Friday Flip Flop

October 12, 2007

608

Well that wasn't so bad was it?

Just a little dip to keep us on our toes – so far!

Did the market just fire a warning shot across the bow of the bulls or is this the beginning of the end? On the whole, it was a mild-low volume pullback but it won't take much follow-through to send us into a major correction so we need to be vigilant and get ready to move back to cash. I will be VERY concerned if we give up another 25 points on the Nasdaq (2,750) as that could lead to a quick retest of 2,650, an that's a test we dare not fail!

Asia had a mild sell-off in response to our little dip with the Nikkei and the Hang Seng giving back a point going into their weekend. China's trade SURPLUS jumped 56% in September with the country sending out $24Bn more than it purchased. Wow, they run their whole country at a profit! Maybe we should make Hu Jintao our next "CEO in Chief."

The WSJ says: "Critics of Beijing's trade record say controls on China's currency, the yuan, keep it undervalued and give Chinese exporters an unfair price advantage in foreign markets." ROFL! What do you think the rest of the world is saying about us? We've got the worst currency on the planet!

China held back on its imports of both crude oil and refined products in September, possibly in response to benchmark prices hitting record highs. The country, which is buying crude not only for its own refineries but also for strategic stockpiling purposes, imported 13.66 million metric tons of crude in September, or the equivalent of 3.34 million barrels a day, according to preliminary data from the General Administration of Customs.

Wow! So China uses it's SPR to control the price of oil and buys LESS when it's expensive. Wow! It's almost like they are an intelligent consumer… President Bush is a consumer (notice missing adjective) of oil too. In fact, he is actively fighting congress right now to push through the addition of 1.5 BILLION barrels of oil to the SPR, an amount that would take us 6 years to fill at 5M barrels a week.

Aside from this increasing global oil demand by 5% for 6 consecutive years
Aside from it costing taxpayers $120Bn at current prices and aside from it
Aside from it increasing the price of the 20M barrels of oil we do consume by (conservatively) $20 and costing US consumers an additional $146Bn a year (not including refining mark-ups)
Aside from the fact that that $146Bn, Bush's $120Bn and the $584Bn we're already paying for oil (not including refining mark-ups) ALL going in no deniable part directly into the hands of "terrorist states"
Aside from the fact that Bush is bulling through 300M barrels of purchases AGAINST the will of Congress already

WHERE THE HELL IS THE OIL SUPPOSED TO COME FROM?

We are being told every day that there is a shortage of oil. If this is true then how can the White House even begin to plan to buy an EXTRA 1.5 Billion barrels of it? How can the American people allow a man (who has already purchased 300M barrels of crude since he took office USING YOUR MONEY and stuck it in the ground AND refuses to release any of it, no matter how high the cost of oil goes) to increase "his" control of oil by over 200%? What Bush wants to do, aside from spending $120Bn of money we don't have (never stopped him before) is to control that PLUS the $56Bn worth of oil we already have sitting in the ground. Not only is he President, but he and Dick get to control $176Bn worth of crude…

Are we going to add this to the list of things we are going to lie back and take? Why not? We take so much BS already what's another few hundred Billion a year funneled from the people to the fat cats and sheiks that run our government? Today they are telling us that the PPI is up only 0.1% and the markets are rallying into the open. Forget the fact that "non-core" PPI was up 1.1% (that would be 13.2% annualized) due to rising energy costs

It's time to switch off our brains again and BUYBUYBUY the momentum as retail sales increased 0.6%, much better than expected and completely the opposite of what was indicated by yesterday's same-store sales numbers. Whatever you do, don't actually read the report, which shows retail sales were up ENTIRELY based on a 2% increase in gasoline sales, a 0.8% increase in food spending and a 1% increase in health care costs. Yipee! We're buying stuff we need to live for much more money than last month!

Suffering in this report were things we LIKE to buy like Furniture (down .6%), Building Supplies (down .1%), Sporting Goods, Hobbies and Books (all down .7%), General Merchandise (down .1%) and clothing (down .4%).

What a bright, shining nation we are building where we can all look forward to working all day long in order to have enough money to heat our empty homes at the end of the day. Thank goodness for television – the true opiate of the masses, that allows people to live a life with nothing more than the box, a chair and some Cheetos while CNBC and Fox news tells them how great everything is.

Everything is great if you are one of the nation's wealthiest 1%. The top 1% of Americans earned 21.2% of all income in 2005, up over 10% from the 19% of the country's income they earned in 2005 and it's probably getting close to 25% this year, if it hasn't already passed it. This is a post-depression record folks – congrats to all for sticking it to the man (the man being the other 99 people out of 100).

In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids." Oh that's right, he's the "Education President."

One study by University of Chicago academics Steven Kaplan and Joshua Rauh concludes that in 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.

Mr. Rauh said "it's hard to escape the notion" that the rising share of income going to the very richest is, in part, "a Wall Street, financial industry-based story." The study shows that the highest-earning hedge-fund manager earned double in 2005 what the top earner made in 2003, and top 25 hedge-fund managers earned more in 2004 than the chief executives of all the companies in the Standard & Poor's 500-stock index, combined. It also shows profits per equity partner at the top 100 law firms doubling between 1994 and 2004, to over $1 million in 2004 dollars.