We have New Global Financial System, hence, we need to see "PROACTIVE" regulatory system than reactive crisis management. The "SEC" or other regulatory entity, banking industry, should have established good guidelines and control procedures to prevent such mess as ARM fiasco.
Of course, as I noted before, the ARM fiasco was a big plot by some bankers when they repealed "Glass-Steagall" act. But only God knows all the truth!
As noted, we have new global financial system calling for new regulations with very good control procedures which will prevent fraud or financial crisis.
PROACTIVE REGULATION than reactive crisis management!
~~~
Bush Seeks Financial Regulation Overhaul
Saturday March 29, 6:54 am ET
By Martin Crutsinger, AP Economics Writer
~~~
Wise Bush, testing the water with TS Paulson, then, comes out with the news as well.
While many are against the war, we certainly need to understand that the religious extremists are relentless with false understandings, from our perspective, of God's Will.
For example:
http://www.islamreview.com/articles/thechristiandifference.shtml
Also, Muslim extremists highest calling is to kill NON-muslims. I don't know much about Islam as I haven't read much about it. However, I know Bible as I studied Biblical Studies.
The point is we are fighting against the very fundamental differences which noted on the above link. I don't know that is accurate information on Isalm verses, but Jesus verses are correct. If anyone sees the Islam verses are incorrect, it is good to let the author, Abdullah Al Araby, know.
We are in confusing times as we have the war and conspiracy theories, but when we ponder the events, it is not surprising as it is written in Revelation that we will go through Tribulations.
Of course, if you don't believe in Bible, it is your choice.
In conclusion, I think that the new effort for "Financial Regulation Overhaul" is an excellent progress toward better economy.
~~~
Bush Administration Proposes Sweeping Overhaul of Financial Regulation, With New Powers to Fed
WASHINGTON (AP) -- The Bush administration is proposing a sweeping overhaul of the way the government regulates the nation's financial services industry from banks and securities firms to mortgage brokers and insurance companies.
The plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained by The Associated Press.
The Fed would be given broad authority to oversee financial market stability. That would include new powers to examine the books of any institution deemed to represent a potential threat to the proper functioning of the overall financial system.
The proposal, which will be outlined Monday in a speech by Treasury Secretary Henry Paulson, is certain to set off heated debates within different sectors of the financial services industry and in Congress, where some Democrats are likely to complain that the proposal does not go far enough to crack down on abuses.
The administration divided its recommendations into short-term goals that could be adopted quickly, intermediate recommendations and an "optimal" regulatory framework, which contains a radical restructuring of how the government supervises banks and other financial institutions.
The recommendations are the product of a yearlong review that was begun in an effort to modernize the government's regulatory structure so that the country's financial services industries could better compete in a fast-changing global economy.
The plan also seeks to address problems that have been brought to light in recent months since a severe credit crisis began roiling financial markets last August.
That crisis has already claimed as its biggest victim Bear Stearns, the nation's fifth-largest investment bank, which came to the brink of collapse before a government-arranged purchase by JP Morgan Chase & Co.
"I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years," Paulson will say in the remarks he will deliver on Monday.
But the plan does seek to address problems highlighted by the current crisis in which the Fed in an unprecedented move has begun making direct loans to securities firms in an effort to shore up a system badly shaken by billions of dollars of losses stemming from sour mortgage loans.
The proposal would allow the Fed, in its new role as "market stability regulator," to dispatch examiners to check the books not just of commercial banks but of all segments of the financial services industry.
The administration proposal would also consolidate the current scheme of bank regulation by shutting down the Office of Thrift Supervision and transferring its functions to the Office of the Comptroller of the Currency, which regulates nationally chartered banks.
The plan recommends that the Securities and Exchange Commission, which regulates stock trading, be merged with the Commodity Futures Trading Commission, which regulates futures trades for oil, grains and various other commodities.
The plan would create a national regulator for the insurance industry, which is now largely governed by the states, and would create a Mortgage Origination Commission to try to address the abuses exposed in the current tidal wave of mortgage defaults.
The role Federal Reserve Chairman Ben Bernanke and his colleagues have been playing to shore up the financial system would be formalized in the administration plan by giving Fed officials greater power to detect where threats might be lurking in the system.
The proposal is certain to generate intense scrutiny in Congress and within the financial services industry, where past efforts to change how regulation is handled have met with fierce resistance.
Many Democrats in Congress are already pushing tougher proposals that would impose much stricter regulation in an effort to crack down on abuses exposed by the current credit crisis.
Sen. Charles Schumer, D-N.Y., said he believed Paulson's plan offered some valid suggestions.
"In broad outlines, we agree with large parts of Secretary Paulson's plan," Schumer, chairman of the Joint Economic Committee, said in a statement. "He is on the money when he calls for a more unified regulatory structure, although we would prefer a single regulator to the three he proposes."
Under Paulson's approach, the long-term goal would be to designate the Fed as market stability regulator and to have a financial regulator who would focus on financial institutions that operate with government guarantees such as providing deposit insurance.
The administration plan, which was first reported by The New York Times on its Web site Friday night, also proposes a business conduct regulator who would be in charge of overseeing consumer protection issues.
The initial reaction from the securities industry was also positive.
"Treasury has delivered a thoughtful and sweeping plan which should provoke intense discussion, debate and potential legislative changes," said Tim Ryan, president of the Securities Industry and Financial Markets Association.
"Our present regulatory framework was born of Depression-era events and is not well suited for today's environment where billions of dollars race across the globe with the click of a mouse," Ryan said in a statement.
http://biz.yahoo.com/ap/080329/fed_overhaul.html
Saturday, March 29, 2008
Friday, March 28, 2008
The Merger of SEC and CFTC
With the merger of SEC and CFTC, the Fed will control more of SEC regulation which is less "Independence" and "Integrity" in the system.
As is, SEC is not doing the proper job exercising "due diligence" to oversea the financial system as we have recently seen "naked shorts" going out of control. If the "SEC" does or did "its job" of controlling the financial system, then, we would now have better economy and we would not need new "SWAT" team. Since "SEC" wasn't given enough power or greater role to oversea the financial system operation, SEC wasn't able to perform what the entity was meant to do. We now have direct hotlines among the Fed, the Treasury dept, and financial institutions.
If the Fed takes away more of "SEC" responsibility, then, it would greatly minimize "INTEGRITY" of the system which would be a collateral damage for promoting financial stability. Nevertheless, SEC primary responsibility of "Independence" and "Regulatory" role does not necessarily have to be lessened if that is not the Fed intention.
Considering the global scope of the trading and financial fund flow, we need more centralized regulatory system for effective and efficient controls which could monitor financial market activities. Hence, one of the FED, SEC, FBI or CIA has to have greater power to control the new global financial market system. So, which one would be the one? The Fed would not give more power to "SEC" which seems to be the most sensible choice. However, the Fed will not assign more power to "SEC".
The proposal would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.
http://www.forbes.com/2008/03/27/cme-margins-increase-market-comm-cx_md-0327markets10.html?partner=yahootix
CME Acts Against Speculators
Maurna Desmond, 03.27.08, 1:40 PM ET
The Chicago Mercantile Exchange responded to the wild upward swing of commodities in recent months by raising margin requirements on Thursday, forcing speculators to put more skin in the game.
On Thursday, CME Group (nyse: CME - news - people ) told Forbes.com it was raising the initial amount of capital that investors had to post in order to trade futures on corn, soybeans and soybean oil. Raising commodities margins would deter speculation and possibly slow the price rises that have been affecting grains in recent months.
As is, SEC is not doing the proper job exercising "due diligence" to oversea the financial system as we have recently seen "naked shorts" going out of control. If the "SEC" does or did "its job" of controlling the financial system, then, we would now have better economy and we would not need new "SWAT" team. Since "SEC" wasn't given enough power or greater role to oversea the financial system operation, SEC wasn't able to perform what the entity was meant to do. We now have direct hotlines among the Fed, the Treasury dept, and financial institutions.
If the Fed takes away more of "SEC" responsibility, then, it would greatly minimize "INTEGRITY" of the system which would be a collateral damage for promoting financial stability. Nevertheless, SEC primary responsibility of "Independence" and "Regulatory" role does not necessarily have to be lessened if that is not the Fed intention.
Considering the global scope of the trading and financial fund flow, we need more centralized regulatory system for effective and efficient controls which could monitor financial market activities. Hence, one of the FED, SEC, FBI or CIA has to have greater power to control the new global financial market system. So, which one would be the one? The Fed would not give more power to "SEC" which seems to be the most sensible choice. However, the Fed will not assign more power to "SEC".
The proposal would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.
http://www.forbes.com/2008/03/27/cme-margins-increase-market-comm-cx_md-0327markets10.html?partner=yahootix
CME Acts Against Speculators
Maurna Desmond, 03.27.08, 1:40 PM ET
The Chicago Mercantile Exchange responded to the wild upward swing of commodities in recent months by raising margin requirements on Thursday, forcing speculators to put more skin in the game.
On Thursday, CME Group (nyse: CME - news - people ) told Forbes.com it was raising the initial amount of capital that investors had to post in order to trade futures on corn, soybeans and soybean oil. Raising commodities margins would deter speculation and possibly slow the price rises that have been affecting grains in recent months.
The Fed Control
Treasury Dept. Seeks New U.S. Power to Keep Markets Stable
WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.
The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.
Democratic lawmakers are all but certain to say the proposal does not go far enough in restricting the kinds of practices that caused the financial crisis. Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation.
According to a summary provided by the administration, the plan would consolidate what is now an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.
While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.
The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings.
The plan would give the Fed some authority over Wall Street firms, but only when an investment bank’s practices threatened the entire financial system.
And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security.
Some of the proposals could actually reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. The proposal would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.
The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.
The proposal began last year as an effort by Henry M. Paulson Jr., secretary of the Treasury, to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system.
His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.
“I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every 5 to 10 years,” Mr. Paulson will say in a speech on Monday, according to a draft of the speech. “I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible.”
Congress would have to approve almost every element of the proposal, and Democratic leaders are already drafting their own bills to impose tougher supervision over Wall Street investment banks, hedge funds and the fast-growing market in derivatives like credit default swaps.
But Mr. Paulson’s proposal for the Fed echoes ideas championed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee.
Both see the Fed taking a central role in overseeing risk across the entire financial spectrum, but Mr. Frank is likely to favor a stronger Fed role and to subject investment banks to the same rules that commercial banks now must follow, especially for capital reserves.
Under the Treasury proposal, Fed officials would be allowed to examine the practices and even the internal bookkeeping of brokerage firms, hedge funds, commodity-trading exchanges and any other institution that might pose a risk to the overall financial system.
That would be a significant expansion of the central bank’s regulatory mission, which has been limited primarily to supervising commercial banks.
When Fed officials agreed this month to rescue Bear Stearns, once the nation’s fifth-largest investment bank, they pointedly noted that the Fed never had the authority to monitor its financial condition or order it to strengthen its protections against a collapse.
In an unprecedented pair of moves, the Fed engineered a shotgun marriage between JPMorgan Chase and Bear Stearns, lending $29 billion to JPMorgan to prevent a Bear bankruptcy and a chain of defaults that might have brought down much of the financial system.
For the first time since the 1930s, the Fed also agreed to let investment banks borrow hundreds of billions of dollars from its discount window, an emergency lending program reserved for commercial banks and other depository institutions.
But Mr. Paulson’s proposal would fall well short of the kind of regulation that Democrats have been proposing. Mr. Frank and other senior Democrats have argued that investment banks and other lightly regulated institutions now compete directly with commercial banks and should be subject to similar regulation, including examiners who regularly pore over their books and quietly demand changes in their practices.
In a recent interview, Mr. Frank said he realized the need for tighter regulation of Wall Street firms after a meeting with Charles O. Prince III, then chairman of Citigroup.
When Mr. Frank asked why Citigroup had kept billions of dollars in “structured investment vehicles” off the firm’s balance sheet, he recalled, Mr. Prince responded that Citigroup, as a bank holding company, would have been at a disadvantage because investment firms can operate with higher debt and lower capital reserves.
Senator Charles E. Schumer, Democrat of New York, has taken a similar stance.
“Commercial banks continue to be supervised closely, and are subject to a host of rules meant to limit systemic risk,” Mr. Schumer wrote in an op-ed article on Friday in The Wall Street Journal. “But many other financial institutions, including investment banks and hedge funds, are regulated lightly, if at all, even though they act in many ways like banks.”
Because Mr. Paulson’s proposal would affect scores of deeply entrenched industry groups, it is likely to provoke bruising turf battles in Congress among agencies and rival industry groups that benefit from the current system of regulation.
Administration officials acknowledged on Friday that they did not expect the proposal to become law this year, but said they hoped it would help frame a policy debate that would extend well after the elections in November.
In a nod to the debacle in mortgage lending, the administration proposed a Mortgage Origination Commission to evaluate the effectiveness of state governments in regulating mortgage brokers and protecting consumers.
The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.
This proposal would consolidate a large number of regulators into roughly three big new agencies.
Bank supervision, now divided among five federal agencies, would be led by a Prudential Financial Regulator, which could send examiners into any bank or depository institution that is protected by either federal deposit insurance or other federal backstops. It would eliminate the distinction between “banks” and “thrift institutions,” which are already indistinguishable to most consumers, and shut down the Office of Thrift Supervision.
Any effort to merge the Commodity Futures Trading Commission with the S.E.C. is likely to provoke a fight between the agencies as well as the companies they regulate.
Yet another proposal in the blueprint would, for the first time, create a national regulator for insurance companies, an industry that is now regulated by state governments.
Administration officials argue that a national system would eliminate inefficiencies of having 50 different state regulators, who have jealously guarded their powers and are likely to fight any encroachment by the federal government.
Thursday, March 20, 2008
DOW, SPX, Nasdaq, V
SPX closed at 1329.51 near HOD and near falling wedge trendline. Once it breaks above the resistance, 1350, we will see more positive talks chasing markets to 1425 +/-.
DOW is about to break above downtrend line 12400 +/-, then, we certainly will hear positive comments stating price actions have improve technically as well!
Comparatively, breaking above Nasdaq 2300!
"V" retrace to 65 at the open IPO price.
Yield Curve - Bottomless Pit BOTTOM
Bottomless pit BOTTOM is here. As noted markets were discussing soft/hard landing in 2006 and noted that markets were pricing in the ARM crisis since 2005 housing top.
The big funds knew entire ARM crisis and as public/some banks lose money, others have made a lot of money using the loopholes.
Now we have yield curve favorable for a rebound.
YC is showing .18 lower than Oct 2002. Financial is bouncing up today.
Wednesday, March 19, 2008
Greed demonic power is getting bigger
Another blood bath - greed demonic power is getting bigger than ever.
It's Armageddon. God save US from demonic power.
It's Armageddon. God save US from demonic power.
U.S. 401k Contributor Sheepsters
Poor U.S. 401k sheepsters... It is a good possibility that U.S. Markets are used as a world online gambling place at where many foreign traders could suck out U.S. 401k money in addition to selling oil to us.
Poor U.S. 401k sheepsters...
It is obvious that U.S. 401k sheepster holders are slowly and surely wiped out clean.
When you study market history, price actions, and other surrounding circumstances, U.S. 401k contributors are slowly wiped out clean while big fat greed demons are sucking blood out.
It is like a slow internal bleeding for U.S. 401k contributors and the rest of average americans as their wealth is sucked out by greed demons.
At least, oil glut is lessened today, off 4.5% to 103.60
Being stupid with oil suv suckers... paying for it.
Poor U.S. 401k sheepsters...
It is obvious that U.S. 401k sheepster holders are slowly and surely wiped out clean.
When you study market history, price actions, and other surrounding circumstances, U.S. 401k contributors are slowly wiped out clean while big fat greed demons are sucking blood out.
It is like a slow internal bleeding for U.S. 401k contributors and the rest of average americans as their wealth is sucked out by greed demons.
At least, oil glut is lessened today, off 4.5% to 103.60
Being stupid with oil suv suckers... paying for it.
Oil Glut
At least, oil glut is lessened today, off 4.5% to 103.60
Being stupid with oil suv suckers... paying for it.
Volatility
Volatility is up again. Option demons sucking blood out from market.
Markets are jerking around in a day cycle.
Tuesday, March 18, 2008
SPX and DOW
SPX traded to 1330.74 closing at HOD and at a resistance.
Markets are showing positive divergences. That confirms the price actions since 3/11/08 and completing the retest of the low of the low. For those are constantly looking for "Retest of the lows" now have undeniable retest of the low of retest of the low... We have about 2-3 spanking retest of lows.
I noted that we have a CIT date during this week and it is very encouraging to see market actions building base at the LT support.
DOW rallied 420 points closing at 12392 above 50dma near at 12500 r. As noted that markets were showing positive divergences, as now we saw markets have rallied. Markets are showing "retest of bottom" with P.D. and progressing after 3/11/08 rally with a follow-through.
AAPL
Nice AAPL rally with positive news on Mac Pro. Measured target 145 -148
AAPL looks like a cow boy hat at a LT support 120 +/-
Sunday, March 16, 2008
as if Bankers who robbed ALL
Goldman (20 billion +??) and Paulson ( hedge fund profiting ARM crisis over 20 billion + ). Paulson knows late 1990s history. It seems that he took a great advantage of the loophole in the system. Of course, he knew about the repeal of the act in 1999.
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
http://www.progressivehistorians.com/2007/11/bill-clintons-role-in-mortgage-crisis.html
http://www.igss.ynu.ac.jp/library/collection/thesis/2002/57.htm
Bank LT comparative performances
LT bank comparative performances: JPMorgan Says It Will Buy Ailing Bear Stearns in a Deal Valued at $236.2 Million
NEW YORK (AP) -- JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.
http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html?.v=19
Commodity
Commodity shows weakening momentum at resistance, a megaphone formation on weekly.
Money is moving around from one asset class to other like a cloud of locust going through one crop field to another.
Hopefully, we will see adjustment on hyperbola commodity price actions.
As posted, we have many ETF which you can choose from to play the markets using ETFs in the sectors which you are interested in. We have so many sector specific ETFs as well as varied risk level for different volatility appetite for each individual.
DOW Theory
Trans:DOW, DOW theory relative performances in LT shows similar pattern during 1990s. Note that DOW theory is not precise to time market turns.
$BKX LT
$BKX, C, BSC, BACK, JPM, and UBS relative performance in LT.
~~~
Weill quits right before starting ARM crisis after causing the big problem. Weill is one of most cunning bankers who created the entire problem of ARM greed demon.
Sanford I. Weill (born March 16, 1933), commonly known as Sandy Weill is an American banker, financier and philanthropist. He was formerly a chief executive officer and chairman of Citigroup Inc. He served in those positions until October 1, 2003 and April 18, 2006 respectively.
Saturday, March 15, 2008
Market in the trading range waiting for the Fed day
Markets finished in the recent trading range as noted that markets will wait for Bernanke. I think that we will see a breakout from the range during the OE week as we have the Fed day catalyst as well.
Next week is 4-day option week as Friday is holiday.
We have the Fed day on Tuesday, 3/18.
Thursday, March 13, 2008
Higher Oil Price
Who gets rich off $3 gas - who doesn't
The guy running the service station makes just a few cents, while crude oil producers take the biggest chunk.
Just a few cents of every gallon goes to the gas station when you fill up - most goes to those that produce the oil.
NEW YORK (CNNMoney.com) -- Motorists may fume when forking over $3 a gallon at the local service station, but as it turns out, your local filling spot makes chump change from a gallon of gas.
So exactly who is getting rich?
Oil traders: While often blamed for pushing up prices, traders don't necessarily benefit from the high price of crude or gasoline; they profit from how much the price changes. Traders can get rich - as long as they bet correctly on whether prices will rise or fall.
For example, an investment bank that makes a bet that the price of oil will rise makes money when oil prices go from $95 to $100 a barrel - or $100 to $95 if it bet the price will fall - not on the difference between production cost and trading price.
"If you wanna keep your job, you gotta be more right than wrong," said John Kilduff, an energy analyst at the trading firm MF Global in New York, explaining how traders make their money.
Gas stations: A surprisingly small amount goes to the guy who runs the station.
Most service stations are independently owned and operated and take in between 7 and 10 cents for every gallon they sell, according to the U.S. Energy Information Administration.
That 7 to 10 cents going to the gas station isn't even profit. Out of that, station owners still have to pay leases, workers, and other expenses - leaving them with a profit of just a few cents. For the service stations, most profit comes from selling coffee, cigarettes, food and other amenities.
These calculations are based off of EIA's most recent numbers, when gas was $3.04 a gallon. Gasoline hit another record nationwide average of $3.27 a gallon Thursday.
Taxes: The government takes about 40 cents right off the top, with about 18 cents going to the feds. State taxes vary widely, but the national average is about 22 cents a gallon. Most of this money is used to build and maintain roads.
Transportation: Getting the gas from refineries to service stations via trucks or pipelines - and the cost of storing it in large tanks - eats up another 23 to 26 cents per gallon.
Refining: About 24 cents a gallon goes to refining companies like Valero (VLO, Fortune 500), Sunoco (SUN, Fortune 500) or Frontier (FTO, Fortune 500) that specialize in turning crude oil into gas. Some companies like ExxonMobil (XOM, Fortune 500), Chevron (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500) also have refining operations.
Profits for refiners have been squeezed lately because the price they pay for oil has risen so much faster than the price they can sell the gas for. This helps explain why Big Oil companies -like Exxon, which actually buys more crude oil than it produces - haven't seen their profits rise as much as the price of oil.
Crude oil: This is the most expensive part of a gallon of gas. Of every gallon of gas $2.07 from every gallon of gas goes to producers of crude like Chevron (CVX, Fortune 500), BP (BP), and smaller outfits like Anadarko (APC, Fortune 500) and Marathon (MRO, Fortune 500), or national oil companies controlled by countries like Saudi Arabia, Mexico or Venezuela.
Crude currently trades around $110 a barrel, but breaking down the money in that barrel of oil is tough. Exploration and production costs, royalty payments - all a big part of $110 a barrel oil - vary widely country by country and project by project.
"It's difficult to generalize; there's a whole spectrum of costs," said Ron Planting, an economist with the American Petroleum Institute, an industry trade group.
They can range from $1 a barrel to produce crude in Saudi Arabia to over $70 a barrel to find, develop and pump oil in the deep water Gulf of Mexico or off the coast of Algeria, said Ann-Louise Hittle, an oil analyst with the energy consultants Wood Mackenzie.
EIA estimates it costs U.S. oil companies an average of about $24 a barrel to find, develop and produce oil worldwide, but that doesn't include costs like transportation, administration, or income taxes - which can be substantial. While Exxon made $40 billion in 2007, a 60% increase from 2004, it paid $100 billion in taxes and royalties.
Nonetheless, $40 billion - or any of the record profits seen by most oil companies over the last few years - is certainly a lot of money, and it has put Big Oil in lawmaker's cross hairs.
Rep. Edward Markey, D-Mass., has called the chief executives of the five biggest oil companies to testify on the industry's record profits on April 1st. Markey's office swears it's no April fool's joke.
http://money.cnn.com/2008/03/13/news/economy/gas_gallon/index.htm?eref=rss_topstories
Tuesday, March 11, 2008
Big Rally - SPX 1270 Retest
SPX closed at 1320.65 above 1300 resistance which is a significant resistance as it is 200 weekly ma and a round number.
We have a sharp reversal day induced by the Fed action.
I have noted that markets are very oversold and was showing positive divergences with extremely negative sentiment; so market action which we have seen today is not a big surprise as we have seen, in the past, sharp reversals from very oversold markets with negative sentiment.
Next major resistance is SPX 1400 +/- which I am anticipating to trade higher.
SPX retest of the low SPX 1270. I noted SPX correction to 1270 +/- during Dec 2007.
We now have the correction and a consolidation period with a retest of the low.
As noted, markets are very oversold and we have a CIT date which is setting up for a good case for markets to trade up.
DOW has reversed at 11650 LT support.
NDX reversal at 1672 which is LT support after a climactic volume action in Jan 2008.
Sunday, March 9, 2008
Alternative Scenario
On previous post, noted bear case. There are a few who are looking for a bullish scenario with a contrarian view. If the current support is held, I think that this scenario is possible.
One more note on the bullish count, majority of big brokerage firms are wrong on the market if we indeed go into bear market even though many are anticipating mid year rally into the year end.
I noted the pivotal week during the last week and the next one is in Jun 2008.
It is interesting that Warren Buffett is supporting Obama. Bear market action certain favors Buffett as many will be discontent with bad economy and bad stock market.
Let's see whether we will see a miracle if market can rally from here thinking that the bad news is priced in and starts to discount a moderate recovery which will bring economy to sustain the ARM crisis shock.
I think that 3 factors will help economy and soften the ARM crisis impact.
1. Interest cut on Mar 18, if not earlier.
2. Economic stimulus package which will start in May 2008.
3. Stable financial market instead of falling into bear market at this time.
Air Powered Car - Alternative Energy
Trans Revolution God's gift and our hope: World's First Air-Powered Car: Zero Emissions
~~~
Hi MFB,
I read your comment and understand your points concerned with our dependence on foreign oil. As you noted, 80-90% of oil is consumed by transportation; therefore, a revolutionizing transportation is the key. Such as air-powered car would be the ideal invention if the invention is further developed. Of course, we have electric and hybrid cars already, but those are not widely used yet because of cost-inefficiency as well as other issues such as it will cost just as much as to consume electric than oil.
I understand that you have ranked the types of alternative energy.
If you assign a score to each category, shown in the ( ), and added them up, you would come up with this:
electric car: 10
hybrid car: 10
air car: 7
hydrogen: 5
If we could develop air car, I think that it is the most efficient and practical as it does not consume natural resource and we have plenty of air. We need to focus on developing energy resources like this as well as solar energy. I think that air car is the answer for transportation energy need and solar energy for household.
Further developing the energy source will solve most of our problems.
We need an invention like Bill Gates with windows.
Thanks again
~~~
Air power news is a revolution which will lead our economy. Air power is the next generation of our energy source.
Air power is a revolution for all human race. It would be beneficial to focus on solving problems like all scientists in engineering field, and whoever, need to develop alternative energy. "Air Power" energy is the most effective, so far, superior than "Solar Power"!
http://www.popularmechanics.com/automotive/new_cars/4217016.html
I think that the Gov should give incentives and rebates to buy the air cars, so that many will have motivation to buy those.
http://www.youtube.com/watch?v=QmqpGZv0YT4
http://www.theaircar.com/acf/air-cars/air-cars.html
The Air Cars
Compressed air is an energy vector that can be used, in a viable way, to transport both people and goods.
The main goal of Air Car Factories is to develop and manufacture a vehicle driven by a compressed air engine with a level of performance that will respond to the actual needs of today’s market. With this aim we have drawn up a full agenda and an R&D plan of action for production start up.
~~~
By MFB
A simple 5 step process:
1. Clearly define the problem. Ok, this can be several things, but I think the ultimate problem is to reduce the use of oil, and for me in particular, the use of foreign oil.
2. Gather data about the problem. This would include what does all this oil get used for? If we reduce the demand for oil, then we could buy less foreign oil. In this country, a vast majority of oil is used for transportation (around 80-90%). This would include cars, trucks, trains, airplanes, boats, etc. Since I am worried about reducing the use of foreign oil, is there any domestic sources of energy that could be using in substitution? There is oil, coal, natural gas, nuclear, and other forms of renewable (solar, wind, biomass, geothermal, waste, etc.).
3. Generate possible solutions to the problem. Ok, so we know what the problem is and have gathered some data on the problem. Now we have to come up with some solutions to reducing our use of foreign oil.
One solution would be to pump more oil here in the U.S, like out of Alaska. While this solves our dependence on foreign oil problem, it does not help with out overall dependence of oil. Another solution would be to shift the use of oil to other forms of energy that are domestic. Well, a car can not run directly off of coal. Some buses run off of natural gas. And unless you have an aircraft carrier, nuclear is out of the question.
But what do we have here in the US that uses all these forms of energy (coal, natural gas, nuclear, other) and is readily available? How about electricity? What if you used electricity, generated from coal, natural gas, nuclear, to replace oil? Well, what about an electric car? You could charge the battery from electricity that is generated from a domestic source, and in return, you use less oil, and in particular, less foreign oil.
There are other solutions to this problem, including you air car, but it also uses electricity to compress the air that will power the air car. One other solution would be the hydrogen fuel cell car. Even one more solution would be a hybrid gas-electric car.
4. Implement the best solution. Ok, we have our possible solutions, and now we have to implement the best solution. Well, which solution is the best? This is where the whole efficiency thing comes into play, as well as cost, safety, and current state of technology. Without going into too much detail, the efficiency of the above solution,from best to worst, would be:
electric car(4)
hybrid car(3)
hydrogen fuel cell car(2)
air car(1)
Ok, how about cost, from best to worst? I think this would be:
air car(4)
hybrid car(3)
electric car(2)
hydrogen fuel cell car(1).
Safety, from safest to least safe would be:
hybrid car(2)
electric car(2)
air car(1)
hydrogen fuel cell car(1).
And finally current technology. The order would be:
hybrid car(2)
electric car(2)
air car(1)
hydrogen car(1).
If you assign a score to each category, shown in the ( ), and added them up, you would come up with this:
electric car: 10
hybrid car: 10
air car: 7
hydrogen: 5
You could play with the order and numbers a little, but this clearly shows that the hybrid car and electric cars are currently the best solutions for reducing our oil consumption, and our dependence on foreign oil. The air car and hydrogen fuel cell car would be the worst solutions, with hydrogen being the absolute worst.
5. Iterate, if needed. This last step is only need if the current solution does work out and you need to back up and try something different. However, from looking at the above analysis, I think if we go with the electric car solution, you probably will not need to iterate.
So to review:
1) The problem is to reduce the use of oil and foreign oil.
2) Find a source of energy that is not oil and is a domestic source of energy. This would be electricity generated from domestic sources of coal, natural gas, and nuclear.
3) The current best solution would be to use an electric car to take advantage of these domestic sources of energy.
~~~
Hi MFB,
I read your comment and understand your points concerned with our dependence on foreign oil. As you noted, 80-90% of oil is consumed by transportation; therefore, a revolutionizing transportation is the key. Such as air-powered car would be the ideal invention if the invention is further developed. Of course, we have electric and hybrid cars already, but those are not widely used yet because of cost-inefficiency as well as other issues such as it will cost just as much as to consume electric than oil.
I understand that you have ranked the types of alternative energy.
If you assign a score to each category, shown in the ( ), and added them up, you would come up with this:
electric car: 10
hybrid car: 10
air car: 7
hydrogen: 5
If we could develop air car, I think that it is the most efficient and practical as it does not consume natural resource and we have plenty of air. We need to focus on developing energy resources like this as well as solar energy. I think that air car is the answer for transportation energy need and solar energy for household.
Further developing the energy source will solve most of our problems.
We need an invention like Bill Gates with windows.
Thanks again
~~~
Air power news is a revolution which will lead our economy. Air power is the next generation of our energy source.
Air power is a revolution for all human race. It would be beneficial to focus on solving problems like all scientists in engineering field, and whoever, need to develop alternative energy. "Air Power" energy is the most effective, so far, superior than "Solar Power"!
http://www.popularmechanics.com/automotive/new_cars/4217016.html
I think that the Gov should give incentives and rebates to buy the air cars, so that many will have motivation to buy those.
http://www.youtube.com/watch?v=QmqpGZv0YT4
http://www.theaircar.com/acf/air-cars/air-cars.html
The Air Cars
Compressed air is an energy vector that can be used, in a viable way, to transport both people and goods.
The main goal of Air Car Factories is to develop and manufacture a vehicle driven by a compressed air engine with a level of performance that will respond to the actual needs of today’s market. With this aim we have drawn up a full agenda and an R&D plan of action for production start up.
~~~
By MFB
A simple 5 step process:
1. Clearly define the problem. Ok, this can be several things, but I think the ultimate problem is to reduce the use of oil, and for me in particular, the use of foreign oil.
2. Gather data about the problem. This would include what does all this oil get used for? If we reduce the demand for oil, then we could buy less foreign oil. In this country, a vast majority of oil is used for transportation (around 80-90%). This would include cars, trucks, trains, airplanes, boats, etc. Since I am worried about reducing the use of foreign oil, is there any domestic sources of energy that could be using in substitution? There is oil, coal, natural gas, nuclear, and other forms of renewable (solar, wind, biomass, geothermal, waste, etc.).
3. Generate possible solutions to the problem. Ok, so we know what the problem is and have gathered some data on the problem. Now we have to come up with some solutions to reducing our use of foreign oil.
One solution would be to pump more oil here in the U.S, like out of Alaska. While this solves our dependence on foreign oil problem, it does not help with out overall dependence of oil. Another solution would be to shift the use of oil to other forms of energy that are domestic. Well, a car can not run directly off of coal. Some buses run off of natural gas. And unless you have an aircraft carrier, nuclear is out of the question.
But what do we have here in the US that uses all these forms of energy (coal, natural gas, nuclear, other) and is readily available? How about electricity? What if you used electricity, generated from coal, natural gas, nuclear, to replace oil? Well, what about an electric car? You could charge the battery from electricity that is generated from a domestic source, and in return, you use less oil, and in particular, less foreign oil.
There are other solutions to this problem, including you air car, but it also uses electricity to compress the air that will power the air car. One other solution would be the hydrogen fuel cell car. Even one more solution would be a hybrid gas-electric car.
4. Implement the best solution. Ok, we have our possible solutions, and now we have to implement the best solution. Well, which solution is the best? This is where the whole efficiency thing comes into play, as well as cost, safety, and current state of technology. Without going into too much detail, the efficiency of the above solution,from best to worst, would be:
electric car(4)
hybrid car(3)
hydrogen fuel cell car(2)
air car(1)
Ok, how about cost, from best to worst? I think this would be:
air car(4)
hybrid car(3)
electric car(2)
hydrogen fuel cell car(1).
Safety, from safest to least safe would be:
hybrid car(2)
electric car(2)
air car(1)
hydrogen fuel cell car(1).
And finally current technology. The order would be:
hybrid car(2)
electric car(2)
air car(1)
hydrogen car(1).
If you assign a score to each category, shown in the ( ), and added them up, you would come up with this:
electric car: 10
hybrid car: 10
air car: 7
hydrogen: 5
You could play with the order and numbers a little, but this clearly shows that the hybrid car and electric cars are currently the best solutions for reducing our oil consumption, and our dependence on foreign oil. The air car and hydrogen fuel cell car would be the worst solutions, with hydrogen being the absolute worst.
5. Iterate, if needed. This last step is only need if the current solution does work out and you need to back up and try something different. However, from looking at the above analysis, I think if we go with the electric car solution, you probably will not need to iterate.
So to review:
1) The problem is to reduce the use of oil and foreign oil.
2) Find a source of energy that is not oil and is a domestic source of energy. This would be electricity generated from domestic sources of coal, natural gas, and nuclear.
3) The current best solution would be to use an electric car to take advantage of these domestic sources of energy.
SPX LT
SPX LT View: During Mar2000-Oct2002, SPX corrected 50% of 20 year rally even though the LT chart does not visually show the severe correction. During the last 10 years, markets have consolidated the 1990s rally.
We have bears just waiting for markets collapse as bear market correction is often fast which is taking shorter time to mark down to attractive price level.
Breaking the current support, technically, we are in bear market discounting prices ultimately to SPX 970 +/-, DOW 9000 +/-, Nasdaq 1700 +/-, and Qs 27 +/-.
Holding the current support, markets will rally back up which is a bullish case even though, with the current negative sentiment, it looks to be impossible to see new bull market high level. This is the test of low SPX 1270. In this case, we would be seeing truncated wave 5 of A-B-C correction ending Wave IV.
Test of Jun 2006 low to SPX 1225 +/- will be completing wave 5 of A in bear market.
I noted that the last week was a turn week and the next major turn is in Jun 2008. Therefore, with oversold market condition, we will see whether we will be seeing support at this level.
Markets were fed with bad ARM crisis news with write-downs. Considering negative sentiment, we do not have any reasons that markets will turn bullish at this point unless we see significant comments from Bernanke during the next Fed meeting which is on Mar 18. Bernanke lately was playing words games such as he does not see "recession" and we have not heard negating his opinion even though he said that he would not know that we are in recession until it is too late, meaning, he does not want to admit that we are in recession and create further turmoil. This is the same as Paulson promoting strong dollar while dollar is trading lower making historic low prices.
Bernanke would lose credibility if he continues to deny that we are in recession and would not want to lower interest rate. He is squeezing consumers putting more pressure by not lowering interest rate in favor of pro-higher-interest group.
In summary, we have two key supports: SPX 1270 +/- which is retest of 1/23/08 low or SPX 1225 +/- which is 6/14/06 low.
My LT Analysis
I have commented on LT view on my previous posts during the last three years. Now we are at critical juncture which will confirm that we are in bear market.
As shown on the LT chart, Markets have corrected about 17-19% during Jan 2008 reaching the targeted SPX 1270 +/- which I noted on my previous comments.
While I was noting a possible reversal from the Jan 2008 bottom rallying to SPX 1600-1650 which were the SPX breakout targets noted during the last year; SPX has failed the break out above SPX 1550 March 2007 top.
Given the ARM crisis and Economic data which we are subsequently hears, we have no or little hope to form a bullish sentiment at this time.
The pessimistic news is continuing to feed the markets and traders since the Jan 2008 bottom causing the recent consolidation period remaining in very tight trading range.
After remained in a tight trading range for one month since 1/23/08/, markets sold off 7-8% during the last 7-trading days, after making lower-high on 2/27/08.
Bush and Bernanke claims no recession. With breaking the current support, we are sure to see fast acceleration of bear market which will likely cause a serious recession. A serious question is "How hard the recession will be".
Saturday, March 8, 2008
Real U.S. Problems
Bush: 'It is clear the economy has slowed'
Saturday March 8, 10:16 am ET
~~~
Con Winter This is the same as we are conned. I would not go into details noting super bears' view.
Bush now says, "Slowed Economy", but still does not say, "recession".
When market breaks the current support, we are surely in bear market, while Bernanke is playing with "interest cut hope" while prices are faded.
Paulson preached "Strong USD".
Bush & Bernanke "No Recession".
Commodity is hyped by super rich funds so that Bernanke can say "inflation concern".
We are driven to the worst situation which we could be heading, i.e. commodity (gold and oil) is hyped to maximize long/short gains, while financial markets are sold.
If anyone has no confidence in U.S., it is because the U.S. policies are making U.S. poor because of shipping jobs and trade deficit. At the same time, we are in a war spending money which makes U.S. worse.
We need to change policies, just like ARM crisis is a big, big regulatory failure, we need to see a fundamental change.
~~~
President Bush said Friday that "it's clear our economy has slowed," hours after a government report showed a decline in payrolls for the second straight month.
But he said the long-term outlook is good, with a stimulus package enacted last month by Congress providing a "booster shot."
Bush made a statement after meeting with advisers. Chief economic adviser Edward Lazear said earlier in the day that the nation's economy could contract in the current quarter.
Saturday March 8, 10:16 am ET
~~~
Con Winter This is the same as we are conned. I would not go into details noting super bears' view.
Bush now says, "Slowed Economy", but still does not say, "recession".
When market breaks the current support, we are surely in bear market, while Bernanke is playing with "interest cut hope" while prices are faded.
Paulson preached "Strong USD".
Bush & Bernanke "No Recession".
Commodity is hyped by super rich funds so that Bernanke can say "inflation concern".
We are driven to the worst situation which we could be heading, i.e. commodity (gold and oil) is hyped to maximize long/short gains, while financial markets are sold.
If anyone has no confidence in U.S., it is because the U.S. policies are making U.S. poor because of shipping jobs and trade deficit. At the same time, we are in a war spending money which makes U.S. worse.
We need to change policies, just like ARM crisis is a big, big regulatory failure, we need to see a fundamental change.
~~~
President Bush said Friday that "it's clear our economy has slowed," hours after a government report showed a decline in payrolls for the second straight month.
But he said the long-term outlook is good, with a stimulus package enacted last month by Congress providing a "booster shot."
Bush made a statement after meeting with advisers. Chief economic adviser Edward Lazear said earlier in the day that the nation's economy could contract in the current quarter.
Peter Schiff - the mega bear
Peter Schiff: While his comment on youtube is fundamental and basic economic cycle, what he does not mention is the core reasons for the phenomenon. Obviously, he does not care about U.S. except he is making money, like Cramer.
The core U.S. financial problems are : Exporting jobs, overspending, and excessive imports.
Apocalypse Bear and several other bear types which Schiff is falling into.
http://www.youtube.com/watch?v=4n3g5lUgkWk
http://www.safehaven.com/archive-162.htm
http://www.wallstreetfollies.com/beartypes.htm
The core U.S. financial problems are : Exporting jobs, overspending, and excessive imports.
Apocalypse Bear and several other bear types which Schiff is falling into.
http://www.youtube.com/watch?v=4n3g5lUgkWk
http://www.safehaven.com/archive-162.htm
http://www.wallstreetfollies.com/beartypes.htm
Friday, March 7, 2008
SPX, DOW, and Nasdaq LT supports
SPX close at 1293 below 1300 support which is starting to be pessimistic. Breaking the current support, targeting SPX 1170.
DOW closed at 11893.69 below 12000, not a good sign, even though it is closed above final LT supports. Need to see finding supports.
Nasdaq closed below weekly 200 ma support even though it closed above 2200. We need to see a major reversal during the next week.
NQ, large speculators vs Commercial, large speculator sentient on NQ is quite negative.
Lucky Hillary or Obama with R.E. and financial market correction before starting the office.
DOW closed at 11893.69 below 12000, not a good sign, even though it is closed above final LT supports. Need to see finding supports.
Nasdaq closed below weekly 200 ma support even though it closed above 2200. We need to see a major reversal during the next week.
NQ, large speculators vs Commercial, large speculator sentient on NQ is quite negative.
Lucky Hillary or Obama with R.E. and financial market correction before starting the office.
Markets at LT supports
Bear market: Breaking the current supports is shouting loud that we are in bear market.
Party is over, turn out the lights.... Actually party debate will be just starting while bears are partying hard.
Bradley using the presidential year psychology made the turn dates in Jun, i.e. visually at least, but it is not going to be another mid year 2004 reversal which will change consumer sentiment after being in bad bear market for the next 3 months which will take us down to the next major support SPX 1170 +/-. In order to negate the sentiment, we need to see a market support at the current level.
Markets are oversold at the current level. Breaking the current level will take us to SPX 1170 +/-.
Party is over, turn out the lights.... Actually party debate will be just starting while bears are partying hard.
Bradley using the presidential year psychology made the turn dates in Jun, i.e. visually at least, but it is not going to be another mid year 2004 reversal which will change consumer sentiment after being in bad bear market for the next 3 months which will take us down to the next major support SPX 1170 +/-. In order to negate the sentiment, we need to see a market support at the current level.
Markets are oversold at the current level. Breaking the current level will take us to SPX 1170 +/-.
Saturday, March 1, 2008
Distressed markets
The weekly charts show how stressful markets have been. As noted, the last two weeks market actions were further distressing the oversold condition.
Commodity/inflation vicious cycle
As noted during the week of 2/18, hyping commodity price is exacerbating inflation. The stagflation debate started during the week of the late commodity hype. Even though Bernanke thinks that we will not have stagflation, the vicious cycle will be feeding into the market price actions as we have seen it during the last two weeks as oversold markets could not bounce off from the major supports.
Whether Bernanke is playing politics now as TS Paulson did with his comment on strong $USD, we will know; however, he has not lost his credibility except with "helicopter Bernanke".
Hopefully, we will see a stop to vicious cycle of feeding inflation through commodity price hype.
Feeding negative sentiment during the last two weeks
During the last two weeks markets were feeding more negative news and have shown more commodity price hype. The late commodity price hype started during the week of 2/18, since then, markets were sending "stagflation" signal which Bernanke does not agree that we are having a stagflation.
The late commodity hype during the week was followed by more bad economic news during the last week.
The price actions during the last two weeks confirm the two week events as noted above.
Market sentiment is 98% bearish even with the very oversold condition.
I was looking for a change to negate the bearish sentiment; however, the events fed to markets during the last two weeks have not changed the sentiment, but exacerbated the bearish sentiment with commodity hype and bad economic data.
With the Friday price actions after weak price actions after reaching the SPX 1270 +/- target which noted in Dec 2007, markets sentiment is showing that we are indeed in bear market.
We have a turn date in March and the Fed meeting on Mar 18; and will look for any change in sentiment confirmed with price actions.
The late commodity hype during the week was followed by more bad economic news during the last week.
The price actions during the last two weeks confirm the two week events as noted above.
Market sentiment is 98% bearish even with the very oversold condition.
I was looking for a change to negate the bearish sentiment; however, the events fed to markets during the last two weeks have not changed the sentiment, but exacerbated the bearish sentiment with commodity hype and bad economic data.
With the Friday price actions after weak price actions after reaching the SPX 1270 +/- target which noted in Dec 2007, markets sentiment is showing that we are indeed in bear market.
We have a turn date in March and the Fed meeting on Mar 18; and will look for any change in sentiment confirmed with price actions.
Subscribe to:
Posts (Atom)