Tuesday, October 2, 2012

Why an Islamic Revolution in Saudi Arabia Is a Surefire Way to Send Oil to $300 a Barrel

By Marin Katusa, Casey Research
There is little that would rock the oil world more than a revolution in Saudi Arabia.

But with a coming leadership crisis, it is becoming all too likely.

Saudi is facing major economic challenges as dramatic increases in social spending and domestic fuel consumption eat through the kingdom's all-important oil revenues.

Saudi Arabia is smack in the middle of the Middle East, an ever-tumultuous region currently rocking and rolling more than usual as the Arab Spring challenges longstanding autocratic assumptions, while war-torn Syria and defiant Iran tip the delicate Sunni-Shia religious balance in the world's most important oil region.

While the House of Saud might present itself as a stable, strong, and cohesive royal family, in truth the king and his successors are growing old and incapacitated in a throne room full of competing contenders. Meanwhile, the only other organized social group in the country – the Islamists – are waiting just outside the door.

Want to see oil at $300 a barrel?

To see $300/bbl oil, or to watch the news as Saudi troops attack Tehran, or to see a stranglehold on US oil imports, watch what a failed succession battle in the House of Saud that ends up destroying the whole family and ushering in an Islamist age in Saudi Arabia would do to the price of oil.

It could happen sooner than you think.  (more)


A little over a year ago, SD published the 1st hand account of StackerX’s experience surviving the devaluation of the Mexican Peso in the late 1970′s. 
With The Fed now two weeks into it’s official QE∞ policy, and with calls this week by Fed Presidents Evans and Plosser for even further easing-bringing a devaluation/hyperinflation of the dollar one step closer by the day, we thought it apropos to republish StackerX’s account and experiences recognizing, surviving, and even profiting from a fiat currency devaluation.
Those who recall the account may benefit from re-examining the lesson, and for those unfamiliar with the account of the 1976 Mexican Peso devaluation, this is an ABSOLUTE MUST READ as the US is rapidly descending into full-blown Banana Republic status.

In 1976 I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn’t want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.  (more)

This Unloved Stock Could Deliver an 80%-Plus Short-Term Gain

While value investing and short-term trading seem to be at opposite ends of the investment spectrum, there are ways short-term traders can use long-term value investing principles to profit. Value investors look for cheap stocks and buy in the hope that over the long term there will be a very large move in the stock. When a short-term trader finds a value stock with a chart that is indicating that it's a buy, they can trade it for a short-term gain as the value investors are accumulating their positions. And through the use of options they could leverage a relatively small price move into a large gain.
Looking at unloved sectors in the stock market, the hunting ground for many value investors, airlines stand out as dismal performers besieged by bad news. Some of the major airlines may not make it -- bankruptcy seems to be part of the business plan for major carriers. Regional airlines, on the other hand, seem to have business plans based on profitable operations. Among the regional airlines, Southwest Airlines (NYSE: LUV) stands out as a potential trade.
LUV Chart
The weekly chart shows that LUV is trading near support. The pattern could be thought of as an extended cup-and-handle with the handle currently being formed and defining the support level.

The 52-week high is slightly above $10 a share and there is every reason for a value investor to believe that the stock will eventually return to that level. (more)

A Federal Reserve Governor Asked A Brilliant Question About Interest Rates

Besides Bernanke, Charlie Evans of the Chicago Fed is probably the most important FOMC member to listen to these days. That's because he's the most aggressive dove, and the person most eager to see the Fed follow a rule in which they allow inflation go grow more than normal until employment is improved, a notion that's not that different from what Bernanke announced a couple of weeks ago.
He was on CNBC this morning, and at one point, Becky Quick asked him a fairly common question: What do you say to savers who are getting squeezed by low interest rates.
His response, which you can see at the 4:40 mark in the video below was basically: "Savers would be better off if interest rates were higher... the question is: What do you mean by higher interest rates?"
So naturally, this got him mockery from the likes of ZeroHedge and others. After all, a dovish Fed guy asking what the definition of low interest rates -- when low interest rates seem to the the bane of savers -- does seem at first blush to be the definition of out-of-touch.

Best Stock Market Indicator Ever: Weekly Drop from 81% to 77%, But Very Tradable

Click to view As we all know, the key to successful investing is very simple: "Buy low, sell high."

However, you enter a chaotic, fun-house world of uncertainty once you ponder the logical follow-up question: "When?"

The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to accurately forecast conservative entry and exit points for the stock market.

Gold the 19 Year Correction: Martin Armstrong

Gold the 19 Year Correction
Martin Armstrong

click here to read

This Decimated Solar Giant Could Double From Current Levels : FSLR

In early 2011, this stock traded at a high near $175. Within a year, shares plummeted to less than a third of that value, near $50. They continued in a freefall into early summer 2012, hitting a low near $11.40 in early June. Since that time, they have more than doubled.

Now, First Solar (NASDAQ: FSLR) -- the world's largest producer of thin-film solar panels -- looks to be headed even higher. If a significant nearby resistance level can be broken, the technicals point to sharp gains ahead.

Helping buoy the stock are rumors the company may be awarded a major contract to supply solar panels to electric utility, NextEra Energy (NYSE: NEE). The panels would be used for a solar farm in Southern California that would become the largest solar operation on the planet.

First Solar is a front-runner because it's one of the only manufacturers with enough capacity to make the project happen. The company also has a history of supplying panels for similar projects.
First Solar is currently building a large solar farm in Arizona, for electric utility company NRG Energy (NYSE: NRG). The solar farm, known as Agua Caliente, is 85% completed and will also be one of the world's largest solar farms.  (more)

Guest Post: Andrew Maguire responds to “Trader David R”

tfmetalsreport.com / by Turd Ferguson /
Last week, the good folks at Miles Franklin created quite a stir by posting a blog from a supposed bullion bank insider. It seemed a rather cunning bit of disinformation so I asked my friend, Andrew Maguire, to read the piece and write up a few “clarifications”.

Before we get started, it’s probably best to re-visit the actual blog post from Miles Franklin. You can read it by clicking this link: http://blog.milesfranklin.com/the-cartel-and-hedgies-are-short-paper-but-long-physical-gold.

Recall that regular members of “Turd’s Army” not only have the ability to observe Andy’s trades in real time, they also receive his weekly commentary every Sunday. (To register, click here: http://www.coghlancapital.com/daytrades-application?ak=turd_army). Andy’s commentary is an invaluable service and offers true insight into the behind-the scenes dealings of the bullion banks in London. This week, Andy included in commentary his rebuttal to “Trader David R” and he has kindly made it available to all Turdites everywhere. I hope that, by reading it, you will gain an increased understanding of the bullion bank system as well as an appreciation of the ongoing campaign by Cartel agents of disinformation to deceive and confuse you.
(Please understand that this post is not meant to discredit Miles Franklin or their services. They are a great firm that does terrific work in educating and serving the investing public. Ranting Andy did not approve of the blog post in question and it seems that his company published it in an attempt to “air all sides”. I know that I have published a few things that I later regretted so I don’t want anyone to hold this against them. They did not set out to intentionally deceive anyone, “Trader David R” did.)