NYIM May 5th Meeting; Oil Report; Swine Flu Update

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

We would like to thank our guest, best selling author William Cohan for a great interview at the New York Investing meetup last night. The discussion of his recent book, "House of Cards" touched on many of the major issues currently facing Wall Street and the financial system. Cohan was mostly critical of Wall Street during his talk as he was in his book. There was also a talk at the meeting about stocks, oil, gold and silver and where the opportunities currently lie. To find out even more about this topic, we urge everyone in the New York Metro area to attend the New York Hard Assets Investment Conference next Monday and Tuesday. Registration is free and can be done by going to: http://www.hardassetsny.com/. Meanwhile, more news about swine flu is coming out, but the medical authorities are finally being somewhat more responsible about informing the public about what is really going on.

While there are many point of agreement between the New York Investing meetup and William Cohan, some divergences of opinion come out during his interview. Cohan stated quite clearly that he believed significant reform was on the way for Wall Street and that he had high hopes for Timothy Geithner's tenure as Treasury Secretary. While there is certainly a strong movement for reform among the American populace, little has been done so far and anyone who reads this blog regularly knows we are not fans of Timid Tim Geithner. We certainly agree with Cohan's criticism of Congress and the large campaign donations that it accepts from Wall Street has corrupted our system. We don't agree with Cohan's favorable views of TARP, something we vehemently opposed and consider to be one of the biggest wastes of government money ever. Cohan did provide some interesting insight into the failure of Lehman Brothers saying there was really no clear answer why the authorities let it fail other than the timing of its demise (if it had been first, he believes a bailout would have taken place) and it wasn't a favored institution of the government as is Goldman Sachs. We hope to have at least excerpts of the interview out on video shortly.

The weekly oil storage report came out from the EIA this morning and it looked pretty bullish. Oil in storage was up only 600,000 barrels, while analysts has expected a rise of 2,000,000 barrels. Gasoline was down 200,000 barrels and the high demand summer driving season is just about to begin. In the meetup last night we showed how oil was well below its 200-day moving average and predicted it needs to get to that level before the current rally will end. Oil jumped up to a new 5-month high after the inventory report with light sweet crude reaching $55.55 a barrel. There is probably at least $20 more upside to the commodity, if not more, before a 2009 high is hit.

In today's media coverage, the first actual American death of someone who tested positive for swine flu was reported. Read the articles carefully however, they do NOT say that the woman who died on the Texas/Mexican border died of swine flu. Indeed the medical authorities refuse to state that she did and said that she had other 'critical underlying medical problems'. The little Mexican boy who died in Houston also had other significant medical issues. In Mexico, the current count is 42 deaths (still nowhere near the originally reported 160). No medical history is available for most of these people, who were poor and had limited access to health care. It is quite possible all of them had other medical issues as well and swine flu was not the primary cause of their deaths. This would explain why there are no swine flu deaths outside Mexico in places where advanced health care systems and accurate record keeping exist. There is no substantial proof that the current outbreak of swine flu is deadly, nor that it is even a serious disease.

NEXT: A Rally Frothing at the Mouth

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Banks Get Swine Flu; William Cohan at New York Investing

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The long awaited bank stress test is scheduled to be out this Thursday. There have already been more leaks in this government PR gambit than in a sinking ship. Meanwhile, the Swine Flu panic is winding down, with an article by TIME magazine this morning questioning whether all the hoopla was justified (see the Sunday and Saturday entries for this blog for a detailed analysis for why it wasn't). And finally, I will be interviewing best-selling author William Cohan at the New York Investing meetup tomorrow. Whether or not you saw him on the Daily Show with John Stuart or elsewhere on TV, this is your chance to see him in person.

In the news out today, Citigroup and Bank of America are stating that they are going to be raising $10 billion more in capital to shore up their reserves. Didn't both of these banks say they were profitable in the first quarter and planning on returning TARP funds? Something seems to be inconsistent with this story. Wells Fargo and PNC Financial also need more capital. The U.S. banking system is by no means stable yet and if the Fed withdraw all the funding it is providing from its half dozen or so programs, almost every major U.S. bank would collapse immediately.

While it is difficult for the average person to understand how poorly the government has handled the Credit Crisis, it is much easier to see how badly they have handled the current outbreak of swine flu (the 1976 outbreak was bungled as well and had tragic consequences for hundreds of people who participated in the government's vaccination program - there was only one supposed swine flu death). A number of the top government medical authorities made dire warnings of impending tragedy and sounded the alarm bells at top volume in the last two weeks. Not only is there no rising death toll as they warned us about, but there are no deaths at all outside of Mexico. Even the supposed deaths that have taken place in Mexico are questionable. Over a week ago, Mexico claimed 160 deaths from swine flu had taken place, the current claim is 20. Mexico's health care statistics seem to be about as reliable as most U.S. banks financial statements (see the previous blog entry for more about this).

If you are in the New York metro area, you should be coming to the May 5th meeting of the New York Investing meetup tomorrow (PS 41, 116 West 11th Street at 6th Avenue, starting at 6:45PM, for more details see: http://investing.meetup.com/21). I will be interviewing William Cohan about his latest book, "House of Cards", which is about the demise of Bear Stearns (New York Investing was the first major group to predict that this would happen in August 2007). Cohan doesn't make a lot of personal appearances, so this is your opportunity to not only hear what he has to say about the Credit Crisis, but get him to sign of copy of his book for you.

NEXT: Market Getting Frothy; Meeting tonight for New York Investing

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Pandemic of Government Stupidity Over Swine Flu Sweeps Globe

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The biggest thing to fear from the current swine flu outbreak is the stupid reactions of government officials. While we would like to think that we live in a world where intelligent scientific thought dominates and ignorance and irrational emotional reactions are not the basis for important decisions, the reaction to swine flu indicates otherwise. The global medical establishment, highly trained scientists, have reacted more like voodoo shamans instead of engaging in rational analysis. The mainstream press, instead of acting as a responsible gatekeeper, has had a field day spreading panic. Government officials have followed up by doing some of dumbest things imaginable (in case you don't understand what is going on with how they are dealing with the Credit Crisis -think about how well that's probably being handled).

One of the most outrageous government acts so far has taken place in Hong Kong where authorities have sealed the downtown Metropark Hotel, where a sickened Mexican tourist had stayed, trapping 350 business travelers, tourists and employees inside. Riots have broken out in Egypt when police have tried to fulfill the government's mandate to kill all of the country's pig population - there is no evidence that any of pigs have swine flu there. In Baghdad, the Boars in the zoo were slaughtered even though there is no swine flu in Iraq. The U.S. has closed down hundreds of schools. In Mexico, the capital is totally closed down and will remain so for a few more days. Officials from the CDC, the federal Health and Human Services Department and the New York City Health Department have made irresponsible statements that have helped engender panic. The first two warned of an increasing death toll from swine flu and the latter that there were already hundreds of cases in New York City last week - none of which has turned out to be true.

The source of all the worry about swine flu is and always has been suspect. There have been two competing strains of information that have led to contradictory conclusions. Authorities throughout the world have chosen to believe the unreliable information source over the reliable one. The first strain of information are reports and statistics on swine flu from Mexico - a country with a chaotic health care system and questionable data gathering ability. The second data source is from the developed world, where health statistics are reliable. Based on initial reports out of Mexico, swine flu was a deadly virus. However, even as of today, there have been no fatalities elsewhere - and that's hard reliable data. When you are exposed to contradictory information from two sources with widely varying credibility, which do you believe? In the case of swine flu, it as if the medical authorities chose to believe Star Magazine over the New York Times.

Moreover, it has since been demonstrated that the initial reports on swine flu from Mexico were pure speculation and are not supported by the facts. Over a week ago, there were already supposed to have been 160 deaths there from swine flu in Mexico. The current count has risen to 19. What? Tests for swine flu were not being done initially and now that they have been only 19 people so far who have tested positive for swine flu have died. Whether or not they died from swine flu is not proven and should be questioned considering that no one outside of Mexico dies of swine flu. These 19 could have died from any number of other illnesses and considering there was an epidemic of virulent pneumonia in Mexico, this would be a strong candidate for the actual cause of death. How are the Mexicans handling this rather embarrassing situation? Just today, in a news release, Mexico's Health Secretary said "11 people were suspected to have died from the virus in the previous 24 hours". Huh? While the glaring headline seems to indicate swine flu deaths are increasing, what was meant was that testing has shown the number of supposed deaths from swine flu jumped from 9 to 20 (including the Mexican toddler that died in Texas). Note to Mexico's Health Secretary, 20 is a much smaller number than 160.

U.S. medical authorities are already backtracking and making the case that their highly irresponsible actions were justified. In appearances on the Sunday talk show circuit, it was stated that a vaccine for swine flu is being prepared and after it was created it would then be decided whether or not to order large amounts of it be produced in the fall. Despite their hemming and hawing, it was quite obvious they realized they had screwed up big time. Don't expect an admission of this and don't expect any one of these bozos to be fired. After all, why should the health of the American people be in the hands of competent people.

NEXT: Banks Get Swine Flu; William Cohan at New York Investing

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Swine Flu Update - Government Scamdemic and the Credit Crisis

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

If you thought the U.S. government's handling of the Credit Crisis was bad (and you should), the handling of the current swine flu outbreak is even worse. Both have similar elements and it is those elements that need to be addressed if the financial system is to be righted, the economy is to be put back on a sustainable track, health policy is to be handled responsibly and anything else is in the U.S. is to run the way it should. Otherwise things are only going to continue to fall apart and possibly just blow up spectacularly one day.

We are living in a time where there seems to have been a complete suspension of the use of common sense and basic logic among the powers that be. You see this in the Credit Crisis, where it was believed that people who had no jobs and no history of paying their bills, even if they had a job, were considered good prospects for home mortgages. Somehow, there was surprise when large numbers of these mortgages defaulted. Government programs to extend home ownership to the poor (why should someone not own something just because they can't afford it) were at the root of the Credit Crisis and this helped support unlimited Wall Street greed in trying to make money off of these programs. The government is still trying to prop up Wall Street with your taxpayer money in its various bail out programs even though most of this mortgage debt is and always will be worthless.

The same suspension of common sense has taken place with the current swine flu outbreak. A genetic analysis of the virus released yesterday indicates that it doesn't have any elements of the 1918 virus that caused that virus be so dangerous (plus that virus was an avian flu and not a swine flu as was thought to be the case for decades, a rather major point that seems to have been ignored by the medical authorities). Instead of spending tens of thousands of dollars for this study, simple observation of the people with confirmed cases of the disease was all that was necessary. Outside of Mexico, there have been ZERO deaths so far (the one case supposedly in the United States was a resident of Mexico City who had been brought to the U.S. and he had other significant health problems). Anecdotal reports outside of Mexico indicate that many of the people who have had swine flu didn't even bother going to the doctor because they weren't that sick. Most people with swine flu have recovered quickly. If basic logic wasn't enough, you would think having the scientific confirmation that swine flu isn't deadly would be an adequate reason to stop the government's panic reaction to the situation. You would of course be wrong.

From the top all the way down, the government's desire to spend your tax dollars ($1.5 billion has been committed) to save you from a non-existent menace goes on unabated. President Obama himself in his radio address Saturday stated, "This is a new strain of the flu virus, and because we haven't developed an immunity to it, it has more potential to cause us harm. Unlike the various strains of animal flu that have emerged in the past, it's a flu that is spreading from human to human." The ability to pack so much ignorance in so few words is truly a gift (I previously thought George Bush was the master of this art). Flu arises from animals and becomes epidemic when person to person transmission is possible, so this is exactly what has happened in all past flu epidemics. The idea we have no developed immunity to the swine flu is not supported by the mildness of the cases, nor for that matter has there been any random testing to find out if people test positive for swine flu, but didn't become ill (this was indeed found to be the case in the 1976 outbreak).

Neither common sense, nor scientific evidence seems to have phased Dr. Steve Waterman, the head of a team from the Centers for Disease Control and Prevention in Mexico. Even after getting the genetic analysis stating the swine flu virus wasn't deadly, Dr. Waterman warned that more deaths were to come. Dr. Waterman stated his main goal of his CDC team in Mexico (other than to spend the unlimited government funding they have) is to find out HOW swine flu kills. He should be asking IF it kills, not how. Anyone with a wit of intelligence (it is quite possible that no high ranking medical official is in that category) should be immediately suspicious that no one has died of swine flu outside of Mexico. Many days ago, the official Mexican figures were 2498 swine flu cases and 160 deaths. As of right now, viral typing (the only way to accurately know if someone has swine flu, since there are many other diseases with similar symptoms) shows only 397 confirmed swine flu cases in Mexico with 16 of those people having died. There are no medical histories for those people (most of whom seem to be urban and rural poor with limited access to health care), so it is impossible to determine if they died from swine flu or some other disease. There is by no means out of the question, especially since there was an outbreak of virulent pneumonia this winter in Mexico prior to the outbreak of swine flu. To say that Mexican health statistics are questionable and their health care system is a mess would be an understatement to say the least. Yet, they are being given credence while the more reliable evidence from the developed world is being ignored.

As of today (Saturday, May 2), there are 161 confirmed cases of swine flu in the U.S. New York leads the way with 50 cases. Few new cases seem to be appearing in New York even though the head of the city's Health and Human Services irresponsibly tried to panic the public earlier in the week by warning there were already hundreds of cases (so where are they?). More than 430 schools are closed in the U.S. affecting about 245,000 children in 18 states. Has the U.S. Secretary of Education said this is ridiculous and there is no justification for this. Not at all. Even after the scientific study indicating swine flu is not deadly was available, new guidelines were released to keep schools closed 14 days instead of the shorter times that had been planned. How else could we prepare today's students for future government service other than to keep them totally ignorant and uneducated?

Like the boy who cried wolf, the government is playing a dangerous game with swine flu. When a truly serious crisis arises, it is likely to be ignored in the future. Of course, that would assume that the goverment would actually realize a serious crisis existed. It didn't with the Credit Crisis and it still isn't reacting properly to fix it. Don't assume things are likely to be any better in the health arena.

NEXT: Pandemic of Government Stupidity Over Swine Flu Sweeps Globe

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Markets Rise Despite Swine Flu Scamdemic

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

U.S. stock indices were all up over 2% yesterday despite the increasing hysteria about a swine flu pandemic. The market was clearly not buying that story, nor should you (more below). The markets were giddy over comments coming from the Fed meeting yesterday. The Fed said the rate of the economy's decline had slowed considerably. It further stated that it would consider additional funding for its programs if necessary. Expect the printing presses to be running full time well into the future with bail outs needed in the insurance industry, commercial real estate and for state and local governments. And don't forget that we will be bailing out Mexico too, probably sooner than later thinks to the recently totally unjustified brouhaha over swine flu.

Rarely if ever have I seen more irresponsibility on the part of the medical authorities and media than in the handling of the current swine flu outbreak. Coverage seems much worse than during the outbreak in 1976, when 200 people were sick with swine flu and one person supposedly died from it. That swine flu outbreak started at an U.S. army base at Fort Dix, New Jersey. The first person to have been identified with swine flu, was the only recorded fatality (it is not clear from the available information that other causes of death could be ruled out). Four other army recruits had to be hospitalized. However, it turns out that 500 other soldiers at the base tested positive for swine flu, but didn't even become sick. Somehow, the U.S. government used this data to justify spending $135 million on a large-scale immunization program, which had to be halted once it was realized that people were dieing and being horribly crippled - from the vaccine! No swine flu epidemic ever materialized.

The facts of today's swine flu outbreak also tell a very different story than the one you are hearing from the media. The glaring front page headline in a major newspaper yesterday, "Swine Flu, Why You Should Worry" is typical of what the public has seen and heard and which have caused needless panic throughout the world. In reality, NOT ONE PERSON outside of Mexico has died from swine flu (how many have died inside Mexico may also have been grossly exaggerated). But what about the reports of the first American death, even mentioned in this blog yesterday? Well, it turns out the unfortunate toddler who died after two weeks in a Houston hospital came from Mexico. His parents claim he only became sick once they crossed the border and arrived in Brownsville, Texas. The toddler also had other significant health problems, which the medical authorities refuse to reveal. Without knowing what these were, it is impossible to say if he actually died from another medical condition or swine flu.

It needs to be kept in mind that the symptoms of swine flu are identical to other types of flu and similar to many other illnesses as well. Swine flu can only be identified by viral typing, something the Mexicans didn't have the ability to do during the beginning of the outbreak. They had to send samples to the United States. As of April 26th, only 18 cases of swine flu had been confirmed in Mexico by viral typing, yet the media reported 160 people dead from swine flu there (how did they know this?). Not only is it quite possible many of these people actually died from something else, it is the logical conclusion if you consider that there aren't any deaths elsewhere. As for the viral typing that has been done in the United States on suspected cases, a large majority of the tests have come back negative for flu. Of the few that were positive, twice as many indicated already known forms of the disease and not swine flu.

By every measure so far, the current version of swine flu seems to be the mildest form of influenza that has ever existed. No deaths in the U.S. versus 36,000 a year from other flu related illnesses and 7 hospitalizations versus the usual 114,000 annual number (thats 0.006%). Yet, that's not how the medical authorities have reacted. They have done everything possible to fan the flames of panic among a naive and gullible public (and increase their budgets - the federal government has already promised $1.5 billion). The New York City Health Commissioner, Thomas Frieden, stated that there were many hundreds of school children in the city with suspected cases of swine flu (that word suspected got buried in the coverage). Health and Human Services Secretary, Kathleen Sebelius, warned that the child who died in Houston would not be the first death in the U.S. form swine flu. Perhaps she's planning an airlift of the seriously ill from Mexico? You got to find some way to spend that $1.5 billion.

NEXT: Market at Key Resistance; Scamdemic Update

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Markets Catch Swine Flu

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The only pandemic that you need to worry about right now is that global markets are being infected by swine flu hysteria. The Asia markets sold off last night, Taiwan and Hong Kong for the second day in a row with both down 1.9%. The Nikkei dropped 2.7% and South Korea's Kopsi was off 3%. As I write this, major European markets are down between 2.1% and 2.8% and S&P futures are down 1.8%. Oil if falling from the above the 50 level again (this has become a recurrent pattern as of late). Most amazingly, gold is down about $20 in the futures market, even though the price of gold should go up during a crisis (is this telling us something about the Fed meeting taking place this week?).

The media's handling of the swine flu news is incredibly irresponsible and outrageous (keep this in mind when reading financial news which is not handled that much differently). You would think that another Medieval Black Plague was about to strike. Just as in investing reporting the facts get buried amid the hype and the news deviates significantly from reality. So far, it doesn't look like there are any deaths outside of Mexico. While flu has been found in 40 people in the U.S. who had traveled to Mexico, the cases seem relatively mild and this seems to be true in other countries as well. The disease seems to be one thing in Mexico, but quite another outside of Mexico. This is a huge inconsistency that doesn't make sense, so there is obviously more to this story than is being reported, or perhaps it would be more accurate to say, less to the story.

So far the most damaged stock groups from the Swine flu news are airlines and hotels. AMR, UAUA, and LCC were all down in the double digits yesterday. They are still not buys however since they were already overextended on the upside when they began selling off. They would have to have about 4 serious days of selling to make them interesting for other than day trading purposes. Anti-viral biotechs were the big winners, most going up well into the double digits. Expect them to come right back down once the crisis blows over. At that point they might be longer term buys. If you want to take a look: BCRX, BTAHY/BTAHF, GNBT, HEB, NVAX, PPHM, and VICL. Only very experienced traders should play with these stocks.

Wall Street reaction to the swine flu is as would be expected. Hearing the word swine, the usual suspects have answered the call. One market analyst is out on the net with a statement that the market could drop 15% (if this turns out to be as bad as SARS that is - it won't be, the two aren't comparable at all). One oil analyst has come out with a prediction that oil will go back to $33 a barrel because air travel is likely to have a huge drop. My guess is this is all going to be much ado about nothing. Even though the swine flu may disappear, don't assume the swine on Wall Street will have done the same. You always need to worry about them.

NEXT: The Stupidity Pandemic; U.S. GDP Tanks

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

IMF Notices Recession; Possible Sovereign Defaults

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

In what could only be described as 'you heard it here last' news, the IMF (International Monetary Fund) has just released a report that predicts the deepest global recession since the Great Depression. What caused this great revelation is a mystery. Perhaps they finally started reading last years papers and realized all the economic news around the world was bad. We'll probably never know. Meanwhile, U.S. News and World Report has complied a list of countries in danger of default - and get this, Argentina is on the list. Well, that is a shocker! A country that has defaulted on its debt over and over and over again is at risk of defaulting again. Who could have predicted it?

I have often said economists are the last people to know about a recession. Apparently, international economists take this concept to an extreme. While anyone who doesn't live in a cave has realized for at least a year that there have been serious global economic problems (the New York Investing meetup itself predicted recession in December 2007), the IMF has finally come out with a prediction of global contraction in 2009. They are predicting a 1.3% drop overall and a 3.8% drop for the advanced economies. The IMF is also predicting that the major economies will have budget deficits of 10.5%. Who the money is going to be borrowed from when almost every government has a big deficit was not in the report (they should have just included a picture of a big printing press). The current IMF forecast is the fifth downgrade for global growth in a little over 6 months. Thank you IMF for that timely update.

As for the risk of sovereign defaults, this is based on information from the ratings agencies S&P and Moody's, the people who gave subprime loan securities triple A ratings (well, there's no question that they're on top of things). Pakistan, which already defaulted 6 months ago is in danger of defaulting again. The usual Eastern European suspects, the Ukraine, Belarus, and Latvia aren't in good shape either (and you could probably add three to four more countries in the region). Closer to home, Mexico is in danger of default. It is only a question of when and not if for a possible Mexican default. Mexico gets a significant percentage of its federal revenues from the rapidly declining Cantarell oil field and its budget problems are only going to get worse. The U.S. will have no choice but to bail out Mexico. The IMF will take the lead for the other countries (picture that printing press again). Countries not on the list include Greece, Portugal, Spain and Ireland. Well, maybe next year.

As an investor you should be concentrating only on what is likely to happen sixth months in the future. News that everyone already knows is irrelevant because it has already been priced into the market. That doesn't mean that the mainstream media won't announce it in blaring headlines or give it dramatic coverage. You need to ignore all of these superficialities. You also need to consider whether or not you are the last to hear the news. If a stock price has already been going up long before some good news has been officially announced, you can be pretty assured that lots of other people knew what was going on long before you did.

NEXT: The Gold is in Eastern Capitalism

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

If It's Wednesday, It's the Oil Storage Report

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

Every Wednesday at 10:30AM the EIA (Engergy Information Agency) releases it oil inventory report for the U.S. This not only includes the oil at the NYMEX storage facility at Cushing Oklahoma (actually down two weeks ago, although the drop didn't get press attention), but oil at refineries, oil just arriving by ship, etc. It also includes the oil in the Strategic Petroleum Reserve, which is not available for general use except during an emergency. Media coverage has continually reiterated that there is a 'glut of oil' and that we are 'drowning in oil' even though there is only approximately 18 days of oil in storage (this fact remains unmentioned).

While you will continually see references in the media to the drop in global demand for oil, you will see far fewer references to falling supply. In many articles you won't see this key piece of information mentioned at all. World demand is estimated to have fallen from 87 to 84 million barrels a day because of the current economic decline. However, OPEC alone has cut daily production by over 3 million barrels. The decline in usage may also be overestimated. A report out of China, currently the worlds second largest oil consumer, today indicated that year over year demand for oil in March dropped a "whopping" 0.25% (you would need a magnifying glass to notice the change).

Falling oil production isn't just the result of evil plotters and maldoers like OPEC as the American press would have you believe, but is being caused by oil being depleted from major fields. Both North Sea and Mexican oil production are falling rapidly simply because the oil is running out. Production in the Cantarell field in Mexico, the second largest in the world, is dropping by 15% a year. This is one of the major sources of oil for the U.S. As early as five years from now, the oil being pumped from Cantarell may be so little that there will only be enough for internal use in Mexico. This will make the U.S. even more dependent on oil from our "friends" in Venezuela and the politically unstable corruptocracy of Nigeria. Even worse, the recent drop in oil prices has caused a number of production projects to be cancelled and this will add to the inevitable oil squeeze that will be taking place in the next few years.

The oil report today indicated more oil in storage than the consensus estimate. Oil, the commodity, went down on the news. Some oil stocks such as PDS and HTE are doing exceptionally well today however. The seasonals for oil are bullish at until at least June, and maybe into the summer, and there is likely decent money to be made until then in the short term. While a price pull back this fall/winter is probable because of seasonal patterns, that should be considered a major long term buying opportunity.

NEXT: IMF Notices Recession; Possible Sovereign Defaults

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.