by ilene - February 26th, 2012 10:34 pm
Courtesy of www.econmatters.com.
U.S. regular gasoline price has spiked almost 4% in one week to $3.688 a gallon as of Feb. 26, the highest level since last September, with residents in three states--Alaska, Hawaii, California-- are already seeing above $4 at the pump, based on AAA’s Daily Fuel Gauge Report.
The current price level is roughly 11% above a year ago. Analysts estimate that every 1-cent increase in the price of gasoline costs the economy $1.4 billion. Consumers are starting to feel the pinch, and a new Associated Press-GfK poll says 7 in 10 Americans find the issue “deeply important”.
Crude oil is one of the oldest and most complex commodities in the world heavily underpinned by geopolitics, and market speculation throughout its history. Now, with Iran, Israel, U.S. and Europe exchanging sanctions, threats in daily new headlines, it is hard to imagine anyone in the business world would miss the connection between surging oil, gasoline prices, and escalating tensions over Iran’s nuclear program.
To our surprise, Forbes published an op-ed by Louis Woodhill dated Feb. 22 titled “Gasoline Prices Are Not Rising, the Dollar Is Falling” blaming the surging gasoline prices on the dollar depreciation, and that
“Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold…..At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.”
While we don’t disagree that there are many moving parts that could drive oil and gasoline prices higher, but the U.S. dollar and gold are not among the deciding factors as the article asserts.
First of all, crude oil and related processing accounts for over 80% of what we pay at the gas pump (see chart below). So the short answer to the recent gasoline price spike is the surging crude oil prices, and more specifically, Brent oil marker on the ICE exchange. U.S. gasoline prices have been trending more closely with Brent…
by Zero Hedge - February 26th, 2012 9:34 pm
Submitted by Tyler Durden.
Submitted by Jim Quinn of The Burning Platform,
The real world revolves around cash flow. Families across the land understand this basic concept. Cash flows in from wages, investments and these days from the government. Cash flows out for food, gasoline, utilities, cable, cell phones, real estate taxes, income taxes, payroll taxes, clothing, mortgage payments, car payments, insurance payments, medical bills, auto repairs, home repairs, appliances, electronic gadgets, education, alcohol (necessary in this economy) and a countless other everyday expenses. If the outflow exceeds the inflow a family may be able to fund the deficit with credit cards for awhile, but ultimately running a cash flow deficit will result in debt default and loss of your home and assets. Ask the millions of Americans that have experienced this exact outcome since 2008 if you believe this is only a theoretical exercise. The Federal government, Federal Reserve, Wall Street banks, regulatory agencies and commercial real estate debtors have colluded since 2008 to pretend cash flow doesn’t matter. Their plan has been to “extend and pretend”, praying for an economic recovery that would save them from their greedy and foolish risk taking during the 2003 – 2007 Caligula-like debauchery.
I wrote an article called Extend and Pretend is Wall Street’s Friend about one year ago where I detailed what I saw as the moneyed interest’s master plan to pretend that hundreds of billions in debt would be repaid, despite the fact that declining developer cash flow and plunging real estate prices would make that impossible. Here are a couple pertinent snippets from that article:
“A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history.
by Zero Hedge - February 26th, 2012 9:04 pm
Submitted by Tyler Durden.
It is only somewhat appropriate that the announcement of the resignation of Stratfor’s CEO would come in the form of a leaked email that once again was intercepted by Anonymous.
Date: 2012-02-26 19:02:07
It is with great personal disappointment I have to inform you that I will resign from my position as CEO for Stratfor to immediate effect.
Please rest assured that this decision was not an easy. But in the light of the recent events, especially the release of our company emails by WikiLeaks, I have decided that stepping down is in the best interest of Stratfor and its customer base.
I want to emphasize that this will have no effect on Stratfor’s business or its members and we will continue to provide state-of-the-art intelligence services.
Regarding the latest breach, Stratfor is fully in control of the situation However, while I cannot take any personal responsibility for this incident, I still have to admit that mistakes have been made on our side. To be clear: We certainly do not condone any criminal activities by groups like Anonymous or other hackers. This is theft and we will continue to cooperate with law enforcement to bring those responsible to justice. But we must acknowledge that this incident would not have been possible if Stratfor had implemented stronger data protection mechanisms – which will be the case from now on. Indeed we will immediately move to implement the latest, and most comprehensive, data security measures.
While I played no role in our technical operations, as the company’s CEO I do accept full responsibility thus will resign from my position effective immediately.
Again, my sincerest apologies for this whole unfortunate incident.
by Zero Hedge - February 26th, 2012 8:56 pm
Submitted by Tyler Durden.
Earlier today, Wikileaks made its latest startling release on Twitter, telling the media world to standby for a ‘major announcement’. Alas, in keeping with the recent tradition from Wikileaks, the “release” was a dud and is merely the collected dump of all the emails previously hacked from Stratfor by Anonymous, as was noted here previously. Alas a quick perusal through the emails so far reveals absolutely nothing exciting, except for the communiques of a paid intelligence provider, which may at times have had a few delusions of grandure and a mistaken and rather overblown sense of self-importance (hardly unique). Yet one exchange that is rather interesting is the following email thread from 2009 which goes from discussing how the billionaires behind ACORN have lost all respect for Obama and Biden (“The billionaire (who also funds ACORN) is greatly disappointed over Obama’s “weakness and wimpyness” towards China… She believes Biden is weasel and Obama is a pussy… The liberal factions in DC think Obama is being a pussy.“), views on Rahm Emanuel (“I don’t disagree that Biden is a weasel. I think Emanuel is emasculating Obama by selling him on clever Clintonesque tactics”), views on how Obama may get back into the thick of things: (“Obama needs to get in a fight and do something really mean and unfair to the right.”), on Obama and the banks: (“he could also tell the banks to go screw themselves.”) and from there going to analyzing the GOP field: (“The GOP folks I talk to are pushing Jeb Bush. I think that is a mistake. Who else is out there?”) and culminating with the GOP frontrunning Mitt Romney – “Romney can’t make it. Mormons are viewed as Voo Doo.” Much more in the full email thread inside.
Re: Insight – China/Tibet/Obama
Date 2009-11-06 23:08:21
To firstname.lastname@example.org, email@example.com
Maybe, but he’s choked on the national stage a few times now. I can’t get past his smile…makes him look sleazy.
Bobby Jindel? He’s some sort of Indian.
Sent via BlackBerry by AT&T
by Chart School - February 26th, 2012 8:35 pm
Courtesy of Doug Short.
Foreword from dshort: Jason Leach, the Director of Research/Portfolio Management at Craven Brothers Wealth Advisors, sent me a PDF of his latest research — Sleepwalking Toward a Precipice: Our Observations and Outlook, Part I.
Jason kindly granted me permission to share with the Advisor Perspectives audience. The illustrations in the PDF are priceless, so be sure to download and view the PDF format. Below is a snapshot of one of the PDF pages followed by a reprint of the full text without illustrations.
What We Will Cover…
- It’s Structural: The credit crisis and Great Recession revealed structural problems in the United States, Europe and China which may hinder their future growth prospects.
- Political Dysfunction: Political leadership has been unwilling or unable to address these structural issues effectively, resulting in temporary, expedient solutions that often make problems worse.
- Fourth Branch Solutions: With the failure of political leadership, “central planning” has been ceded to central banks to “reflate” markets and reliquify insolvent banking systems and insolvent sovereign nations.
- The Unknowns: Given the fragile nature of global economies coming out of crisis, a variety of uncertainties could also negatively impact growth.
- Market Matters: Over the next decade, we see “double-wide” possibilities for economic growth translating into “double-wide” possibilities for U.S. and global markets.
- What follows is Part I of our outlook on economies and markets. It educates and influences our investment approach which we discuss in the final of three outlook installments. We hope you enjoy.
2011 Market Recap: “Much Ado Then Nothing”
- Headline Drivers: 2011 was an uncertain time across the world with headlines driving markets up and down in “risk on” and “risk off” trends that lasted hours, days, or weeks, but inevitably turned from “on” to “off” and back again.
- Home on the Range to Unchanged: During the first half of the year, the S&P 500 index traded up (1260-1360 range). Sentiment turned negative in the second half with the index trading down violently (1120-1260 range). Remarkably, given a 20% swing from April highs to October lows, the S&P 500
by Zero Hedge - February 26th, 2012 7:22 pm
Submitted by Tyler Durden.
As we enter a week in which the expectations are high for yet another large expansion of central bank balance sheets, and ever more extreme monetary policy (thanks to the LTRO 2), we thought it appropos to listen to Grant Williams, of the famous “Things That Make You Go Hhhhm” newsletter, explain in its simplest terms, why it is still a good time to own gold. In two excellent and succinct presentations, Williams discusses the ‘simplicity’ of investing through the last four decades but ends by focusing specifically on the rotation to Gold at the start of the last decade (2000) and why the reason for rotating out of the precious metal has not occurred yet. Seeing the world of Gold as a battle between Too Much and Not Enough (and drawing on global supply, demand, and holdings flow) Williams lays out the reasons for owning gold, and how to know when to cover – as he narrows the five reasons to reconsider Buffett-and-Roubini’s Barbarous Relic down to one simple rule – Central Bank Monetary Policy Changes.
Simplicity 1 - An introduction to investing by Simplicitly over the past forty years and making one big decision through each decade – ending with a focus on the current position in Gold and Central bank largesse writ large…
Simplicity 2 – Williams expands specifically on Gold – with key insights on owndership, supply, demand shifts, demographics, and central bank behavior with a succinct summation of reasons to own and reasons to exit that should help many deal with the ebbs and flows.
by Zero Hedge - February 26th, 2012 6:46 pm
Submitted by Tyler Durden.
Last week saw dramatic dispersion among the major FX pairs as global and local influences caused significant moves in most of the key crosses. Goldman takes a look back at the key drivers of that volatility and then focuses on the week ahead as the EU Summit at the latter end is the main event risk while ongoing macro developments will be focused on the incessant rise in Crude oil prices and whether we start seeing knock-on impacts in the real economy.
Goldman Sachs: What Matters in FX This Week : FX Week Ahead: Focus On US Growth Data And Oil Price Trends
It has been a big week for FX; a number of global and local influences have caused significant moves in key crosses and mostly in G10 space. First, the EUR rallied on a trade weighted basis; stretched short EUR positions unwound as progress was made on the Greece PSI and as the market took relief in the avoidance of a more disorderly outcome in the Euro-area. Interestingly the EUR rally happened even despite rangebound performance for risky assets and lack of strong directionality in other dollar crosses (such as $/LATAM or $/NJA). The key event to watch in the week ahead in terms of Euro-area tensions will be the EU summit on Thursday and Friday where the final details of the next Greece assistance package will be discussed.
Second, the JPY continued to depreciate sharply, extending the move that began with the BOJ’s latest balance sheet expansion operation and the shift to an inflation target. As Fiona Lake recently argued, although the shift in JPY fits fundamentally with a convergence towards fair value, the timing of the move is tricky and we have been reluctant to follow the shift particularly in the absence of an analogous move in US front end rates.
That said, the main macro development last week, the ongoing rise in Brent crude oil prices to the highest USD denominated level since last spring (and the highest EUR denominated level ever), was conducive to a shift higher in both in EUR/$ as well as in $/JPY. Our commodity strategy team has been highlighting that the run up in Brent prices over the past month has been driven primarily by a recovery in global growth expectations and…
by Chart School - February 26th, 2012 4:48 pm
Courtesy of Declan Fallon
The Nasdaq has no overhead supply, but the gradual weakening of market breadth limited last week’s gain to under one percent.
The Nasdaq Summation Index was the breadth indicator to give up the most (albeit a small loss).
The S&P is just 5 points away from 2011 highs. From there it will go on to challenge the 2007 high, but it might be slow going given Small Caps and Tech will tempt buyers from positions of new multi-year highs.
Next week looks set for a further expansion in breadth weakness which may result in a more substantial pullback in the S&P and Nasdaq than we have seen in recent weeks. The broader trend remains bullish any any selling will likely fit with profit taking rather than an absence of interest from buyers (low volume selloffs carry that distinction).
Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies
by Zero Hedge - February 26th, 2012 4:40 pm
Submitted by testosteronepit.
Wolf Richter www.testosteronepit.com
After an endless stream of horrid reports on the tragedy of the March 11 earthquake and tsunami, and the subsequent nuclear catastrophe in Fukushima, and the hotspots that are cropping up in odd places, and food scares, and even contaminated grasshoppers, we’re ready for something … lighter. This has been circulating in the Japanese internet community for months, has garnered countless comments, and a lot of nodding, agreement, and knowing smiles. Though it’s not based on science or statistics, and certainly not on any polls, it represents, in the eyes of many Japanese, a larger tongue-in-cheek truth.
Note: the areas seen as contaminated are marked in red.
But there other dangers in Japan as well. A couple in Nagasaki made sashimi out of a fugu he'd caught in a nearby bay. An hour after eating it, her lips and limbs got numb. He also developed symptoms. Ah yes, the neurotoxin in the otherwise comical fish. Read…. Don't Try This At Home.
by Zero Hedge - February 26th, 2012 4:13 pm
Submitted by Tim Knight from Slope of Hope.
From the Slope of Hope: I’m not a very good hedonist, I guess.
Here I am in Las Vegas, and to my way of thinking, everything I hate about the human race is conveniently compressed into one tidy package.
And I ask myself: what’s my problem? Why do I let places like this get to me so much? I mean, after all, why should I care what other people do with their time and their lives? What business is it of mine?
Well, it’s none of my business, of course. The whole human race could wallow around in whatever it wants, and as long as it doesn’t adversely affect me or the people about whom I care, it really shouldn’t matter. And, on the whole, this is the state of affairs, because I have designed my life in a tidy little bubble and need not trouble myself with such thoughts.
It still chews at me, though, why I get so irked by hoardes of people engaging in as many bacchanalian propensities as they can muster. Drinking. Drugs. Sex. Slack-jawed gaping of The Things That Are So Bright and The Things That Are So Big. It just isn’t my cup of tea.
My little girl, whose competition brings me here, expressed it wisely beyond her years when, unprompted, she said to me: “Dad, I notice that everything in this town is fake.” And that, I finally realized, was what had my panties in such a wad.
The blonde hair is fake. The big boobs are fake. The wretched, fawning smiles are fake. The attitudes are fake. The posturing, preening, and posing are all put-ons designed by the ho-bags and douche-wads stumbling up and down the streets to hopefully bed whatever quarry about which they fantasize.
How about disappointment? Well, I think we’re starting to get close. And it isn’t because I’m personally associated with these folks. I don’t directly care about any of these people, but I guess since I identify myself as part of this group as a fellow human, it’s disheartening to see it race to the bottom by…