Toxic clean-up, up and away! Tim Geithner put on the hazmat suit and attempted to finally address the stinking part of this economic crisis with a plan to remove the toxic assets from the balance sheets of our nation's banks. The plan is to create a public-private investment partnership, with the goal of moving about $500 billion, and eventually $1 trillion, in toxic assets. Private investors would put up only 7 dollars for every $100.00 in toxic assets that would be bought. The government would match that 7 dollars and the balance would be covered by a government loan, provided in many cases by the Federal Deposit Insurance Corp.
If you were long the stock market or long the oil I guess you can say you toxically cleaned up as the plan spiked a large stock-market rally. What started as an inflation fear based rally in oil turned into a rally of frenzied economic optimism. That optimism grew when it was reported that existing home sales soared by 5.1% in February. The market quit worrying about inflation for a moment and instead focused on perhaps brighter days ahead. Oh sure removing these assets from the bank's balance sheets is the beginning of the end of this crisis but is this surge of economic euphoria ahead of itself especially as the market faces what should be another bearish week of oil inventory reports? The fear is that the rally came on light volume and kind of a sense of relief. Finally Mr. Geithner is a man with a plan and any plan seems better to a market then what seemed to be a rudderless ship. Beware investors, of a deal too good to be true because if you make too much money on the deal the House of Representatives reserves the right to go back and retroactively tax you on those profits made at the taxpayer's expense.
Mark Shenk at Bloomberg reports that U.S. oil supplies probably climbed last week because refineries have yet to finish their seasonal maintenance programs according to the Bloomberg News survey. Crude-oil stockpiles are expected to increase by 1.1 million barrels in the week ended March 20 from 353.3 million the previous week, according to the median of 11 estimates by analysts before an Energy Department report this week. Ten of those surveyed said supplies increased and one said there was no change. Refineries probably operated at 82.1 percent of capacity, unchanged from the week before. Utilization rates unexpectedly declined last week. Refiners often shut units for maintenance in January and February as attention shifts away from heating oil and before gasoline use rises with warmer weather. Gasoline stockpiles probably dropped 500,000 barrels from 215.7 million the prior week, according to the survey. Six analysts forecast a decline and five said there was an increase. Supplies of distillate fuel, a category that includes heating oil and diesel, probably declined 500,000 barrels. Still weak demand may create another bearish surprise especially for gas where the retail price is starting to creep up once again.
Ready to buy a new car but are afraid you can't afford one? Not a problem, just move to India where they will soon be producing the world's cheapest car. The BBC news service that the world's cheapest car is being launched in India. The car is called the Tata Nano will go on sale next month costing just 100,000 rupees ($1,979; £1,366), the Nano will now go on sale across India next month, with deliveries starting in July. Tata hopes the 10-foot (3-metre) long, five-seater car will be cheap enough to encourage millions of Indians to trade up from their motorcycles. I think I'll have to increase my global gasoline demand forecast upward.
Oil is bullish but the surge means we are ahead of ourselves. Position traders be patient and avoid the temptation to chase the market. Short term traders and day traders play the momentum but remember what goes up can come down. Be aware of pre report profit taking. Hopefully a bearish API and DOE report will give you a chance to position for the long term. Option traders watch out! If you need specifics and to open your account just call me at 800-935-6487 or email me at firstname.lastname@example.org . And make sure that you watch The Fox Business Network each and every day where you can see me each and every day!
Buy May crude at 4430 - stop 3900.
Buy May heating oil at 12300 - stop 11400.
Buy May RBOB at 12500 - stop 12300.
Buy May natural gas at 400 - stop 377.
The Dan Flynn Corn & Ethanol Report
Tuesday March 24th 2009
Good Morning !
The Dow Jones had a whopping rally based on housing reversal.Can this be a change in the winds or are we making a mistake of buying value vs. foreclosure.
Our May Corn settled at 396 up 1/2 cent in last nights action.
The range was 403 to 393. I still expect an upswing after the March 31st reports of Grain Stocks 7 A.M. and Prospective Plantings 7:30 A.M. Until the report I see range bound to higher.
On the Energy Front :
We are trading a little easier so far with the softening Stock Market in the early going after yesterdays huge rally. I still remain bearish Energies and don't forget weekly inventories
tomorrow. Expectr builds accross the board !
Have a Great Trading Day !