As to the cause for the high oil prices, there are some who now suspect that hedge funds are buying at spot prices and hoarding it in order to squeeze the shorts. In any case, the US Energy Information Agency reported that inventories plunged -4.6 million barrels last week, which was much more than the -900K bbl consensus. $WTIC surged over $136/bbl. Speculating that the ECB will hike rates in July to counter the specter of higher inflation caused by higher oil (and food) prices, traders sold the Financials (XLF -2.90%) very hard, and crushed the $USD (-0.53% to 73.26) against the Euro (+0.44% to 1.5535), the Pound (+0.44% to 1.9630), and Yen (+0.56% to 93.68).

At the end of the session, the DJIA (-205.99 -1.68%), the S&P 500 (-22.95 -1.69% to 1335.49) and NASDAQ Composite (-54.93 -2.24% to 2394.01) were smashed, led downward also by the Tech sector (XLK -2.57%) as well as Financials, where the Banks ($BKX) and Broker-Dealers ($XBD) each dropped -3.6%.

Energy (XLE +0.61%) was strongest, including the big Oil Stocks ($XOI +1.10%). Accordingly, the Toronto equity index managed to lose just -19.68 -0.13% to 1716.42. In addition the Canadian index ETF (EWC +0.77%) was the only one on the US board yesterday to gain.

On the corporate M&A front, Belgian-Brazilian brewer InBev (ABV) made an unsolicited bid to acquire Anheuser-Busch (BD) for $46 billion, but politics may stand in their path. Also, Staples (SPLS) reached a deal to buy Corporate Express (CXP) for $2.6 billion in cash, putting the company into the leadership for sale of office supplies in the US.

US Treasury selling –at least for the 30-year bond-- continued as the $USB dropped -0.44% to 113.45 and the yield lifted to 4.702. However, yields dropped on the shorter duration Treasuries as this was the safe-haven play when equities were getting smashed.

Cara 100 winners on the day were PDA (meat packaging) +3.2%, SU and STO (oils) +1.9% and TCK (diversified metals) +1.3%. Losers were all over the board, with WFMI -5.7%, WHR -5.5%, GOL -5.4%, and IBN and CHRW down -4.5%.

With the higher oil prices, the US Airlines ($UAL) were hammered -6.1% as traders acknowledge there is no airline that could possibly make a profit at $130+ oil.

At the end of the day, $WTIC Crude Oil futures gained 5.07/bbl to 136.38/bbl and $GOLD futures jumped +11.70/oz to 882.90.

This morning, the $USD futures are much stronger to 73.90, with the Euro futures down hard to 1.5417. Precious metal prices are getting hammered: at 8:19am ET, the Gold, Palladium, Platinum and Silver spot prices are: 865.06, 421, 2004, and 16.50 respectively.

Crude oil prices are down to 133.72 on the $WTIC and 133.82 on the Brent.

The equity futures are up +82 to 12181. Overnight, in Asia-Pacific equity markets, Australia lost -2.31% to 5433.2, Shanghai lost -2.21% to 2957.53, Hong Kong was down -1.30% to 23023.86, and the Japanese Nikkei was down -2.08% to 13888.6. However, India’s Sensex gained +0.43% to 15250.2.

KeyCorp (KEY) just announced they will cut their dividend and raise +1.5 billion in fresh capital.

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Comments & Outlook

Yesterday’s comments, though brief, were particularly relevant.

Inflation in Japan hit a 27 year high. Inflation has become an issue everywhere in the world, while economic slowdown doesn’t appear to be as bad as anticipated. That is not a good mix for lower interest rates. The consensus is growing that rates have bottomed and may rise later this year.

Wal-Mart (WMT) traded at a 52-week high of $59.95, closing at $59.78. We issued a Sell Alert on 2008-06-06 at $58.37. The stock should have been bought last September into weakness in the low 40’s and sold this week into strength in the high 50’s.

Inflation is no longer a notion that can be swept under the carpet. This has become a serious issue as central banks can no longer ignore the need to raise rates. The European Central Bank may take the lead on that and the Fed would then be in a dilemma. If they don’t raise rates immediately, then the recent gains in the $USD will be obliterated, and the US inflation rate will soar further.

So my thinking is that the Fed and Treasury Heads will ask that the ECB and BoE hold the line on rate increases at least one or two more meetings, and that joint communiqués are issued wherein all central banks talk like hawks, but don’t take action. That would serve to push oil, food and gold prices lower, which is the central bankers’ main need at the moment.

I am still waiting for the bottom in gold, and believe we shall see it when oil is below $100. The bond market probably reached its peak in April.

On the Wal-Mart point, the WMT dropped -2.11% yesterday to 58.52. I believe the price is headed lower based on relative values in the market (although maybe not today!), but I do acknowledge that the recent operating performance has been very good.

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Links & Charts

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International Economics Review

US Economic Calendar.

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Knobias Cara100 Tables

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Cara 100 Daily RSI-7 Charts

At least one RSI value >70:

Ticker	Last	RSI-7M	RSI-7W	RSI-7D	Zone
GGB	48.15	89.90	70.84	42.54
SYT	61.00	87.55	57.16	40.60	Sell alert (trig. 4 days ago [on 2008-06-06 at $63.52, -3.97% chg], after a 1 day DZ)
ECA	91.34	86.30	63.75	52.54
ATVI	33.20	84.82	77.97	44.55	Sell alert (trig. 2 days ago [on 2008-06-10 at $33.80, -1.78% chg], after a 1 day DZ)
PBR	66.18	83.16	55.59	38.64
WMT	58.52	80.85	74.60	53.00	Sell alert (trig. 4 days ago [on 2008-06-06 at $58.37, +0.26% chg], after a 1 day DZ)
SU	67.28	79.01	63.76	50.14
TT	46.49	76.65	65.62	56.92
EXC	87.57	73.67	64.33	47.04
TS	62.98	72.74	75.59	56.09	Sell alert (trig. 2 days ago [on 2008-06-10 at $63.23, -0.40% chg], after a 3 day DZ)
PDA	58.24	72.07	57.35	43.15	Sell alert (trig. 8 days ago [on 2008-06-02 at $63.80, -8.71% chg], after a 3 day DZ)
NKE	67.44	71.49	58.80	47.94
STO	37.75	71.20	62.93	47.28
RIMM	131.79	71.18	60.16	40.29
CVX	99.42	70.76	64.15	50.80
DELL	23.45	52.18	73.50	60.98

At least one RSI value <30:

Ticker	Last	RSI-7M	RSI-7W	RSI-7D	Zone
UBS	22.62	21.23	19.91	28.18	Accumulation Zone (for 1 days)
BC	12.93	21.92	24.45	25.52	Accumulation Zone (for 1 days)
ERJ	31.68	23.34	20.14	11.69	Accumulation Zone (for 7 days)
GOL	12.22	24.86	23.92	15.40	Accumulation Zone (for 2 days)
GE	29.83	25.87	27.96	32.17
SBUX	17.57	26.52	49.43	47.54
BDK	59.22	26.57	22.52	23.36	Accumulation Zone (for 1 days)
BMY	19.93	27.26	29.57	17.62	Accumulation Zone (for 2 days)
WFMI	26.82	28.50	24.95	27.27	Accumulation Zone (for 1 days)
DB	94.30	29.63	20.35	10.15	Accumulation Zone (for 2 days)
GSK	41.39	31.16	36.14	21.07
SNDK	24.48	31.64	35.02	21.45
JCP	37.43	33.42	31.66	26.04
WHR	65.32	33.42	21.09	20.21
NOK	25.55	33.98	26.22	21.70
GFI	11.70	34.10	26.99	17.77
KB	58.94	34.37	35.90	25.83
IBN	32.63	34.60	24.28	19.50
BA	73.31	35.34	29.15	18.27
DEO	76.63	37.36	29.20	36.22
SWK	46.30	37.88	30.98	28.75
PAYX	32.52	38.01	29.63	22.70
ABV	64.40	38.50	30.52	21.30
HDB	80.55	38.50	25.86	19.82
ERTS	46.07	39.05	32.57	24.58
GS	162.40	39.77	34.62	25.59
BBBY	28.91	40.45	33.53	19.59
PTR	129.44	41.97	40.08	28.16
UTX	66.65	42.60	29.28	24.43
CHA	57.68	43.65	32.92	18.81
DOW	38.34	44.89	41.33	29.17
INTC	21.81	46.14	41.15	24.36
CHL	67.10	46.15	26.97	18.90
RY	47.46	46.70	44.96	24.42
HBC	80.00	47.15	39.30	18.26
TEF	81.15	50.13	32.85	28.47
VIP	30.23	53.07	41.32	22.73
LLTC	33.74	55.80	48.67	22.00
RIO	34.44	58.07	40.11	21.52
BBD	21.24	58.68	46.76	26.79
CHRW	58.82	59.45	44.03	25.59
BHP	80.35	61.80	48.90	26.74
ABB	29.47	62.92	48.81	17.92

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International Equity Markets Review

Europe

Here is the latest session data for the bourses of Europe.

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Here is the latest session data for the London stock exchange FTSE.

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Here is the latest session data for the German DAX.

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Here is the latest session data for the French CAC 40.

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Here is the latest session data for the Milan Italy stock exchange MIBTEL.

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Here is the latest session data for the Swiss market index.

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Asia-Pacific

Here is the latest session data for the Asia-Pacific stock exchanges.

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Here is the latest chart for the Japanese Nikkei 225 index.

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Here is the latest chart for the Singapore index .

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Here is the latest chart for the Shanghai Composite index .

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Here is the latest chart for the Hong Kong Hang Seng index .

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Here is the latest chart for the India BSE 30 index .

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Here is the latest chart for the Australian All Ordinaries index .

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US Equity Markets Review

DJIA (interactive) chart

NASDAQ Composite (interactive) chart

Table 14: Dow 30 List

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
CVX	99.42	0.64	0.65%	3.52%	-1.00%	1.73%	6.38%	12.77%	10.60%	22.20%
XOM	88.61	0.72	0.82%	3.34%	-2.01%	-1.19%	-5.24%	2.23%	-1.85%	6.68%
WMT	58.52	-1.26	-2.11%	1.46%	2.50%	3.30%	24.78%	16.46%	19.36%	17.49%
MCD	58.75	-1.02	-1.71%	1.33%	0.10%	-3.96%	1.12%	8.29%	-6.94%	14.63%
AA	39.32	-3.40	-7.96%	1.08%	-5.41%	-6.65%	8.83%	4.13%	8.83%	0.05%
KO	57.14	-0.87	-1.50%	0.78%	-0.52%	1.13%	-6.47%	-3.92%	-9.26%	10.67%
PG	66.20	-0.46	-0.69%	-0.38%	2.05%	0.72%	-8.45%	-0.69%	-10.35%	5.00%
HPQ	46.48	-1.09	-2.29%	-0.70%	-0.09%	4.99%	-6.69%	-3.01%	-8.47%	1.29%
VZ	36.67	-0.85	-2.27%	-0.84%	-2.91%	-3.78%	-15.14%	4.15%	-17.54%	-15.72%
MMM	75.27	-0.73	-0.96%	-1.43%	-2.12%	-2.47%	-9.00%	-3.44%	-11.08%	-11.76%
MSFT	27.12	-0.77	-2.76%	-1.53%	-3.76%	-8.93%	-23.00%	-7.38%	-20.47%	-9.66%
DD	45.89	0.17	0.37%	-1.88%	-3.65%	-6.37%	4.92%	-1.46%	0.00%	-9.54%
JNJ	65.20	-0.42	-0.64%	-2.03%	0.49%	-1.82%	-1.08%	4.42%	-3.48%	4.71%
GE	29.83	-0.50	-1.65%	-2.04%	-2.36%	-7.73%	-18.85%	-10.69%	-19.44%	-20.37%
DIS	33.27	-0.56	-1.66%	-3.14%	-1.74%	-3.09%	4.49%	6.67%	4.75%	-2.66%
IBM	123.25	-2.69	-2.14%	-3.37%	-4.86%	-2.63%	17.73%	5.80%	15.20%	19.41%
UTX	66.65	-0.43	-0.64%	-3.77%	-5.10%	-11.04%	-11.38%	-2.52%	-12.78%	-5.03%
CAT	78.93	-1.17	-1.46%	-4.28%	-5.12%	-6.11%	11.75%	8.70%	7.07%	0.23%
HD	25.91	-0.80	-3.00%	-4.67%	-5.54%	-9.88%	-0.77%	-1.11%	-8.77%	-31.29%
GM	16.12	-0.69	-4.10%	-5.23%	-6.01%	-20.20%	-33.96%	-25.95%	-41.40%	-49.26%
BA	73.31	-0.36	-0.49%	-6.04%	-10.74%	-13.83%	-15.37%	-0.12%	-17.35%	-24.85%
T	36.14	-1.08	-2.90%	-6.13%	-8.53%	-7.95%	-11.85%	0.14%	-8.41%	-9.92%
MRK	35.73	-0.66	-1.81%	-6.39%	-7.58%	-8.78%	-37.72%	-15.57%	-40.84%	-30.01%
PFE