Friday, August 22, 2008
Stock indexes have once again rallied higher off the support level I pointed to in my previous post. Note also that stocks rallied at that same level earlier today (notice on left chart). This is a nice rally -- more and better than I expected!
We must remember that this same Fed is the one that told us that there was no credit crisis, that inflation was contained, and that there would be no contagion from the credit markets into the rest of the economy. This is also the same Fed that didn't see any of this coming last year! That's pretty cruddy credibility! Today's remarks sound more like spin than credible economics!
Commodities prices have backed off across the board today, with crude oil leading the way. Grains, softs, and gold have followed suit. The U.S. Dollar is stronger, also. There has been no follow-through buying strength with additional buying of commodities. This is suggestive of a consolidation that could last a very long time.
However, it is also common for commodity buyers to liquidate their positions on Fridays to avoid the potential risk of events over the weekend. These buyers will then reestablish their positions Sunday evening or Monday morning.
The grains, although lower overnight and selling off at market open, have showed surprising resiliency and some renewed buying vigor today.
One economist critical of the Kremlin, Mikhail Delyagin, was apparently given an appearance by mistake on a popular talk show. Before “The People Want to Know” program aired, Delyagin was digitally removed from the tape.I recall how the Soviets used to doctor photos to remove people from them. This looks a lot like the old Soviet mentality has returned to Russia. The above is a quote from the following news story about the absence of press freedom in Russia:
The show’s host, Kira Proshutinskaya, said she was embarrassed over this and other incidents, and admitted that networks are constantly intimidated by the Kremlin.
“I would be lying if I said that it is easy to work these days,” she told the Times. “The leadership of the channels, because of their great fear of losing their jobs — they are very lucrative positions — they overdo everything.”
Press Freedom Absent in Russia
Criminal Case Launched Against Russian Opposition Blogger
Russian Media Group Offices Searched, News Program Cut
Thursday, August 21, 2008
With the amount of worry and turmoil in the market today, I expect that we will soon see another rescue or bail-out very soon. Here is a quick summary:
Dollar is Down, and if it remains this low, it will be in bear market again at day's end
Gold is Up $50/oz. in a few days
Oil is Up partly due to geopolitical supply fears, partly due to Dollar weakness
Treasuries are Down due to fear that the Feds will have to bail out Fannie, Freddie
Commodities Up almost across the board due to Dollar weakness
Crude oil has reached $118.50 per barrel today. This is the highest price in weeks. Perhaps the risk premium of geopolitical events is once again pushing the price of oil into the stratosphere! Could this be one of Putin's purposes for invading Georgia? One certainly wonders if it might be at least one of the fringe benefits, from his perspective!
Note the daily chart below is now back in bull market territory! Personally, I would be surprised if we see prices go back to record territory anytime soon, but anything can happen!
Political opposition voices in Russia recently released a statement saying that in the war upon Georgia has no victors. “No one won from the war,” the opposition leaders write. “More precisely, everyone lost.”
Here is the full statement (see link below). They were incredibly courageous to issue it, considering how many members of the press and Putin political opponents have been murdered. It is estimated that among the press alone, more than 150 reporters have been murdered in Russia over the past 5 years just for criticizing the KGB King. That's about one every two weeks! Russia is the most dangerous place in the world to be a reporter. It's deadly to speak the truth about Vladimir Putin!
Russian Democratic Forces On the Georgia Conflict
Wednesday, August 20, 2008
Once a firm bottom has formed in any commodity, I change my focus from selling on rallies, to a strategy of buying on dips. This changing of the guard between a selling focus to a buying focus is the market psychology that causes consolidation trading such as we're seeing now on the daily chart for crude oil (see below). Note that the Klinger Volume indicator (green, bottom panel) is showing stronger and stronger buying, even though prices are relatively flat!
As long as Putin's Russia continues it brutal invasion of Georgia, I will continue to post short updates on the status.
We also now know that when Putin left Beijing suddenly, he was headed directly for the front lines of Russia's invasion of Georgia. He is personally directing the brutality and humiliation. Photos and video from Russia's state media showed Putin personally directing the invasion at the front. Since when is that in the job description of a Prime Minister, Mr. Putin? That has all the appearances of a dictator, not a diplomat!
Vladimir Putin has the West's number. He knows how to manipulate the UN to block all diplomatic efforts to check his military conquests. He has repeatedly blocked all UN efforts to bring a halt to Iran's nuclear efforts. And he understands the weaknesses of Europe's desire for diplomacy better than Europe understands him. He humiliated President Sarkozy of France, agreeing to a ceasefire and withdrawal, and ignoring them as soon as the ink was dry.
Tuesday, August 19, 2008
The Other Russia
This website is maintained by Gary Kasparov, the former world chess champion, from inside Russia.
Confront the Kremlin - excellent editorial by Oksana Chelysheva
Bank of Georgia
That headline is the estimated net worth of Vladimir Putin, the self-appointed Prime Minister of Russia. He had very little net worth at the time he became President of Russia. Not a bad salary for just 8 years in office! His own countrymen, based upon expert financial analysis of companies he owns or controls, and similar to that of Forbes magazine's calculations to estimate the net worth of the world's other billionaires, estimates that during his tenure in office, he has made himself into one of the world's wealthiest people solely through the activity of politics, a previously unheard-of feat. Wow! He must be some politician! If this net worth is accurate, then it places him as the world's seventh wealthiest person. It also placed him easily and squarely as Russia's wealthiest billionaire. It also places him well ahead of even the wealthiest members of the Saudi Royal Family, who have been in power for decades. Again, some politician!
That's a whole lotta love ... $40 billion worth!
This is really quite typical behavior for grains toward the end of the summer. We are seeing almost daily updates regarding the condition of the corn and soybean crops. For example, the progression of the corn through the silk, to the blister, to the milk, followed by the dough stage, and then the dent stage, and finally to the maturity stage, are carefully monitored and compared with previous years. The one over-riding message thus far this season is that the maturity levels of the two crops, corn and soybeans, are well behind their normal maturity at this late stage in the season. This makes them highly vulnerable at the end of the season to early frosts or an early winter. If an early frost damages the crop, yields could very suddenly by sharply cut within just a few days. All of this risk tends to put a solid floor under prices. Eventually, it could send the market into a new bull trend if yields are cut during the late September, early October time frame. Until the grains are harvested and inside the grain silos, the risk is largely to the downside for yields, and thus, to the upside for prices.
Monday, August 18, 2008
Endgame Nears for Fannie and Freddie