MAKING HAY

Banks are paying bonuses even as shareholders make losses. That is a problem...

A PERFECT STORM'S BREWING TO COOL CRUDE OIL

A perfect storm's brewing to cool petroleum demand Commodities Corner - MarketWatch

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Geithner Aides make Millions giving speeches to Wall St. pals

The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.

Crude Oil Jumps Above $75 to One-Year High on Demand Optimism

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PRICED TO PERFECTION

Equities and many commodities are priced for an Economic Nirvana.  Ask yourself this question:  you know at least three people out of work... how's their job search going?  That said, our view generally is equities are moving up on cheap money and Big Funds who missed the bottom, trying to drive the tape to year-end (making up for last year's lost bonus).  Commodities are following suite, driven by a deeply perforated US Dollar and unrealistic V-shape recovery.  Net, Net:  there is little chance Markets can exceed current expectations needed to drive this tape higher across the Boards.

While we think crude oil will go much higher 3-5 years down the road, don't be surprised if it drops $6 from current levels in the near-term:

CRUDE PUSHES HIGHER

"Crude and products futures increased in heavy overnight volume as European equities advanced and the dollar weakened," Addison Armstrong, analyst at Tradition Energy in Stamford, Connecticut, said in a research note.

GOLD WILL HIT $2,000

The dollar "is a terribly flawed" currency, says Jim Rogers. "Foreign debts are increasing rapidly every year, and I don't think Washington seems to care."

"There was very, very few new production capacity brought on line in the past 30 years for commodities," he said. "We have shortages developing throughout the world."

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JIM ROGERS: $200 OIL LIKELY

While we couldn't agree more with Mr. Rogers over the mid-term, in the near-term crude is very top heavy. Below, is an updated version of the crude oil futures chart we've posted previously. Classic negative divergence, e.g. price moving up on weaker and weaker momentum:

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David Malpass: The Weak-Dollar Threat to Prosperity - WSJ.com

David Malpass: The Weak-Dollar Threat to Prosperity - WSJ.com

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GOLD COULD REACH $1,500

“We believe gold has a significant upside potential into 2010,” the bank said, adding current prices “were off the charts”. In spite of a 40 per cent rally in gold prices since Lehman Brothers collapsed a year ago, few traders appeared to be taking profits or betting on a price fall.

CRUDE OIL DATA MIXED; PRICE DOWN

This morning's energy fundamentals were a mixed bag, but the tape (chart below) tells the Tale:

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COPPER LAGGING, TOO

Copper, while higher today, is still below 280 and appears to be in the process of rolling over.  Oversold, the bounce is to be expected.  If the surge in equities represents a recovered global economy, copper should clear 290 easily and make new highs... if not... well, the picture is considerably less rosy.

BULL TRAP

While the dollar news out of the Middle East and the Aussie rate change hit short equity players hard this AM, crude oil is lagging on a relative basis.  Gold continues to lead the bull charge.  Watch oil.  It will tell the story for equities.

DEMISE OF THE US DOLLAR

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars...

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank.

COCOA SURGES TO NEW HIGH

December cocoa surged $239 to a new contract high of $3,240, blamed on fund buying and ongoing concerns about the upcoming 2009-2010 crop.  Nevertheless, fundamentals are bullish and are being magnified by a weak USD, expect higher highs.

 

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GOLD CHARGING; OIL FOLLOWING

Gold futures rose Monday for a second session, up more than 1% as the U.S. dollar continued to fall against most rival currencies, boosting gold's investment appeal.


Also helping gold, holdings in the biggest gold exchange-traded fund rose in the previous session, and crude oil rose above $70 a barrel, raising gold's appeal as a hedge against potential inflation.

NO SELLERS

As we head into the bond market close, majority of stocks are up or near highs for the session.  That said, the Diamonds Trust (Dow ETF) needs a weekly close above 97.50 to indicate this Bull Run still has legs to make another high for the year.

CRUDE TRADERS BRACE FOR HARD LANDING

Phil Flynn, an analyst at PFGBest in Chicago, said oil prices are due for a downturn after ignoring ballooning inventories amid lower demand. "Eventually, massive oversupply will take its toll," he said. "We maintain our bearish outlook and look for the market to come down hard" by year end.

CRUDE DECLINES ON RECOVERY CONCERNS

“Oil seems to have been caught in a trap,” said Mark Pervan, senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “It has been wanting to see a correction but a weakening U.S. dollar and firmer equity markets have made that difficult.”

The above statement certainly matches this chart of DIG, Ultra Oil & Gas ProShares ETF.  While the channel and the current pullback (with more to go on the downside) is clear, so is the longer term trend:  a glide path UP.

DOLLAR GETS A PASS FROM G-7

“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability... ”

JOB CUTS EXCEED FORECAST

“This has the potential to put a big stop sign on the road to economic recovery...”

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CRUDE OIL DOWN ON BAD JOBS DATA

NYMEX-Crude ends down on jobs data, recovery worry | Reuters.com

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S&P PENETRATES KEY 1040 LEVEL

ES futures are bottoming this AM, but the much watched 1040 level has been violated.  The close will be telling, as well will be the weekly close: