Oil threat remains as markets reopen, but rice gets cheaper

A few items of note as U.S. markets reopen today after the holiday weekend:

--Has oil just greased the skids for stocks? Record crude prices had Wall Street reeling last week, and it's hard to imagine equity buyers finding their footing this week unless the oil price gusher shows signs of easing, at around $132 a barrel here.

Phil Roth, technical market analyst at Miller, Tabak & Co. in New York, says that $130-plus oil just deepens the underlying fear investors have about jumping into stocks: the feeling that the U.S. consumer is tapped out, leaving little hope for an economic rebound in the near term and therefore threatening the expected second-half recovery in corporate earnings.

"This is not only about oil," Roth says. "That's the trap. We're in an economic slowdown, and the consumer is in a box because he can't spend his home equity anymore."

--Maybe oil will take a hint from the rice market? Bloomberg reports here that surging rice prices have suddenly reversed as some key producers, including Cambodia, indicate they'll ease export bans to boost global supplies. Vietnam, the world's second-largest rice exporter, also may soon lift a ban on new overseas shipments, according to Bloomberg.

--No justice for investors trapped in auction-rate securities? The credit crunch has left thousands of investors stranded in so-called auction-rate issues, long touted by brokers as a money market substitute. But suing for damages via class-action cases may be a bust, Bloomberg reports, in part because investors still are earning interest on their money even if they can't cash out. Full story here.

Comments

[bill]

Apparently, everybody is cheered that the new official, government-determined and government-sanctioned inflation is 3.9%, which makes me laugh to think that anybody in their right mind would believe that, and then which makes me howl in anger because the Federal Reserve and a willing co-conspirator Congress (except Ron Paul) allowed this to happen by allowing the banks to create so much excess money and credit, so astonishingly much excess money and credit, so stupidly and criminally irresponsibly much excess money and credit, for so many months, so many years and so many decades, which doesn't even mention the fact that throughout all the rest of human history, 3% inflation was considered to be the cut-off between "High" and "Emergency! Emergency!", but which is actually ignored today!

But even 3% sounds good right now, as even food and energy, and everything else we have to buy, are increasing at rates of inflation that are multiples of the "official rate", which means that the horrifying 3.9% inflation is, unbelievably, the residual inflation after the government ignores the things that went up a lot in price, and then lies about the rest! Hahahaha!

My laugh is nervous and dry, and for a little comic relief we go to this week's Barron's and look in their "Indexes' P/Es & Yields" table to see that the price-to-earnings ratio for the Dow Jones Industrial Average is now up to 87.07! This is, incredibly, up from last week's P/E ratio of 85.97! Hahahaha!

And while that is funny enough, get a load of this; the dividends paid by the DJIA companies to their stockholders was $317.88, while earnings were only $149.16! Hahahaha!

[Michael Snyder]

Some months ago I was greatly relived to hear Donald Trump say, "It's the oil". This sentiment has been echoed by the likes of George Soros so I feel better about all of my b*%@ing.
Oil is the straw that popped the subprime bubble. Acting on the consumer like a tax, the costs of food and fuel have increased beyond the cost of housing in many areas. The Fed may have decided to remove these factors from their touted "core inflation" figures to appease Wall St. but the steady decline of the dollar vs euro can be traced directly to this action. As always, those on the margins feel the pain first, so Ameriquest & Countrywide's underwriting "standards" were first to show their inherent flaws.
The ethanol boondoggle was launched with subsidies given to oil companies who have managed to drive a world wide food shortage (and recession) with their speculation. It's been a long time since we've seen food riots & I fear this bad idea will cost an untold number of lives as we burn grain that should be feeding the world's poor.
Smog laws have become the new tool for stifling an emerging hydrogen conversion industry for automobiles. In order for these relatively simple systems to work they must fool the vehicle's computer into thinking its' producing more pollution than it is or it will add fuel looking for a minimum hydrocarbon output. Additionally, California's test only smog centers have a minimum hydrocarbon output required in order to pass the test. So if you're not producing sufficient pollution, you'll fail the smog test. Score another one for BP.