Warchild NYC

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    • Mon Nov 26th 23:21 PM | Rating: 0 0
      Commented on:
      OPEC and the Denomination Fallacy
      Good point. I find it laughable when the press reports that crude oil is up $3 on a certain trading day because the dollar has weakened. Then you look at the FX markets and see that on that trading day, the dollar weakened by 0.3% vs. the Euro. Oh, so the value of oil should move at many times the percentage change of the US dollar vs. other currencies? Thanks for the help. Perhaps that explains why crude is up 65% this year and the dollar has only depreciated 10-12% against major currencies. These fools in the press who accept the hype from crude bulls at face value apparently don't own calculators or computers, because they could otherwise easily calculate a rise in crude of about 50% this year in any other currency. I find that the commodity bulls typically reference currency depreciation when the move up in price for a commodity is approaching an end and there is no longer any fundamental justification for the stratospheric price. Oil is a prime example, but you could just as easily point to gold or some of the agricultural commodities such as soybeans, which rally based on anything ranging from weak dollar to oil prices (based on the biofuels argument), weather or demand from China. Now that they have doubled, the bulls are regurgitating the same old news to try and keep the rally going. My other favorite device of desperate bulls is the "inflation adjusted all-time high" which they trot out when a market is really overvalued. You can almost set your watch to a correction whenever that logic is used to justify further speculative run-ups in the price of a commodity. It will be fun to watch the carnage unfold when the inevitable bounce in the USD coincides with mounting evidence that economic weakness is dampening demand for all of Jimmy Rogers' "hot commodities" and the Peak Oil freaks and gold bugs run for cover like cockroaches.
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    • Mon Nov 26th 23:00 PM | Rating: 0 0
      Commented on:
      Peak Oil Hits the Wall Street Journal
      Peak Oil is an ingenious device for speculators to milk the most possible out of the recent run-up in crude oil, but it is complete garbage, and the press and gullible public have enabled the traders and proponents of such hype to rip us all off. There is no shortage of oil and never has been. This is all about manufactured scarcity for a commodity product, no different from DeBeers holding back the supply of diamonds to keep prices high. Brazil just stumbled upon 8 billion barrels a few weeks ago. Peak Oil is total BS and all consumers of oil are paying the price for buying into the myth. Look at inventory levels. Look at demand year-over-year for gasoline--down for 4 weeks in a row. Meanwhile, oil has gone from the $50s to the $90s this year. Total BS rally that will be unwound when the US enters a full blown recession in 2008.
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    • Sun Nov 25th 10:54 AM | Rating: 0 0
      Commented on:
      Slamming the Brakes on China
      Great story. I put 2 & 2 together the moment the lending freeze was announced, but it seems like the majority of investors have shrugged it off thus far. People forget that economies that are growing at 11% don't usually decelerate gracefully when a spate of weakness hits, and with respect to China, novice investors are ignoring the weakness in the US and the connection that has to Chinese exports. I believe the long-term growth story is very much intact with respect to China and India, but we are overdue for a very nice correction across all asset classes with very few places to hide (certainly not gold). Despite the pathetic yields right now, cash will continue to be king for the near term. Rather than shorting equities, I am short commodities and long the USD in anticipation of these reversals, as I believe they are the most overvalued. Copper and other base metals are signaling serious warning signs already regarding economic weakness as the mindless run-ups in other commodities (esp. oil and gold) continue. Maybe gold, oil and the ags can continue to hit all-time highs in a global slowdown, but I highly doubt it!
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    • Sun Nov 25th 10:23 AM | Rating: 0 0
      Commented on:
      Gold Due to Correct: Sell Randgold Resources to $29?
      I find it interesting that there is almost nobody out there willing to be quoted with a bearish view on gold. That to me in itself is bearish, but when combined with the overwhelming evidence that gold is technically overbought, and with the recent debacle in 2006
      when gold dropped dramatically from $730 to $550 in May-June following another mindless (in my opinion) run-up serving as an example of what can happen, it seems like a no-brainer 3-month short here at $824. Will gold continue to run up in the short term? Perhaps, but this panic related to the subprime and SIV crises will recede sooner rather than later, and then the incremental "safe haven" buyers will scratch their heads and wonder why they overpaid for a an instrument with a horrendous negative roll yield. Add in an inevitable bounce in the USD,, and the rush for the exits will be breathtaking. There will always be gold bugs out there, but the odds are heavily stacked in favor of a big correction, in my opinion. I am short 1 contract of December gold and plan to roll repeatedly as necessary (and I get paid $5-7 every month to do so).
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    • Sun Nov 25th 09:58 AM | Rating: 0 0
      Commented on:
      Watch Out: A Correction in Oil is Coming
      Interesting story. I believe that the best approach may be to short oil futures, as it is more of a pure play and provides better bang for the buck in the event of an oil correction. Also, I believe that some of the oil companies are going down because of downward pressure on refining margins, while overall valuations for energy stocks do not yet reflect the benefit of $90-100 oil. If oil were to stay up near the current price, I believe energy stocks would eventually perform quite well. However, they usually will go down in sympathy with the oil price in a correction, which, in a move from $100 to the $70s or $80s, would provide a much better long-term entry point. Perhaps the best near term approach right now is to be short or flat anything energy related. The "limited spare capacity" argument for high oil prices falls away completely (temporarily) in a US recession. It is only the incremental oil production that is expensive. If demand goes back to below 83MM per day for a while, prices could really dive. People forget we were in the $50s earlier this year, and that is without a recession!
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    • Sat Nov 24th 19:25 PM | Rating: 0 0
      Commented on:
      $100 Oil By Monday (Read: The Lebanon Crisis)
      Whether oil hits $100 monday or any other day next week, it should be viewed as an opportunity to short. This market was already overpriced at $80 given the broad economic weakness in the US, and once people realize how bad things are getting, $100 or even $80 oil will be in the rear view and we will be looking at $70s and then $60s. There has been a decrease in year-over-year demand for gasoline for four weeks running already according to MasterCard Spending Pulse. Hard to justify a 65% run-up in oil this year, now isn't it?
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