I call Lincoln, Nebraska home; it's a beautifal place year round, but the winters can be long and treacherous. I'm humored when I see folks out navigating the snow covered roads in their European imports. I'm a fan of high quality German engineering, but even the all wheel drive Audi only has six inches or less of ground clearance making them painfully impractical for our Midwest climate. Then there is all the salt that we put down on our winter roads, ensuring rust will begin invading every nook and cranny in the quickest time possible. I make this point only for the sake of venting.
Speaking of cars though, why don't more of us realize that our vehicles are really just shiny garbage bins in which we throw our money? Transportation is the goal, well, safe-practical transportation in our case, so why not approach the problem of getting around with that in mind? Americans, at least the majority of the ones I see and know don't think this way. The problem is that many approach the purchase of a vehicle like that of a pair of trousers or maybe a new pair of shoes. The vehicle has become a status symbol, unfortunately for Americans, a very expensive
status symbol.
The trend has been to drive very large SUV's at least for the last decade. Bernanke said in the last few days that this new surge in oil prices is unlikely to slow growth and US economic recovery. Who is old Benny kidding?! High fuel prices are simply forced asset allocations for anyone who drives. The dollars that are put into the gas tank come out of ones overall budget. The bigger and deeper the gas tank gets, the larger the chunk of the budget it consumes. Because many Americans don't think along these lines, their SUVs they drive to get groceries in are leaving them strapped for cash in other places. In aggregate, this creates a huge inefficiency in the US economy. It would have been better if the Oil bubble never burst and America adjusted to the new prices by downsizing their vehicles. Some did, many did not.
The middle east has become a hot-bed of unrest and will continue to be in the years to come. China is growing at staggering rates right along with India. The world is changing. The American relationship with black gold is therefore going to have to change. What America does with oil is going to be a key factor in her recovery. These high prices are unsustainable at current consumption rates, something has to give, I beleive it will be the love affair with the large gas guzzling SUVs.
As you make your transportation choices, ladies and gentlemen, try to think logically about what you really need. If you don't like paying $5.00 per gallon of gas, go make more money to compensate or get a vehicle that returns you maximum value for the money you are BURNING with it.
Gas is just one factor when looking at the mess the USA is in, but it's an important one, hence the long rant.
Last weeks COT showed continued buying following that small dip. The statistics have not/will not change regarding a pullback to 1.3425, I built a modest position that I've been holding for three weeks now, but I'm * almost * certain the market will pull back before it marches above 1.4. My plan of action remains the same. I hope to average in down near or possibly below 1.35.
Once price does break 1.4, I plan to roll a portion of my floating profits right back into the market. 1.5 and beyond, here we come.
Here is a good Euro-bull article from Reuters today:
Here
In my next post I plan on sharing my views regarding the Gold bubble and when I expect it to burst. Gold still has plenty of upside potential, the more continued buying the harder and scarier the crash will be. I'm thinking late 2012, no not because it's 2012, but because by then I expect the USA to be talking interest rates...Until next time, God bless and good trading.
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