First good news from the Gulf of Mexico in ages. A number of news sources are reporting that the “top kill” effort to stop the flow of oil from the Deepwater Horizon well has succeeded in blocking the well.
There’s no official announcement of “success” but the federal government’s top oil-spill commander, U.S. Coast Guard Admiral Thad Allen, has told the Los Angeles Times that the pressure from the well has fallen to a very low level and that once pressure reaches zero engineers will begin pumping cement into the well to close it.
The financial effects of success, if that is what we’re seeing, are limited to a few stocks such as BP (BP) and Transocean (RIG). Ending the flow of oil won’t suddenly convince Washington to remove the moratorium on new drilling leases nor will it stop the effort to tighten regulation of offshore drilling.
Psychologically, however, success would be a huge boost to the energy sector and indeed to the whole stock market. Nothing like watching a disaster unfold with everybody involved powerless to stop it to depress the market’s animal spirits.
For example, yesterday I saw a story saying that this summer could be the worst for grasshoppers in Wyoming, Montana., Nebraska, and the Dakotas since the mid-1980s. Grasshoppers could cause billions in damage to crops and rangeland.
My reaction?
Of course. Bring on the rest of the seven plagues. What’s next a rain of frogs?
Success of the “top kill” would lift some of the pessimism in the markets created by an extraordinary run of very negative news.
Let’s hope for the sake of the people, wildlife, and environment of Louisiana and the rest of the Gulf—and maybe a little bit for the stock market.
ED
To answer yer query: when I buy a stock I hold it for a minimum of sixteen 3-day weekends. Then I either sell it, or some of it, or hold the rest for as long as WB does. fwiw ;]
tomorrow may be as good a day as any, yes…
Ed McG
I expect a 400-point rout tomorrow [today for you Eastamricas]. And worse next week.
Classic
Maybe if the Plunge Protection Team shoots a junk shot of worthless Fed Reserve free money into the S&P 500, the gusher of exploding bad debt under the global economy will get plugged long enough for a few folks to put some protective booms around their 401k’s…
Ed,
Sheep’s blood is old school. What you really need for the times ahead is a state of the art bunker and some guns to cling too.
http://www.disastershelters.net/shelters_components.php
Japan redux.
Run26.2,
The only problem I have with that link is the extended prediction. I wouldn’t even attempt to be so brave as to say July forward will be anything, bear or bull. I will agree with his deflation prediction though, although even there the Fed and/or the federal government may do something to change the deflation outlook (as he correctly pointed out, Bernanke does have one bullet left in the gun).
Technically speaking, Bernanke could lower the interest rates into the negative range.
Sorry for all the posts, but one more bearish link “2008 will seem like the good old days”. Yikes.
http://www.zerohedge.com/article/tactical-update-bob-janjuah-2008-will-seem-good-old-days
My takeaway, markets could move up in June and then it gets ugly.
Anyone know where to find real time volume information on the NYSE and Nasdaq?
MSN has it for individual securities but I can’t find it for the markets as a whole.
Please and thanks.
grindy2424,
A reduced money supply is deflationary. In a deflationary economic environment, the prices of everything drop (relative to changes in supply and demand, of course). Hence the price of most goods and raw materials will drop.
The reason for this is because there are fewer dollars in the economy. With fewer dollars, that means prices HAVE to drop (the economy doesn’t stop working just because the money supply has gotten smaller). Commodities are not immune to this effect.
Did you hear about the West Virginia scientist that discovered a new use for sheep?………
wool
Folks:
I am combing through everything I own to see if I get more to sell. Unfortunately, I have sold more than 90% of my winners. Only few left.
marr.bo,
If you look across the board commodity stocks are up 6-8% (Vale, TC, YARIY). Also some other emerging market stocks are running (CEDC up 8%).
This stocks took a beating during the 10% correction (all 20+%). They are just having a bigger bounce than anything else.
Jim,
I keep researching and I am really feeling your pain. This is a hard market to invest in when the long term fundamentals look awful. It makes us look very short term (definitely not my strength).
Ed,
This money supply problem is a really big developing story. Not sure about the short commodities though. Could you give more explanation there? Do you think if we start slowing we will see weakening dollar…. Also we will see some more money printing I would suspect as well.
According to the following post, we’ve a completed a left shoulder and a head on the S&P. After forming a right shoulder, we’re going to go down to hit bottom at 870:
http://www.ritholtz.com/blog/2010/05/dow-head-shoulders-chart/
What is it, boils next? Anyone notice that Jubaks Picks, IMPUY is up more than 8% as of this posting? I know market is up, but not that much. This is either an extremely volatile stock or something is up. Any insights?
cjxland,
My position may be vindicated as soon as tomorrow. Would you buy or hold a stock going into a 3 day weekend? If we get some bad news tomorrow, expect a stampede toward the market exits.
Off topic… Here is a very good article on M3 and relates to a previous post from EdMc. Now I see where his bearish view comes from.
http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html
Ed
Out of a sheep, maybe? I think you may still need some- either way the markets go. [But I think your dire bear position will be vindicated, all right. Probably not today, tho…hope you don’t get stopped out completely. ;]
Ed,
Any upstanding Rabbi in NYC should be able to supply all you need…Jim might know a couple of them…second thought, if you find some let me know…Shalom
southof8… MON is down b/c they lowered guidance.
http://www.dailyfinance.com/rtn/pr/monsanto-repositions-roundup-business-to-address-fundamental-market-changes-adjusts-fiscal-year-2010-guidance/rfid333136744/?channel=pf
Jim,
Its heartning to see that oil leak maybe finally fixed. I wish it was done more quikly..:|
marcus_nonarvar
Few days ago I saw a report (I forgot which site, Reuter or bloomburg) saying that an analyst at UBS lowered MON’s target to $87 from 90’s.
Jim,
I have similar concerns with houseof8 regarding Monsanto. This has been a drubbing. I understand that they’re taking a beating on Round Up and at some point they may sell it. I get that they’re focusing on their genetically modified seed business… but this stock has been basically cut in half.
It’s still in the Jubak’s 50 though, so I have to ask… how much more pain is there to come before they start rebounding. Or is competition going to kill their seed business too?
Just trying to determine at this point whether to cut them loose or continue to hang on for the long haul.
Off topic;
Jim, you said yesterday that you are 30% in cash now. Is it more or less than your ideal cash level?
Anyone know where I can get sheep’s blood for my front door?
Note that yesterday Greece had a highway closed due to a horde of frogs.
http://www.google.com/hostednews/ap/article/ALeqM5j-kYaKbDOHERL4nb7uU2z8fZaj5QD9FV7N201
Here’s your millions of frogs: http://wheels.blogs.nytimes.com/2010/05/26/millions-of-frogs-force-closure-of-highway-in-greece/
Allen has said that he spoke prematurely; BP will not say it is a success until they have completed their analysis. But it does look good. I agree with you on the external effects this will have.
The frogs are here too.
Headline: “Newest Greece Crisis: Carpet of Frogs”
http://www.cbsnews.com/stories/2010/05/26/ap/strange/main6520801.shtml
Grasshoppers? Is that why mon is down another 4 bucks on an up day? When does mon become last week’s rig?