GDP up 2%, but VIX dropping. Still, every Rally should Gain on subsequent sell offs. OPEC increase in production and a return to regulated utility prices for natural gas and electricity may be the next political battle ground for a complete economic recovery. Natural Gas in California's two (yes just 2) pipelines, is expected to double in the north and triple in the south, insane right? Nitrogen prices are already increasing the price of food and forcing Midwest dairy farmers out of business left and right.....must we return to Banana Republic plantations and heavy CIA involvement in Latin America just to feed ourselves? We used to feed the world. Costs come out of the bottom line of earnings everywhere, and this has to be rectified immediately....but will it? Greenspan still needs to cut rates 50 to 75 basis points on May 20th to stave off stagnation, that is right, stagnation. Just because the GDP is up 2% does not tell the whole story, the European Central Banks again refused to lower their rates, under the impression that they will escape the recessionary effects of the US slowdown altogether. As I pointed out 19 months ago now, the Europeans would not stand for Greenspan's failed monetary policies, if for no other reason than that they get most of their oil (other than North Sea/Brent) from the Middle East. As long as OPEC keeps European OIL PRICES HIGHER the Europeans will not and can not lower the "price" that is the "interest rates" of their Currency. In this case, OPEC must move first, Europe can not. Greenspan is to blame for that. High FOMC rates since 1999 and through 2000 in the US is why OPEC cut production and increased the price of their currency, OIL, in the first place.
I am,
Truly your$,
-Crystal Ball |
