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Art Cashin: Market Commentary - An Encore Presentation
From Art Cashin's Market Commentary, as distributed by UBS Financial Services, February 4
On this day (+2) in 1858, that august deliberative body, the U.S. House of Representatives was calmly discussing a matter of import to the nation. Well....maybe "calmly discussing" misses the point. The House was in mid-debate/mid-filibuster on the topic of admitting Kansas to statehood....and whether such admission should be as a Free State or slave state.
The debate had been going since the prior day and as it moved into the wee small hours of February 6th the tension, partisanship and weariness began to show. Since night-time in February, in Washington, in the Capitol building, in the 1850's tended not to be too warm, several members of Congress were said to have sipped (or gulped) some alcoholic beverages....just to stave off the chill.
Rep. Keitt of S.C. made a rather uncomplimentary remark about Rep. Galusha Grow of PA. (who had the floor at the time). Rep. Grow responded with an equally unkind assessment of Keitt. Keitt went for Grow's neck, but was knocked to the ground. Soon most of the House was wrestling, spitting, kicking and punching their worthy and distinguished colleagues. Spittoons and inkwells flew through the air. The Speaker gaveled for order with no success. The Sergeant at Arms beat members with his staff (in a non-partisan way, of course).
Rep. Grow was being pummeled by Barksdale of Mississippi when Washburn of Wisconsin rushed to Grow's defense. Washburn's intention was to grab Barksdale by the hair with his left hand and knock him out with a right uppercut. But when he grabbed Barksdale's hair, it came off in his hand. Shocked, Washburn screamed. The rioting representatives looked up and saw a suddenly bald Barksdale…..and Washburn waving his wig. "My God, he's been scalped!" shouted someone and the riot broke up in riotous laughter.
To mark the day, suggest to the bipartisan leadership that they appoint someone from the Hair Club as doorkeeper.
The tape was neither hairy nor scary Wednesday. It was idle and indifferent.
Buck Bounces A Bit So Stocks Buckle A Bit – Duh! Stocks soften. Gold softens. Oil softens. Most commodities softened. And, so the dollar must have – you guessed it Sherlock, the buck bounced. Pundits pointed to things like Pfizer earnings or to some of the data missing the estimates. But down on the playing field, it was clear that it was all about the buck and nothing more.
We wrote yesterday that the easy part of the reflex rally was over. Sure enough the market obliged by producing an inconclusive session. The fog has set in, and, despite Sandburg, it didn’t come in on little cat’s feet, it came in on lower volume. Just a boring and frustrating day. Yawn.
How Dry I Am (And Maybe A Little Hungry Too) – Last year, I suggested that 2010 might be the year of food shortages around the globe. That may be why I was struck by a piece put out by the always sharp-eyed, Andy Lees, of UBS in London. Andy reviewed a treatise on global water put out by the World Economic Forum (pronounced “Davos”). The figures Andy pulled from the report are downright stunning. Here’s how Andy began:
Water – The global growth inhibitor!!!
http://www.weforum.org/pdf/water/WaterInitiativeFutureWaterNeeds.pdf, written by the World Economic Forum, and entitled “The Bubble is Close to Bursting”, gives some pretty hard facts about water security that mean present day assumptions about economic trends seem unlikely to bear any reality to what transpires. It does talk about long term affects from global warming, but given that is all theory, I want to concentrate on just the hard facts as we know them.
70% of global freshwater withdrawals are used for agriculture – (up to 90% in developing economies), but it is thought that 50% of that water is wasted against the most efficient irrigation systems. A typical meat eater’s diet requires twice the water input than a vegetarian diet of similar nutritional value – (meat itself requires 10 times the water per calorie than plants), so a simple switch to meat would wipe out all the possible efficiency gains from drip irrigation etc, before accounting for the 2bn – 3bn (30% - 45%) growth in population numbers expected over the next 25 – 40 years. There simply isn’t the water for the world at large to go on the Atkins diet. “With business as usual water use practices, by 2025, water scarcity could affect annual global crop yield to the equivalent of losing the entire grain crops of India and the US combined (30% of global cereal consumption”.
Andy then went on to point out that if we tried to increase energy supplies by 5% using something like Ethanol, it would
double the global agricultural demand for water. Andy then goes on to compare water usage to GDP.
Not only does China use 10 times the energy per unit of GDP than does Japan, but it uses 5 times the water per unit of GDP than the world on average, and 8 times the water per unit of GDP than the US. There simply are not the resources available to lift China’s GDP per capita to the levels of the West. Of China’s 669 cities, 60% suffer water shortages and half of them lack wastewater treatment. Treating sewage – (pumping) – requires large amounts of energy that China cannot afford. The global market for water and sanitation infrastructure is estimated to grow from USD400bn a year today. By 2015 an average annual investment of USD772bn will be required for water and wastewater services around the world.
We’ll have more on China in a minute but the WEF paper on water may well be worth a weekend read. Not only will water shortages become a drag on the global economy, it may be the cause of conflict both among nations and within them. It will also be a great investment opportunity.
Does Jim Chanos Read Stratfor? – Jim Chanos, the noted short seller, has been very public recently with his bearish outlook on China. Yesterday he got an unexpected assist from the folks over at Stratfor. Here’s what they wrote in a piece titled “China’s Unsustainable Economic Model”.
CHINA RELEASED THE BREAKDOWN of its economic growth statistics on Tuesday. Bottom line: falling exports weighed heavily on growth and nearly canceled out the GDP gains of domestic consumption. Investment — mostly in infrastructure and public services — comprised over 90 percent of growth.
These results capture the essence of everything STRATFOR has said about the Chinese economy over the past year. Like many countries affected by the recent economic crisis, China resorted to government stimulus to make up for the sudden loss in private demand. But unlike other states that use such measures in emergencies, China’s growth has always been fueled by massive infusions of government funds and credit from a statecontrolled banking system. The endless stream of loans nourishes the businesses that employ China’s enormous population. Exports play an important role because they bring in new money to be redistributed by the banks as directed by the government.
Of course, the redistribution process creates divisions between the haves and the have-nots, but such divisions can be elided when times are good. It is only when exports slump that it becomes evident that China’s consumers are too poor to buy all the goods the country produces, and the weight of maintaining growth falls squarely upon the financial system. This setup is particularly problematic because a centrally controlled financial system that endlessly transfers wealth from efficient internationally-linked sectors to inefficient state sectors will eventually collapse under the weight of bad loans.
As you would expect from Stratfor, they go on to analyze the impact of the economics on both China’s internal politics and on China’s geo-political posture. They may have far deeper problems than tapping on the lending brake to deflate a housing bubble. Stay tuned.
Cocktail Napkin Charting – Once again the S&P struggled when it hit the resistance band at 1102/1105. Minutes before 10:00, the S&P hit its intra-day high of 1102.72. Within seconds, it began to head lower. By noon it looked ready to challenge the support band at 1087/1092. Instead it stopped at 1093 and then churned choppily sideways for the balance of the day.
As noted yesterday morning and, again, above, the “easy” part of the reflex rally is over. The market has a couple of options on where it heads next. They range all the way from resuming the January selloff to resuming the December rally. This window of uncertainty could last until about Tuesday. The market should show its hand by then.
For today, the napkins again suggest early resistance at 1102/1105 with critical backup at 1112/1115. Support again looks like 1087/1092. The fall back from there would be 1070/1075. Breaking below 1070 could put the bears back in control.
Trivia Corner
Answer - The state capitals that begin with the same letter as their states are: Dover (Delaware); Honolulu (Hawaii);
Indianapolis (Indiana); Oklahoma City (Oklahoma).
Today's Question - Three pounds of apples and two pounds of apricots cost $2.25. The apples cost less than the apricots.
(One final clue - for the same $2.25 you could buy either apples only or apricots only and not wind up with fractional pounds.) How much per pound are the apples?
h/t Back9
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75 cents per pound for the apricots and 25 cents per pound for the apples?
Not sure, but I'm in Argentina doing farming and we only got 5 cents per pound for apricots after harvest cost this January.
Not sure, but I'm in Argentina doing farming and we only got 5 cents per pound for apricots after harvest cost this January.
nice, you're right 9lbs of apples and 3 lbs of apricots would both equal 2.25
Indeed. Someone needs to relay this to Jim Rogers.
I'm convinced that Rogers and Boone Pickens are the same man. Personally, it has been fun watching Boone blow up twice now, going back to the late 1980s. Jimmy's due to blow up too. The sooner the better, I say.
Apples -25c per pound
Apricots - 75c per pound
How much per pound are the apples? 25 cents.
this article is worth the read for the history lesson which was absolute hoot and the trivia question....
Comparing apples and oranges, perhaps, but I think the more important question is: How much is the doggie in the window?
$0.38/lb apples, $0.56/lb appricot
your prices don't meet the constraint where
2.25 / price = a natural number
Dude, try more like $1.59/lb for the apples, and $3.99/lb for the apricots.
Sheesh.
The apples are 25 cents/lb, until after hours of course, when apple futures oddly ramp up by .5% on light volume, sparking panic buying at 25.13 cents/lb.
funny
Art is lucky he can still remember 1858
In the not to distant future, America's doomed middle class will be choosing to buy 9 pounds of apples to feed their families - forgo the luxuries. No apricots for a long time.
this author's blog theback9 (fore ¢¢¢¢) gives robotrader a run for his money with racy females. loved this article though, save the planet - kill yourself.
screw those countries... i take 20,000 gallons of drinking water and pour chemicals in it just so i can splash around in it.. screw em!
Myself and 300 other boater Anchor our boats in 3 feet of water so we can drink and piss in the Niagara River,
Whats the place called---- GRASS ISLAND
Totally depressing
Damon Vickers on Alex Jones
pt 1 of 4
http://www.youtube.com/watch?v=XvOnvMFop2M
correct links from Feb 5 2010
Damon Vickers on Alex Jones
pt 1 of 4
http://www.youtube.com/user/kalifornya1#p/u/4/AIT7AnE2W7Q
2of4
http://www.youtube.com/user/kalifornya1#p/u/3/85P3yh9HIV4
3of4
http://www.youtube.com/user/kalifornya1#p/u/2/ISSx0hK_rjM
4 of 4
http://www.youtube.com/user/kalifornya1#p/u/1/lo9b07abMZU
Art used to put out his "Cashin's Comments" everyday. Not sure if he does it daily anymore, but my guess is he still does. Always interesting reading.
I see they now call it Market Commentary distributed by UBS ....lol ..... how politically correct we are these days.
The first rule of Hair Club is NO ONE TALKS ABOUT HAIR CLUB!
What's the point of all this? The line at the end where he says a break below 1070 would put the bears back in charge? Well - duh! - and here we are.
But may I point out that Cashin has been calling for a big pullback/correction since about September? I remember days where he looked like he was getting absolutely crushed.
So I guess, assuming he's a man of his word, he comfortably went into the weekend net short, because we held below 1070? I would've thought that end of day rally was bullshit... if it wasn't on such huge volume. I say the low holds... for the year (except for maybe a retest of it on OPEX, given the huge amount of Feb. 105 SPY puts that have been bought in the past month.)
Everyone's been crying for a 10-15% correction,... well, they gave you 8%, and you should feel lucky you got even that.
The apples and apricots are both 45 cents per pound.
After Friday's action, the bears look to be soon back in control. Not a bad thing, I don't think.
that price does not fit the constraint that
price of apples < price of apricots
Some TA people like myself have been warning that the bear rally was ending.
The trend is now down.
March 2009 lows won't hold either.
http://www.zerohedge.com/forum/market-outlook-0
Hey GS,
You dont see a crash coming right? Just a drift lower that may last for a long time?
If this market rally was TA based like most suspect, then you may be right.
That quiz question should be the CAPTCHA quiz! It would keep the idiots off. Leo, too.
Both fruits are .45 per pound; it's because the apples cost less that you can buy three pounds of them vs. two pounds of the apricots. Duh
lmao...i think that the intent was that the
price / lb of apples < price / lb of apricots....
besides there is more than one solution to the
problem shall we say...
questions like that should be the barrier for posting... thx.
Not sure, but I'm in Argentina doing farming and we only got 5 cents per pound for apricots after harvest cost this January.
70 percent of the land area is covered in Ocean.
It's the fact that no one wants to build desalinization plants that is the problem.
6.7 billion people and rising = need for more fresh water
So we can build desalinization plants, powered by Nuclear powered breeder plants.
Or we can let the bankers profit off the 'water wars' bankrolled by the deficit spending?
What seems to be not only the best route, but also the least blood, AND EASIEST to do? Simple. Build desalinization plants.
Which is why a Credit System, rather than a Monetary system is needed. In a credit system, (worldwide), each country could pay for their own desalinization plants, and not need a banker approval.
Under a monetary system, it must be a loan, to them, and the terms dictated, by them. If it doesn't look profitable, watch out. Not to mention 90 percent of what's needed in this world goes undone because of this.
So we can build some needed things, or have wars erupt. It's up to us.
But of course desalinization plants are probably the 20th or so most important thing to focus on. The bankers won't let us do the other things as well. So let the gov't utter the credit, which in America, is in our constitution. We are the ones who decide we have to borrow from the bankers rather than uttering it ourselves for important national projects. Even under a credit system, there has always been private loans. It just won't run EVERYTHING, and it won't prevent nations from becoming self-sufficient...which of course is the bankers goals...to make you NOT SELF-SUFFICIENT. Keep you in debt just enough to dictate things for you, but not enough to default, always keeping you on the leash, rather than let you off it. Because if you don't need to borrow from them, they can't scalp you, or dictate certain things to you, and thus aren't really needed. Thus they need to actually WORK for a living, in banking, rather than just going around and rigging everything. They actually have to provide value to you, rather than sucking you dry.
The whole problem he talks about? Only occurs if we continue down the bankers path. Which is why we must not. That is our future, if we decide it to be so. Does anyone here really want that? Of course not. So don't let it. It's them that need US far more than we need them. We don't, they do. But somehow everyone's got that backwards.
Of course the energy needs need to be addressed. Let me tell you something, if you go green energy, you're just going to make the problem WORSE. You want energy problems massively worse than now? Go green.
It all has to do with ENERGY FLUX DENSITY. We need a much higher one. Which means our scientific community needs to be working on FUSION. Without fusion, we die.
Wasting the last of our easy reachable fossil fuels to develop industry with a same/less energy flux density that we currently have, while our needs are going through the roof is asinine. There is no benefit for going green.
Meanwhile when we achieve fusion, it will be 'green'. But until then it needs to be nuclear breeder plants. That's our only way, and every day we waste, the harder it will be. A trip down solar/wind power will destroy us, especially if you consider we won't have fusion for many years 20-50. But of course that could be 1000 years if you don't research it or put the funding behind it. So fund it.
Let me use the analogy of cars. We have a Yugo here, and we want to go green so we can have a Pinto? Spend trillions of dollars, raise food prices across the world, and not get anything better? Our best minds are going to be on this albatross or false solution rather than a real one? Why not go for the lamborghini, no wait Rocket ship that is fusion. The only way we solve our energy problem. The ONLY way, is fusion. If you don't understand that, and believe wind/solar will do the job, you are just ignorant of the truth (or don't care to check the truth and are just happy that someone told you 'green' was the answer).
So we can actually solve these problems. Or get ourselves deeper in this mess. It's all of our choices....but going green will destroy us. Letting monetary systems control the scarcity of goods will definitely lead to scarcity and wars. So if you just want to go through all the bs we've gone through again, go green.
For the record, I'm all for punishing polluters, and believe the EPA can do good. But, if controlled by imperialists, big government which controls the EPA can do much wrong, like CO2 labelling. Co2 is not the same as arsenic in your water supply. That's the plan. When gov't is small, it's forgetting the regulations that are needed. When gov't is big, it's used to distort the truth. The problem isn't big gov't, it's bad gov't controlled by imperialist interests. When gov't is run by sane people, it creates the image of American we used to know or grew up learning about. That was all because of good gov't. It's the fact we have no gov't or gov't for imperialists that has destroyed us. If you don't understand that, you are acting a fool.