New Highs!...for Oil

by Larry Levin

Ummm, I thought the analysts told us the high was in for oil when it dropped last month? Not so much - it made a new record high today when it traded over $112-barrel. I guess the high is in....wait for it....wait for it...now.

"The market is running into negative winds, with crude oil [at] records, a weak dollar and weak earnings, which are all in line with a decline in economic activity," said Peter Cardillo, chief market economist at Avalon Partners.

But I wonder when the market wasn't "running into negative winds?" Oh that's right, when the Federal Reserve was using your tax dollars to prop up Wall Street banks and the stock market in general. Sorry, I forgot. My bad. And now the federal government wants to give tens of billions of dollars - of your tax dollars - to home builders. That's right, a direct subsidy in the form of tax credits is on the way, but for what I don't understand. Since when did home builders become "too big to fail?" What a joke!

So oil made a new record high, but that's not a problem, remember oil is not inflationary. Oil should be ignored. It isn't counted in government CPI calculations, so I wonder if that applies in the real world? Well, let's ask UPS, shall we? UPS cited a weakening U.S. economy for a decline in business, with higher fuel prices also denting its expected results. How can this be? Both Greenspan and Bernanke agree - oil prices are irrelevant. Anyhow, UPS shares fell 3.7% on the revelation.

"The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products. Significantly increased fuel costs in the quarter also contributed to the lower than expected results," UPS said in a statement.

Getting in on the action today was the IMF. The International Monetary Fund said there is one chance in four that global economic growth will drop to recession levels in 2008 and 2009. The global economy is losing speed in face of the major financial crisis, the IMF said.

"The greatest risk comes from the still-unfolding events in financial markets, particularly the potential for deep losses on structured credits related to the U.S. subprime mortgage market and other sectors to seriously impair financial system balance sheets and cause the current credit squeeze to mutate into a full-blown credit crunch," according to the IMF's World Economic Outlook. Yesterday it estimated that losses from the financial markets' turmoil could reach $1-TRILLION (or more) over the next two years.

Getting back to oil again, I'm guessing the constant rise is having an affect on everyone but the rich. The AP just released an article about the middle class and how the economy and debt are weighing them down. Some of the AP findings include:

--Nearly eight in 10 of all people, or 79 percent, said they believe it has become more difficult compared with five years ago for the middle class to maintain their standard of living, up from 65 percent in 1986.

--Among the middle class, no consensus existed on who was to blame for their economic problems. Twenty-six percent blamed the government, 15 percent faulted the price of oil and 11 percent said the people themselves were responsible. Others faulted foreign competition and private corporations for economic woes.

It found that a majority of all Americans said they haven't progressed in the last five years. One in four, or 25 percent, said their economic situation had not improved, while 31 percent said they had fallen backward. Those numbers together are the highest since the survey question was first asked in 1964. Among the middle class, 54 percent said they had made no progress (26 percent) or fallen back (28 percent).

Hmmm, I wonder if this has anything to do with oil and the collapse of the US dollar. Oh who cares, let's take out another HELOC and buy a new pair of shoes. We'll feel better then.

Real Time Trading Signals*for

Trade Date: 4/9/08

E-Mini S&P Trades*
(before fees and commissions):


1) VA sell @ 9:00am at 1365.00 = +3.00 (1 lot)

2) OTF sell @ 9:50am at 1364.50 = +2.25 (1 lot)

3) OTF sell @ 11:30am at 1357.75 = +1.00 (1 lot)

4) OTF sell @ 12:30pm at 1357.25 = b/e & -.25

5) Engf sell @ 1:40pm at 1354.25 = b/e (1 lot)

6) Engf sell @ 2:10pm at 1352.50 = +1.00 & -2.25

7) OTF sell @ 2:30pm at 1355.25 = -2.00 & -2.00...+.75

E-Mini Russell Trades*
(before fees and commissions):


No ER trades today.


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