And now I’m going to teach each of you first hand why central bank intervention is a bad idea in a non-deflationary environment.
You wish to know why I’ve been saying that the Fed “can’t” intervene. Watch closely, and with amazement, as energy prices skyrocket to levels you had only vaguely imagined possible. The currency swap seems innocent enough. However, Europe’s currency needs are huge.
Even if Uncle Ben limits the net amount of money he’s willing to expose the United States to, the damage has been done. He has told the markets, “I will do whatever it takes.” And the markets are about to respond in kind; without abandon.
Intervention by central banks in a true deflationary environment, like what we experienced in 2009, is almost a free endeavor. Failure to intervene results in a total shutdown of economic output anyway, so who cares if the dollar is devalued? Something is better than nothing, after all.
But what they’re doing today is reckless. Just remember, the blood must still be paid. There are only tradeoffs.
I don’t really believe that the euro has been saved today. It has been granted a reprieve, however. The amount of money that Europe needs to keep from stalling out is measured in the trillions. By linking that much money to the rest of the world, the job has become a little lighter, surely. But how far are they willing to go, when the repercussions start to materialize?
In short, kiddies, I’ll see you closer to WTI $150, and we’ll reassess there just how well the economy’s doing and whether or not you still believe we make it out of this.
I bought UCO for $43.48.
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So you suggest that the Europe is in a NON-deflationary environment? Howis that so? The main reason the yields on Italian and French bonds were up was because of concerns that their GDP growth rate would not be high enough to collect enough taxes to cover the increased cost of debt. This, by definition, is a recession, and, by definition, it is non-inflationary.
No, it isn’t. You can have an inflationary recession. We had one in the 70’s. My understanding is prices in Europe have been increasing, despite their stock markets selling off and their bonds rallying.
But I was mostly talking about the United States.
Nymph, are you still short and strong ???
Cain, I thought you half a short position in UCO, did you cover that and reverse long ???
Yes. If the Fed wants to weaken the dollar at $100, who am I to not profit from it?
$100 oil*
hope for u it will work out but i think u r crazy lol =] (going from short to long at these high levels) again, no ones know what tomorrow brings in this tape
The Trend is your Friend, Eithan.
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maybe I dont see the same trend you are watching I don’t have a clue what moves oil but in the last days it looks like the gaps in spy and uco are the same so using that cliche in the time we are at look to me wasted
All of that has changed. Today is a brand new day. European yields are diving lower, whether by direct intervention from the EFSF or renewed risk taking by the general public. The dollar is tanking because Ben Bernanke refuses to let it rally, and life is simple again.
Get drunk on Christmas and buy some stocks. There will be time to fathom the end of civilization in January.
ahah I don’t feel like getting bullish when there are so many poor and the unemployment is very high can’t see any reason for now but i need to trade better thought i made it after closing the shorts in friday and renewed them this week but dear Ben had to screw me hard today.
It happens; don’t feel bad, at one point my losses hit almost 30% for the year, and that’s after making it all the way through September trading the inflection points almost perfectly.
Unless you were in cash, 2011 was probably the most difficult year ever. I say that without reservation.
True, and I did stop and ponder if I wasn’t making a desperate move here. However, I clearly laid out, prior to today, that this is the one thing that could happen that would get me full-retard long.
Cain, are you now full-retarded fucking long ???
Like 120%, and I’m long oil.
Cain,
You still on the CCJ train?
Without question. That stock goes back to $30 if everything holds like it is.
Cain,
Yes..intrinsic value is there.. whats your timeline on that? i only have small position here..looking to add more..any particular levels you think to build full postion at? Great growth ahead..
My timeline is indefinitely…or until I change my mind. I don’t know, it really all depends on what happens between then and now. This is very much an investment, not a trade, so I’m patient. Only disaster will derail me.
As for accumulation points; if we get into a good rally, then I’d expect the stock to jump back above $20, probably going as high as $24-25. So right now may be a good point.
But hold off from throwing everything you’re willing to throw at it; in January or February I wouldn’t be surprised if people start getting scared again, and the problems in the economy with demand are really going to trump all. Then we could see another series of selloffs and intrinsic value won’t count for much.
Honestly, if I was just getting started, I’d put about a third of my alloted cash into it now, then just wait and see if something better doesn’t come along.