Wednesday, May 21, 2008

Daily Economic News

It's been a long day and there is so much I want to say, but there just isn't enough time.

I just got in... Attended my son's H.S. Graduation Awards Ceremony tonight and I'm proud to report that he's graduating with High Honors (4.2GPA).

One wonders, with the economic situation being what it is, what opportunities will be available to him 4 years from now when he has a B.S. Degree in hand. Scary to even contemplate...

Anyway, much happening in the markets of late. The US Dollar index is plummeting again. Will it make another historic "all-time low" this time around? I think it's quite possible, though 70 will provide very tough downside resistance.

And how about that Oil? Holy Crap--Light Sweet Crude Oil just broke through $135 in Asian Trading tonight! The Chart below hasn't even had a chance to catch up yet.... Anyway, with that said, I want you to note the severely overbought condition in Oil. Don't be surprised to see a pullback sometime soon, but I honestly don't think it will fall below $110 and when it does, it won't stay down for very long. Expect $150 tops before a nice correction.

Gold, as I've been forecasting for weeks now, is rebounding nicely. It has cut back through the 50DMA and the MACD has decidedly turned upwards. I still stand by my earlier comment: $1,200 gold by end of 2008.

The DOW on the other hand is looking pretty ugly -- it sliced back through its 50DMA and the MACD is also turning down. I don't think we'll test the March lows just yet, but think it's inevitable over the longer run -- and when we finally do: look out below!

I expect tomorrow to be a very interesting day also... All the Asian Indexes are currently in the red on inflation concerns, and existing home sales data gets released tomorrow at 10:00 EST. Consensus expects the numbers to come in at 4.85 Million (annualized) sales -- keep your eye on market reactions.

With that, I'm going to have to call it a night (told you I didn't have much time). I hope all of you have a great evening.




Patrick said...

WSJ: Oil Monitor (IEA) to Slash Estimate Of World's Supply of Crude

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

Peak oil — once considered the domain of conspiracy theory buffs — has become hard economic fact, as fears of an oil production shortage within five years sent long-term oil futures to almost $140 a barrel today.


“The little things pile up; if it’s not one thing, it’s another. This is generally the case when supply and demand are so tightly matched there is almost no margin for error. That’s where we stand now in terms of global oil demand vs. available daily supply.”

- - -

Wall Street's Racket Has Gone Too Far, and We're Going to Pay the Heavy Price

The important part of this is that the money is gone. What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage.

The logical conclusion of all this is not what the American public wants to hear: We have become a much poorer society and are now faced with the unavoidable task of making major changes in how we live. All the three-card monte moves at the highest level of finance lately amount to an effort to avoid the unavoidable, acknowledging our losses. Certainly the political fallout of all this will be awesome. But it's not about politics, really. It's about the entire society's inability to form a workable new consensus of reality.

It's hard to predict how long these institutions at the heart of our economic system can linger in the "far from normal" limbo of pretending that money has not been defaulted out of existence. Since the same process is under way in Great Britain and Spain, places beyond the control of Bernanke, Secretary Henry Paulson and the Boyz on Wall Street, and since actions and reactions there will affect the destiny of money here, it’s hard to escape the conclusion that we're at most months away from the brutal recognition that Wall Street has managed to bankrupt itself (and, by extension, the United States). This is the dark heart of the matter of which no one dares speak.

Anonymous said...

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Blemish and Pittance: The New Place

Anonymous said...


Congratulations on our son's graduation. If he is anything like his old man he will be many steps ahead.



Randy said...

Appreciate the links and info Patrick -- scary as usual.

PDM, Thanks for your vote of confidence.