Post by Savant on Sept 13, 2004 5:25:17 GMT -5
Our basic theme "Market Strength Defies Gravity" initiated in mid-August continued to manifest itself right into the 2nd weekend of September, portending further upside in the week ahead, if we can maintain this current momentum, which, if anything appears to be strengthening by virtue of the emerging dominance of the Nasdaq towards week's end, something we distinctly stated could actually add increasing bullishness to the overall market.
Why is this happening? The Presidential race appears to be going Wall Street's way, although the coming week could see some new adjustment or narrowing of the differential and that could cause the market to pause in around these levels or pullback some if it were to overshoot too much.
Our Employment Enigma theory received a strong positive boost just hours after it was published when the Labor Department reported the largest weekly drop in unemployment claims in three years: Another positive boost for the market adding to this already powerful force, which we think is the major driver behind the recent rally.
What this great news also means is the possibility that between 300,000 to upwards of half a million new jobs could be created before the election and actually bodes well for a strong jobs continuation going into the new year. This could equate to an unemployment rate projecting down to as low as 5.3% by November.
Not too bad considering all the negatives and could put the total number Americans at work to as high as 150 Million before this growth cycle peaks sometime in the next year or so.
It's hard to get much more enthusiastic than that at this stage, because the pace of job growth thus far has been a lot more subdued than in the 90's, but since we are expecting a major technology growth phase to unfold in 2005 and beyond, it's not beyond the realms
of possibilities that employment growth could also surge in a kind of catch up mode making up for the slowness or recent years past.
Still, this apparent strengthening of economic and job growth, which is being reflected in the recent stock rally, just goes to show that the U.S. economy really is enjoying one of its best performances ever and continues to dominate most other economies Worldwide
The only improvement we would advocate is expanding the deficit to create more jobs by investing more in education and healthcare and especially in Energy exploration and production and acceleration of the developments of energy derivatives and alternatives.
Though this may sound ludicrous to many: Being able to borrow at such low rates to invest in our future, where all three of the above will yield huge future returns, seems like a no-brainer. Such needed expenditure benefits, even expanding the Military, are practically immeasurable. Has anyone figured how much these extra jobs would benefit the economy, let alone the impact of 150 Million workers' tax receipts?
We said we would add some additional statistics to our Energy Sector a few issues ago, close to calling the recent highs in Energy.
Since then, Crude Oil has broken sharply down to the low 40's, rallied back last week to near $45 and then broke sharply on Friday. It is beginning to look like the backs of this Crude Oil surge and Energy markets in general have been broken, at least for a while.
The most significant development Friday was the speed and suddenness with which Crude Oil broke down and also wholesale gasoline prices falling below 1.20 for October delivery. It now looks like wholesale gasoline prices could be headed towards the $1.10 level and Crude Oil prices could soon break $40 per barrel on the downside towards $38.50 if this new downtrend continues. A break of the $38 price level could have a further significant downward impact on Oil prices, although a strong bounce from lower levels would be likely. On Friday, the weakening oil developments were an overall positive for stockmarkets causing a midday rally to unfold and gain momentum into the close.
The early part of this week might create an opposite effect if there is one more snap-back rebound in Energy prices as the path of Hurricane Ivan could take it directly into the path of numerous oil platforms and drilling rigs off the coast of Alabama and Louisiana in the northern Gulf of Mexico. The price of Natural Gas which has fallen precipitously of late actually rose late Friday, perhaps in anticipation of Hurricane Ivan. There has not been a storm this strong in the northern Mexican Gulf in quite a while...
Where the oil is
The Middle East remains the biggest player in oil.
The region dwarfs the rest of the world, when it comes to reserves, ensuring its prominence on the global political stage. Saudi Arabia alone possesses 25% of the world's proved reserves.
The North Sea and Canada still have substantial reserves, but they would prove very expensive to extract.
Global production
The Middle East is also the biggest oil producer, currently providing nearly one-third of the world's total.
But Europe and Eurasia (mainly Russia and the UK) and North America are also big producers.
The difference is, nearly all the Middle East oil is for export while Europe and the US do not produce enough to meet their own needs.
Imports and use
Western Europe and Japan are heavily dependent on oil imports as production cannot meet massive domestic demand.
The gas-guzzling US is the world's largest per-capita oil consumer but produces much of its requirements itself.
Producers in the Middle East, where oil costs so little, are also heavy users. Poorer countries consume much less per head, but this is changing, especially in China.
An interesting development in the Oil exploration world of late was the revelation by President Vicente Fox of Mexico in his State of the Union address of September 1, was his proclamation that recent new and expanded discoveries in the territorial and Gulf areas of Mexico, have the potential to double the life expectancy of Mexico's oil reserves. What this really means in numbers was not given or elaborated on, but it could be a promising development. We will expand upon and quote excerpts from this important address in a future issue. Whilst it was not that warmly received by certain elements of the joint congress it contained some very interesting and provocative ideas.
Have a Great Week
Trade Very Well
Savant
Why is this happening? The Presidential race appears to be going Wall Street's way, although the coming week could see some new adjustment or narrowing of the differential and that could cause the market to pause in around these levels or pullback some if it were to overshoot too much.
Our Employment Enigma theory received a strong positive boost just hours after it was published when the Labor Department reported the largest weekly drop in unemployment claims in three years: Another positive boost for the market adding to this already powerful force, which we think is the major driver behind the recent rally.
What this great news also means is the possibility that between 300,000 to upwards of half a million new jobs could be created before the election and actually bodes well for a strong jobs continuation going into the new year. This could equate to an unemployment rate projecting down to as low as 5.3% by November.
Not too bad considering all the negatives and could put the total number Americans at work to as high as 150 Million before this growth cycle peaks sometime in the next year or so.
It's hard to get much more enthusiastic than that at this stage, because the pace of job growth thus far has been a lot more subdued than in the 90's, but since we are expecting a major technology growth phase to unfold in 2005 and beyond, it's not beyond the realms
of possibilities that employment growth could also surge in a kind of catch up mode making up for the slowness or recent years past.
Still, this apparent strengthening of economic and job growth, which is being reflected in the recent stock rally, just goes to show that the U.S. economy really is enjoying one of its best performances ever and continues to dominate most other economies Worldwide
The only improvement we would advocate is expanding the deficit to create more jobs by investing more in education and healthcare and especially in Energy exploration and production and acceleration of the developments of energy derivatives and alternatives.
Though this may sound ludicrous to many: Being able to borrow at such low rates to invest in our future, where all three of the above will yield huge future returns, seems like a no-brainer. Such needed expenditure benefits, even expanding the Military, are practically immeasurable. Has anyone figured how much these extra jobs would benefit the economy, let alone the impact of 150 Million workers' tax receipts?
We said we would add some additional statistics to our Energy Sector a few issues ago, close to calling the recent highs in Energy.
Since then, Crude Oil has broken sharply down to the low 40's, rallied back last week to near $45 and then broke sharply on Friday. It is beginning to look like the backs of this Crude Oil surge and Energy markets in general have been broken, at least for a while.
The most significant development Friday was the speed and suddenness with which Crude Oil broke down and also wholesale gasoline prices falling below 1.20 for October delivery. It now looks like wholesale gasoline prices could be headed towards the $1.10 level and Crude Oil prices could soon break $40 per barrel on the downside towards $38.50 if this new downtrend continues. A break of the $38 price level could have a further significant downward impact on Oil prices, although a strong bounce from lower levels would be likely. On Friday, the weakening oil developments were an overall positive for stockmarkets causing a midday rally to unfold and gain momentum into the close.
The early part of this week might create an opposite effect if there is one more snap-back rebound in Energy prices as the path of Hurricane Ivan could take it directly into the path of numerous oil platforms and drilling rigs off the coast of Alabama and Louisiana in the northern Gulf of Mexico. The price of Natural Gas which has fallen precipitously of late actually rose late Friday, perhaps in anticipation of Hurricane Ivan. There has not been a storm this strong in the northern Mexican Gulf in quite a while...
Where the oil is
The Middle East remains the biggest player in oil.
The region dwarfs the rest of the world, when it comes to reserves, ensuring its prominence on the global political stage. Saudi Arabia alone possesses 25% of the world's proved reserves.
The North Sea and Canada still have substantial reserves, but they would prove very expensive to extract.
Global production
The Middle East is also the biggest oil producer, currently providing nearly one-third of the world's total.
But Europe and Eurasia (mainly Russia and the UK) and North America are also big producers.
The difference is, nearly all the Middle East oil is for export while Europe and the US do not produce enough to meet their own needs.
Imports and use
Western Europe and Japan are heavily dependent on oil imports as production cannot meet massive domestic demand.
The gas-guzzling US is the world's largest per-capita oil consumer but produces much of its requirements itself.
Producers in the Middle East, where oil costs so little, are also heavy users. Poorer countries consume much less per head, but this is changing, especially in China.
An interesting development in the Oil exploration world of late was the revelation by President Vicente Fox of Mexico in his State of the Union address of September 1, was his proclamation that recent new and expanded discoveries in the territorial and Gulf areas of Mexico, have the potential to double the life expectancy of Mexico's oil reserves. What this really means in numbers was not given or elaborated on, but it could be a promising development. We will expand upon and quote excerpts from this important address in a future issue. Whilst it was not that warmly received by certain elements of the joint congress it contained some very interesting and provocative ideas.
Have a Great Week
Trade Very Well
Savant
