Another article about potential market "direction"-
US stock market-to-GDP ratio favored by Warren Buffett points to imminent 50% crash
Whenever the Sage of Omaha is pushed on how he judges whether the US stock market is trading too high or too low he refers to the ratio between the value of US stocks and GDP as a reliable guage of where the market stands.
Analyst Doug Short has a version of the ‘Warren Buffett Indicator’ which uses the value of the Wilshire 5,000, a very broad index. It shows that stocks are more expensive than they were before the 2008 crash and almost as expensive as they were before the dot-com crash in 2000.
Warren Buffett is not exactly shouting it from the roof tops but his favorite indicator is pointing to an imminent 50 per cent crash in US stocks. The main indexes are all far too high. You don’t need to be a genius like Warren Buffett to see it...
Here is a close-up (ST) chart of Gold price vs. 30 year bond PRICE. This close-up shows gold's recent outperformance of the bond price. On a longer term chart gold's turn-around is not quite apparent yet. But when gold price outperforms bond prices, a bull can begin to gallop. Makes sense.
WTF is going on with crude? Serious question. Up a bit again today to almost $103. The below article correlates it with the frigid weather here in North America, but that seems like an easy excuse when demand is normally depressed during the winter. My WAG is that it is primarily a storage and distribution shortfall. If this is correct, therefore people using petro fuels for heat are getting squeezed on supply, and the distributers, speculators, and hedgies are ganging up and piling on the profits in a tight, volatile market. Is this a reasonable assumption?
Oil & Gas Recover From Friday's Sell Off
Posted February 24, 2014 6:09 (GMT)
By FX Empire Analyst - Barry Norman
Friday was a crazy day in the energy markets, with traders selling off to book obscene profits as crude oil and natural gas continued to climb mid session as the winter storm blanketed the US east coast and the weatherman called for more snow and cold throughout the balance of February and into March. Oil price resumed its rally during last week. WTI oil increased by 1.9%; Brent oil, by 1%. Natural gas jumped to the highest price in five years as forecasters warned of more freezing U.S. weather. Hedge funds increased bullish bets on the heating fuel as inventories dropped to the lowest in a decade. Natural gas rose as much as 5.6 percent to $6.478 per million British thermal units in electronic trading on the New York Mercantile Exchange, the highest intraday price since Dec. 3, 2008.
On Friday, Accuweather reported that a series of storms could combine over the Northwest “snow would likely evolve near or along the I-95 corridor, leading to another round of disruptions to travel and daily routines,” it said. About 49 percent of U.S. households use gas for heating, with the biggest consumers in the Midwest, U.S. Energy Information Administration data show. Later in the day the forecast changes both the short term and near term, to a bit warmer and no major storms which pushed traders to sell and book immediate profits after Natural gas surged. This morning gas is trading at 5.133 up by 121 points after declining in the afternoon session in the US on Friday. Gas surged 15 percent during the period covered by the report as winter storms brought snow and below-normal temperatures to the eastern U.S. Forecasts show a polar blast returning to the region this week. Gas supplies dropped to 1.443 trillion cubic feet in the seven days ended Feb. 14, the lowest level for the time of year since 2004, government data show.
Crude oil added 29 cents this morning to trade at 102.49, while Brent oil added 20 cents to reach 110.03 as traders recovered from Friday’s sell off. West Texas Intermediate crude rose from the lowest price in a week amid speculation that cold weather in the U.S. will boost demand for heating in the world’s biggest oil consumer. WTI has risen in the past six weeks, capping the longest run of weekly gains in a year, as crude inventories at Cushing, Oklahoma, fell and cold weather bolstered fuel demand. Another blast of freezing air is forecast for the central and eastern U.S. this week as two storms threaten to bring snow to the Northeast, according to the National Weather Service.
The opening of the southern link of TransCanada Corp.’s Keystone XL pipeline in January eased a bottleneck in the central U.S. Supplies at Cushing, the delivery point for the WTI contract, fell 1.73 million barrels to 35.9 million, the lowest level since Oct. 25, the EIA said last week. Nationwide crude supplies rose 973,000 barrels to 362.3 million in the seven days ended Feb. 14. Heating oil gained 106 points this morning also recovering from the sell off on Friday to trade at 3.0495. It seems that the weatherman cannot make up his mind as to what to expect this week.
Don't believe the hype on short supplys for NG. We have a lot of NG production, I talk to the guys on a regular basis, from the dirty grunts to the CEOs. Basically, after NG crashed in 08, they shut down production. They are either just producing enough to tread water (if they are on a shoestring), or only producing with wells that would cause havoc if they shut them down entirely. We're talking below 25% production, some under 10%.
When prices rise, they'll be met with supply, and a lot of it.
Sorry Scorpio, I don't want to take this thread too far off course but the GDP issue is interesting to me. Fed states inflation is what, 2%. GDP at 2.4% doesn't give much growth at all, 0.4%. When the numbers come out for Q1 2014, GDP could even be below 2%. Won't have to wait until the end of the year for negative GDP. But we know we can't use the Fed's inflation number. So plug in your favorite estimate for inflation and it is as we have known for some time. Not good.
IMO we have had credit expansion with out the same amount of economic expansion. Now all of this junk economy is coming home to roost.
Neither really reacted as they should have though, gold should have had a 50 or 100 buck day and a buck or two or three in silver, dollar up , dow down, just cant figure this sht anymore, thinking more and more the manipulation has to end sooner than later. Or maybe we just wake up and gold is 3k and silver 100 bucks, don't know