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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (5998)	5/10/2004 3:37:16 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Heinz on oil Date: Mon May 10 2004 13:59 trotsky (the 'OPEC threat') ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved we have arrived at the 'word play' stage. OPEC can't really do much beyond threatening to increase production. the point being, it can't act on the threat, since by all accounts the official 'production ceiling' is ignored by everybody anyway - i suspect that they're ALREADY producing at, or near, full capacity. a capacity that is under constant depletion pressure. note also, the 'OPEC hawks' such as e.g. Venezuela and several others, are only hawkish BECAUSE they're already producing at capacity. thus if spare capacity can be brought to bear by Saudi Arabia ( which is the only OPEC member that possibly still has any ) it won't benefit those who can't raise output - they'd still be producing the same amount of crude, but would get less money for it. anyway, unless any reserves miracles have occurred while we weren't looking, OPEC is a paper tiger. Date: Mon May 10 2004 14:20 trotsky (cap) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved my point is only that mere words from OPEC really won't change a thing. the only thing that could imo take some pressure off the oil market would be a resumption of the synchronized global downturn that began in late '00. a distinct possibility actually.

To: Wyätt Gwyön who wrote (5998)	5/10/2004 3:50:34 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Will the rout be over when the FED moves? ..... . Manufacturing firms of 30 years ago, like General Motors (GM:NYSE - commentary - research), are now in the finance business and the cost of capital is key to their profitability. A rate hike could seriously hurt many of these firms, particularly since they are so heavily leveraged, Saut argued. "The pain of returning to a more normal relationship between interest rates and inflation in a heavily leveraged economy could be a perilous one," he said. Other analysts say a rate hike would reduce consumer spending, which has fueled economic growth over the past few years. Already, there have been signs that consumer spending might be slowing down as oil prices surge, and it could weaken further in the second half of the year when the effects of tax rebates and refinancing wears off. Well, yes, glad someone noticed. But the important rate hikes are happening in the real world, without the Fed. thestreet.com