Contrary to media assertions, the recession continues and that is starting to weigh on the price of oil as it dropped to a six-week low on Friday, and will plunge again after the Labor Day weekend.
The problem is the so-called stimulus money is gone, which had masked the real condition of the economy, and that is causing the jobless claims numbers to rise to levels which reflect that, along with the falling manufacturing numbers, as represented by the release of the general economic index by the Federal Reserve Bank of Philadelphia, which showed a plunge of 7.7 percent this month.
Again, while seeming to be a contraction, things are just returning to what they've in reality been since the recession began as the stimulus money effects leave the economy.
The government and Federal Reserve were hoping to buy time through spending the hundreds of billions so the private sector could rebound and take their place as creators of jobs and economic growth.
But the stimulus produced a false signal which had CEOs even hailing the economic turnaround, when they were in fact the beneficiaries of taxpayer dollars, rather than demand from the marketplace.
No matter how you look at it though, we're in for a rough ride economically, as there's nothing out there to indicate we're even close to beginning a recovery, and in fact the failure of government interference is being revealed publicly to all, yet the Federal Reserve has give us their assurance they're ready to do and spend what it takes to shore up the recessionary economy again, which will cause even more devastation over the long term.
Crude oil prices and inventory are predictably responding, as the oil inventory of the U.S. surged to its highest level since 1990, according to an Energy Department report.
That means consumers are staying close to home and continuing to cut back on spending.
When taking into account the fundamentals, crude oil prices are still considered too high, and the possibility of increased demand is falling by the wayside. Nothing indicates that will change anytime soon.
In other ominous and understated economic news, Axel Weber, a council member of the European Central Bank, said the European economy may need intervention from the central bank through the end of 2010. That's not surprising, as there was no way the sovereign debt crisis, which has largely been ignored by the media after it was allegedly taken care of, has been resolved, as the sheer size of the problem couldn't be taken care of with a few debt offerings, no matter what the size of them were.
While the austerity measures taken by some nations were a good move, it staggers the mind to think they could go back to throwing money out into the economy of the region through central banks, making the problem even worse than it is.
With oil prices looking to the economy to signal where things are at, the answer is it's in bad shape, with no prospects it's going to turn around in the near future.
That means consumption, at least in the U.S., the world's largest oil consumer, will continue to fall, and oil prices should follow that lead.
In the peak July traveling season, joblessness and higher gas prices held consumption down, keeping demand relatively unchanged at a time it should have been soaring. Gasoline deliveries even fell slightly from last year, averaging 9.257 million barrels in July 2010, in comparison to 9.26 million in July 2009.
Stockpiles in the U.S. rose to 1.13 billion for the week ending August 13, gaining 5.3 million.
Showing posts with label Economic Concerns. Show all posts
Showing posts with label Economic Concerns. Show all posts
Monday, August 23, 2010
Friday, August 20, 2010
New Caterpillar (NYSE:CAT) CEO Likes Growth Prospects of Company
Doug Oberhelman, who recently took over the reins of Caterpillar (NYSE:CAT), is attempting to generate positive feelings about the company, saying he sees little chance there will be a double-dip recession, and confirms guidance for 2012 which had been given in 2009.
Oberhelman said, “We don’t think the world has ended. We think there is going to be fantastic growth in our industries in the future.”
He also said Caterpillar executives are positive about the global economy, and see it growing going forward, with little chance of another recession.
For 2012, Oberhelman said guidance continues to be earnings of $8 to $10 a share on revenue between $55 billion to $60 billion.
These comments were made in his first meeting with analysts since taking over as CEO in June.
This sounds way too optimistic to me, and doesn't take into account recent data showing the economy is either slowing extremely, or never moved out of the recession in the first place.
We have to remember that the government throwing hundreds of billions into the economy doesn't have anything to do with the underlying reasons for the recession, and as results show, once it worked its way through, the economic weakness remains.
The only reason I see for the optimism shown by Oberhelman is the comments made by the Federal Reserve that they're ready to do it all again if the economy begins to falter, and that has already started to happen.
With voters already outraged over the irresponsible government spending, it's hard to believe they'll do it all over again, but this administration and Ben Bernanke don't have any checks or balances, or restraint, when it comes to monetary policy, and that doesn't bode well for America, even if it gives a false impression we've moved out of the recession.
Oberhelman said, “We don’t think the world has ended. We think there is going to be fantastic growth in our industries in the future.”
He also said Caterpillar executives are positive about the global economy, and see it growing going forward, with little chance of another recession.
For 2012, Oberhelman said guidance continues to be earnings of $8 to $10 a share on revenue between $55 billion to $60 billion.
These comments were made in his first meeting with analysts since taking over as CEO in June.
This sounds way too optimistic to me, and doesn't take into account recent data showing the economy is either slowing extremely, or never moved out of the recession in the first place.
We have to remember that the government throwing hundreds of billions into the economy doesn't have anything to do with the underlying reasons for the recession, and as results show, once it worked its way through, the economic weakness remains.
The only reason I see for the optimism shown by Oberhelman is the comments made by the Federal Reserve that they're ready to do it all again if the economy begins to falter, and that has already started to happen.
With voters already outraged over the irresponsible government spending, it's hard to believe they'll do it all over again, but this administration and Ben Bernanke don't have any checks or balances, or restraint, when it comes to monetary policy, and that doesn't bode well for America, even if it gives a false impression we've moved out of the recession.
Barrick (NYSE:ABX) Chairman Sees Gold Prices Going Higher
Citing the weak economic conditions, Barrick Gold Corp. (NYSE:ABX) Peter Munk said gold prices have a better chance of going higher than falling in the future.
Munk added that he sees no reason for the company to hedge at this time, as it's not likely there'll be major declines in gold prices because of the instability in the global economy, which pushes up rather than lowers the value of gold.
Even in healthy economic conditions gold tends to move upward in the fall season, add the deteriorating global economy and in the near term there will be a big push for gold, which while eventually leveling off, will continue on an upward trajectory for some time to come.
The countries and central banks around the world have for the most part made every wrong decision they could have to battle the ongoing recession, and even though they're saying the possibility of a double dip could happen, the reality is outrageous amounts of money spent on stimulus plans only masked and hid the recession, it did nothing to change it, as the results obviously reveal.
Already the Federal Reserve has stated they're ready to begin "quantitative easing" again (print money, buy Treasuries), and that will play into the increased value of gold as investors flock to it to protect their assets.
Munk added that he sees no reason for the company to hedge at this time, as it's not likely there'll be major declines in gold prices because of the instability in the global economy, which pushes up rather than lowers the value of gold.
Even in healthy economic conditions gold tends to move upward in the fall season, add the deteriorating global economy and in the near term there will be a big push for gold, which while eventually leveling off, will continue on an upward trajectory for some time to come.
The countries and central banks around the world have for the most part made every wrong decision they could have to battle the ongoing recession, and even though they're saying the possibility of a double dip could happen, the reality is outrageous amounts of money spent on stimulus plans only masked and hid the recession, it did nothing to change it, as the results obviously reveal.
Already the Federal Reserve has stated they're ready to begin "quantitative easing" again (print money, buy Treasuries), and that will play into the increased value of gold as investors flock to it to protect their assets.
Thursday, August 19, 2010
Teck (NYSE:TCK), Freeport (NYSE:FCX) Fall on Weak Economic Data
Teck Resources(NYSE:TCK) and Freeport-McMoRan Copper & Gold (NYSE:FCX) fell today as jobless claims in the U.S., as expected by Commodity Surge, increased again, this time to about 500,000.
The other bad economic news was the manufacturing in the Philadelphia area dropped fro the first time in a year, according to the Federal Reserve.
With increasing confirmation the recession is continuing on, concerns over how that will impact demand for raw materials is putting downward pressure on commodity companies and miners.
The positive side for those miners with strong gold exposure is this will cause misguided politicians and governments, especially the U.S. government, to print more money and buy up its own debt, making gold an even stronger performer in the years ahead.
China has, and will continue to, be the major importer of most commodities. And they will determine much of how companies like Teck and Freeport will perform going forward.
The other bad economic news was the manufacturing in the Philadelphia area dropped fro the first time in a year, according to the Federal Reserve.
With increasing confirmation the recession is continuing on, concerns over how that will impact demand for raw materials is putting downward pressure on commodity companies and miners.
The positive side for those miners with strong gold exposure is this will cause misguided politicians and governments, especially the U.S. government, to print more money and buy up its own debt, making gold an even stronger performer in the years ahead.
China has, and will continue to, be the major importer of most commodities. And they will determine much of how companies like Teck and Freeport will perform going forward.
Tuesday, August 17, 2010
Exxon Mobil (NYSE:XOM), BP (NYSE:BP) Stakes Increased by SAC Capital
Steven Cohen's SAC Capital Advisors LP hedge fund, like John Paulson, has increased its holdings in oil and/or energy companies the last quarter, pointing to concerns over the continued weakness of the U.S. and global economy.
Paulson acquired 9.2 million shares of Exxon Mobil in the last quarter as well.
For SAC Capital, they increased the number of shares they hold in Exxon Mobil by 2.3 million to 3.64 million.
Concerning their acquisition of more BP shares, they added an additional 2.93 million shares, to bring their total to 2.94 million.
In these weak economic conditions, institutional and other large investors look to energy companies to strengthen their portfolios, as they will usually outperform other equities during those times.
Paulson acquired 9.2 million shares of Exxon Mobil in the last quarter as well.
For SAC Capital, they increased the number of shares they hold in Exxon Mobil by 2.3 million to 3.64 million.
Concerning their acquisition of more BP shares, they added an additional 2.93 million shares, to bring their total to 2.94 million.
In these weak economic conditions, institutional and other large investors look to energy companies to strengthen their portfolios, as they will usually outperform other equities during those times.
Thursday, August 12, 2010
Investors Flee to Gold For Safety as Economy is in Shambles
Very few people seem willing to admit the U.S. and global economy is under extreme pressure. Investors know it though, and fled to gold as a safe haven today, pushing gold futures up to their highest level in eight weeks.
The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.
Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.
Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.
This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.
Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.
The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.
Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.
What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?
Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.
The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.
Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.
Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.
This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.
Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.
The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.
Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.
What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?
Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.
Tuesday, July 27, 2010
Valero (NYSE:VLO) Generates First Profit in a Year
Valero Energy Corp (NYSE:VLO) shattered analysts' expectations, posting a profit of $583 million, or 93 cents a share. Analysts at Thomson Reuters had been looking for 71 cents a share in earnings.
Last year during the same quarter, Valero took a loos of $254 million, or 36 cents a share.
Revenue also soared in the quarter, rising from $17.4 billion last year to $21.8 billion this year.
Lower-grade crude oil helped them in earnings, as the spread between higher grades and lower grades was better than expected.
Consequently, margins were close to double for the refiner over last year in the Gulf Coast region, where they have five plants in the market.
Going forward, the margins and cost remain strong, but aren't expected to be quite as good as the previous quarter, which led Valero Chief Executive Officer Bill Klesse to say the company needs the economy to grow if fuel demand is to increase.
In other words, the third quarter won't be as good as this quarter if there isn't something outside the company to increase demand.
Last year during the same quarter, Valero took a loos of $254 million, or 36 cents a share.
Revenue also soared in the quarter, rising from $17.4 billion last year to $21.8 billion this year.
Lower-grade crude oil helped them in earnings, as the spread between higher grades and lower grades was better than expected.
Consequently, margins were close to double for the refiner over last year in the Gulf Coast region, where they have five plants in the market.
Going forward, the margins and cost remain strong, but aren't expected to be quite as good as the previous quarter, which led Valero Chief Executive Officer Bill Klesse to say the company needs the economy to grow if fuel demand is to increase.
In other words, the third quarter won't be as good as this quarter if there isn't something outside the company to increase demand.
Friday, July 2, 2010
Gas Prices Drop as Fourth of July Weekend Arrives
With the economy in the U.S. extremely weak, and economic data continually bringing bad news, Americans continue to tighten up their spending habits and as a result demand for gasoline has fallen, along with the prices.
Travelers over the Fourth of July weekend should be happy, as prices dropped slightly from last week, at a time when demand usually pushes prices up in a big way.
Gas prices on a national average dropped 0.4 cent on Friday to $2.75 a gallon. Although that's higher than last year at this time, it's far below projections of $3 a gallon analysts had been calling for in the spring months.
The lowest gas prices are expected to be in the Gulf Coast states, Texas, and the Midwest.
Since last week, gas prices have fallen on average by one-half a cent.
Travelers over the Fourth of July weekend should be happy, as prices dropped slightly from last week, at a time when demand usually pushes prices up in a big way.
Gas prices on a national average dropped 0.4 cent on Friday to $2.75 a gallon. Although that's higher than last year at this time, it's far below projections of $3 a gallon analysts had been calling for in the spring months.
The lowest gas prices are expected to be in the Gulf Coast states, Texas, and the Midwest.
Since last week, gas prices have fallen on average by one-half a cent.
Oil Prices Fall Before Busy Holiday Weekend
For the fourth day in a row, oil prices fell on Thursday, as concerns over the economy could keep people closer to home, not only on this busiest of summer travel times, but throughout the rest of the summer as well.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
Thursday, June 24, 2010
Jim Rogers Long on Commodities
Jim Rogers has been sounding the alarm a long time on the global economy, saying the economic problems will continue as long at there is too much debt and too much reliance upon consumption.
“I’m short stocks and long commodities,” Rogers said in a phone interview. “America of all things they think the solution to too much debt and too much consumption is more debt and more consumption. Which means they are going to print even more money.”
That means a continuing debasement of the currency, and no lasting solutions, as printing money is just another way of kicking the can down the road and passing the problem onto someone else.
Rogers has also said he has no intention of selling his gold.
“I’m short stocks and long commodities,” Rogers said in a phone interview. “America of all things they think the solution to too much debt and too much consumption is more debt and more consumption. Which means they are going to print even more money.”
That means a continuing debasement of the currency, and no lasting solutions, as printing money is just another way of kicking the can down the road and passing the problem onto someone else.
Rogers has also said he has no intention of selling his gold.
Monday, June 21, 2010
Goldman (NYSE:GS) Slashes US Steel (NYSE:X) Price Target
Goldman Sachs (NYSE:GS) dramatically cut their price target on US Steel (NYSE:X), slashing it from $73 to $62, although they did maintain their "Buy" rating on the company.
According to Goldman, their reasoning was, "We are reducing our 3Q-2010 earnings estimate for US Steel to $0.96 from $1.36 as we now expect lower volume due to higher-than-expected demand slowdown in summer months... Our 2010 estimate is now $1.35 down from $1.75 earlier."
Demand is definitely a concern as almost everywhere we're hearing the global economy isn't performing to the expected levels projected, and that is reducing analysts' estimates for a number of companies.
Even so, Goldman concluded, "We believe that this is one of the best positioned companies in the universe due to its backward integration."
Analysts are looking for $0.59 a share on revenue of $4.61 billion.
According to Goldman, their reasoning was, "We are reducing our 3Q-2010 earnings estimate for US Steel to $0.96 from $1.36 as we now expect lower volume due to higher-than-expected demand slowdown in summer months... Our 2010 estimate is now $1.35 down from $1.75 earlier."
Demand is definitely a concern as almost everywhere we're hearing the global economy isn't performing to the expected levels projected, and that is reducing analysts' estimates for a number of companies.
Even so, Goldman concluded, "We believe that this is one of the best positioned companies in the universe due to its backward integration."
Analysts are looking for $0.59 a share on revenue of $4.61 billion.
Thursday, June 17, 2010
Gold Prices Close at Record High
Gold prices didn't hit a record high today, but they did close at a record high, as the yellow metal gained $18.20 on the day to close at $1,248.70 an ounce, up from the June 8 record close of $1,245.60 an ounce.
Most of this is the result of continuing bad economic news, including plunges in new housing starts, increasing unemployment and the continuing European Union sovereign debt crisis which is far from over.
Data from the Philadelphia Federal Reserve's index of regional manufacturing plunged so far that some economic news outlets didn't even release the amount it dropped and how far it was below analysts' expectations.
The reading came in at only 8.0 for June, down from the 20 looked for by analysts, and down further from the 21.4 reading in May.
This is the lowest level of manufacturing growth in 10 months for the region, which includes Delaware, southern New Jersey and eastern Pennsylvania.
Most of this is the result of continuing bad economic news, including plunges in new housing starts, increasing unemployment and the continuing European Union sovereign debt crisis which is far from over.
Data from the Philadelphia Federal Reserve's index of regional manufacturing plunged so far that some economic news outlets didn't even release the amount it dropped and how far it was below analysts' expectations.
The reading came in at only 8.0 for June, down from the 20 looked for by analysts, and down further from the 21.4 reading in May.
This is the lowest level of manufacturing growth in 10 months for the region, which includes Delaware, southern New Jersey and eastern Pennsylvania.
Monday, February 8, 2010
Marc Faber: US Bankrupt 10 Years
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Thursday, November 6, 2008
Weakening Economy Continues to Drive Down Oil, Gas Prices
Weakening economic conditions continue to put downward pressure on oil prices, which in turn is also driving down the price of gasoline as consumers continue to tighten their wallets and spend only on necessities.
Oil for December delivery fell as low as $60.16 today, and ended up settling at $60.77 on the New York Mercantile Exchange. Brent Crude in London moved in step, falling by $4.44 to settle at $57.43 for December delivery.
Gasoline prices in the U.S. have continued to fall as well, with overnight averages coming in at $2.34 a gallon according to the AAA, and could fall to $2.00 a gallon by the end of 2008.
Oil for December delivery fell as low as $60.16 today, and ended up settling at $60.77 on the New York Mercantile Exchange. Brent Crude in London moved in step, falling by $4.44 to settle at $57.43 for December delivery.
Gasoline prices in the U.S. have continued to fall as well, with overnight averages coming in at $2.34 a gallon according to the AAA, and could fall to $2.00 a gallon by the end of 2008.
Thursday, October 9, 2008
Bottom Continues to Fall Out of Dow, Plunges to 5-year Low
Today's performance of the Dow Jones industrial average capped off the worst yearly performance in 34 years as the 679 point drop brings the total since last October 9 to a 5,585 point loss, or 39.4 percent. Last year on the same day the Dow stood at 14,164.53 at the end of the session. Today's drop was over 7 percent, finishing at 8,579.19.
The Standard & Poor's 500 index didn't fare any better as it also dropped by over 7 percent for the day, finishing the session down by 75.02, falling to 909.92.
Investor's nerves continue to be on edge as every negative announcement causes huge selloffs in the market. Today the main impetus was the announcement by a credit--rating agency that Ford and General Motors may have their ratings cut, which would tighten credit for them even more.
The Dow isn't making the type of history it would wish, as the decline of 2,371 points for the last seven sessions is the worst drop for that time period in history. Percentage-wise, the fall of 20.9 percent is the worst since the seven days ending on October 26, 1987, where the fall was 23.8 percent of the Dow. That seven-day period included the infamous Black Monday of October 19, 1987, where the Dow plunged by 23 percent in one day.
Also falling significantly, but not as much as the other major indices were the Nasdaq composite index, which dropped to 1,645.12; a 5.5 percent, or 95.21 decline. For the Russell 2000 index, it performed the worst according to percentages, as it fell by 8.7 percent to 499.20, a 47.37 drop.
The major refuges for investors has been short-term Treasurys, where most people are just looking to preserve their capital. Gold, as usual in times like these, has started an upward move as the economic news gets grimmer. It did go as high as $925 tonight, although after hours at about 10 p.m. EST it has fallen back to almost $914 an ounce.
The Standard & Poor's 500 index didn't fare any better as it also dropped by over 7 percent for the day, finishing the session down by 75.02, falling to 909.92.
Investor's nerves continue to be on edge as every negative announcement causes huge selloffs in the market. Today the main impetus was the announcement by a credit--rating agency that Ford and General Motors may have their ratings cut, which would tighten credit for them even more.
The Dow isn't making the type of history it would wish, as the decline of 2,371 points for the last seven sessions is the worst drop for that time period in history. Percentage-wise, the fall of 20.9 percent is the worst since the seven days ending on October 26, 1987, where the fall was 23.8 percent of the Dow. That seven-day period included the infamous Black Monday of October 19, 1987, where the Dow plunged by 23 percent in one day.
Also falling significantly, but not as much as the other major indices were the Nasdaq composite index, which dropped to 1,645.12; a 5.5 percent, or 95.21 decline. For the Russell 2000 index, it performed the worst according to percentages, as it fell by 8.7 percent to 499.20, a 47.37 drop.
The major refuges for investors has been short-term Treasurys, where most people are just looking to preserve their capital. Gold, as usual in times like these, has started an upward move as the economic news gets grimmer. It did go as high as $925 tonight, although after hours at about 10 p.m. EST it has fallen back to almost $914 an ounce.
Friday, October 3, 2008
Commodities May Experience Largest Weekly Plunge Since 1956
Largely led by silver, corn and copper, commodities are on their way to their biggest weekly loss since 1956, as concerns over the weakening global economy, along with the surging U.S. dollar against the euro, continue to put downward pressure on the sector.
The Reuters/Jefferies CRB Index dropped by 9.9 percent so far this week, again, its largest downward move in 52 years.
Two major factors are delayed weakness of the European market, which is just starting to show its strains, as well as the softening Chinese housing market. The overall U.S. market is of course further along than the two economies mentioned, and is already partaking in the pain.
As far as corn, copper and silver, they all have dropping to their largest weekly losses in over 20 years. The 18 percent fallout of silver is its worst performance for a week since 1983.
The labor department also released jobless claims figures for the week ending September 27, and they're the worst since 2001. That puts the jobless rate at about a five-year high of 6.1 percent.
It is spurring more debate on whether it's wise to implement a bailout plan which not only won't help in these difficult times, but will exasperate the problem, as history has taught us.
The Reuters/Jefferies CRB Index dropped by 9.9 percent so far this week, again, its largest downward move in 52 years.
Two major factors are delayed weakness of the European market, which is just starting to show its strains, as well as the softening Chinese housing market. The overall U.S. market is of course further along than the two economies mentioned, and is already partaking in the pain.
As far as corn, copper and silver, they all have dropping to their largest weekly losses in over 20 years. The 18 percent fallout of silver is its worst performance for a week since 1983.
The labor department also released jobless claims figures for the week ending September 27, and they're the worst since 2001. That puts the jobless rate at about a five-year high of 6.1 percent.
It is spurring more debate on whether it's wise to implement a bailout plan which not only won't help in these difficult times, but will exasperate the problem, as history has taught us.
Tuesday, September 30, 2008
Some Say Wait on Commodities Till Things Settle Down
The volatility in the economy, especially in relationship to base metals, gold and oil, have some experts saying investors should wait for a few days until things unwind and there's more clarity in the overall picture. I also think that's the best thing to do in current circumstances.
There are too many variables not usually connected to the market that make things at this time more unpredictable than usual.
With fear being a main driver at this time, we have to be cautious in what we do, as the rejection of the bailout package in America suggests.
Fear is being used as a tool by some now to get things done in the way they want them done. With this in mind, it makes it impossible to know with any reasonable accuracy in the short term which way things will go.
Even many analysts, normally glad to be in the spotlight, were quiet on Monday, as anything they say could go the opposite direction with ease.
I would wait a few days to allow things to settle down.
There are too many variables not usually connected to the market that make things at this time more unpredictable than usual.
With fear being a main driver at this time, we have to be cautious in what we do, as the rejection of the bailout package in America suggests.
Fear is being used as a tool by some now to get things done in the way they want them done. With this in mind, it makes it impossible to know with any reasonable accuracy in the short term which way things will go.
Even many analysts, normally glad to be in the spotlight, were quiet on Monday, as anything they say could go the opposite direction with ease.
I would wait a few days to allow things to settle down.
Friday, August 1, 2008
Platinum, Palladium Fall on Auto Demand Concerns
Platinum fell by almost 7 percent today, and palladium followed the same pattern, falling by 6 percent, as high fuel prices continue to hamper demand in the auto sector.
Spot platinum fell to $1,644.50/1,664.50 an ounce at 1507 GMT from $1,749.50/1,769.50. Spot palladium fell to $363.50/371.50 an ounce from $379.50/387.50 on Thursday. It dropped to a seven-month low during the day to $356.00.
"Everybody expects car demand to be very low and the higher oil price will dampen it further," said Commerzbank analyst Eugen Weinberg.
It didn't help to hear the news in the industry that all the major auto companies plunged in sales during July. Nissan (NSANY) was able to grow by 8.5 percent, but that was because the $10,000 incentive included to buy its Titan pickup truck.
Wednesday, June 18, 2008
A Look at the three Bills that could Impact Commodities Markets
Independent Senator Joe Lieberman revealed the drafts of three Bills which could cut back on the investment choices of large players in the commodities markets.
In the first bill, it would not allow pension funds of private or public companies holding over $500 million in assets to invest in energy or agricultural commodities on U.S. futures, foreign or over-the-counter exchanges.
The second Bill would empower the Commodities Futures Trading Commission to limit the share financial investors could hold in the commodity market.
Finally, in what is being called speculatation in the market, the futures regulator could put limits on investments deemed not connected to hedging activities. That would cut back on investments from huge investment banks on commodities swaps.
What I don't like about this is it is really an excuse by politicians for their revealed inability to handle markets. It underscores the weakness and limitations of government, something politicians don't like the electorate to think about.
It's also an attempt to deflect, rather than accept blame for the poor decisions by government officials that have led to high energy and food prices; things like not drilling for oil on American land and coasts, and the terrible decision to subsidize corn-base ethanol, which has resulted in higher food prices across the world.
In the first bill, it would not allow pension funds of private or public companies holding over $500 million in assets to invest in energy or agricultural commodities on U.S. futures, foreign or over-the-counter exchanges.
The second Bill would empower the Commodities Futures Trading Commission to limit the share financial investors could hold in the commodity market.
Finally, in what is being called speculatation in the market, the futures regulator could put limits on investments deemed not connected to hedging activities. That would cut back on investments from huge investment banks on commodities swaps.
What I don't like about this is it is really an excuse by politicians for their revealed inability to handle markets. It underscores the weakness and limitations of government, something politicians don't like the electorate to think about.
It's also an attempt to deflect, rather than accept blame for the poor decisions by government officials that have led to high energy and food prices; things like not drilling for oil on American land and coasts, and the terrible decision to subsidize corn-base ethanol, which has resulted in higher food prices across the world.
Friday, June 13, 2008
Corn Prices Explode to Record Highs
While food prices dropped last month, the continuing surge of corn prices may spur spur food prices higher, as the ethanol fiasco continues to haunt lawmakers and consumers.
The reason given for the price increase is the weather in the midwest, but that's in reality a secondary cause, as the subsidy's afforded the industry by lawmakers is the underlying reason prices continue to increase.
With so much corn going to dubious ethanol production, it has caused an artificial demand which has caused prices to grow. As a result, every time something happens in the supply chain, it is exasperated because of the ethanol foolishness.
Corn reached a record price of $7.30 a barrel on the CBOT Friday, the sixth day in a row it broke a record.
Producers of meat are especially concerned as animal feed costs will rise, causing them to raise their prices as well.
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