Posts filed under “Contrary Indicators”

Is Crude Oil About to Collapse?

The cover story in this week’s Barron’s is a canary yellow screamer: Ready for $150 Oil. (click cover at right for larger graphic)

Normally, the magazine cover indicator does not work with business press; it only applies to mass market magazines (think Time or Newsweek).

In the present case, Gene Epstein is forecasting a new leg up in oil prices — “projected oil shock of spring 2012″ — breaching the prior highs in crude that will shave 1.5% off of GDP:

“Despite the recent 20% decline from April highs, new highs on crude, heating oil, diesel fuel, jet fuel and gasoline seem likely over the next 12 months. Following some further easing over the summer, the second leg of the long-term bull market in petroleum–the first occurred in 2007-08–probably will begin this fall.

As oil producers’ spare capacity gradually declines to worrisome levels, the average monthly price could reach a record $150 per barrel by next spring, with spikes to $165 or $170. With this, $4.50-a-gallon gasoline will become the norm. That will put a huge dent in consumer wallets, while ramping up the desirability of fuel-efficient cars.”

For many reasons, I have my doubts about an oil shock in the spring of 2012. I do not see the economy as remotely as strong as it was pre-crisis, so demand for Oil is not nearly as robust. Secondly, with the dollar down 40%+ since 2001, the big spurt in Oil prices may have already occurred. Third, a rise towards $150 is likely to slow the global economy down enough to correct prices back towards ordinary levels before we hit that mark. And last, I am less than impressed with the author’s forecasting record.

Regardless, it is in intriguing argument that is worth your time to check out . . .

>

Previously:
The Economy is Just Fine . . . (October 19th, 2008)

Barron’s Bad Book Recommendations (August 15th, 2009)

Source:
Get Ready for $150 Oil
GENE EPSTEIN
Barron’s, JULY 2, 2011  
http://online.barrons.com/article/SB50001424053111903617204576411791590055646.html

Category: Contrary Indicators, Economy, Energy, Financial Press, Really, really bad calls

Window Dressing Proceeds Apace

With 6 of the past 7 weeks in the red, the markets have managed to string together a series of winning days. Daily gains both this week and last have ranged between 0.50% and 1.25%. Indeed, the Dow’s gains on Monday and Tuesday represent the first consecutive triple digit gain for the Industrials  since December…Read More

Category: Contrary Indicators, Markets, Technical Analysis, Trading

VIX: Where is the Panic In the Markets?

Click on chart for larger image > Despite the concern about the economy, Greece, China, etc., and general sentiment readings, the VIX remians surprisingly low: BusinessWeek: No Panic in Options After VIX Takes Six Weeks to Exceed Average It took six weeks of equity losses, a series of lower-than-estimated economic reports and political turmoil in…Read More

Category: Contrary Indicators, Markets, Psychology, Technical Analysis

Checklist: How to Spot a Bubble in Real Time

Are the Linked In/Groupon IPOs proof we have a new bubble in Tech? Are US Treasuries a bubble? Commodities? There have been numerous attempts by many Fed economists to argue that bubbles cannot be seen as they happen, and they we can only spot them after the fact. I believe they are incorrect. We can…Read More

Category: Contrary Indicators, Psychology, Trading

Uh-Oh: Gold on the Cover of NYT Magazine ?

I am not quite sure what to make of this NYT magazine cover. On the one hand, it is gold on the cover of a mainstream magazine. But its less convincing as a magazine cover contrary indicator. Compare it to the Housing peak covers in Fortune (May 2005) or Time (June 2005). The focus here…Read More

Category: Contrary Indicators, Gold & Precious Metals

Short Memories (Fade the Inflation Hysteria, II)

Flashback to June 2008 (only three short years ago): Headline CPI was running very close to 5.0 percent.  The Fed funds rate was at 2.0 percent.  Brent crude was $132/barrel.  The Fed’s June 2008 minutes mentioned the word “inflation” 110 times (“deflation” and “disinflation” combined:  zero), and also contained this caveat (emphasis mine): With increased…Read More

Category: Contrary Indicators, Cycles, Data Analysis, Economy, Federal Reserve, Inflation

World Gold Bug Article on WSJ Front Page

Front page WSJ story today — World Is Bitten by the Gold Bug: “Gold continued its upward march in a time of global financial tumult, closing above $1,500 an ounce Thursday for the first time as investors seek safe haven in the metal. In a remarkable performance for any sort of asset, gold has notched…Read More

Category: Contrary Indicators, Gold & Precious Metals

Michael Burry: Notes from Vanderbilt Speech

Hunter is the author of the Distressed Debt Investing blog. His commentary has been seen in online versions of WSJ, FT, and BusinessWeek. Hunter currently works as an investing professional at a large money manager, focused on the credit markets. Previously, he worked at two large hedge funds, as an analyst working on distressed debt…Read More

Category: Contrary Indicators, Investing

Top 10 Signs Silicon Valley is on Tilt Again

It’s apparently that time again — the Valley has gone on tilt. Consider the following top ten signs. 10. Conferences are selling out 9. Venture capitalists are launching blogs 8. Everyone you know has a startup 7. Harvard MBAs are trekking to “hot” events, like SXSW 6. Harvard MBAs are fundable as CEOs 5. Private…Read More

Category: Contrary Indicators, Venture Capital

Time Magazine Covers & the Stock Market

I firts showed this back in November 2008. I wanted to show it again — this time using Slideshare, a nice Powerpoint/PDF presented. My only caveat is the time period. Its one that encompasses the greatest bull market in history. I would be more interested in seeing this across multiple secular markets — say, 1946…Read More

Category: Contrary Indicators, Financial Press, Think Tank