Thursday, December 18, 2008
Quick question: Why is Bernie Madoff, apparently one of the biggest crooks of all time, doing house arrest with an ankle bracelet in his $7 million house when he couldn't make bail?
In a related story SEC Chairman Cox had this to say: the agency has found "no evidence of wrongdoing by any SEC personnel" in connection with Madoff's alleged $50 billion Ponzi scheme and that the SEC intends to get to the bottom of where it may have gone wrong. Is this guy kidding me? While he is at it he should find out where he went wrong alleviating the uptick rule.
OPEC Meets, OPEC Cuts Output, Crude Falls
In a meeting yesterday the OPEC ministers agreed to cut a record 2.2 million barrels of production a day from the market. This type of news at one point would have had the power to put fear into the trading pits and a tight squeeze into the crude shorts.
The announcement came as U.S. crude inventories rose more than expected which pushed the price of crude lower. Total motor gasoline inventories increased by 1.3 million barrels, compared to the 1.0 million barrel rise expected by analysts. And distillate fuel inventories increased by 2.9 million barrels, while analysts had expected an increase of 0.9 million barrels. This rise in inventories are in the face of sharp price declines that one would have assumed would drive demand up.
Where Do We Go From Here?
"Goldman, Once Warning of $200 Oil, Sees $45 in 2009", CNBC
"Merrill Lynch Says Oil Could Fall to $25"
Any of this look at all familiar? Maybe if you rushed to lock in your heating oil for the winter at $4+ because the "experts" were forecasting crude above $200 a barrel. Like they forecast Google above $1000 and so on and so on. Ah the experts. Where would we be without them? We could go by the random walk theory or maybe just flip a coin.
There is no question that demand for the product is weak and may remain that way for sometime which is bullish for a decline in price. Maybe I am just a contrarian which I am. But what I do know from watching Wall Street analysts for oh these many years is that when the momentum is strong in one direction regardless of the product, and they begin to fall over each other trying to outdo price targets, it can be time to look in the other direction.
Not that this time these forecasts might not be right. They may be. But where is the Mea culpa from Goldman regarding the $200 call. The same place it will be if crude makes a beeline for $100. No accountability, the Wall Street way.
I did, however, just lock in my heating oil price.
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Michael Haltman, President
Hallmark Abstract Service LLC
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The way they always get around being wrong is by not setting a date. I am sure SOMEDAY, crude will be at $200, and they will say, "Look, we told you." I always have noticed when they make predictions at the start of the year, they are mostly wrong, but people forget. I started writing them down and at the end of the year, sure enough, the pro's were way off, but there is never any follow up from the financial press or media. On a related note, I am not "predicting" anything, but lets face it, with all the trillions of dollars being pumped into the economy, is it not at least possible the dollar will decline and the price of crude will rise? Boone Pickens (the greatest oilman of this generation) probably has it right, the correct price in 3 to 5 years will be between 80 and 100. Of course the OECD says more like $200 due to inflationary pressures, but who knows, maybe by then we will all have wind powered cars.