Si la toma seguramente impactará en su ya abultado déficit fiscal.
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Mostrando las entradas con la etiqueta dolar. Mostrar todas las entradas
Mostrando las entradas con la etiqueta dolar. Mostrar todas las entradas
martes, agosto 4
SEGURO DE DESEMPLEO
En USA están empezando a vencer fuertemente los seguros por desempleo otorgados durante la crisis reciente. Si el gobierno no toma ninguna medida, mucha gente quedará realmente en la calle.
Si la toma seguramente impactará en su ya abultado déficit fiscal.
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Si la toma seguramente impactará en su ya abultado déficit fiscal.
SEGUIR LEYENDO...
lunes, agosto 3
COMENTARIOS SOBRE EL PBI AMERICANO
El Viernes pasado se dió a conocer la cifra de ctrecimiento preliminar del PBI americano para el 2° trimestre del corriente año. Cayó 1%, mejor que lo esperado, -1.5%.
Sin embargo hay algunos puntos de vista interesantes para tener en cuenta según surge desde extracto del The Daily Reckonig:
"The U.S. economy shrank at a 1% annualized rate in the second quarter, the Commerce Department estimates today," reports Ian Mathias in today's issue of The 5.
"Since that's better than the 1.5% contraction the Street had predicted, we see headlines of 'the pain is easing,' and 'recession easing' left and right. True, the latest GDP number is better than previous quarters, but here are some of the stats that really got our attention:
Sin embargo hay algunos puntos de vista interesantes para tener en cuenta según surge desde extracto del The Daily Reckonig:
"The U.S. economy shrank at a 1% annualized rate in the second quarter, the Commerce Department estimates today," reports Ian Mathias in today's issue of The 5.
"Since that's better than the 1.5% contraction the Street had predicted, we see headlines of 'the pain is easing,' and 'recession easing' left and right. True, the latest GDP number is better than previous quarters, but here are some of the stats that really got our attention:
- The U.S. economy has now contracted four quarters in a row, the worst streak since the Great Depression
- GDP has contracted 3.9% in the last year, the worst fall since at least 1947, when the Commerce Department started keeping track
- First quarter GDP was revised down heavily, from a 5.5% to 6.4% - the biggest quarterly GDP drop in almost 30 years
- The Commerce Department revised 2008 down too, from a 0.4% annual contraction to a 1% decline
- Consumer spending, 70% of U.S. GDP, contracted 1.2%. Their retrenchment was largely replaced by government spending, up 10.9%
- Employment compensation rose by just 1.8% over the last 12 months, the slowest rate on books that go back to 1982.
martes, junio 30
LAS 3 HERMANAS: OLAS GIGANTES
Las olas gigantes que adquieren la altura de 30 metros (semejante a un edificio de 10 pisos) pueden hundir buques en el medio del océano.
Si bien se las tomaba como "mito náutico", se se ha descubierto que verdaderamente existen. Los resultados del satélite ERS (European Remote Sensing) de la ESA (Eupoean Space Agency) han ayudado a determinar que estas olas gigantes existen en realidad, y ahora se utilizan para estudiar sus orígenes.
Estas olas, cuya ocurrencia se produce por una combinación ocasional de diferentes ondas, generan paredes de agua, que se elevan como una torre por sobre la superficie oceánica. Un caso especial de las mismas, y muy temido por los navegantes, son las llamadas "Las tres hermanas". A una primera ola gigante, le suceden dos más seguidas, generando un efecto devastador para quien tenga la desgracia de estar frente a ellas.
¿A que viene toda esta introducción oceanográfica?
Pues en el último informe de Carta Confidencial del think-tank europeo LEAP/Europe2020 (Laboratorio Europeo de Anticipación Política), se incluyó un análisis sobre la crisis económica global que se avecina hacia fines del verano 2009 (hemisferio norte), como efecto del impacto de "Las 3 hermanas".
La primera: La ola de desempleo masivo: tres fechas de impacto que variarán según los países de América, Europa, Asia, Oriente Medio y África
El verano 2009 será un punto de inflexión en lo que respecta al impacto del desempleo en el desarrollo de la crisis sistémica global. En efecto, será el momento de las consecuencias, el paro se convertirá en todo el mundo en un factor de agravación de la crisis. Desde luego que este proceso no se desarrollará en todas partes al mismo ritmo, ni con consecuencias idénticas…
La segunda: La ola de quiebras en serie: Comercio, banca, inmuebles, Estados, regiones y ciudades
Más allá de estos acontecimientos muy evidentes, se asiste por todas partes a un aumento rápido y continuo de las quiebras de empresas y establecimientos financieros de gran, media o pequeña importancia que se acelerará después del verano de 2009, mientras que se prepara en Estados Unidos, el Reino Unido y España en particular, una segunda ola de embargos inmobiliarios que en el verano de 2009 va a caracterizarse por el inicio de una ola de cese de pagos de Estados, regiones y ciudades. Los « jóvenes retoños » de los medias financieros no hacen más que ocultar las « hojas muertas » de la economía real…
Y finalmente la tercera: La ola de la crisis terminal de los Bonos del Tesoro estadounidense, el USD, la libra y el retorno de la inflación
Esta primera cumbre del BRIC, que no es difícil imaginar cuan difícil ha debido ser de organizar, constituye una primera señal de desarticulación del sistema internacional actual. No sólo Estados Unidos han debido hacer todo lo posible para impedir la reunión, sino que además se les negó su presencia en calidad de observador, una señal clara que lo que se dijo allí no pretendía ser diplomático. Y el tema central no era ciertamente un problema estratégico-militar, sino una cuestión financiera-monetaria: ¿que hacer con cientos de miles de millones de USD (en forma de Bonos del Tesoro, en particular,) acumulados por estos cuatro países durante los recientes años?...
Cada uno podrá asignarle la probabilidad de ocurrencia a la llegada de "las tres hermanas", pero luego de la recuperación que tuvieron los mercados, no estaría de más tomar una posición más defensiva. Por lo menos ponerse el traje de agua.....
Parte del informe lo pueden leer Acá
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miércoles, mayo 27
HIPERINFLACION EN USA?
Marc Fabber, prestigicio analista de mercados se despacho con la siguiente opinión:
The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
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The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
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jueves, mayo 21
USA = AAA?????
Standard and Poor's rebajó la nota de la perspectiva de la economía británica de "estable" a "negativa", debido al "deterioro de las finanzas públicas".
"La degradación de la nota está basada en que creemos que el endeudamiento global del Reino Unido puede acercarse a 100% del PIB (Producto Interno Bruto) y permanecer en ese nivel en el mediano plazo", agregó S&P en un comunicado.
¿Ahora le tocará a USA?
Veamos las subdivisiones de Moodys para los triple A:
A su vez en la minutas de la última reunión de la Fed, las proyecciones para la economía americana empeoraron:
Finalmente el dólar cae frente al resto de las monedas (salvo en Argentina), los treasuries caen, y el oro sigue rumbo a los USD 1.000..... SEGUIR LEYENDO...
"La degradación de la nota está basada en que creemos que el endeudamiento global del Reino Unido puede acercarse a 100% del PIB (Producto Interno Bruto) y permanecer en ese nivel en el mediano plazo", agregó S&P en un comunicado.
¿Ahora le tocará a USA?
Veamos las subdivisiones de Moodys para los triple A:
A su vez en la minutas de la última reunión de la Fed, las proyecciones para la economía americana empeoraron:
Finalmente el dólar cae frente al resto de las monedas (salvo en Argentina), los treasuries caen, y el oro sigue rumbo a los USD 1.000..... SEGUIR LEYENDO...
jueves, mayo 14
EL ORO: ¿PUM PARA ARRIBA?
El primer objetivo de USD 920/930 fue alcanzado, y la tendencia indica que esto recien empieza.
Subir el Stop/Loss a USD 900. Próximo target USD 965.
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Subir el Stop/Loss a USD 900. Próximo target USD 965.
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miércoles, mayo 13
CRISIS FINANCIERA: 2° ROUND
La crisis subprime castigo fuertemente al sistema financiero americano. El gobierno salió a socorrerlo, luego que la caida de Lehman generó pánico.
Al tiempo, un stress test "a medida" mostró que la situación era manejable, aunque dicho también test arrojó como resultado que las pérdidas esperadas con las tarjetas de crédito para los 19 bancos podría exceder los USD 82.4 billions americandos, hacia fines del 2010.
Eso es más que el market cap del City, American Express, Capital One, & Discover combinados.
Si creemos que está todo terminado para el sistema financiero veamos el siguiente chart sobre las pérdidas por tarjeta de créditos desde 1985, y saquemos nuestras propias conclusiones....
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Al tiempo, un stress test "a medida" mostró que la situación era manejable, aunque dicho también test arrojó como resultado que las pérdidas esperadas con las tarjetas de crédito para los 19 bancos podría exceder los USD 82.4 billions americandos, hacia fines del 2010.
Eso es más que el market cap del City, American Express, Capital One, & Discover combinados.
Si creemos que está todo terminado para el sistema financiero veamos el siguiente chart sobre las pérdidas por tarjeta de créditos desde 1985, y saquemos nuestras propias conclusiones....
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miércoles, diciembre 31
UN AÑO PARA EL OLVIDO
Termino el 2008. Una año para el olvido a nivel de inversión. Igual nada indica que el 2009 sea más fácil.
En el interín recordemos como salió el mundo de la debacle financiera.
FELIZ 2009
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En el interín recordemos como salió el mundo de la debacle financiera.
FELIZ 2009
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lunes, diciembre 15
¿DOLAR o EURO?
El mundo esta movido, y se sigue buscando el refugio de los ahorros. En el interín sigue la pregunta, ¿Dólar o Euro?
Desde Julio del corriente año el dólar ha recuperado terreno fuertemente. Para algunos se viene una corrección de dicha moneda, mientras que para otros terminó la corrección de la suba del Euro.
Veamos algunos punto para confundirnos más.....
El costo de los Treasury a 3 meses ya tienen una tasa negativa. Hoy el inversor prefiere tener sus fondos a tasa negativa, que invertir en cualquier otro activo. Esto obviamente debería desalentar la inversión en el "green-back".
También podemos ver en los siguientes charts como el dólar Index, o el dólar vs. el Euro, han cortado la media diaria de 50 días.
Del lado de enfrente se mencionan tres amenazas sobre el Euro:
1. La crisis ha generado que sea más difícil para las economías emergentes de europa llegar a cumplir con las reglas para poder ingresar a la comunidad, y también para aquellas que hoy están dentro para mantenerse. Esta reconfiguración de la comunidad puede llegar a tener un impacto sobre el Euro, que si bien es difícil de cuantificar, hay que contemplarlo.
2. Todavía hay bancos europeos expuestos a los efectos de la crisis, especialmente los austríacos que han tenido una fuerte exposición en los mercados emergentes.
Esta incertidumbre financiera tendrá impactos monetarios que impactarán obviamente sobre le Euro.
3. La recesión europea es otra de las amenazas que impactarán sobre el Euro.
Como vemos no es fácil establecer cual moneda será la ganadora. El dólar tiene la ventaja de haber sido siempre la moneda utilizado como reserva de valor. Aunque por otro lado China estaría más reacia para seguir aumentando su tenencia en dicha moneda.
Ante la duda, no descartemos al oro como reserva de valor.
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Desde Julio del corriente año el dólar ha recuperado terreno fuertemente. Para algunos se viene una corrección de dicha moneda, mientras que para otros terminó la corrección de la suba del Euro.
Veamos algunos punto para confundirnos más.....
El costo de los Treasury a 3 meses ya tienen una tasa negativa. Hoy el inversor prefiere tener sus fondos a tasa negativa, que invertir en cualquier otro activo. Esto obviamente debería desalentar la inversión en el "green-back".
También podemos ver en los siguientes charts como el dólar Index, o el dólar vs. el Euro, han cortado la media diaria de 50 días.
Del lado de enfrente se mencionan tres amenazas sobre el Euro:
1. La crisis ha generado que sea más difícil para las economías emergentes de europa llegar a cumplir con las reglas para poder ingresar a la comunidad, y también para aquellas que hoy están dentro para mantenerse. Esta reconfiguración de la comunidad puede llegar a tener un impacto sobre el Euro, que si bien es difícil de cuantificar, hay que contemplarlo.
2. Todavía hay bancos europeos expuestos a los efectos de la crisis, especialmente los austríacos que han tenido una fuerte exposición en los mercados emergentes.
Esta incertidumbre financiera tendrá impactos monetarios que impactarán obviamente sobre le Euro.
3. La recesión europea es otra de las amenazas que impactarán sobre el Euro.
Como vemos no es fácil establecer cual moneda será la ganadora. El dólar tiene la ventaja de haber sido siempre la moneda utilizado como reserva de valor. Aunque por otro lado China estaría más reacia para seguir aumentando su tenencia en dicha moneda.
Ante la duda, no descartemos al oro como reserva de valor.
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miércoles, noviembre 5
ONE MONTH TREASURY NOTE YIELD
Los Treasury Notes (TN) a un mes rinden casi cero (0.09%). ¿Que significado puede tener esto?
1. que es más barato guardar los ahorros en TN, que en una caja de seguridad?
2. que las tasa americanas van a subir?
3. miedo a un default americano?
4. estar líquido?
5. otros?
6. ................
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1. que es más barato guardar los ahorros en TN, que en una caja de seguridad?
2. que las tasa americanas van a subir?
3. miedo a un default americano?
4. estar líquido?
5. otros?
6. ................
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viernes, octubre 24
EL MERCADO DE CAMBIOS MUNDIAL
En las últimas semanas hemos visto recuperar fuerte al dólar. Más allá que las medidas de salvataje tomadas por el Tesoro americano debería jugar en contra de dicha moneda, encontre una explicación razonable de porque no sucedió así, en el newsletter diario The Daily Pfennig, y extraje la parte relevante de la explicación:
"The story is the same as we have seen over the past few months. Institutional investors and hedge funds are having to pay down some of the loans which they have taken out over the past few years. These investors had been rolling over loans in the lower yielding currencies of the yen, franc, and dollar in order to pick up the 'carry' between these low interest loans and their higher yielding investments. Now, due to the credit crunch, the banks are not renewing these loans, and the institutional investors have to sell investments and buy back the yen, franc, and dollar in order to pay off the banks. In addition to the flow of funds to pay off these bank loans, investors are also having to purchase dollars to make up for the losses which they are incurring on US$ based mortgage investments and credit default swaps."
"A question we hear a lot these days is when will this stop? That question is very difficult to answer, as hedge funds are mostly unregulated so there is no good data on just how much leverage there is. Making it even more difficult, the credit default swaps do not trade on an 'exchange' so it is almost impossible to try and gauge just how much of these swaps are outstanding. For those of you who are new to the Pfennig, credit default swaps are agreements which were entered into by institutions which guaranteed holders of certain mortgage backed investments against the risk of default. They are basically insurance policies on mortgage backed investments. These swaps are contracts between two parties, and are not cleared on a common exchange. As mortgage backed securities have plummeted, holders of the credit default swaps have started collecting. The vast majority of these derivative contracts are issued in US$, so when holders collect, the issuers have to pay off in US$, and sometimes have to sell investments in other currencies to raise the US$."
"But I digress, back to just how long this will last. No one knows. As long as the losses keep mounting on Wall Street, and volatility continues, investors will continue to have to buy dollars. I know this isn't helpful to readers who want someone to tell them right when the bottom is, but anyone who tells you they can predict these markets is delusional. I can only tell you that at some point the deleveraging will be complete, and the markets will start trading back on fundamentals. The fundamentals are not good for the US$, as we continue to increase debt and widen our deficits."
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viernes, septiembre 19
DEMASIADA INTERVENCION EN USA
Que hubieran opinado los inversores extranjeros si la argentina prohibía las ventas cortas. Nos hubieran dicho anticapilistas como mínimo.
Ahora Uk y USA lo hicieron. Esto es muy grave para los mercados. El prohibir las ventas cortas no va mejorar la situación del sistema financiero americano.
Tampoco concuerdo con la "estatización" de los malos créditos hipotecarios. Todo esto frenará el impacto de la crisis en los mercados, pero creo que dañará seriamente la confianza sobre el "capitalismo" americano.
El tiempo dirá.
A continuación adjunto un artículo, uno de los tantos, que han salido a criticar la actuación de la Fed, la Sec, y el Tesoro.
The Socialists Killed The Short Sellers
There was a perverse honor in being a short-seller. It was an honor among thieves, but the group usually made lots of money by taking significant risks.
Short-selling was based on one of the foundations of capitalism. Making money betting on disaster is just as much a part of the economy as taking the optimist's side.
Banning short-selling in financial stocks, which both the US and UK have done, will halt the activities of the so-called naked shorters. These firms short shares without borrowing them from other firms. They are required to do that borrowing because it is the basis of their risk. If the stock they borrowed goes up, they have to pay the difference of what the original owner would have made.
Killing short-selling buries naked shorting. It also demolishes the entire market for legitimate gambles that a stock will go down. It subverts one of the most important checks and balances of equities trading.
The regulators feel that poisoning part of the system is the only way to save the whole market. No one will ever know if that is true. Free marketers such as George Soros felt that the whole bloody mess should be sorted out on its own and that the government should simply stand by and watch the world burn. Soros and his ilk were voted down and banned from the property.
Short-selling was always a dirty business, and now the government has decided that it is no business at all.
Financial stocks will rise on the news that the system for betting against them has been crushed. In the process of the shares going higher. there will be very little left to tether them to the earth.
Exuberance will have its day, but it may be that when the next set of banking and brokerage quarterly losses are announced there will be another round of crashing share prices. The shorts will not have been permitted to do their jobs.
Douglas A. McIntyre
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jueves, septiembre 11
UNA EXPLICACIÓN SOBRE LA CRISIS SUBPRIME
Encontré este video que explica claramente lo que pasó con la crisis de las hipotecas subprime en USA.
Espero que lo disfruten.
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Espero que lo disfruten.
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viernes, agosto 22
LA CRISIS AMERICANA YA TIENE SU FILM
Ayer se estreno en U.S.A. el film I.O.U.S.A. Un documental sobre la situación fiscal americana, y que les los está llevando derecho a la peor crisis de su historia.
Se estima que tiene una necesidad financiera de USD 53 trillions basicamente por el sistema de salud Medicare, y el sistema de seguridad social. Además la deuda nacional es de USD 9,6 trillions, la cual crece USD 1,86 billions por día.
Las perspectivas son muy negras, y la verdad que con este escenario el dolar parece caro contra el resto de las monedas. Además el sistema financiero no goza de buena salud.
Por todo esto se sigue viendo al oro como una inversión seguro por los próximos años (5?, 10?, quien sabe).
A continuación el trailer de dicho film.
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jueves, agosto 14
US DOLLAR INDEX: FUERTE SIGNO DE SOBRECOMPRA
From the Bespoke Investment Group
Dollar Up Ten Days in a Row
Since our post on the Dollar breakout last week, the currency has continued its trek higher. It is currently trading well into overbought territory, however, and is also up ten days in a row for just the fifth time since we have daily pricing going back to 1971. The last ten-day winning streak for the currency was all the way back in May 1990. The currency has gone up eleven days in a row just twice, and it has never been up twelve days in a row. While we expect the uptrend to continue for the Dollar, it can't go up every day.
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Dollar Up Ten Days in a Row
Since our post on the Dollar breakout last week, the currency has continued its trek higher. It is currently trading well into overbought territory, however, and is also up ten days in a row for just the fifth time since we have daily pricing going back to 1971. The last ten-day winning streak for the currency was all the way back in May 1990. The currency has gone up eleven days in a row just twice, and it has never been up twelve days in a row. While we expect the uptrend to continue for the Dollar, it can't go up every day.
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lunes, agosto 11
RALLY DEL DOLAR O SOLO CORRECCIÓN
El dólar ha tenido una fuerte suba en la última semana.
Cuando uno analiza las causantes de dicha recuperación no las podrá encontrar en una mejora de la economía. El deficit sigue creciendo, el problema financiero esta lejos de solucionarse, no ha dejado de emitir dolares, y tampoco tienen pensado subir la tasa.
Es cierto que ya se empiezan a notar fuertes sintomas de deterioro en la economía europea, pero según un artículo publicado en GoldMoney.com, que pueden leer a continuación, la verdad habría que buscarla en la intervención realizada por los bancos centrales. A eso hay que sumarle el efecto de quienes estaban vendidos en dólares que tuvieron que salir a cubrir posiciones.
Ante esto la pregunta es ¿cuanto aguantará esta intervención? ¿Hay que olvidarse de un dólar debil? ¿O tomamos esto como una correción y una oportunidad de venta del greenback?
Con un Euro debajo de los 150, y el oro debajo de 900 la respuesta parece resuelta.
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Cuando uno analiza las causantes de dicha recuperación no las podrá encontrar en una mejora de la economía. El deficit sigue creciendo, el problema financiero esta lejos de solucionarse, no ha dejado de emitir dolares, y tampoco tienen pensado subir la tasa.
Es cierto que ya se empiezan a notar fuertes sintomas de deterioro en la economía europea, pero según un artículo publicado en GoldMoney.com, que pueden leer a continuación, la verdad habría que buscarla en la intervención realizada por los bancos centrales. A eso hay que sumarle el efecto de quienes estaban vendidos en dólares que tuvieron que salir a cubrir posiciones.
Ante esto la pregunta es ¿cuanto aguantará esta intervención? ¿Hay que olvidarse de un dólar debil? ¿O tomamos esto como una correción y una oportunidad de venta del greenback?
Con un Euro debajo de los 150, y el oro debajo de 900 la respuesta parece resuelta.
Mystery Solved
by James Turk - Founder of GoldMoney
On July 15th the US Dollar Index closed at 71.87, the lowest close since reaching its record low in April. This index was in the process of breaking down, and in fact it had actually fallen out of its uptrend channel.
However, rather than continue lower and fall off the edge of the cliff, the Dollar Index suddenly and mysteriously reversed course. It has now risen on 12 of the 17 trading days since reaching that low, and closed today at 74.55, a 5-month high. What caused this index to suddenly pull back from the brink and then reverse course to shoot higher over the past three weeks?
The Federal Reserve did not suddenly contract the amount of dollars in circulation. Its latest H.6 report shows that both M1 and M2 expanded in recent weeks, so there was no shortage of supply.
The Federal Reserve did not raise interest rates during this period. Consequently, inflation adjusted interest rates remain negative. In other words, the annual inflation rate is higher than the amount of interest one can earn on a 1-year dollar deposit, which is highly inflationary and a major disincentive to holding dollars.
There has not been any news exceptionally favorable to the dollar. In fact, the banking problems in the United States continue to mount, while the federal government's deficit continues to soar out of control. On July 28th Reuters reported that "The Bush administration on Monday plans to project the U.S. budget deficit will soar to a new record...because of the slowing economy and an economic stimulus plan approved this year."
So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here's the proof.
When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.
On July 16, 2008 (the closest date of the weekly reports to the July 15th low in the Dollar Index), the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. To put this phenomenally high growth rate into perspective, for the twelve months ending this past July 16th, assets in the Federal Reserve's custody account grew by 17.3%, which is less than one-half the growth rate experienced over the past three weeks.
So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others. So central banks pushed in one direction and funds and traders then stepped on board. In other words, central banks ignited the fuse of a bear market rally.
With this intervention, central banks have bought some time. But alas, they have not fixed the problem. Central bank intervention does not make the dollar "as good as gold", the description that once accurately described the dollar.
In the final analysis, it is fundamental factors that determine the course of markets and the process of price discovery that results from them. Central bank intervention - like fiat currency itself - is ephemeral. In contrast, gold lasts throughout the ages. So what would you rather own? A sick dollar that it requires central bank intervention to prop it up? Or gold?
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martes, julio 22
CORRELACIÓN ENTRE DISTINTOS ACTIVOS
Adjunto esta nota de The Bespoke Investment sobre la correlación existente entre distintos activos.
Chart: (clickeé sobre el mismo para ampliar)
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Asset Class Correlations
Today's Wall Street Journal had an interesting article about asset class correlations. With that in mind, below we highlight (click here for PDF) a correlation matrix of various asset classes including the S&P 500 sectors, oil, gold, the dollar, the yen, emerging markets, the 10-year note and the FTSE 100. The first matrix highlights the correlation between the daily percent changes of asset classes since the S&P 500 peaked on October 9th, 2007. Each column (vertical) is color coded from green to red based on highest to lowest correlations.
The second matrix highlights the correlations between the same asset classes, only from a much longer time horizon (1990-present). Then, in the bottom chart, we highlight the difference between the short-term and long-term correlations to see where differences arise. Correlations that have increased since the bear market began in 10/07 are shaded in light green, while correlations that have decreased are shaded in light red. In each column, the biggest increase and decrease in correlation is highlighted in dark green or red. As shown, correlations have generally increased among sectors, while stocks have become less correlated with oil, gold and Treasuries. Correlations between stocks and the yen have increased the most in the short-term compared to their long-term correlations. To view the matrices in PDF form, please click here. It's definitely an interesting data set to analyze and it's better to let the info speak for itself.
Chart: (clickeé sobre el mismo para ampliar)
SEGUIR LEYENDO...
viernes, julio 18
HAS OIL FINALLY TOPPED OUT?
Comparto con Uds. esta nota sobre el petróleo que publico el miércoles The Daily Reckoning.
Has oil finally topped out?
Yesterday, the price fell another $4 – to $136. Still, of course, not far from its all-time high. But sliding...
“Oil is a bubble ready to pop,” say some analysts. “No, oil is merely responding to supply and demand,” say others.
What’s the real story?
As usual, you can count on us, here at The Daily Reckoning , to give it to you -- straight, unvarnished and unmitigated.
Trouble is, the real world always has a bend to it. Everything has a lacquer on it. And mitigations are everywhere.
In the oil market, we see both a bubble...and a useful commodity responding to economic forces. If you want to see a “pure bubble,” you have to look at something like the tulip mania in Holland or the Mississippi affair in France or the dot.com debacle in New York. These were “pure” bubbles because neither tulips, nor shares in the Mississippi company, nor dot.coms had any real economic value. Their prices were based 100% on speculation – not supply and demand. And since there was no “there there,” as Virginia Woolf might say, there was nothing left when the speculation disappeared. Their prices could go to zero, in other words.
Will the price of oil go to zero? No...not a chance. If the oil market is in a bubble, at least it is a bubble mitigated by three very important circumstances: 1) oil is perhaps the world’s most useful commodity, 2) more and more people want the stuff, 3) it is priced mostly in dollars whose value, in terms of everything else, is going down.
Normally, we can set aside the first two circumstances. Everyone knows oil is useful. Everyone knows the Chinese, the Indians and all the other foreigners are becoming addicted to it – just as Americans have been addicted for the last 50 years. These circumstances come as no surprise to anyone...and markets can sort them out. They were obvious in the oil market two years ago...they are obvious now.
Of course, even if they are obvious doesn’t mean investors have noticed. And in today’s oil market, it looks as if investors are suddenly waking up to something they should have seen a long time ago. But we suspect that the real surprise to most investors is the third circumstance. During the last 15 years – a period known as the Great Moderation – it was inflation that seemed to be taking a long nap. The band was playing loud music. Free drinks were passed around. Everyone was there – except inflation. Maybe it was out of town, some wondered. Or, maybe it was dead. Whatever happened to it, inflation was not around.
But, then the old party pooper showed up – and people began looking for their hats and saying goodbye to each other.
“US consumer prices up most in 26 years,” was yesterday’s most telling headline. Even the Wall Street Journal announced a price increase – to $2 an issue.
If you’re an oil sheik whose only asset is $100 billion worth of oil under the desert sand, you pay attention. The dollar has lost about 25% of its purchasing power – depending on how you measure it – in the last 5 years. If inflation rates just stay the same, the poor oil sheik stands to lose more than $25 billion by 2013. If he doesn’t think he’s getting a fair deal at today’s oil price, he’s likely to put a little crimp in the oil pipeline – reducing production until the price increases.
On the other hand, if the price of oil goes up enough, he’s likely to think that he should get it while the gettin’s good. Then, he would increase production – driving down the oil price.
Our guess is that the oil market has probably over-reacted to circumstances. When investors realized how much demand was increasing...they bid up prices. And when they realized how much inflation was increasing...they bid up prices further. And when speculators saw prices rising so much, they bid them up even further.
Now, oil is probably ready for a correction. Ten years ago, an ounce of gold would buy about 10 barrels of oil. Today, it buys only about 7. As is the case with oil, gold has responded to the increase in inflation rates. As to everything else, it is probably indifferent. So, if we were just adjusting the oil price to inflation, it should probably sell for about $95 a barrel.
As to the forces of supply and demand – Mr. Market would know better than we do. But Mr. Market, for all his sage experience, has a tendency to over-react. He probably over-reacted to growing, worldwide demand. Now, growth rates are declining throughout the world; he will probably over-react to that too.
So, where will the price of oil go? We wish we could tell you. It might very well sink below $100. But it will never sink as low as a busted dot.com or a crushed tulip bulb.
Even if the price of oil does drop, the U.S. has gotten the message: the time to find what will power the ‘car of the future’ is now.
SEGUIR LEYENDO...
Has oil finally topped out?
Yesterday, the price fell another $4 – to $136. Still, of course, not far from its all-time high. But sliding...
“Oil is a bubble ready to pop,” say some analysts. “No, oil is merely responding to supply and demand,” say others.
What’s the real story?
As usual, you can count on us, here at The Daily Reckoning , to give it to you -- straight, unvarnished and unmitigated.
Trouble is, the real world always has a bend to it. Everything has a lacquer on it. And mitigations are everywhere.
In the oil market, we see both a bubble...and a useful commodity responding to economic forces. If you want to see a “pure bubble,” you have to look at something like the tulip mania in Holland or the Mississippi affair in France or the dot.com debacle in New York. These were “pure” bubbles because neither tulips, nor shares in the Mississippi company, nor dot.coms had any real economic value. Their prices were based 100% on speculation – not supply and demand. And since there was no “there there,” as Virginia Woolf might say, there was nothing left when the speculation disappeared. Their prices could go to zero, in other words.
Will the price of oil go to zero? No...not a chance. If the oil market is in a bubble, at least it is a bubble mitigated by three very important circumstances: 1) oil is perhaps the world’s most useful commodity, 2) more and more people want the stuff, 3) it is priced mostly in dollars whose value, in terms of everything else, is going down.
Normally, we can set aside the first two circumstances. Everyone knows oil is useful. Everyone knows the Chinese, the Indians and all the other foreigners are becoming addicted to it – just as Americans have been addicted for the last 50 years. These circumstances come as no surprise to anyone...and markets can sort them out. They were obvious in the oil market two years ago...they are obvious now.
Of course, even if they are obvious doesn’t mean investors have noticed. And in today’s oil market, it looks as if investors are suddenly waking up to something they should have seen a long time ago. But we suspect that the real surprise to most investors is the third circumstance. During the last 15 years – a period known as the Great Moderation – it was inflation that seemed to be taking a long nap. The band was playing loud music. Free drinks were passed around. Everyone was there – except inflation. Maybe it was out of town, some wondered. Or, maybe it was dead. Whatever happened to it, inflation was not around.
But, then the old party pooper showed up – and people began looking for their hats and saying goodbye to each other.
“US consumer prices up most in 26 years,” was yesterday’s most telling headline. Even the Wall Street Journal announced a price increase – to $2 an issue.
If you’re an oil sheik whose only asset is $100 billion worth of oil under the desert sand, you pay attention. The dollar has lost about 25% of its purchasing power – depending on how you measure it – in the last 5 years. If inflation rates just stay the same, the poor oil sheik stands to lose more than $25 billion by 2013. If he doesn’t think he’s getting a fair deal at today’s oil price, he’s likely to put a little crimp in the oil pipeline – reducing production until the price increases.
On the other hand, if the price of oil goes up enough, he’s likely to think that he should get it while the gettin’s good. Then, he would increase production – driving down the oil price.
Our guess is that the oil market has probably over-reacted to circumstances. When investors realized how much demand was increasing...they bid up prices. And when they realized how much inflation was increasing...they bid up prices further. And when speculators saw prices rising so much, they bid them up even further.
Now, oil is probably ready for a correction. Ten years ago, an ounce of gold would buy about 10 barrels of oil. Today, it buys only about 7. As is the case with oil, gold has responded to the increase in inflation rates. As to everything else, it is probably indifferent. So, if we were just adjusting the oil price to inflation, it should probably sell for about $95 a barrel.
As to the forces of supply and demand – Mr. Market would know better than we do. But Mr. Market, for all his sage experience, has a tendency to over-react. He probably over-reacted to growing, worldwide demand. Now, growth rates are declining throughout the world; he will probably over-react to that too.
So, where will the price of oil go? We wish we could tell you. It might very well sink below $100. But it will never sink as low as a busted dot.com or a crushed tulip bulb.
Even if the price of oil does drop, the U.S. has gotten the message: the time to find what will power the ‘car of the future’ is now.
SEGUIR LEYENDO...
miércoles, julio 2
LOS TIEMPOS DE MAD MAX ESTAN CERCA?
Todos recordarán la trilogía de Mad Max, con Mel Gibson, donde la gasolina era el bien más preciado. Según el siguiente artículo, dramático por cierto, hacia allá vamos.
Oil Crisis Worsening! What's Next ...
by Sean Brodrick
I've been pounding the table about an energy crisis for quite some time. As a loyal reader of my Money and Markets column, you might think I've been proven right by gasoline soaring over $4 a gallon in 32 states and oil hitting new record highs.
But most of what I've been talking about is simply the long-term supply/demand squeeze that will transform our oil-addicted civilization in the future.
It appears, however, that the future is happening now. My fundamental and technical indicators are ALL sounding alarm bells.
Today, I'm going to give you an uncensored, no-holds-barred look at the consequences of the energy crisis. First, let's talk about why Peak Oil poses such an extreme economic threat to both Wall Street and Main Street.
The Short-Term Energy Crisis in America!
If oil reaches $200 a barrel, forget $4-per-gallon gasoline. Think $6.64, according to a Rice University analysis of the link between prices of crude and gasoline. And they're optimists in the bunch of experts who study Peak Oil.
What I'm telling you to prepare yourself for is a short-term spike in oil prices where gasoline becomes unavailable. As in, you'll want to buy it, but it won't be available at any price ... or any price you can afford.
You see, the world's producers are pumping flat-out. Saudi Arabia just promised to raise production a little bit, but that reduces their spare capacity to almost nothing. There is no margin of error ... no room for something to go wrong.
But something always goes wrong!
What will spark the kind of gasoline crisis I'm talking about? Take your pick of potential disasters. Here are just the top three ...
#1) U.S. Edging Closer to War with Iran
Last week, the Jerusalem Post reported that former U.S. ambassador to the U.N. John Bolton said that Israel is likely to attack Iran in the time between the November presidential election in the U.S. and the inauguration of the new president. Mr. Bolton also said that he does not believe the U.S. will participate in the attack. Israel may attack because Iran will not give up its nuclear development program.
However, in the U.S., CBS News reported that the Israelis are trying hard to get the Bush Administration to mount an attack on Iran's nuclear facilities. And the U.S. Congress is debating a resolution that slaps new economic sanctions on Iran, proposes a blockade, and seems to open the door for military action. Ron Paul, the courageous U.S. Representative who has long stood up against the Iraq War, calls the new bill "a virtual war resolution."
Do you think the Iranians are sitting on their thumbs, waiting for something to happen? Hardly. According to another Israeli news service, Iran has aimed its Shahab-3B ballistic missiles into launch positions, targeted squarely at Israel ... including Israel's nuclear reactor in the Negev city of Dimona.
What's more, Iran says that if it's attacked, its Revolutionary Guards would mount attacks on shipping in the vital Strait of Hormuz oil route. Two-fifths of all globally-traded oil passes through the Strait of Hormuz. And it's not hard to figure that oil facilities in Saudi Arabia could also be targeted.
If it comes to a new war in the Persian Gulf, don't expect $200 per barrel oil. Expect $400 per barrel oil ... $500 per barrel oil ... maybe higher.
#2) Monster Hurricanes in the Gulf of Mexico
Hurricanes Katrina and Rita proved that the Gulf of Mexico is America's soft underbelly, vulnerable to a devastating punch from Mother Nature during hurricane season.
When a global weather pattern called La Niña is strong, hurricanes are also more powerful than normal. Well, batten down the hatches, because a strong La Niña is expected to last through the summer, delivering worse-than-average storm activity THIS season.
The National Oceanic and Atmospheric Administration (NOAA) predicted above-normal hurricane activity in its Atlantic Hurricane Season Outlook. NOAA projects 12 to 16 named storms will form within the Atlantic Basin, including 6 to 9 hurricanes, of which 2 to 5 will be intense during the upcoming hurricane season.
And that could be a lowball estimate. The average number of Category 4 and Category 5 hurricanes worldwide has nearly doubled over the past 35 years.
Now here's the bad news: The Gulf of Mexico is home to 20% of the natural gas and 30% of the oil produced in the U.S. and 40% of America's refining capacity.
If that refining capacity gets taken out by a massive hurricane, forget $4 a gallon gasoline ... $5 a gallon gasoline ... heck, we might be looking at $6 a gallon gasoline or higher, very quickly. And the higher we go, and the longer we stay higher, the more "normal" otherwise outrageous gasoline prices become.
And refineries are already playing with fire as it is ...
#3) Refiners and Retailers See Profit Margins Squeezed
With the rising cost of oil, America's refiners are taking a gamble by keeping low inventories of crude and lowering their refinery utilization rates at the same time. According to the Energy Information Administration, gasoline stockpiles fell by 153,000 barrels to 208.8 million barrels in the most recent week.
Refinery utilization, which normally hovers in the 95% range at this time of year, is currently at just 88.6%. In fact, it's at the lowest level for early summer in 15 years.
If refinery inputs are at 15.4 million barrels per day (mainly crude oil), a one-percent change in yield is a 154,000 barrel-per-day (4.7 million gallons) change in product volume. U.S. consumption of gasoline is around 388.6 million gallons/day. So those few percentage points mean a real difference in supply ... which means higher prices.
Meanwhile, demand for motor gasoline over the past four weeks declined by an average of 9.3 million barrels per day — down 2.1% from the same time a year ago, and down 5% from its peak of 21.3 million barrels a day on January 4, the EIA reported.
This lessening of demand is the excuse the refiners use for the low run rates. Since American consumers are using less gasoline, they say they need to process less. But less supply drives up prices, so consumers use less gasoline — it's a vicious circle.
While rising input costs have squeezed refinery margins mercilessly, gasoline retailers — gas stations — are also seeing profit margins tighten to the vanishing point.
In 2007, the average markup of gas sold at the pump was 14.3 cents per gallon over what the owner paid, according to data from the National Association of Convenience Stores, the trade group for the stores that run more than 80% of the country's gas stations.
The profit, or net margin after all expenses have been figured in, has now shrunk to a measly 1.5 cents a gallon!
Now, with the price of gasoline rising, charges for credit card transactions are rising as well, and many gas station owners are making no money at all. That's why Exxon, the most profitable company in the history of the world, announced in June that it is selling the 2,200 gas stations it owns.
Will it find buyers for those gas stations? If not, we can expect gas stations to close. And we may see gas stations across America close anyway, as station owners gets squeezed out of existence.
Some rural areas are served by only a few gas stations ... as they start to go out of business, it may become very difficult for some Americans to buy gasoline. And that will lead us to a whole new problem ...
Prepare for Hoarding and a Recession-Turned-Depression
Why hoard? Well, when the price of gas rises 10 cents in a week, as it did in my neighborhood, it starts to make economic sense to hoard gas. Say you run a lawn service that uses 500 gallons of gasoline a week. If you buy next week's allotment ahead of time, you can save $50 a week.
And if refinery utilization is so low that gasoline stations simply run out — or a massive hurricane takes out refinery capacity — then you'll see hoarding kick into overdrive. This will only deplete stockpiles that are already near historic lows, making the whole situation much worse. Eventually, we may get to the point where you are unable to buy gas.
I'm talking about actual gasoline shortages ... massive unemployment and foreclosures ... evicted families living in tent cities and cars they can't afford to drive ... maybe, if things get really bad, food shortages and food and fuel riots.
At $7 gasoline, those making less than $25,000 a year will see gasoline expenditures go from 7% of their income to 20%. For some people, it simply won't be worth it to drive to work.
Factor in the airlines parking planes, delivery trucks no longer running, fishing fleets staying in port, and car manufacturers going out of business.
Wait a minute — car makers going out of business?! Yep, GM is on deathwatch now, and it's not getting better. In fact, according to a leaked report from J.D. Power and Associates, the June seasonally adjusted annual sales rate will plunge to 12.5 million vehicles, down from 16.3 million last June.
Add it all up, and America has the ingredients for a major economic collapse.
And Yet Oil Demand Is Still Skyrocketing Globally!
Will reducing U.S. demand cause oil prices to plummet? No, because demand in emerging markets is accelerating, and even if the global economy slows, that won't stop them. Much of China's growth is fueled by internal spending now. They may not like it if Americans are out of work, but they'll carry on.
Just think: How bothered were you by the collapse of the Soviet Union? A major superpower hit the skids in 1985 and imploded in 1991. Did that adversely affect your life in any meaningful way? I'm not saying a severe recession in America won't affect China ... just not as much as we might think.
This year, emerging markets are overtaking the U.S. in consumption of oil for the first time, and it won't be long before they consume more than the entire developed world.
At the same time, internal demand is rising in major oil producers and exporters. Over the last three years, oil consumption among OPEC members has grown by more than 5% a year. Hence, their exports go down and prices go up.
So while America's car sales may be hitting the skids, 6.6 million to 10 million new cars, trucks and vans will hit the roads in China this year. India will probably grow at an even faster pace, percentage-wise. Bottom line: They'll use every barrel of oil we don't.
And the Rising Price of Oil Could Even Lead to Severe Food Shortages
American agriculture directly accounts for 17% of our energy use, or the equivalent of 400 gallons of oil consumed by every man, woman and child per year, according to the most recent statistics I could find.
If the cost of fuel gets too high, farmers won't plant. If truckers run out of fuel, they won't deliver food to supermarkets. If enough of this happens often enough, people won't just sit there and take it. They will lash out.
Now, what would you say the odds are of this happening in a year when we are on the brink of war with Iran ... when meteorologists say this hurricane season should be worse than normal ... and when refineries are keeping historically low levels of inventories? I'd say better than average.
And the sad thing is, I've just barely scratched the surface of what could go wrong this year. I'd say America is in real trouble.
How to Protect Yourself — And Your Family
Laying in a month's supply of food might not be a bad thing to do for the next year. But you can also protect yourself financially.
Take, for example, the United States Oil Fund ETF (USO): This fund is designed to track light sweet crude, plus or minus 10%. It's not perfect, partly due to the fact that the fund has an expense ratio of 0.50. Still, that's pretty good, and it's an easy way to get direct exposure to rising oil prices.
In a recent one-year period, the S&P 500 fell by 12.6%. Crude oil rose 94.7%. And the USO rose by an astounding 110.3%. That's the kind of investment you may want to consider in this market.
___________________________________________________________________________________
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
SEGUIR LEYENDO...
Oil Crisis Worsening! What's Next ...
by Sean Brodrick
I've been pounding the table about an energy crisis for quite some time. As a loyal reader of my Money and Markets column, you might think I've been proven right by gasoline soaring over $4 a gallon in 32 states and oil hitting new record highs.
But most of what I've been talking about is simply the long-term supply/demand squeeze that will transform our oil-addicted civilization in the future.
It appears, however, that the future is happening now. My fundamental and technical indicators are ALL sounding alarm bells.
Today, I'm going to give you an uncensored, no-holds-barred look at the consequences of the energy crisis. First, let's talk about why Peak Oil poses such an extreme economic threat to both Wall Street and Main Street.
The Short-Term Energy Crisis in America!
If oil reaches $200 a barrel, forget $4-per-gallon gasoline. Think $6.64, according to a Rice University analysis of the link between prices of crude and gasoline. And they're optimists in the bunch of experts who study Peak Oil.
What I'm telling you to prepare yourself for is a short-term spike in oil prices where gasoline becomes unavailable. As in, you'll want to buy it, but it won't be available at any price ... or any price you can afford.
You see, the world's producers are pumping flat-out. Saudi Arabia just promised to raise production a little bit, but that reduces their spare capacity to almost nothing. There is no margin of error ... no room for something to go wrong.
But something always goes wrong!
What will spark the kind of gasoline crisis I'm talking about? Take your pick of potential disasters. Here are just the top three ...
#1) U.S. Edging Closer to War with Iran
Last week, the Jerusalem Post reported that former U.S. ambassador to the U.N. John Bolton said that Israel is likely to attack Iran in the time between the November presidential election in the U.S. and the inauguration of the new president. Mr. Bolton also said that he does not believe the U.S. will participate in the attack. Israel may attack because Iran will not give up its nuclear development program.
However, in the U.S., CBS News reported that the Israelis are trying hard to get the Bush Administration to mount an attack on Iran's nuclear facilities. And the U.S. Congress is debating a resolution that slaps new economic sanctions on Iran, proposes a blockade, and seems to open the door for military action. Ron Paul, the courageous U.S. Representative who has long stood up against the Iraq War, calls the new bill "a virtual war resolution."
Do you think the Iranians are sitting on their thumbs, waiting for something to happen? Hardly. According to another Israeli news service, Iran has aimed its Shahab-3B ballistic missiles into launch positions, targeted squarely at Israel ... including Israel's nuclear reactor in the Negev city of Dimona.
What's more, Iran says that if it's attacked, its Revolutionary Guards would mount attacks on shipping in the vital Strait of Hormuz oil route. Two-fifths of all globally-traded oil passes through the Strait of Hormuz. And it's not hard to figure that oil facilities in Saudi Arabia could also be targeted.
If it comes to a new war in the Persian Gulf, don't expect $200 per barrel oil. Expect $400 per barrel oil ... $500 per barrel oil ... maybe higher.
#2) Monster Hurricanes in the Gulf of Mexico
Hurricanes Katrina and Rita proved that the Gulf of Mexico is America's soft underbelly, vulnerable to a devastating punch from Mother Nature during hurricane season.
When a global weather pattern called La Niña is strong, hurricanes are also more powerful than normal. Well, batten down the hatches, because a strong La Niña is expected to last through the summer, delivering worse-than-average storm activity THIS season.
The National Oceanic and Atmospheric Administration (NOAA) predicted above-normal hurricane activity in its Atlantic Hurricane Season Outlook. NOAA projects 12 to 16 named storms will form within the Atlantic Basin, including 6 to 9 hurricanes, of which 2 to 5 will be intense during the upcoming hurricane season.
And that could be a lowball estimate. The average number of Category 4 and Category 5 hurricanes worldwide has nearly doubled over the past 35 years.
Now here's the bad news: The Gulf of Mexico is home to 20% of the natural gas and 30% of the oil produced in the U.S. and 40% of America's refining capacity.
If that refining capacity gets taken out by a massive hurricane, forget $4 a gallon gasoline ... $5 a gallon gasoline ... heck, we might be looking at $6 a gallon gasoline or higher, very quickly. And the higher we go, and the longer we stay higher, the more "normal" otherwise outrageous gasoline prices become.
And refineries are already playing with fire as it is ...
#3) Refiners and Retailers See Profit Margins Squeezed
With the rising cost of oil, America's refiners are taking a gamble by keeping low inventories of crude and lowering their refinery utilization rates at the same time. According to the Energy Information Administration, gasoline stockpiles fell by 153,000 barrels to 208.8 million barrels in the most recent week.
Refinery utilization, which normally hovers in the 95% range at this time of year, is currently at just 88.6%. In fact, it's at the lowest level for early summer in 15 years.
If refinery inputs are at 15.4 million barrels per day (mainly crude oil), a one-percent change in yield is a 154,000 barrel-per-day (4.7 million gallons) change in product volume. U.S. consumption of gasoline is around 388.6 million gallons/day. So those few percentage points mean a real difference in supply ... which means higher prices.
Meanwhile, demand for motor gasoline over the past four weeks declined by an average of 9.3 million barrels per day — down 2.1% from the same time a year ago, and down 5% from its peak of 21.3 million barrels a day on January 4, the EIA reported.
This lessening of demand is the excuse the refiners use for the low run rates. Since American consumers are using less gasoline, they say they need to process less. But less supply drives up prices, so consumers use less gasoline — it's a vicious circle.
While rising input costs have squeezed refinery margins mercilessly, gasoline retailers — gas stations — are also seeing profit margins tighten to the vanishing point.
In 2007, the average markup of gas sold at the pump was 14.3 cents per gallon over what the owner paid, according to data from the National Association of Convenience Stores, the trade group for the stores that run more than 80% of the country's gas stations.
The profit, or net margin after all expenses have been figured in, has now shrunk to a measly 1.5 cents a gallon!
Now, with the price of gasoline rising, charges for credit card transactions are rising as well, and many gas station owners are making no money at all. That's why Exxon, the most profitable company in the history of the world, announced in June that it is selling the 2,200 gas stations it owns.
Will it find buyers for those gas stations? If not, we can expect gas stations to close. And we may see gas stations across America close anyway, as station owners gets squeezed out of existence.
Some rural areas are served by only a few gas stations ... as they start to go out of business, it may become very difficult for some Americans to buy gasoline. And that will lead us to a whole new problem ...
Prepare for Hoarding and a Recession-Turned-Depression
Why hoard? Well, when the price of gas rises 10 cents in a week, as it did in my neighborhood, it starts to make economic sense to hoard gas. Say you run a lawn service that uses 500 gallons of gasoline a week. If you buy next week's allotment ahead of time, you can save $50 a week.
And if refinery utilization is so low that gasoline stations simply run out — or a massive hurricane takes out refinery capacity — then you'll see hoarding kick into overdrive. This will only deplete stockpiles that are already near historic lows, making the whole situation much worse. Eventually, we may get to the point where you are unable to buy gas.
I'm talking about actual gasoline shortages ... massive unemployment and foreclosures ... evicted families living in tent cities and cars they can't afford to drive ... maybe, if things get really bad, food shortages and food and fuel riots.
At $7 gasoline, those making less than $25,000 a year will see gasoline expenditures go from 7% of their income to 20%. For some people, it simply won't be worth it to drive to work.
Factor in the airlines parking planes, delivery trucks no longer running, fishing fleets staying in port, and car manufacturers going out of business.
Wait a minute — car makers going out of business?! Yep, GM is on deathwatch now, and it's not getting better. In fact, according to a leaked report from J.D. Power and Associates, the June seasonally adjusted annual sales rate will plunge to 12.5 million vehicles, down from 16.3 million last June.
Add it all up, and America has the ingredients for a major economic collapse.
And Yet Oil Demand Is Still Skyrocketing Globally!
Will reducing U.S. demand cause oil prices to plummet? No, because demand in emerging markets is accelerating, and even if the global economy slows, that won't stop them. Much of China's growth is fueled by internal spending now. They may not like it if Americans are out of work, but they'll carry on.
Just think: How bothered were you by the collapse of the Soviet Union? A major superpower hit the skids in 1985 and imploded in 1991. Did that adversely affect your life in any meaningful way? I'm not saying a severe recession in America won't affect China ... just not as much as we might think.
This year, emerging markets are overtaking the U.S. in consumption of oil for the first time, and it won't be long before they consume more than the entire developed world.
At the same time, internal demand is rising in major oil producers and exporters. Over the last three years, oil consumption among OPEC members has grown by more than 5% a year. Hence, their exports go down and prices go up.
So while America's car sales may be hitting the skids, 6.6 million to 10 million new cars, trucks and vans will hit the roads in China this year. India will probably grow at an even faster pace, percentage-wise. Bottom line: They'll use every barrel of oil we don't.
And the Rising Price of Oil Could Even Lead to Severe Food Shortages
American agriculture directly accounts for 17% of our energy use, or the equivalent of 400 gallons of oil consumed by every man, woman and child per year, according to the most recent statistics I could find.
If the cost of fuel gets too high, farmers won't plant. If truckers run out of fuel, they won't deliver food to supermarkets. If enough of this happens often enough, people won't just sit there and take it. They will lash out.
Now, what would you say the odds are of this happening in a year when we are on the brink of war with Iran ... when meteorologists say this hurricane season should be worse than normal ... and when refineries are keeping historically low levels of inventories? I'd say better than average.
And the sad thing is, I've just barely scratched the surface of what could go wrong this year. I'd say America is in real trouble.
How to Protect Yourself — And Your Family
Laying in a month's supply of food might not be a bad thing to do for the next year. But you can also protect yourself financially.
Take, for example, the United States Oil Fund ETF (USO): This fund is designed to track light sweet crude, plus or minus 10%. It's not perfect, partly due to the fact that the fund has an expense ratio of 0.50. Still, that's pretty good, and it's an easy way to get direct exposure to rising oil prices.
In a recent one-year period, the S&P 500 fell by 12.6%. Crude oil rose 94.7%. And the USO rose by an astounding 110.3%. That's the kind of investment you may want to consider in this market.
___________________________________________________________________________________
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
SEGUIR LEYENDO...
USA: PESIMISMO O REALISMO
Pesimista o realista esta nota de The Daily Reckoning? Uds. dirán.
The Limited Shelf Life of Dollar Fruit
London, England
Wednesday, July 2, 2008
Today, we’ll keep it short and sweet.
The Dow managed only a piddling 32-point rise yesterday; still no recovery from last week’s big losses.
Oil rose another $1.30 – to close over $141. Gold jumped $16; it will now cost you $944 to buy an ounce.
“Caught between a fragile economy and banking system and rising inflation,” writes James Saft, “Bernanke and other Fed policy makers seem to have arrived on a strategy of jawboning the dollar higher and inflation lower.
“But talk is only effective if your audience judges that you have the means and willingness to follow through.”
Based on the last few days’ trading results, Team Bernanke might as well have kept their mouths shut. Gold and oil are acting as though they expect higher rates of inflation, not lower rates. And the dollar loses value daily – though it still has not collapsed completely.
The last part of that phrase might be worth a thought or two. The dollar has fallen against other major currencies. Against the euro, for example, it is worth barely half what it was at its high, which was reached shortly after the euro was launched 10 years ago. Against gold, it is worth only about a third of what it was worth 10 years ago. And against oil...the loss has been even greater – it’s down about 80%.
Yet, the dollar still hasn’t “collapsed.”
To give you an idea of what a collapse looks like, we look out the window. The English housing market seemed to defy the California trendsetters. As U.S. houses fell in value, U.K. prices stubbornly held up.
“It’s a small island,” explained the analysts. “We have a lot of immigration from overseas,” they went on. “We like owning our own houses,” was the verdict. Said a woman in the office when we enquired: “Housing always goes up in Britain.”
It goes up until it goes down. Now, it is going down, say the London papers. And the house builders are collapsing. Comes news this morning that the U.K.’s largest house-builder, Taylor Wimpey, was cut in half yesterday after it failed to raise the money it was looking for. This morning, the shares are still falling.
Another English builder has already collapsed. Its shares are selling for less than one times trailing earnings.
You want to see collapse? Just look at what has happened to Wall Street this year. In the last 6 months, Citigroup has lost 43% of its value. Merrill Lynch is down 40%. And Lehman Bros. has fallen 68%. The Wall Street Journal says banking stocks are beginning to look like the dotcoms in 2000. The big question is whether these are just temporary corrections – caused by panic over subprime losses and a credit crunch. Or whether it is a case of another dotcom-style bubble popping; if so, the Wall Street firms have further to fall and will not recover for many, many years.
But, back to the dollar.
In the vaults of various central banks around the world lies $4.8 trillion worth of foreign currency reserves – the fruit of selling oil and widgets, mainly to U.S. consumers. And like oranges or papayas...these dollars have a limited shelf life.
We have not been invited to peek into these vaults, but we have no doubt what we would find: huge stacks of green money, with the faces of dead U.S. presidents on the notes. Americans have been the world’s biggest spenders of the last 20 years. Naturally, it is their money that makes up the bulk of those foreign currency reserves. It is their money, too, that now poses the biggest problem – not only for the people who shipped it overseas, but also for those who have it in their vaults.
By our very rough calculation the total of these reserves will hit $5 trillion before the end of this calendar year. Then, we will be talking about real money. But that is the trouble; we are not really talking about real money at all, are we?
We should have said: $5 trillion is a lot of money; too bad it isn’t real. These are dollars, remember, the faith-based currency. The same dollars that have lost approximately 97% of their value over the last hundred years...and, according to the statisticians on the government payroll...now loses value at about 4% per year.
If we take the government’s number goons at their word, and presume that the entire $5 trillion were invested in 91-day U.S. Treasury bills, currently yielding 1.63%, the holders of all this dough are losing about $120 billion per year. The fruit is starting to smell a little rich, in other words.
But it could be a lot worse. If the euro, gold, oil, or commodities rise sharply, foreign dollar holders will feel like chumps. A few may give up on the dollar and dump it on the world market in large quantities. This could cause a sudden drop in the value of the greenback...leading other holders to rush for the exits. The dollar’s collapse would bring down the whole post-’71 monetary system...and pitch the world into a much more serious problem.
Already, many dollar holders are getting itchy. Many are looking to lighten up their loads. Some are trading dollars for food...
(“Hoarding nations drive food costs ever higher,” says the New York Times .)
A few have helped recapitalize the banks. And Abu Dhabi just traded $900 million for the Empire State Building. Only about $4.7 trillion left to go.
By comparison, the entire world’s stock of gold – above ground – is only worth about $4.2 trillion.
*** What the candidates will never tell you...
As we keep saying, democracy is fine, as long as you don’t take it seriously. The candidates for the White House job are eager to show voters that they are patriotic, religious and right-thinking men. What they don’t want to do is trouble the voters with real problems.
What kind of problems?
In our view, there are three major challenges facing the United States.
1) The country is going broke.
2) The military is out of control.
3) Standards of living are falling.
What? You haven’t heard the Democrats mention these things? How about the Republicans? Nope...?
As to the first, the country is going into a recession with its finances in the worst shape ever. In fact, if you believe Eli Broad, founder of Kaufman & Broad, the big building firm, this is the worst period in U.S. economic life since World War II. In his entire life, he says he’s never seen anything like it. And he’s 75 years old.
But here, we’re not talking about the economy itself. We do that every day. Here we’re referring to public finances.
Typically, in a recession, the government tries to “lean into the wind” to counterbalance the effect of an economic slowdown. Business stops investing so much. Consumers stop spending so much. The government – according to classic Keynesian economics – tries to take up the slack by spending more.
But where does it get the money? The feds already have a deficit of about $500 billion. And a “financing gap” of $57 trillion. In the coming recession, predicts Bill Gross of the PIMCO fund, the federal deficit will go to $1 trillion. Obama will likely be the next president. He’ll be tagged with the first TRILLION DOLLAR DEFICIT. But what can he do?
Obama says he’s going to cut spending. But every economist in the nation is going to tell him not to do it – not during a recession. It will only make the recession worse, they’ll say. Instead, they’ll urge him to spend more money. They’ll remind him that the Japanese used fiscal stimulus on a massive scale – equal to 10% of GDP – and it still wasn’t enough to light a fire under their economy. A similar fiscal stimulant in the United States would mean a deficit of $1.7 trillion!
Our old friend John Mauldin is sure we will “muddle through” somehow. “We always do,” he says. And it’s true; we muddle through most things. But a man does not muddle through a hanging; nor does an economy muddle through when its government goes broke.
More on these major problems tomorrow... SEGUIR LEYENDO...
The Limited Shelf Life of Dollar Fruit
London, England
Wednesday, July 2, 2008
Today, we’ll keep it short and sweet.
The Dow managed only a piddling 32-point rise yesterday; still no recovery from last week’s big losses.
Oil rose another $1.30 – to close over $141. Gold jumped $16; it will now cost you $944 to buy an ounce.
“Caught between a fragile economy and banking system and rising inflation,” writes James Saft, “Bernanke and other Fed policy makers seem to have arrived on a strategy of jawboning the dollar higher and inflation lower.
“But talk is only effective if your audience judges that you have the means and willingness to follow through.”
Based on the last few days’ trading results, Team Bernanke might as well have kept their mouths shut. Gold and oil are acting as though they expect higher rates of inflation, not lower rates. And the dollar loses value daily – though it still has not collapsed completely.
The last part of that phrase might be worth a thought or two. The dollar has fallen against other major currencies. Against the euro, for example, it is worth barely half what it was at its high, which was reached shortly after the euro was launched 10 years ago. Against gold, it is worth only about a third of what it was worth 10 years ago. And against oil...the loss has been even greater – it’s down about 80%.
Yet, the dollar still hasn’t “collapsed.”
To give you an idea of what a collapse looks like, we look out the window. The English housing market seemed to defy the California trendsetters. As U.S. houses fell in value, U.K. prices stubbornly held up.
“It’s a small island,” explained the analysts. “We have a lot of immigration from overseas,” they went on. “We like owning our own houses,” was the verdict. Said a woman in the office when we enquired: “Housing always goes up in Britain.”
It goes up until it goes down. Now, it is going down, say the London papers. And the house builders are collapsing. Comes news this morning that the U.K.’s largest house-builder, Taylor Wimpey, was cut in half yesterday after it failed to raise the money it was looking for. This morning, the shares are still falling.
Another English builder has already collapsed. Its shares are selling for less than one times trailing earnings.
You want to see collapse? Just look at what has happened to Wall Street this year. In the last 6 months, Citigroup has lost 43% of its value. Merrill Lynch is down 40%. And Lehman Bros. has fallen 68%. The Wall Street Journal says banking stocks are beginning to look like the dotcoms in 2000. The big question is whether these are just temporary corrections – caused by panic over subprime losses and a credit crunch. Or whether it is a case of another dotcom-style bubble popping; if so, the Wall Street firms have further to fall and will not recover for many, many years.
But, back to the dollar.
In the vaults of various central banks around the world lies $4.8 trillion worth of foreign currency reserves – the fruit of selling oil and widgets, mainly to U.S. consumers. And like oranges or papayas...these dollars have a limited shelf life.
We have not been invited to peek into these vaults, but we have no doubt what we would find: huge stacks of green money, with the faces of dead U.S. presidents on the notes. Americans have been the world’s biggest spenders of the last 20 years. Naturally, it is their money that makes up the bulk of those foreign currency reserves. It is their money, too, that now poses the biggest problem – not only for the people who shipped it overseas, but also for those who have it in their vaults.
By our very rough calculation the total of these reserves will hit $5 trillion before the end of this calendar year. Then, we will be talking about real money. But that is the trouble; we are not really talking about real money at all, are we?
We should have said: $5 trillion is a lot of money; too bad it isn’t real. These are dollars, remember, the faith-based currency. The same dollars that have lost approximately 97% of their value over the last hundred years...and, according to the statisticians on the government payroll...now loses value at about 4% per year.
If we take the government’s number goons at their word, and presume that the entire $5 trillion were invested in 91-day U.S. Treasury bills, currently yielding 1.63%, the holders of all this dough are losing about $120 billion per year. The fruit is starting to smell a little rich, in other words.
But it could be a lot worse. If the euro, gold, oil, or commodities rise sharply, foreign dollar holders will feel like chumps. A few may give up on the dollar and dump it on the world market in large quantities. This could cause a sudden drop in the value of the greenback...leading other holders to rush for the exits. The dollar’s collapse would bring down the whole post-’71 monetary system...and pitch the world into a much more serious problem.
Already, many dollar holders are getting itchy. Many are looking to lighten up their loads. Some are trading dollars for food...
(“Hoarding nations drive food costs ever higher,” says the New York Times .)
A few have helped recapitalize the banks. And Abu Dhabi just traded $900 million for the Empire State Building. Only about $4.7 trillion left to go.
By comparison, the entire world’s stock of gold – above ground – is only worth about $4.2 trillion.
*** What the candidates will never tell you...
As we keep saying, democracy is fine, as long as you don’t take it seriously. The candidates for the White House job are eager to show voters that they are patriotic, religious and right-thinking men. What they don’t want to do is trouble the voters with real problems.
What kind of problems?
In our view, there are three major challenges facing the United States.
1) The country is going broke.
2) The military is out of control.
3) Standards of living are falling.
What? You haven’t heard the Democrats mention these things? How about the Republicans? Nope...?
As to the first, the country is going into a recession with its finances in the worst shape ever. In fact, if you believe Eli Broad, founder of Kaufman & Broad, the big building firm, this is the worst period in U.S. economic life since World War II. In his entire life, he says he’s never seen anything like it. And he’s 75 years old.
But here, we’re not talking about the economy itself. We do that every day. Here we’re referring to public finances.
Typically, in a recession, the government tries to “lean into the wind” to counterbalance the effect of an economic slowdown. Business stops investing so much. Consumers stop spending so much. The government – according to classic Keynesian economics – tries to take up the slack by spending more.
But where does it get the money? The feds already have a deficit of about $500 billion. And a “financing gap” of $57 trillion. In the coming recession, predicts Bill Gross of the PIMCO fund, the federal deficit will go to $1 trillion. Obama will likely be the next president. He’ll be tagged with the first TRILLION DOLLAR DEFICIT. But what can he do?
Obama says he’s going to cut spending. But every economist in the nation is going to tell him not to do it – not during a recession. It will only make the recession worse, they’ll say. Instead, they’ll urge him to spend more money. They’ll remind him that the Japanese used fiscal stimulus on a massive scale – equal to 10% of GDP – and it still wasn’t enough to light a fire under their economy. A similar fiscal stimulant in the United States would mean a deficit of $1.7 trillion!
Our old friend John Mauldin is sure we will “muddle through” somehow. “We always do,” he says. And it’s true; we muddle through most things. But a man does not muddle through a hanging; nor does an economy muddle through when its government goes broke.
More on these major problems tomorrow... SEGUIR LEYENDO...
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