This page has been archived and commenting is disabled.
Stocks Post Longest Multi-Week Drop Since 2002 - History Predicts Much More Pain In Store
As the superimposed chart below demonstrates, the current 6 week drop, which is the longest in the last 9 years, or since 2002, may just be the beginning. And while our prediction that 2011 is a replica of 2010 is now confirmed, the far scarier possibility is that the next comparison to 2011 is 2002 - if that year is any indication, the SPX will drop to ~1000 before rebounding: obviously at that point the Fed will have no choice but to proceed with QE3, or the downward momentum will accelerate in what may then become a repeat of October 2008, and all those predictions for an S&P 400 would promptly be validated.
»
- 19373 reads
- Printer-friendly version
- Send to friend
- advertisements -
As long as Oblahma goes.
Forget Oblowma, it's the Banking Cartel that needs to go.
http://www.youtube.com/user/zedgehero
http://www.youtube.com/watch?v=n54UhZYOY1E
Zedge Hero
Tha chick should be Lisbeth
Boring ... cycles said get bearish 3 weeks agooooo
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=215_sp500-cycle-update-2011-05
wait so 1000 point drop, then QE3, then ?, then gold confiscation, then _____
Go ZHers fill in my ? &______ I dare ya
The D word will now be spoken.
Look at the other Great Depression for guidance. Mass state gov layoffs (school closures especially), sovereign defaults didn't really get going until 1932-3.
Same pattern now. Capitulation is near.
Its already started but is generally confined to "housing depression". Its just a matter of time before the use of the word begins to expand into wider usage. Its a process where people begin to accept the idea.
A recent poll showed a large % of Americans believe we're headed towards a depression so acceptance is already underway.
i'm of the belief that this is gonna turn out like 1937-1938
http://stockcharts.com/freecharts/historical/djia19201940.html
Take careful note of where the actual "Great Depression" occured in 1929 on the chart...and then look at the rest of the chart. If you believe, like you say, that we are in a repeat, well then we have an awful lot of downside beneath our feet.
I, for one, agree with you.
If you bought at the bottom, you made 500% over the next five years. That's kind of my strategy. Ride it down in a bear fund with the money I feel comfortable putting at risk, which for me is about 25% of the portfolio, then when absolutely no one wants to own stocks, reverse course and go long.
Sounds good in theory, but there are so many uncertainties these days, it's all a roll of the dice. The only thing I believe is absolutely certain is that we're in a deflationary depression, and try though they might, TPTB can't paper over it forever.
note the pm miners didn't participate in the 30-32 decline (sideways to up) but did in the subsequent rise: http://www.oilngold.com/analysis/research/gold-a-gold-stocks-during-peri... that's one way to play it.
https://secure.wikimedia.org/wikipedia/en/wiki/Demographics_of_the_Unite...
the difference is the concentration of huge segments of the population in dense urban areas reliant nearly entirely on global trade for necessities.
Spoke to a couple of state employees at the department of child support today. They've had 7 'furlough' days (unpaid days off) so far this year, a result of state budget cutbacks. Their wages have also been cut 3% and they're now having to pay more each month into their medical plans. They were telling me it's a bad time to be a gov't worker. They probably have no idea what's coming.
"Help us, Obi Wan Bernanke!"
The force is strong with him.
I think you mean:
'the bourse is strong with him'
clever
jeg liker
Haakon på bilderberg. Snodig verden vi lever i
The Dark Side of the Schwartz is strong with him more likely.
Are certain investors trying to force a QE3 by taking money out of the markets? And sitting on it? If so, it amounts to robbery of the taxpayer/state. Or do I misunderstand where the QE1/2 funds have gone?
Look at the dollar. Yes, folks are going fiat and sitting on it. What else is there to do, when the economy tanks even while it is on steroids, and when certain big players provide the direction?
I mean, if i had cash in the stockmarket, i certainly wouldn't want to stay in, while stocks and commodities become a capital-sink?
P.S.: The big picture is simple: Both the stockmarket as well as commodities are massively overvalued, thanks to QE1 + 2. It's a baloon that wants to deflate, yet constantly is resupplied with more fiat-air. The fed is threatining to stop pumping air..... what else is one supposed to do, than jump off the sinking ship? Of course, this in turn will send the market down.... which in turn is just the excuse which bernanke needs, to announce the next round of air infusion, at which time stocks and commodities will explode in price.
Well the problem is there: "certain big players": it's not their own cash these "players" have taken out, it's the taxpayers'. Meanwhile a lot of good stable companies remain undervalued (from what i've read). How can it help the economy when share price is so volatile? Maybe the QE funds should've gone straight into the companies, ie into jobs, R&D, production, etc. The whole thing sounds totally stupid.
PS Just read your ps! Yes i get that the market may be overvalued due to QE1 and 2. Yet i have read last week that some companies are undervalued (according to the usual measures, NAV and whatnot). I'm not an economist but surely there has/d to be a smarter way of solving these issues.
Jamie Dimon cried to the FED, and it failed. So Jamie Dimon tried to do it diabolically for us to see, and it failed.
Do you think Jamie would take all that money back out of the markets? Of course he and the other hedge funds will too.
Remember, JPM, GS and BAC traded 90 days straight and only one had one day that they lost money. Hmmmmm.
I am willing to bet they all made money this month too. No QE so they will destroy the markets. That is how it works.
Risk off, totally now. Could change, but they will have to have a fresh diaper and powder first.
Yes hmmmmmm, the big boys are going to shake out the small hedgies and other investors not in the know. HFTs better watch their backs. They are robbing the elite. It it time to stop that. The mafia whacks their enemies, big money bankrupts theirs. They will crash the market, then QE 3 will appear at the proper moment.
+1 However, you also have to keep in mind that big money has plenty of hft programs all their own. Also, with PD's net short the market right now the evidence would indicate you are correct.
The problem is with you - you're thinking too "Sane" :)
This whole stupid experiment never was supposed to actually help the economy. As you correctly point out, there are about a few hundred better ways to fix the broken economy (and many of them do not require much cash - just pissing off a lot of lobbies and campaign contributors)... rather than bailing out banks, who have already shown that they are parasites and a hazard to the economy. Heck, even thowing all those billions out of the window, by throwing a really big party in every major city, every day, would have been better - not because it would have fixed anything, but because it at least wouldn't have helped to sustain the issues which caused the whole crisis.
But alas, that's not what they have been doing, and are doing. It's neither about the bottom 90% of the population, nor is it about small to midsized companies. Those actually are now worse off than before. The only ones who benefitted, were large banks and megacorps. So yes, it is robbery... but on a much larger scale, than just the recent stockmarket drop.
It's TREASON, I say.
Brilliant comments from everybody. Yeah they'd have been better giving every law-abiding citizen $50 shopping vouchers or something. Well the dollar is going to suffer as the Chinese and other economies move into the IMF. Wonder how long it's gonna take before the dollar is superceded.
PS Oh yeah Sane i get u ... Well it's inSane as we know!
Nomi Prins in "IT TAKES A PILLAGE" said they could have paid off EVERYBODY's mortgage in the whole country by now with what they have spent on the banks.
They also could have "cushioned" the supposed big evil crash, that according to them would have happened, if they do not bail out the megabanks. I'm sceptical if said crash would actually have been as severe as they claimed - but it doesn't matter, because even if it would have been that bad, all the trillions of dollars printed, could have softened such a crash.
So, two of the choices they had were:
1) Print massive amounts of cash to conserve the problem.
2) Print massive amounts of cash to get rid of the problem, and soften the consequences.
They did choose 1. And they didn't do so, because they're incompetent.
$50 ?
You're still underestimating the in-sanity of the whole program :)
They are each month printing almost 50% of a low-income wage..... multiplied by the total population of the USA.
Yes.
P.S.: In case you are not aware about it - taxpayers are not paying any taxes for this. Taxes are collected IN ADDITION to this. The way how *all holders of US Dollars* pay for this instead, is inflation. It really isn't so different to taxation, but is not called taxation (the population would instantly turn washington into a blootbath, if they figured this out). It works like this: When you print money and give it to people, those people now hold more weatlh, while everyone elses wealth (buying power) is reduced. And the killer is that this type of "taxation" knows no national borders - as i mentioned, every holder of US dollars is affected, regardless of where on the planet he lives.
Woah, holly shit! Well, if there was any doubt left, that people are escaping the market, then look at friday's close. Neither traders nor bots wanted to stay in the market over the weekend - no trust in consistency left in the market. Pick any stock or commodity index.... everyone was fleeing the market near the close.... and where did the capital go? Well, look at the dollar, heh.
Prediction: At this rate, the market will crash before the end of QE2, unless the "dealers" stabilize it, or QE3 is announced already in the next week.
I thought S&P 666 was the target?
I kind of doubt either. I just don't see them giving back that much. It would look really bad and discredit QE2. Either way it's going to be a roller coaster.
But... on the other hand. They have to wait long enough so QE3 can have a lasting impact going into the presidential debates.
I agree, Im long volatility with both calls (C and dollahs) and puts (spy), should be interesting.
At the current speed, they cannot wait for long. Look at the speed at which the market is going down... SP will reach 1000 in weeks, if not less.... perfectly timed to coincide with the end of QE2. At that point, there will be only two routes left: 1. Do nothing, and the broken market will go down vertical. 2. Inflate the broken market with more stimulus.
It's a matter of weeks, not months.
dwdollar, the big boys never lose when the market goes into a known crash. They short it and make a killing in the process.
The "giving back" would be from 401k holders, not the big boys; sheeple make more attentive voters when their retirement isn't being sacrificed at the altar.
Exactly. As long as people believe in their 401k retirement fantasy, they won't make too big a fuss.
A general uprising of angry voters can still displace any accounting irregularities at the tally machine.
They KNOW what the number is. We can only speculate.
Given all the wage inflation, I guess we can assume that this QE trigger number may be a little higher this time...
...oh wait
QE1 ~ 666
QE2 ~ 1050
QE3 ~ ????
i still cant get my head around this Deflation and Inflation both being good for Gold - surely that makes about as much sense as piling debt on top of more debt to get ourselves out of this mess?
I disagree with that premise. Gold is historically a hedge against monetary inflation. The "gold is money" crowd has yet to prove their (good in periods of deflation) thesis with me.
Well, in pure THEORY, the real value of gold should not change much, if it is constantly used as a stable wealth storage.
But in practice, that does not happen. When fiat devalues, or is rather stable, people prefer it over PMs. I can understand why... easier to transfer than PMs, plus it's less complicated if you do not constantly need to exchange between PM and fiat. And so, as long as fiat is strong, PM demand decreases and thus sends it's prices down.
I guess, in theory the best solution would be something, which long ago was the case in the USA.
http://seekingalpha.com/search/?source=search_general&q=gold+inflation+deflation&cx=001514237567335583750%3Acdhc2yeo2ko&cof=FORID%3A11%3BNB%3A1&goto_search_tab=#997
Read the articles from 2008-2009. Sorry about the source- but the search function worked easily. The was some more substantial analysis that came out during the same period but I can't find it online now.
IYR was finally destroyed today.
"Destroyed", you mean like that TZOO stock you were pumping? Funny how we never hear about your lame stock picks after they blow up. Keep pretending you're a real trader, asshole.
The youth of today, no respect. RT was one of the reasons ZH became popular before it was invaded by one eyed fanatics who will only get more & more irate as the truth unfolds. I suggest you search the archives more deeply before hurling criticism.
Amen brother
I'm new here and and have heard something similar. Are you saying that there is more doom and gloom talk these days?
Sorry, we the peanut gallery don't roll that way.
Oh, and why no more graphs and pics? Hmmmmmmm??????
That was RoboTrader (one letter "T") me thinks.
NO!!! I TOTALLY MISSED THAT!!!
Seriously.
While I agree w/ your defense of Robo, I resent your comment on "One-Eyed Fanatics"...
Perhaps you should locate a 55-gallon drum of Visine™... :>D
I second that emotion.
-3x etf DRV +7.58% today, the black boxes are being re-programmed, I tell ya. That's why there's no panic. FAZ was last 2 weeks, now perfected (as of 2 pm). There are 2 -3x RUT etfs- SRTY & TZA. My guess is we'll have a final runup so as to wind back down these Inverse etfs, like recoil the springs before they let loose on the downside. These did not exist in 2009. Now we have FAS/Z w/ weekly options expirations, whew!
NOTE: ALX not in IYR yet largest DRN/V holding, untouched today $394.14, -0.12
Top 6 Banksterz up today: GS JPM BAC C WFC MS
JNK didn't fare as well as TLT either.
Que the Greeks! Let's get it over with by 10 am Monday.
zeroHeads already know this is the PPT getting us ready for QEIII
Yes, they trotted out Tepper today to set the mark. SP < 1000.
+1 (actually -270 more pts)
Broken spine, bitchez.
Down Bernank's glory hole the unrealized gains shall flow.
With or Without POMO.
Financial Jihad!!!!
Bankstas are using the play book to blackmail the Fedidiocricy into QE3...masterminds
As evidenced by the VIX reading below 20, this downturn has been greeted with a collective yawn by the apathetic retail investor and trader. These poor schmucks will finally capitulate at the bottom, with the VIX registering at least 30, maybe near 40. Get your shorts on, or at least, close out the longs.
Yup, after the Fed stops QE, the VIX should finally "wake up".
When it slices through 30, and preferably 40, I'm selling my Treasuries.....
Welcome to the New American Revolution, the book is going out to the publisher on Monday and should hit the street sometime this summer if all goes well. VIVA la' REVOLUTION!!!
What goes up MUST come down sometime.
The market can remain irrational far longer than you can remain solvent.
Damn right.
They are going to be rigging it to the upside very soon. But I think we go back to at least 8500 on the dow before any real new cyclical bull. The secular bear could take us to sub 1,000 on the dow.
Come on Tyler. This is nothing. Dropping from 138 to 127? it's not even 10%. People should gradually get used to this. When this junk went up from 700 to 1380, the greedy people think it wasn't enough, they want 1500. They will eat shit first.
Well, I think what Tyler is saying is that the elevator makes stops to let people off, and some on, to go to a higher floor., The market does not go straight down. If you look at your chart that is a good level for a bear bounce. Gotta have some patience guys. Took us 2 years of lies to get up here, not going down to the basement in a month.
at least you learned your lesson.
Maybe not in a month, but it won't take two years like it did to get here. 6-8 months ought to do it.
Express elevator to Hell going down
For your viewing pleasure:
http://www.youtube.com/watch?v=uDLQg8ZKBS8
QE whatever will be tough. If the first 2 did nothing except raise prices and inflate the goods we need what will 3, 4 to infinity do for us? And, for the first time, some of the sheeples are starting to get this "printing" from the head inmate. Politics will rule, and for now no QE, subject to change of course.
And shorting is not for the feint of heart. It is tough. Usually best just to remain with confetti if you are not comfortable with the ups and downs. For me, it feels good to work my convictions for a change. Never got into the longs outside of gold, oil, etc. but now can short and feel good about it.
And finally, shorts may do well, but lets not rant about our success on the site too much as there are many who only play long and are hurting. Remember those trolls who shout will glee as our gold and miners keep going down. Same way with shorts for those of us who work that side.
Have a great weekend all. Monday gonna be interesting.
Sad thing is we haven't even seen the inflation from QE2 yet.
All the way to 400. ZH u should publish the pdf which explains why 400 is coming.
Start here and here
That was cool!
Oh damn. hahahahah.
That is so cool how you do those links.
Trick.
http://lmgtfy.com/?q=let+me+google+that+for+you
Very cool.
Now if I could only post a chart now and then. ;-/
Cycle wave C to take the DJIA down to 400 sometime in 2016....
www.elliotwave.com
CNBS facing dilemma on new hat orders:
"DOW 36K"? or "Obama 2012"? decisions decisions
I know Art still has his DOW 10,000 hat. Wonder if the "brilliant" ones on the idiot channel saved theirs.
They popped that puppy out, what a dozen times? And they'll be doing it again.
DOW 2012. No further decisions considered necessary.
While the chart pattern may be close, the moving averages do not compare for the 2 timeframes involved.
The timing of the drop needs to be considered in the proper context.
QE3 will happen, but in order to be justified, Bernanke needs to be able to point to deflation, so a drop in stocks is inevitable.
When it will happen is also pretty clear in the context of the next presidential election and the debt ceiling matter.
In order to win the presidential election, QE3 must be made to be palatable (enough). There is a built in excuse to blame Republicans, which is that they refuse to raise the debt ceiling. This refusal will be spun as the cause for the crash in stocks (and the problems with the bond market), but of which will actually have been the result of the end of QE2.
However, in self-fullfilling prophecy mode, the Republicans will certainly not pass anything until after Aug. 2, which will cause some traders to panic (and rightly so, as payments to government vendors will be halted, so major banksters and government looters will see revenues drop).
Understanding the players, you can understand how to play the game. This is poker. Watch what happens end of July. All the blame will go to the Republicans, the stock market will hit lows, commodities will crash, presto - deflation, just in time for Bernanke to justify QE3 because "No one is buying bonds while default fears spook the marketplace - because of the Republicans failing to do what is best for the country, blah blah blah..."
Perfect timing, perfect excuse. QE 3 will be slated to last until at least November of next year. YOY comparisons leading up to elections will be comparing June and July and August, which will be low this year but notionally much higher next year after massive QE3...
It is all there to see. It also makes the timing easy. Short now. QE3 WON'T be announced until August, when in a "panic" weekend, the Fed will ride in to "save the day"
I'm short as can be right now, will go long right when it looks like congress will ABSOLUTELY NOT pass a debt ceiling increase (but right before a miraculous compromise actually does allow it to pass a few days later, and after QE3 gets announced.
--Brian
Brian,
QE3 all the way from Sept 2011 to November 2012 elections? Do you think gas at $300 per barrel and $15 per gallon will help Obambam get re-elected? It will also drive interest rates higher.
And does QE3 necessarily mean a rising stock market at this point?
Not saying you are wrong, nobody knows what is going to happen yet, probably not even Ben.
I'm buying gas at $300/ barrel then. Scru gallons.
I didn't say that I think the plan will be successful. I think it is a disaster, as I have been shouting from the rooftops for the past 8 years.
This is the culmination of it, and there is no question in my mind that hyperinflation and dollar destruction will result. I have written several articles saying the same thing over the years.
All I'm pointing out is that playing the market isn't the way to look at things anymore; playing the players is what to do as an investor right now. And the players are looking at this current debt ceiling in the context of really, really, really wanting to print more money. How do they get their way? Simple, blame the debt ceiling, not their own printing, for the economy's woes.
It's absolutely a disasterous plan for the USA and the dollar, but it is exactly what is playing out.
$300 per barrel oil? Probably. I will be very long before that happens, though.
--Brian
I think your timing doesn't work; August is about 12 months too early, IMO. If the Democrats are going to pull a fast one, I think it's got to be an October ('12) surprise. How 'bout a war?
Paper propping up paper
This is Friday Porn at its best.
I love the smell of burning berkshire butt in the afternoon.
That is way gross, even for you. Gotta hurl....
Risk off. Maybe Ben should have taken that bid from AIG on Maiden Lane after all.
http://www.bloomberg.com/news/2011-06-09/fed-s-maiden-lane-sales-trigger-bank-stampede-to-dump-risk-credit-markets.html
How about S&P ~900 with no QE intervention?
That phony 2pm BAC spooge saved my ass.
the trigger for further stimulation will be unemployment rate ...well... and the need to hide the impending bond implosion for a while longer.
because future efforts will likely be as ineffective as QE1/2 and any incidental effect will be at best transitory one could expect the charade will be timed for shortly before the elections. I think this POMO stuff (while it brightens Tyler's day) is lost on most off us - I am expecting checks in the mail on this round.
or abolish income tax? I don't want their money. I just want to keep mine.
Buy short (inverse) ETFs and ride it down. Follow ZH when to jump out.
I logged on to Google finance and it was showing the DIJA at 00.00 down 100%!!
http://i1128.photobucket.com/albums/m491/socialREMODEL/DIJA%200000/Fullscreencapture610201143231PM.jpg
a sign of things to come?
What happened to the "stick save" crew today ?!?!?
I guess the "Squid" was shorting the market.
other symbols are showing this too
Dont be afraid of a little pain.
Pain is good for you, just not for me.
It's hard to imagine any sticksaves right now, but i have been surprised before.
QE3 should ramp oil and the rest of the commodities. Each QE has been less effective than the previous one.
It won't matter much if the DOW is 22,000 and peple are starving because a loaf of bread is $10 due to a greatly devalued dollar. Bernanke's QEing has led to food price spikes in the Middle East and riots. With another QE we could be facing $7/gal gas it will lead to more termoil. Eventually everybody wants out of the dollar when the value drops enough.
Bernanke and the Fed is destroying the fabric of the American finaincial system only to enrich a few people on Wall Street.
1937, live it, love it, embrace it. I am runing a sale on apple boxes...
This is getting nastier and nastier.
nasty, brutish, and SHORT
This could be just oh so much fun if we could just short the Robot bitch off this board.....
Say to S&P 800 should do it.
This is simple. For QE to be "allowed," and not trigger a currency crisis, there must be what I have dubbed a "Decent Interval" between QE 2 and QE 3. For that reason, the equities markets, and the risk on trade MUST take a hit for the summer at the very least. The Eurocrisis is good for the Treasury issuance post QE 2 - there is even a chance that market demand, the search for the riskless return in a time of declining markets, will fill the gap (in terms of buyers for Treasuries) during the Decent Interval.
However, this cannot last, as the lack of liquidity will cause the TBTFs, who own the Fed, much pain and consternation. Wait for the signs that QE 3 is coming - in the meantime, looad up on gold, and be ready to buy equities when the time comes to ride the markett up for a bit. But this leaves open the very real question of how long this game can continue.
The fundamental issue is too many people not enough resources. If a billion or so Chinese and now Indians want to enjoy similar standards of living as in the western nations, someone else has to take a cut in theirs. This dollar devaluation and eventually euro collapse is just a controlled descent rather than the more historically consistent cathartic resolution. If the US or euro decide not to accept this , then the only resolution is some kind of conflict. Already we have proxy wars throughout MENA, it's probably just a matter of time before we get an "incident".
shall I do the obligatory " that's what she said" here? OK, done. Have a nice collapse...
Re: China saying we have already started defaulting...If I were China, I would launch every ship I had into the Pacific until you couldn't see the water anymore and send them straight to LA to start the invasion. China's not gonna get paid. So much for keeping the stockholders happy. If you bought stock in America ( US Savings bonds)....I R pissed!
Intersting but one thing is true: we are the most armed and dangerous debtor on the planet, and there are no means of collection of unsecured debt in this circumstance. All the paper is unsecured and if we default there is no recourse to the borrower.
China is the world's largest gold producer, and they hold enough Bernanke Bucks to torpedo the USD whenever they choose. If they torpedo the USD and simultaneously float CHY (thereby giving the DC ass clowns exactly what they have been begging for), the US won't be able to afford OIL for consumers, producers, and the military and will turn on ITSELF. Meanwhile the price China pays for oil goes remains relatively flat. All they have to do is keep the EU afloat awhile and grow the third world consumer's borrowing capability a bit. Then the weakness of out sized US share of the Chinese exports is diminished and the economic shooting range can go hot.
It is much more efficient to allow your advesary to destroy himself, then to expend your own resources to do so.
While I agree with your point about DC getting exactly what they have been asking for [a weak dollar to inflate away debt], your point about not being able to afford oil omits the counter measure known as the Strategic Petroleum Reserve. While folks who include the SPR in their analysis of daily US oil consumption ALWAYS cite that it only represents a two month supply, the fact is that releasing oil from this facility, in earnest, would quite literally break the price of oil and, hence, the oil trade.
There is enough oil there, and with a capacity to release more than 4 million barrels per day, to arbitrage to death entities bent on driving oil parabolic. And if "break" is too strong a word, the SPR makes the move that you are suggesting VERY RISKY...and expensive.
If you then add to this part of the argument the reality of collapsing economic activity around the world [ie falling demand associated with what is clearly an impending global recession], the stake to the heart move of driving the US under with oil prices is not likely at this time.
As for China "floating" its currency, there are a whole seperate set of economic consequences to that which you are also not considering...but to which I say, go ahead and float it, China, so that we can see what the world wide market has to say about that. Of course, the consequences to which I refer speak to the domestic problems that would crop up within China were it to make that move.
My point is...it ain't as simple as your post would seem to suggest.
I wasn't suggesting that it was easy or that China would have all the preparations completed in the immediate future. However, opening the SPR is very risky for purely economic reasons, especially while having the military active in three theaters already. The SPR calculations I recall were about 3.5 mbpd average draw-down, but that was a while ago and it took into account the decline in w/d rate as the SPR empties. Hopefully number of active theaters will be reduced by the time China completes phases 2&3 of its SPR. The problem is that the US isn't strengthening its position over time, it's weakening its position. Once the American consumer is tapped out of wealth to feed the Chinese exporters the cost benefit equation changes for them.
Not sure I understand what you are suggesting. Considering the comparatively low basis established on the per barrel number, the opening of the SPR and the selling of that oil would be profitable...for the US govt.
If the SPR were opened, in earnest, and sold down to counter any scheme to drive oil up prices, it would have the effect of flooding the market with oil for around 200 days. There is not an oil trader alive that could withstand that pressure, and via futures contracts, the price of oil would collapse. Of course, the US govt could then reverse the entire process and buy forward at collapsed prices [which would cause them to rise again...but probably in a more timid fashion]. This is the very basic premise I am suggesting here. It has nothing to do with a "tapped out American consumer."
Not sure what you mean by Chinese exports of oil, either, as China imports oil. Perhaps, you misunderstood me to suggest that it was China's SPR that I was talking about.
About the weakening of America's forward position regarding domestic oil production, that process is now beginning to reverse DESPITE the current govt's ineptitude regarding US energy policy. In North Dakota and Colorado, enormous energy supplies have been discovered, and the process of exploiting those has begun. As well, the amount of oil in the Gulf of Mexico is far greater than anyone talks about, notwithstanding the pooch screw by BP. On this count, it will take time to get to where America needs to be on the domestic oil. Thankfully, however, Canada continues to help ease the pain for US needs.
It is very complicated, I grant. My point, specifically, was to the very fragile nature of the current price of oil, and how the SPR could be used [in accordance with its express purpose] to insulate the US from foreign influence on the price of a barrel of oil were it the case that some entity decided to use that oil price as an economic weapon. I thought that was point of your posted comments.
The Chinese exports I was referring to were manufactured goods.
I think if China were to engage in economic warefare with the US the primary weapon would be the value of the USD itself, and using it to drive US inflation and domestic instability.
A rising nominal USD oil price would be a reflection of that inflation, which could be mitigated within the US energy complex by the US SPR with a host of caveats or unknowns on timing, duration, % of the global oil trade then denominated in USD.
The Chinese would then have the option of revaluing the CNY offset their rising domestic oil price with a host of caveats or unknowns on timing, duration, % of the global oil trade then denominated in CNY/RUB.
The whole thing is a big "what if" outside of contingency and strategic planning, but the US hasn't reduced foreign energy dependence since the Energy Department was created in '77. The US continues to ship its manufacturing base overseas and increase its trade deficit. Even the existing debt load is unsustainable with historically average interest rates, and no one is even seriously talking about balancing the budget much less significanlty reducing the debt load. So as time passes the battlefield inherently favors the Chinese more and more.
They also have the advantage of experience in sacrificing welfare or lives of tens of millions of citizens in pursuit of their five year plans.
I dunno Ned...
Bet we won't host the Olympics anymore.
sweet
What did the CBOE Options Equity Put/Call Ratio look like at that time?
http://www.investopedia.com/articles/optioninvestor/02/052102.asp#axzz1OxSRzQZM
Comments on this? http://tickerforum.org/akcs-www?singlepost=1063193
BTW, it's Free Gold Access Weekend on TickerForum http://tickerforum.org
This is why Obomba has stared bombing Yemen now. We will "Bomb Our Way Back To Prosperity"©. Or do we make the Daisy Cutters in China now? It gets so confusing -- our gifted leaders will figure it out.
As always, "Bomb the Dip".
General Dynamics is in CT...they'll make the parts in China, while getting their uncle to borrow from China, until we have to use them on China.
+10.
I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident, that all men are created equal."
Oh well......
One of the sad facts of life is that not all men are created equal. And life ain't fair.
The true meaning of anything is perception. Substantive equality is but a dream.
Is that to say the U.S. doesn't have a creed to live up to?
How is Tyler gonna afford all that hair gel for his outdated dew?
I have read several times that this is the longest weekly losing streak for the S&P 500 since 2002. I am seeing six consecutive down weeks ending the week of 7/11/2008 and 7/23/2004. One happened in the context of a cyclical bull and the other a cyclical bear.