Monday, July 6, 2009

Comment by Peter Grandich

Knowing that soothsayers are only as good as their last call, yours truly has gathered in his tea leaves, ouija boards, horoscopes, lucky numbers, rabbits’ feet, horseshoes, lucky underwear (clean) and all other forecasting “tools” in order to “see” the future.

Two very important facts must be considered when you’re in the business of “seeing” the future:

1 - Only God really knows the future (sorry, but Cramer is not God).

2 - Those of us who fool ourselves into thinking we can look into a crystal ball and know the future always end up eating a lot of broken glass. (more)

Biggest VIX Drop Hides Options Bets S&P 500 Will Fall

July 6 (Bloomberg) -- The biggest drop in U.S. options prices since 1998 masks growing anxiety over the stock market’s rebound, as traders pay more for bearish contracts than any time since before the failure of Lehman Brothers Holdings Inc.

Investors are spending the most since August 2008 to protect against a 10 percent decline in the Standard & Poor’s 500 Index versus wagers on an advance, according to data compiled by Bloomberg. That’s one month prior to New York-based Lehman’s bankruptcy. The premium on so-called put contracts increased even after the Chicago Board Options Exchange Volatility Index, a gauge of U.S. options prices known as the VIX, fell 40 percent last quarter. (more)

Wall Street Journal, July 6, 2009

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Iran Suffering From Own Version of Peak Oil

What's going on in Iran? When the old guard starts shooting the young people, that's not a favorable sign for the long term.

Last time Iran had a revolution, in 1979, it ushered in turmoil in the oil (and gold) markets for several years. Of course, the invasion by Iraq in 1980, and subsequent war, had something to do with it as well.

After 30 years, the Iranian theocracy - and well-connected family and friends - has pretty much taken over that nation's economy. Most everything that's worth owning - oil facilities, banks, industrial facilities, etc. - has some 'revolutionary' connection. And these folks are not going to walk away from it without a fight. (more)

Asian Stocks Decline as Commodity Prices, Shipping Rates Drop

July 6 (Bloomberg) -- Asian stocks declined as commodities prices and shipping rates dropped amid concern the global economic recovery will falter.

BHP Billiton Ltd., the world’s biggest mining company, dropped 1.7 percent after metals prices fell. Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line by sales, sank 2.4 percent after shipping rates slumped 4.1 percent on July 3 in London. Inpex Corp., Japan’s largest oil explorer, fell 2 percent after crude oil prices declined.

“There’s a tug of war going on as the focus shifts to the outlook for individual companies,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. “Right now, the market is waiting for some data to provide it with direction.” (more)

Treasury’s Summer Rally Not This Year as Traders See Bottleneck

July 6 (Bloomberg) -- One of the best bets in the $6.45 trillion Treasury market may no longer be such a sure thing.

Yields on benchmark 10-year U.S. notes fell from June through September in 15 of the last 20 years by an average of 35 basis points as the U.S. wrapped up the bulk of its debt auctions and investors reinvested the proceeds from interest and coupon payments. The last time yields failed to decline was in 2005, when they rose 34 basis points as the Federal Reserve boosted interest rates. (more)

Trend Trader for Monday July 6, 2009