Monday, March 24, 2008

Another Middle East Visit and Beyond...

Middle East Visit...
Vice President Cheney found himself in the Middle East again...in part to shore up support for the Iraq situation, in part to touch base with OUR dear friends in Saudi Arabia. Saudi Arabia for a long time had been the cornerstone in what Ron Paul refers to as "Dollar Hegemony."(1) As W. did last year, is a desperate plea to the Saudis to increase oil production and more importantly to pull the beleaguered dollar out of a tailspin. The U.S. must at all costs confirm that oil producing countries will continue to price oil in U.S. dollars...or usher in a period of worldwide financial collapse. Since that visit, oil has come off its record high last week, recording a 9% drop. (2) While it is surely no coincidence, Cheney also found himself in Israel backing a Middle East Peace plan while reiterating the U.S.' stance against Hamas and the countries who support them (namely Syria and Iran). It is my belief that intelligence was shared by the U.S., Israel, and Saudi Arabia's governments regarding Iran's nuclear program...and that is one of the stories that did not hit the papers...

Don't be fooled by the Bear Sterns bailout...
During a recent interview on NPR former Secretary of Treasury Robert Rubin commented that the problems on Wall Street at this point...are not limited to Wall Street but may effect the average American who does not have a dime in the stock market. In essence, he is of the mind that the FAT CATS in Bears Sterns should be burned for their risky investment strategy. (3) While greed cannot be regulated by the government, Rubin commented that over-regulation of the financial markets can in fact be detrimental to the U.S. economy. If that is the case, hasn't over-regulation already taken place when tax payer dollars have been infused to bailout the risky behaviors of the greedy on Wall Street? As is always the case, the little guy is left holding the bag once again. In the case of the "underprivileged" or "Average Joe" at Bear Sterns, grief counselors were called in for the saps who were cleaned out...(the average employee lost $200,000.00). Chicken feed for the guys who put the big JP Morgan buyout together! (4) Who knows the real truth for the wheelers and dealers on this one...will the real truth ever be found? Do you believe the company's elite executives had to speak with grief counselors as well on this one? I doubt it!

Employment News...National Association of Realtors Propaganda...and the Recovery that never was...
The 4/4 jobs report will be on everyone's mind. Non-farm payrolls should be down like the Titanic. While Cleveland, like much of the Midwest HAS BEEN IN A RECESSION for the last six months, The Plain Dealer's job opportunities was the weakest in years. During the bull market of the 1990's the employment listings would be four sections long...Sunday's was only one! While the Midwest as a collective lot has not seen the gains of other regions, this observation should be indicative of other job markets outside the oil booms in Texas and Oklahoma. The National Association of Realtors should consider cross-training their constituents in other lines of work if they plan on renewing memberships this year. The "encouraging" numbers for existing home sales are a snap shot of income tax returns...that are feeding a few realtors as of now...and don't count on the "bonus checks" to be of any real consequence in sustaining the realty market.

The Fed and Wiggle Room...

This Week
Month Ago
WSJ Prime Rate 5.25 6.00 8.25
Federal Discount Rate 2.50 3.50 6.25
Fed Funds Rate 2.25 3.00 5.25
11th District Cost of Funds 3.970 4.072 4.392

A high degree of creativity has been applied by the Fed. (5) (I still would like to know who exactly is the Fed...and who the private citizens are that sit on the boards of these quasi-government institutions...sure seems like A LOT OF POWER TO ME!) The real question becomes...What happens when the Fed runs out of wiggle room? What happens when there is no other way to manipulate the currency system with smoke and mirrors? While the 1929 Market Crash was seen as an over-active Fed. What happens when the Fed is too active?

Stock Considerations:
1. put PHM...look for a new 52 week low by July...tighter standards...and slow resale continue to hurt new home giant.
2. long call COIN...great outlook for a company that is cleaning the environment by reducing chemical applications in agriculture.
3. call Zeus will test its 52 week high.

Sources Referenced/Cited:
http://www.house.gov/paul/congrec/congrec2006/cr021506.htm
http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=3&article_id=90189
http://www.npr.org/templates/story/story.php?storyId=88710813
http://abcnews.go.com/Business/story?id=4476286&page=1
http://www.realtor.org/press_room/news_releases/2008/existing_home_sales_rise_in_february.html
http://www.bankrate.com/brm/ratewatch/leading-rates.asp

Post your favorite money stretching tips:)

WHO really is the FED?

3 comments:

AX said...

Housing numbers just came out and were worse than awful. I agree with you that Pulte is bankrupt and should be valued at zero, perhaps a strangle on them isn't a bad idea either as the market seems impervious to real-time data these days....

My money-stretching tip is to do your shopping at Super Target. I find it to be about 20% cheaper than my local grocery store for food items and even more so for household items. It's also definitely a step above the Walmart experience.

Tiger Coach said...

If there are Super Targets, I have yet to see one in Ohio. However, Super Wal-Mart is starting to rear its head in N.E. Ohio. As long as there is competition among the grocers things will be ok.

I'll probably give Schwab a call today, and put a couple of these plays into action...I would assume the employment report for 4/4 has not been figured into this market. Big news to days is Oracle's numbers...should be slightly up!

Tiger Coach said...

P.S. Saf and I were just talking about the Ax Bros. all-nighter in Vegas...that was so funny my knees buckled! What was even funnier is seeing Saf wiped out after 5 minutes in old Vegas:)