Bullish signs? Not according to Warren Buffett!

Based on the drop in oil and commodity prices, we can assume the CPI (inflation) numbers will begin to show less inflation. Right? I would be real quick to make that assumption.

Inflationary pressures give corporations an opportunity, and excuse to raise prices. The old adage of passing higher costs on to the consumer rings true. But, once inflation subsides, price hikes remain, and corporate profits soar.

This is why dollar cost averaging into the stock market during periods of market termoil makes sense. Sure, it would be easier to wait until the "all clear" signal is blown, but also blown are our chances to make the big bucks when the market begins to rally.

Through the years I have heard financial gurus say that they are willing to give up the first 20-30% on the upside to make sure the market has reversed its downward trend. I am not willing to give up that kind of profit. I, on the other hand, I want to dollar cost average in at various downside targets, and participate on all of the upside when the market turns.

The big news last week was the release of Warren Buffett's quarter investment holdings. In the period that ended 06/30/2008, Mr. Buffett only purchased one stock, NRG Energy Inc. (NRG), added to two others, IngersollRand (IR), and SanofiAventis (SNY). Since the latest bottom in the market didn't occur until after the reporting period, we don't know what he picked up (if anything) in July.

Since Mr. Buffett gets preferential treatment from the SEC in regards to reporting some of his positions, no one knows what he has done (bought more or sold) with his Conoco-Phillips (COP) position. This would have been nice to know now that oil prices are falling.

It's August, and many senior traders are still on vacation. After Labor Day, the markets could get much more interesting. With oil and commodities falling will they switch investment tactics- such as buy the financials, and short oil? We will see. Could a new trend be developing?

Here are our Top 10 ETF's for the week of August 18th:

1) DBA: Powershares DB Agriculture Fund- .323
2) EWZ: Brazil Index- .310
3) SLX: Market Vectors Steel Index Fund- .293
4) FXF: Currency Shares Swiss Franc Trust- .250
5) EEB: Claymore ETF BNY BRIC- .225
6) DDM: Ultra Dow 30 Proshares ETF- Not Rated
7) DUG: Ultrashort Oil & Gas Proshares- Not Rated
8) PGJ: PS Golden Dragon China Fund- .112
9) KBE: KBW Bank ETF- Not Rated
10) IYF: iShares Dow Jones US Financial Sector- Not Rated

Here are our Top 10 Fidelity Sector Funds for August 2008

1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FWRLX- Wireless
9) FSRBX: Banking
10) FSVLX: Home Finance

NEW BUYS:

None

NEW SELLS:

None

Honorable Mention (Holds):

None

The Week in Review:

The U.S. New World Order gang is mad at Russia for taking military action in Georgia. Subconsciously they must be saying, "hey, only we can do things like that!". I wonder if the U.S. response would have been different if oil and a pipeline wasn't involved?

Could the politicians be upset that British Petroleum (BP) owns 30% of the BTC pipeline that runs from Azerbaijan through Georgia, and into a terminal on the Mediterranean Sea? I would think so since BP said the pipeline will remain shut indefinitely.

Today's focus is on Tropical Storm "Fay". I don't know what all the fuss is about. Fay will not come anywhere near the oil platforms in the Gulf. It has however interrupted the slant drilling the Chinese are doing off the coast of Cuba.

Last week, five major banks agreed to buy back billions of dollars in auction-rate securities as part of a settlement with regulators.

The economic lies reported to the American public is finally being confirmed. In particular, the so called "benign CPI number" came in hotter than a firecracker. Consumer prices rose 0.8% in July, the fastest rate in 17 years. In addition, import prices are up 21.6% from July 2007.

The calls of a housing bottom earlier this year also turned out to be a fib. According to the National Association of Realtors, existing home sales (single family and condos) fell 16% to a 10-year low. Oddly, sales of foreclosures and short sales accounted for one-third of all existing home sales.

If oil prices continue to decline, the economy has a good chance of rebounding. I think that $75-$85/ barrel oil would reignite the economy pretty rapidly.

Continue reading "Dynamic Growth: August 18, 2008- Briefing" »

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Oil prices rose slightly this morning to $114/bbl after the EIA reported declines in its latest fuel inventories. Given this news, and the conflict between Georgia and Russia, we have to ask why isn't the reaction more bullish for oil?

1) The U.S. dollar continues to gain strength versus the Euro, Yen and British pound. The latest news from the European Central Bank suggests the next move in rates in Europe will be to cut. The slowdown in the European economy is making Jean-Claude Trichet re-think his strategy.

2) The Georgian/ Russian situation will cool down. The executive branch of the US government was up in arms over Russia's military actions in Georgia. Were they upset over military action and the killing of hundreds of citizens? No way! They were upset over a potential ramifications of the global oil supply. It so happens that the second longest oil pipeline in the world (Baku-Tbilisi-Ceyhan (BTC) pipeline) carries oil from Azerbaijan, through Georgia and Turkey to a terminal on the Mediterranean Sea.

If there was no potential oil disruptions in the region, we probably wouldn't hear a peep out of the executive branch.

3) China will continue to have reduced oil demand until the end of the Olympic games. See, to put their best face forward China is trying to reign in their incredible pollution (smog) problem by ordering 45 percent of Beijing's 3.29 million cars off the roads. In addition, several industrial plants around Beijing have temporarily shutdown.

4) Some demand destruction has taken place in the US as consumers continue to adjust what they drive, and when they drive.

5) Don't forget the election year magic that I keep referring to. Politicians like to pullout all the stops before an important election. Yes, this includes getting their friends to help push oil prices lower.

As we get closer to the end of Olympics and November elections, I'll be re-visiting the oil trade.

The Rest of the Story

Don't you find it odd that the rally in the financials ended yesterday, just as the SEC ban on a certain kind of short-selling expired.

The ban on short-selling took effect July 21 to prevent stock manipulation. I guess its ok to continue the manipulation again. Free markets? What a joke!

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

The stock market came under pressure today after JP Morgan said it would write down mortgage-backed assets totaling $1.5 billion. In addition, Goldman Sachs fell after analysts said a slowing economy would hamper earnings.

The dollar rose to a 5 1/2 month high against the Euro leading to a further drop in oil prices. In addition, Russia called off military operations in Georgia.

On the subject of the Georgia-Russian situation, I had to laugh when our fearless leaders told Russia to halt their "aggression", and leave Georgia alone. Even the NWO's presidential mouthpieces, John McCain, and Barack Obama called for a cease-fire.

Isn't it amazing that in the rest of the world the press knows that Georgia initiated the violence that killed Russian peace-keepers and hundreds of civilians in South Ossetia. By the way, the Russian peace-keepers were in the country with the permission of the Georgian government.

And if our idiotic politicians want to debated initiating violence, and fighting a war that has no defined enemy, they should look no further than Iraq and Afghanistan. At least in Russia's case Georgia violated its agreement with Russia by attacking South Ossetia, and killed Russian peace-keepers in the process.

What's really strange is the Russians claim that the war in Georgia was orchestrated by the US. As I dug into the situation a little I found that the U.S. government was involved.

Keeping an eye on Wall Street is tough enough, but when you have to keep an eye on Washington too, things can get exhausting.

As we head closer to the election, I have a prediction to make. If Barrack Obama is elected president, he will not end the war in Iraq, and our troops will remain. So, I believe those voting for Obama thinking he will end the war will be very disappointed. I will not waste my time predicting what John McCain will do. I think that is obvious.

Oh, by the way, Congressman Ron Paul said he believes that House Congressional Resolution 362 paves the way for a military strike against Iran. Paul said,

“The frightening thing is they say they are taking no options off the table, even nuclear first strike,” “That is my sense because the Democratic leaders in the House are proposing no resistance whatsoever, “We saw this when a supplemental bill came up and the president asked for $107 billion for the war, the Democrat leadership gave them $162 billion.

“It is still totally bewildering to me when I see men and women in the Congress that I know and like doing this just to get along. Most of them will say ‘I agree with you on all you say but the Iranians are bad people and they might attack us some day. . . . I hear members of Congress saying if we could only nuke them.’”

Stay tuned a the oil trade during September-October time frame. I beginning to warm up to the idea.