at $25.38 and $31.75. The following day's close was $46.49. Management was operating in full bluff mode. Today, to this point, the stock is back down to 26 and change. Lehman still has to sell billions in treasury stock to stay in the game, and the market is not going to be kind to them.]

can this old dcr still hunt?

TWM, DUG, SMN, QID looking good today.

Grabbed more DIA 121 puts right at the peak.

H & B rhetoric hollow. ST USD manipulation destined to fail.

If I'm not mistaken Brandon now has a lot of money. He (or another in the same circumstance) was finally released and he was able to prove his innocence. IMO the conflicting factor was likely his wife, who was on camera wearing the head scarf, Islamic style dress, etc.

Remember when long hair got you there?

Are you suspicious of HB&B? Do you believe everything the domestic media mainstream provides? How about FETV?

There may be reasons other than what the U.S. media portrays why Chavez does something. Think readers know that from past postings by Jock or catching a BBC report.

You want insight into how Chavez may think when it comes to the U.S? To foreign companies? The IMF or World Bank?

I recommend two John Perkins books: “Confessions of an Economic Hitman” and “The Secret History of the American Empire”. It’s not about Chavez, but Chavez has read it (BBC report page 148 Empire book).

Perkins is an American (from New England) who served American corporations' interests overseas by providing economic forecasts as a Boston contracted consultant for the IMF and World Bank. He lays his role all out in “Confessions” and the in “Secret Empire” provides information from others including CIA operatives, reporters, other economic hitmen, and jackals.

You may not like the individual (why did he wait so long to publish? Why did he take bribes not to write about it?) He claims 9/11 changed him.

Just a perspective to see how some South American countries (and others) may look upon the U.S. government and corporate motives.

GG - buying more

It was looking like a nasty day for the ol' trading portfolio - but someone just hit my stink ask on one of my gold juniors - SIM.TO which I mentioned the other day

sold my 5,000 @ 0.34

The stock had hit a multi-year low today of $0.25 earlier today!

Woohoo!

Thank you market gods

The U.S. Securities and Exchange Commission may recommend this week that Moody's Investors Service, Standard & Poor's and Fitch Ratings include a new designation to the scale created by John Moody in 1909, according to people familiar with the plans. The changes may force investors to reassess the way they gauge the risk of securities backed by mortgages, student and auto loans and credit cards, said one of the people, who declined to be named before the announcement. The action could force banks to add capital to guard against losses or curb lending.
http://tinyurl.com/4gwtjg

[Bill Cara note: Sounds to me like the SEC is trying to protect Mom & Pop from a complete wipe-out.

BTW, I plan to write stuff tomorrow on the good job I think Chris Cox is doing in pushing the new rules for XBRL interactive data filings. This reminds me of the significant move the SEC made after Black Monday 1987 when they ushered in the SOES rule that permitted the average person to gain direct access to markets. Now and then, the people at the SEC do their job. Admittedly, it's a tough job.]

RE: Chavez

"Confessions of Economic Hitman" is worth a read. I think I read the whole book in a day! I haven't read "Secret Empire" although I am aware of it.

Remember when Chavez called Bush the devil?

He was holding a Noam Chomsky book!

http://www.cnn.com/2006/WORLD/americas/09/20/chavez.un/index.html

-> look at the picture!

feels like capitulation in the refiners...these companies were 2-3x higher a year ago...moving from 40% to 80% allocation on VLO/TSO/SUN...

TSO was a clever bull trap. I don't think the refiners will rally, even with oil falling, if the overall market is "tanking". Market is running on fumes now. I even let go of my core of PWE earlier.

MR. Chavez
Can read anything he wants too
But. He must also knows that dictator are gone/king and queen are done/communist authorial has fail and gone. (Some still in power because of us help like in china)
Only thing works is US style political/social/and economical system

Also I think that what is good for us corporation is good for us

aurator- have to disagree with you, man...let's see what happens..

aurator
when oil goes down refiners makes more money and they do rally

Wow! This is great. You guys make me look moderate.

REG - Join the party, beats freshwater fishing but not SW.

is there anything left in ABK/TMA?

Stocks, bonds and commodities all heading south? When was the last time that happened?

Casey: The thing about the herd is that it has existed forever and always will. I like to think I operate at the fringe or even outside of the herd but we are all probably members of different herds of varying proportions influencing to varying degrees the overall direction of the mainstream herd.

We all talk about change here but bigger picture it will be interesting to see how far from the moving average our local and global society strays and what it looks like as it reverts back to the mean and past it. Now, if only there were an objective way to define the mean.

FirstFed financial was up earlier but now down 12% on no news. Where there is smoke there is...

Opening 2X Long FXI at eod today. If it doesn't move above 140 tomorrow I'll exit.

Dave

Not saying Chavez is a saint, “just a perspective” to consider as traders.

Vinod- Don’t agree with “what is good for U.S. corporation is good for us” statement.

Could cite many examples, but here’s a couple.

HAL Can’t help to think when HAL charged for services NOT provided or overcharged the government for work, is good for you and me. Sure HAL fattens their bottom line with profits, but we as taxpayers pay.

GS I really don’t think when GS embraces a strategy it is necessarily in our (trader) or the public’s interest.

Is what's good for HB&B good for us? IMO, don't think so.

ABK is at $1.86, with 37.8 mil shs. traded.

It wasn't that long ago that the market was nervous about their AAA rating drop. WOW

Dave,

Don't be betting against me. I have a profit now in FXP...

:)

Author: Jim Sinclair

Dear CIGAs,
The euro is down hard today on the premise that this is the start of increased interest rates in the US, a statement that is totally ludicrous.

There are two possibilities here:
Bernanke and Trichet are in the midst of a pissing contest with the US Fed not paying any attention to the financial hell they are about to release.
Saving face at the Fed is more important than the cost thereof.

There is only one result possible:
Any nitwit knows what happens if you increase the Discount Rate when business is accelerating its downturn.
Now what happens if the Fed does not increase rates?
Bernanke has painted himself into quite the corner.
There is absolutely no possibility on earth that the Fed can start a series of increases as that will end the financial world, not as we know it, but totally.
Gold is a fishing line today. Friday it was a Rhino Horn.

[Bill Cara note: I can't comment on fishing lines and Rhino Horns or even Hindenberg Omens, but I do know that Bernanke and Paulson have been talking the $USD up, and that most goldminer stocks took quite a hit today. I have been saying that I will tell you when I think it's the time to buy. That's likely when the gold bugs are a lot more pissed that they are today.]

Refiner HOC coming back here, looks like others VLO/SUN/TSO are also.

Seamus
I was speaking in general

b0ss- JMO-> i think Dave is making a good trade...ask yourself if you're confident FXP continues to go up, or hoping FXP continues to move up...

Boss - take your profits...

Dave

Tony -

I think the market is still nervous about ABK/MBI failures, as can be seen in some of the bank loss estimates resulting from their downgrades from AAA. However, the powers that be have delayed until public attention has shifted away, as the uninformed public's attention is fickle. But the smart money understands the issue and they are selling Lehman, among others, hand over fist.

vinod understand, thank you . . I like living here in the U.S. also and like to see successful (ike Bill writes) "social equity" companies. Hey maybe even F will come back some day!

Although the Bahamas look like a tempting place to live after looking at Bill's photos and links from the Bahamas! ;)

Boss - here's some of the thinking behind my 2x FXI entry today.

* v low RSI (23 on the 9 day) - a level which has recently generated positive movement

* slight break under 140 - a level I see as support

* positive RSI divergence

* only 3% away from it's long-term (since June 06) up-trend line

BTW, I rely much more on the chart for FXi than the chart for FXp (inverse I know). FXP hasn't traded very long and the chart is too jerky to read much from.

Just my thoughts.

Dave

I was watching Bloomberg this morning and they had an analyst from Credit Suisse on in full cheerleader mode claiming that market was cheap based on... analyst estimates. He says that another 10% reduction in analyst estimates would be the maximum envisioned. Ha! This is the height of absurdity. Just read what Bill posted Saturday concerning the book by a former analyst called "Full of Bull".

The Decoy of the Falling Dollar
http://tinyurl.com/4ge4sz

Chickenpookie -

Amazon preservation is PC in the US and Europe, but not, I think, in South America where Chavez seeks to build his popularity. I doubt that Hugo cares how he is regarded by "greens" in N. America or Europe.

I wouldn't be surprised to see Las Cristinas and Las Brisas "green-lighted" within one year, but not to the benefit of KRY or GRZ ...

(I have no inside info; just an educated guess).

Stephen1985, thanks for the link. I think the following paragraph from the linked article helps explain why speculators have moved into commodities such as oil and agriculture:

"Some years ago I put forward a new theory of Kondratiev’s long-wave cycle* revealing its cause as the fluctuation in the propensity to hoard. This fluctuation is in turn caused by the centuries-old wrong-headed policy of banks, aided and abetted by the government, in obstructing the flow of the gold coin to the saver whenever he finds the rate of interest unacceptably low. The flow of gold in and out of the banks is the mechanism whereby the saver regulates the rate of interest under a gold standard. You cannot take away the saver’s right to control bank reserves with impunity. Gold is the natural conduit for hoarding. If you obstructed gold hoarding, the saver would have recourse by hoarding other marketable goods. This would, however, have some serious side effects. It would generate the Kondratiev cycle with its devastating flow of money back-and-forth between the bond and the commodity market."

I am unsure that a return to a gold standard would be workable, but I do think that allowing gold and silver to freely circulate as competing currencies (as proposed by the Free Competition in Currency Act) might help alleviate hoarding of commodities such as oil and food.

RH

[Bill Cara note: I'm all for a gold standard based on a true trade-weighted international basket of currencies.

BTW, tomorrow may be an important one for goldminer stocks. Time for a straddle? Any further $USD strength this week could push these goldminers below an important trendline on the Weekly charts.

http://stockcharts.com/charts/gallery.html?%24XAU

One thing that traders often ignore/forget is that goldminer producers usually produce a variety of other non-precious metals in combination, like copper for instance, which impacts the bottom line when those prices change. Also, inflation may help the top line (ie revenue from a higher gold price), but it also hurts the cost to produce gold, and the higher interest rates may affect their costs as well, and so the bottom line may be adversely affected.

However, when interest rates rally because of inflation reasons, there is usually a lag effect in that the price of gold usually rises faster.]

According to Lloyd's List oil tanker owners are eagerly awaiting the Mid East loading schedule hoping for some fresh demand for tankers because for the past two weeks the market has suffered from a lack of demand for tankers leading to weaker charter rates. Say what??? What about all that demand we've been hearing about? Then, per Bloomberg, you have the Iranians idling 14 tankers filled with heavy crude (lower quality than other forms of crude) which supposedly no one will buy at the the inflated asking price and the Iranians won't lower their asking price.... then you have the Russians setting up a deal to store crude in man made caverns near Gutenberg Sweden.... supply and demand? ... it is all too complicated for me
so I'm just staying away and watching as the intrigue of oil unfolds!

to all skip post: just me venting

Bert:

I know, it just irks me at times watching those in power playing the games which push normal people into the dirt. Today for some reason was a bit worse than normal for me.

I know so many people right now who are lost trying to figure what they should do... People talk about the crash to come, the change to come, etc: but it will be at the price of those we love, the average person being used as a commodity. That's not an acceptable price in my mind, and yet the average investor walks that direction, not wanting to take personal responsibility of choice...Yet, you just can't save people, that doesn't work either.

Re-balancing will come, and it will not be what anyone expects this time around is my guess, so I don't guess and learn from day to day how to trade in this market. I guess we are the learning curve now...

I am not saying anything that hasn't already been said here or pointed out. I am just venting.

apologies to all...

Vince Farrel posted this today-I leave it for the more educated to interpret:

Lehman Brothers (LEH - commentary - Cramer's Take) reported a big loss made worse by "hedges" that didn't hedge and actually worked the other way and exacerbated the loss. How can that be?

There was a brief article in the paper the other day that didn't get the notice I think it should have. Joellen Perry of the WSJ said in her article that the Bank for International Settlements (BIS) -- sort of a central bank to the central banks -- issued a report that said a key measure of estimating the value of subprime mortgage securities may be overstating potential losses of AAA-rated paper by MORE THAN 60%!

There is a thing called the ABX index which is supposed to track the value of securities backed by subprime mortgages. It's only two years old, but is widely used as a proxy for the value of subprime debt. The BIS says it's inaccurate because it covers only a small portion of the market, and it's used by traders to make bearish bets on the subprime market.

Forget the details. The index doesn't reflect what it's supposed to, and we may be far more negative on the AAA-rated collateralized bonds than we need to be or that are being reflected in the writedowns some banks have taken. The BIS says this index is off by 60%!

Turn the situation around a bit. If we could be that far off on this index, we clearly could be wrong on others. Well, looks like Lehman was. I'm sure part of the problem is that everyone was trying to set up the same sort of hedge, and when everyone does that, the pricing is all wrong. I bet we see hedge losses when the other investment banks report their results.

All of this makes me more convinced that some/a lot of the mark-to-market losses taken are going to be reversed in the coming quarters.

[Bill Cara note: The thing is none of us really knows. That's what makes markets interesting. If some of us actually knew, we would be taking major positions and the current prices would be far different than they are. In time, we get a better understanding and prices revert to the mean... Then things change--like house prices, interest rates, etc, and we then position ourselves accordingly.]

sign of the times:

http://tinyurl.com/6awthm

Lake? What lake? Can a 267 acre lake disappear?

http://tinyurl.com/6qrly3

Shark - DCR is an EFT? I put the ticker in Yahoo and was surprised to see what the excitement was about. Good job.
What is the difference between DCR/UCR and DUG/DIG?

Another note.

"Earth and Water"

As far as I see it the world is changing and it is changing faster than it appears.

USA - all countries can't stand it, The same thing goes for the Chinese, French, English, Russians and Japanese (probably missed a couple countries).

To those that live in this country that is a serious problem, the only thing is that the worldwide sediment has only progressively got worst since 2004. Let could lead to serious debate...

One must probably study history to see where a trend or solution could be examined. (I will not be open to a debate that things are different today than 1000 plus years ago, history does trend, humans follow patterns, as it is in our DNA, the only difference today than the past is information moves faster as so does money)

Time for my opinion and the other side of the coin... Preferably the round edge, not the heads or the tails. Only problem is that it is literally impossible to land a coin on it's round edge. Thus there will never be a middle ground. RIGHT - WRONG - LIB - CON - UP - DOWN <--- it doesn't' matter everyone is wrong because we are all to concerned about ourselves. More on that below.

Oh... by the way. Our society was not meant to be set up as a democracy, we are a republic. If our country actually paid attention to the "pledge of allegiance" instead of American Idol and desperate housewives we would know that.

The problem isn't the corruption. We could go down the timeline, all governments are corrupt, which is very scary. We are taught at a young age to do the right thing because it is the right thing to do.
Apparently when one is sworn into to political office or works up the corporate ladder into a "multi-national" ( or large company that can be hit by regulatory-risk), you now have the right to do the wrong thing because it seems to be the right thing to do?
When did that ever seem like a good idea? My guess is when your behind is on the line is makes sense.
So we are taught to do the right thing but the adults of our country don't practice what they preach.

When does it stop??? never, it will never stop. The system is corrupt so "we can win", know the rules break the rules don't get caught. Occasionally the crime is so apparent that, someone has to go down. So this could come back full circle to what the Knucleheads in our three branches of branches of government have not done. Congress, Executive and the Judicial have all let us down for what? Special interests, who's interest nothing more than their own. (more on this is a second).

Back to "Earth and Water" the line that Leonidas so humbly fired back at the persian messenger. Like it or not, if we step outside the game and get into the bleachers. The next decade could be a scramble for nothing more than earth and water. In secret empire (perkin's book) he describes what we and other parts of the world have done to collect natural resources across the world. The USA wasn't the only culprit, the whole world IS in on it, the USA was just the best at it.
Why did these countries take advantage of other countries because we all have superficially societal needs. (we or the world has to have NIKEs, IPODs, and reality tv). We would rather use their resources cheaply at the expense of their people than ours. This is something along the line of survival of the fittest. 1st world societies love to have their cheap goods, especially when it is at someone else's expense as long as they are not reminded on an MINUTELY basis of what the costs are.... exploiting other humans.

Now we have a problem, or the problem was here we just failed to address it. Do we consume our resources? or go out and find others? what do you do when they are gone?
Now there has to be a strategy put into place, how does the first world societies get resources???
I see that there are four options... Maybe more..
First is we debate it in the UN or other means.... Yeah sure that debates will work, just like how they were going to reform SSI (in congress) or better yet the UN is such a non corrupt form of mediation, (OIL FOR FOOD SCANDAL), policies that do absolutely nothing but benefit those who are in their pockets.
Second - counties directly negotiate with other countries, might work, problem is once some are given a glass of milk they might want cake. This is by far our best choice.
Third - sounds a bit fishy but step back and think. Lets impose Greenhouse gas laws across the world. Now to those economies that think it is their right to start their polluting industrial revolution just because for over 50 years the USA, Europe, China, Japan and Russia did it. So if we (UN) could impose rules to limit the amount of carbon output by counties we could in-fact keep them from modernizing at a record pace and curb the demand for those resources. This is a THEORY (not saying that global warming is true or not true but unfortunately it would work to a point until LIMITED LIABILITY kicks in)
Fourth - the worst of all choices (well UN is probably worst beause it tries to combat the constitution) is war. Heck the human movement is nothing more than earth and water, eventually all societies must fall and start over.

Russia is storing oil, I am willing to bet that since 93% of the world's oil is controlled by governments while the other 7% is in private hands (windfall profits tax MAKES NO SENSE) those countries will mostly look to get greedy and horde their supplies. Greed what a word, think that will cause problems down the road?
Would you??? But wait, we are first world citizens they can't do that to us.... It is our right to have cheap fuel/ IS IT???

My point to this long winded comment is that we GAVE UP OUR RIGHTS.
We live in a limited liability society.
We have became HUMANE. Don't hurt your neighbor (someone didn't tell your neighbor that because they will bang your wife and kill your kids just to drive your car).

(this is a USA statement, theory)
There was a time when the collective group as a whole, the USA had real pride to be a US citizen. Give me a sec here....
Now I am not talking about serving the country in the military. I am trying to expand on actually caring about what our history is, where it came from, and what does it mean today. We live in a limited liability society, we want all the perks but no responsibility of the recourse. If you were to walk down the street and ask 10 people two questions, who is the secretary of state and who was our last vice president. Remarkably you will find out that only two of ten people will know that Condi Rice is the Sec State and one in ten will know Al Gore was the last VP. This is a SERIOUS problem and here is why. They don't care... Again American IDOL, HOUSEWIVES and complain about GAS prices. (These are the people who VOTE! Scary).
Back to Limited Liability.... so now we have an undereducated society of individuals who really don'' even understand how our government is structured. We have people who don't have pride or cause to serve in the military or americorps or any PUBLIC SERVICE for that matter. Our role models aren't fighter pilots, Mayors or Fireman. The times that we live in now has defaulted, I will say that we have defaulted the responsibility to the FEW. Less people get involved in military and (or understand) government and more people turn their heads away because we believe it is A OK. Until crap happens, seems like crap is starting to happen now.
So we have left the responsibility of our "empire" in the hands of the few in a system that we know is corrupt. The problem I have with that is there are few involved, no real competition for their jobs and desperation to keep your special interests in tact. We need more people gunning for CIVIC DUTY, military service and having pride for what sacrifices were made for us to have paved roads. US citizens make SACRIFICES? - <--- that is another long winded comment.

We could say that we the people here in the USA want to be like a "security" - passively involved, look to someone else for profit limited liability - and pool profits. <--- that isn't what I thought was on the brochure when I signed up for US citizenship.

Unfortunately if the "fourth option" gets closer, this is going to be nothing more than a positioning on strategic choke points to cut off worlds supplies of oil. Why else attack afgan, patrol fleets outside of malasia and move more towards the panama canal, missle defense shield being built as far east as prague and romania. If this was a chess board, the muscle is placed in all the right spots, their problem is it can't be sold as beneficial. That puts us all in a rock and a hard place.

I hope we find a solution out of this mess and STOP SPENDING MY SOCIAL SECURITY benefits, after all we want to be treated like a security and pool our profits!

MY apology for the long post.

vinod- re UAUA:

http://tinyurl.com/5pz2r7

short-term, it's more fuel for the upside...long-term, i don't know...

Stephen1985:

"He was holding a Noam Chomsky book!"

You have a problem with Chomsky? Good grief.

Reg Crowder, were you in Los Angeles in 1990? If so, we may have crossed paths.

Norm,

I'm no expert on etf's or anything else. i don't know why DCR closed up 30 percent today whereas DUG..... another short-oil play was down 5 %. They trade independently of the price of oil. I just got lucky.

norm- interesting post...

IMO, the people that comprise the global power platform are no different that you or me...subject to the exact same pitfalls/dead-ends in their thinking, the same emotional decision-making, and prone to the same mistakes...i would wager were any of us sitting in the boardrooms where decisions that affect our future are being made, we would come up with very reasonable solutions...many of the barriers to our understanding are deliberately placed and maintained (again, IMO)-> as you point out, people today are no different that they were 1000 or 5000 years ago-> common sense will get you a long way towards filtering out the 'crap' that you rightly suspect we're being fed, and making sense of what you see..we're all struggling to understand where things went wrong...

2nd,

Thanks a bunch, although your post is much easier on the eyes!
You bring the point home with the boardrooms.

Where did things go wrong? Was it recently or has this been going on for decades?

Shark - Thanks for update. That is what I thought but wasnt' sure....

Is it time to short oil?

Nah norm, not necessarily. The way I'd play it is, if oil is down big tomorrow, DCR will probably get a pop, but be careful.

norm- if you want an honest answer: with human beings, things have always gone wrong->it's human nature...every once in awhile, we make the effort to make things better (electing leaders with the power to inspire is a good start), but it takes effort, which explains why we always slide back into the easy chair...ever wonder why tragedy, war, sickness and disaster often bring out the best in people?

DCR is a short oil play that will 'expire' on june 25... DUG is double the inverse of the Dow Jones Oil and Gas Index-> oil and gas companies benefit from high oil prices up to a certain level, at which point they begin to run up against falling margins and/or demand, so may or may not always (negatively) correlate well with the price of oil...at least that's my understanding..

DCR - up because it shorts oil

DUG - up because it shorts mostly oil companies

Sometimes they move together, sometimes they don't

While the SEC is at it, some kind of sell-side conflict of interest disclosure notice could be included.

I tried, gains and losses on DCR. Haven't reconciled the disaster to know + or -.

Stay away. It's highly manipulated and a sorry plsy considering all the others. It's a broken toy.

Hell will find you in due time. Don't create your own early.

testing the 52-wk low in shangahi, at 2992 right now...

2nd
it is time to buy FXI
also may jump in airlime tomorrow

Aurator,

That's a dark outlook, no?

vinod- not certain i'll see a better entry into CAF than the 38.32 this morning...i'm not a trend player-> at 3000, shanghai is back to where it was over a year ago, and over 50% off the high of 6124-> so buying right now makes more sense to me than selling (which is what at least a few investors are doing, right)...where do you see shanghai in a few months, higher or lower...then act accordingly...

My outlook may seem dark, depending on your perspective.

I'm in the Schiff/Puplava camp to the extent they are compatible.

I see the FED has no ammo, other than to continue to print money and hide M3. M3 at 15%+.

They are insane... and their ruse is coming to an end. They tried to BS us, even today, and failed.

IMHO; everything you thougt you knew prior to (2006 -) 2008, is wrong. We have a complete paradigm reversal. Posted before and laughed off. I am not here cuz it's more fun than sitting at the pool.

It's not only peal oil, it's peak credit.
The whole mess is... peak credit.

Everything you ever thought you knew about credit,
has reversed. For the rest of our lifetimes.

I intend to save my own arse, and I hope you save yours.

My money is on a paradigm reversal and complete collapse of our monetary system because no-one seems to have a clue how the accurate financial model works.

It's a shame, people do, and are ignored.

How much pain will it take, to flush out the ignorance of the current financial syatem?

We can deliver as much as is necessary.

the unwinding process is always painful, but it's manageable...a total collapse is not going to happen for the simple reason that life goes on...if it was my household on the verge of collapse a few things would be forgiven and the pain shared by all-> it would be no different for an entire society, but i don't think it comes to that...

Gold seasonal chart: click to enlarge

Mohsen Talaie, the deputy foreign minister in charge of economic affairs, said Tehran was pulling its money out of euro instruments (presumably Bunds, BTps, EIB bonds, etc) to avoid sanctions over its nuclear weapons programme.

“Upon the decision of the government’s task force a segment of Iran’s foreign exchange assets will be converted into real assets such as gold and stocks,” he told Iran’s Etemad-e Melli newspaper.

Europe is planning to freeze the assets of Iran’s biggest bank Melli. A draft communique for the EU-US summit on Thursday confirms that Europe is ready to join the crack down on Ahmadinejad.

It all goes to prove the gold bug axiom that nations - like people - will invariably turn to bullion as the ultimate store of value when all is threatened.

Iran’s demarche did not seem to help gold prices today. It slid $9.5 to $883 an ounce, off almost $150 since the giddy heights of February, despite the surge in oil prices. But then the gold angle to this news has not been given any prominence.

But then too, there are a lot of headwinds. As you can see from this 26-year season chart, gold tends to have a rough patch from April to early July. It then rockets in September and October (ceteris paribus).

The Iran news may have hurt the euro, which dived in morning trading. The concerted drive by the Fed, the US Treasury, and even President Bush to talk up the dollar before the G8 meeting in Japan may have spooked the dollar shorts. Hank Paulson used the word “intervention” for the first time. It would be dangerous to take on the combined might of the world’s fortress banks.

With oil at the current price, Iran is building up reserves fast. If it parks a 20pc or so of the build-up in bullion could be enough to swing the gold market (tiny by comparison with energy).

But then you never know. These regimes talk with forked tongue.

When I asked Barrick Gold’s Peter Munk in Davos whether it was significant that Vladimir Putin had ordered his central bank to switch 10pc of Russia’s reserves into gold, he just laughed. “That must mean Putin wants to sell gold,” he said.

Nothing is ever what it seems.

Posted by Ambrose Evans-Pritchard on 10 Jun 2008 at 13:18
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...i wouldn't underestimate the resilience or resourcefulness of the american people...they may spend their time watching american idol and desperate housewives in the absence of more compelling distractions, but as mentioned earlier, tragedy or disaster usually bring out the best in them, and in my experience they're more than up to the challenge...JMO...

Looks like kaimu must be out surfing, as I would have expected him to pick up on Bill's comment earlier:
"Bill Cara note: I'm all for a gold standard based on a true trade-weighted international basket of currencies."

I would venture, very cautiously, that if you have a gold standard, then there is no need or value in a national currency, beyond the seignorage (sp?) fee from minting it. In fact one of the major benefits of a gold standard is that when a country runs a deficit, gold leaves the country in the normal course of paying for the excess imports, so the amount of money in circulation in that country declines, and consequently so does economic activity, until the "living standard" of the country is reduced to the point that it now consumes as much as it produces. Just the same as for an individual or family.

Its all just IMHO of course (never studied economics) but if someone can explain in simple terms how fiat is superior to this natural flow, I'm eager to be educated.

major technical damage seems imminent on the gold chart.

one more time, cmg is breaking down (that's Chipotle.) like i said at $135, there will be many chances to make money all the way down. there have been at least three major, easily identifiable short entries, and the naked calls have had fat, fat premiums all the way down. fat.

a LOT of hope was sold and pocketed.

just like squeezing dollars from greasy burritos.

and now, six days of corn up and more of that as far as the eye can see and nobody wanting anything to do with a tomato can't be helping.

note that the part of casual dining that has done well has significant overseas exposure. like yum. cmg, no.

NOTE: this is one ugly chart and they have a fundamental headwind. BUT, as they get down below 40 times earnings they are not so obviously overvalued as at 135. it's still a growth story until it's not. at some point the short trade will get hammered. i just don't think it is just yet.

just saying it with a close stop and a shrug of my shoulders if i'm wrong, as could easily be the case.

did i say the gold chart looks ready for major technical damage? if so, i'll look at dzz.

putting it out there:

short gold
long dzz
short $10 burritos

long jeezy. i put on for my city.

Hi cyderman,

"In fact one of the major benefits of a gold standard is that when a country runs a deficit, gold leaves the country in the normal course of paying for the excess imports, so the amount of money in circulation in that country declines, and consequently so does economic activity, until the "living standard" of the country is reduced to the point that it now consumes as much as it produces."

Does your statement above imply that domestic goods would become more affordable after gold leaves the country to pay for excess imports?

Also -- changing the subject -- the gold/oil ratio is currently at 6.65, which is much lower than its historical average of 15.2 (see http://www.zealllc.com/2005/gorex3.htm for more details). The probabilities are good that the gold/oil ratio will mean revert back to 15.2 (i.e. the dollar price of oil will likely drop or the dollar price of gold will likely rise), therefore it would make sense to be long gold and short oil until the mean reversion is complete. Shorting oil *might* be the more profitable trade at this time (see http://www.zealllc.com/2008/gameoil.htm)

RH

Disclosure: I'm currently long gold, and am selling some of my oil and gas stocks.

OT: Jet Man, this is how gold is going to soar in the future.

http://tinyurl.com/37kamb

2nd
take a look at MRK and PFE
look at RSI 7-14-30 for PFE and divident
also MRK will cover cap
But will have to keep them for may be three month
I do not think they will go down much

The charts look like train wrecks for MRK & PFE. What do they have in their pinelines to prop them up in 3 months?

nothing...which is probably why vinod is pointing them out ;)...it seems like the same groups of people congregate at every stage of a train wreck: good samaritans and emergency crews-> curious onlookers/reporters-> fascinated onlookers-> morbidly fascinated onlookers-> investigators-> clean up crew/opportunists-> builders...as contrarians, i guess vinod and i are drawn to the same kinds of charts-> a little morbid fascination never hurt anyone (LOL), but we act as detached investigators/opportunists for the most part, knowing a high percentage of these wrecks recover quickly...(analogzing only here, alright...NOT saying we would fit in the same category given a real train wreck)...

I almost jumped on the DCF train wreck yesterday morning... couldn't log in to the brokerage... doh.

Train wrecks in the stock markets are sometimes a good 5-10 day buying opportunity... especially ones that seem to have flown a few hundred feet off the tracks.

I find decent returns during or just after options expiry week and selling the 1st week of the month on stocks that have gapped down. I should have taken my own advice and sold GE after that happened in April... bought at the low and still holding lower for the delayed dividend.

Why did the selloff in MRK happen Jan 1? Why did they converge with PFE in Feb - along with NVS? Pricing suits? Product liabilities?

http://tinyurl.com/3vmlzl

How about Bayer?

I tend to stay out of drug stocks after my haircut in Hemosol.

Some more train wrecks... CROX, UBS.

Actually it's looking like somebody derailed a bunch of stocks just after Jan 1... perhaps some forex sales or changes to government policies? It can't just be the credit crunch... isn't that just a side effect?

ALOHA !!

WOW ... Jim Sinclair mentioned this article with regards to a derivatives "clearing house"!

Here's a bit of the article that I focused on ...

"June 10 (Bloomberg) -- Regulators and banks agreed to changes aimed at easing the risk of a collapse in the $62 trillion market for credit-default swaps."end quote

It is interesting that "We The People" who are now bailing out these banks just to stay afloat have been given the task of creating yet another even more giant entity(clearing house)that we will have to bail out! So the plan is to take a lot of smaller failures and combine them into one BIG one! The same entities that created the problem somehow will solve it ... Hummmmmm ... where have I heard that before?

"This will reduce the systemic risk when a large counterparty fails,'' Tim Brunne, a Munich-based credit strategist at UniCredit SpA, said in an interview today. ``A large portion of the market would be trading against the central counterparty, and that would be a good thing."end quote

WOW AGAIN!!! These guya are PLANNING FOR FUTURE FAILURES! How can the credit bubble be over when all the major banks are planning for more failure?

"A central counterparty, more automated trading and settlement and other fixes will help improve the system's ability to manage the consequence of failure by a major institution, and we expect to make meaningful progress over the next six months,'' Geithner said."end quote

WOW x 3 !!! We already have a CENTRAL COUNTERPARTY ... its called the US TAXPAYER! We work-a-day lugs are whats backing the US PESO, not the faith and credit of the US government, because the US government would not exist if we did not pay taxes. The US government like all government has no ability to produce income they only steal(tax) it. The US TAXPAYER is the ultimate COUNTERPARTY!

We TAXPAYERS are being set up to take the BIG FALL! These guys are so arrogant that they are already patting themselves on the back for this "clearing house"! All I can say is ... GOOD JOB BROWNIE!

I'm putting NOT.V back on my radar today - Looks from the chart that a trip to 3.30-40 could be in the cards this week

RE:number2son

"He was holding a Noam Chomsky book!"

You have a problem with Chomsky? Good grief.

-> I have no problem with Noam Chomsky. In fact, I have a number of his books and DVD's. If anything, you could say I support Noam Chomsky.

Craig - re: "My paternal family name is English. Captain English commanded one of the first three vessels to come to "America".

Seems we share a common history!
My paternal ancestor was on the "Anne", which arrived the spring after the Mayflower, lol. I don't remember the captain's name, unfortunately. I guess your ancestor was either the captain of that ship, or the next one (the "Little John")?

Good morning.

Here are your Cara 100 Ratings Changes:

Upgrade:

CCJ - to Buy @ UBS

Target Price Raised:

ATVI - from $33 to $40 @ Lazard Capital

-------------------------------------------------

Have a great day.

ALOHA !!

IF OBAMA WINS?

I seriously doubt that the Dems will keep Bernanke onboard or Hank Paulson, two BUSHIES! If they are going down witht heir tails on fire they will want to appoint two "money heads" of their own choosing with a bent on what the "heretofore unknown" Dem agenda to fix the US PESO!

This article from the Cunning Realist points out that Bernanke has to be feeling the hot breath of OBAMA on his shoulder! This article also points out that other financial bloggers are seeing the BIG PICTURE about the rising prices of commodities and the "real culprit" ... the US PESO(aka: the US government)!

READ ON:
Monday, June 09, 2008

Inconveniently Calm In The North Sea
On March 18, referring to the Federal Reserve, I wrote:

They're telling you what they're prepared to do. If it drives oil to $150 or $200, a gallon of gas to $8 or $10, and the dollar down another 25%, they will do it. I can't emphasize that enough. That doesn't mean go out and load up on gold or oil. They've had huge runs, are infested with momentum players, and are due for a pullback.

On that day, oil closed at $109. Last Friday it winked at $150, trading just shy of $140. (And checking on the "due for a pullback" part of that post: oil fell 8% in the three trading days after March 18. Gold immediately plunged $81, finally bottoming in early May after dropping $153 from the day of my post.)

Last week was important, because there was no oil-specific excuse for what happened. No weather in the North Sea, no fog at U.S. ports, and nothing new for the peak oil prophets to get breathless about. The media was forced to focus instead on central bank/currency factors. I've warned (most recently in this post) about the danger of a Treasury secretary losing credibility and called for Hank Paulson to be replaced. With Paulson's credibility shot, Bernanke tried to talk up the dollar last week by getting hawkish on inflation. But especially post-Bear Stearns, Bernanke and this Fed have as much credibility as Paulson. So we have a dangerous and exceedingly rare situation in which a Treasury topper and a Fed chairman have both lost the ability to influence the foreign exchange markets -- and by extension, the price of oil -- for longer than a few hours. And we're coming into what's traditionally the most volatile part of the year for financial markets. This should be interesting.

If you're Bernanke, the playbook from the past few years stays the same: you continue to do and say whatever's necessary on any given day. You also hope that something comes along to both serve as an excuse for the spiraling price of oil and distract the public from it. If it also boosts McCain's chances in November (and therefore the prospects, currently dim, for Bernanke to stay on at the Fed for another term) all the better. That, one would think, is where the "rogues" come in.

posted by The Cunning Realist

Bill often speaks about the rampant corruption in US politics, and the linkages to the just as corrupt business environment. It may not be new, but the attached story outlines just how much these organizations bleed corruption & self interest.

http://vinnycatalano.blogspot.com/2008/06/enron-loophole.html