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Friday, March 29, 2024

Follow-Through Friday???

We were worried about the CPI report yesterday and so was the rest of the world.

Asia sold off last night despite our very decent day with the Nikkei falling 191 points in a poor afternoon session while the Hang Seng fell 64 points, flatlining at the 22,200 mark, almost exactly 30% off the November highs of 31,800 and back to the level they broke out from last year.  Are we seeing signs of global rotation out of Asia (still out gaining the Dow by over 2:1 over the past year) that is following the cheap dollar into US equities or is the entire global market party coming to an end?

While Bloomberg headlines with "Agency Mortgage-Bond Spreads Fall on Financial Company Optimism," Mr. Murdoch’s Journal would have us know on page one that: "Futures Slip Ahead of Inflation Data" and "Recession Gloom Gathers" and "Nervous Banks Drain Carlyle Fund," which apparently Mr. M is trying to get one more day out of.  Let’s forget the fact that (now 8:48) the pre-markets are clearly higher, or that the CPI came in surprisingly flat and non-inflationary (leading the Journal to say "INFLATION flat in February"). 

Unfortunately, the Journal has lots of charts and graphs and cool pictures while Bloomberg is pretty much straight text so Rupert rules and the MSM remains bearish in the face of all contrary data.  The CPI came in so low that we have to question the data, somehow it measures energy prices as having gone down 0.5% in February (despite oil climbing from $86 to $102 during the month), so a rational person may wonder how that happened.  Yesterday I said that Paulson pleded the Plunge Protection Team would do "whatever it takes" to support the markets and this AMAZING CPI data paves the way for a BIG Fed cut next week, which they can now claim will not overstimulate inflation.

Pay no attention to that $110 barrel of oil behind the curtain!

So the government is going to have us believe that $110 a barrel oil is not something we should worry about because it’s not really infaltionary.  This despite the fact that heating oil in the Northeast is up .70 per gallon in the past 4 weeks (20%) or that $4 a gallon gas is once again showing up at West Coast service stations.  The fact is that oil has never been in greater supply and demand has never slowed more quickly, but as long as we keep shelling out inflated dollars with no change in government policy, there’s still plenty of money to be made by Bush’s former business partners, the Bin Laden family and Cheney’s old pals at Haliburton, as well as all the other big campaign contributors, the oil companies that are forming up behind candidate John McCain as the party machine flexes it’s muscle with this little demonstration about who knows how to look out for the interests of big oil.

Check out this great article making the rounds: "Democrats Aim to Sabotage Oil Industry" warning that the Democrats "will scrap the tax deduction given to major integrated oil companies, which helps the companies discover, extract, refine and market the energy that drives our nation’s economy."  That’s right, the elimination of the $18Bn tax CREDIT we GIVE to the oil companies against the $803Bn A YEAR they CHARGE us for the oil that they take out of OUR land is going to undermine the American way of life – what a crock!

Anyway, I’m not going to complain and the markets are off to a rip-roaring start this morning.  It’s not going to affect our covers as we went with a 1/2 cover strategy ahead of the weekend and this will just give us a very nice cushion to ride into next week with expiration day coming on Thursday so let’s strap in for a wild ride and enjoy ourselves.

Have a great weekend!

– Phil

 

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