Friday Already?

What an exciting week this has been.

I'm very bullish today after hearing Obama's speech last night (and here's a cool view of it) as it's very exciting to have the prospect of a leader who can actually inspire people.  Whether you agree with the guy or not, he's a great orator and we could really use a President who can rally people to a cause and make this country great again.  I've said for a long time that what we mainly have wrong with this economy is a crisis of leadership as it would not take much action to fix housing and energy issues – just the conviction to do something about it.

Without leadership, fear drives the markets and the hyenas use fear to manipulate stocks because it's easy to stampede a populace that is treated like sheep by their leaders.  Yesterday the sheep were herded out of AAPL as Bloomberg "accidentally" published Steve Jobs' obituary.  You would think this sort of nonsense would prompt a very serious SEC investigation but apparently Bloomberg get's to say "oops" and no one even asks who published the story, who edited the story, who OK'd the story (or do things in Bloomberg just randomly get published all the time?) and who those people are getting checks or gifts from.  Despite being obviously false, this allows the hyenas to churn rumors through their usual outlets regarding Steve Jobs' health, which is now an issue again because he isn't dead.

Speaking of hyenas, we're still on hurricane watch as Tropical Storm Gustav is keeping hope alive in the oil patch.  I will again remind people that 2 consecutive hurricanes – Katrina and Rita, just one month apart, only spiked oil to $80 and then it fell back to the $50s and that was when the US consumed 5% more oil per day (1Mb).  This concept of hurricanes affecting the price of oil is another example of the crisis of leadership in this country.  Price gouging is clearly illegal during disasters yet not one investigation was conducted by this administration into the behavior of the US oil cartel during the storms that set this country on a path to $100 oil, which has cost US consumers alone and additional $1.4Tn (how much we've paid over $60 a barrel) over the past 3 years in addition to another $1Tn in ancillary inflation DESPITE THE FACT THAT WE USE LESS OIL NOW THAN IN 2005!

Since 1980 we've had major Gulf hurricanes: Allan, Elana, Gilbert, Roxanne, Allison, Isidore, Lili, Ivan (Labor Day 2004) – all of which had virtually no effect on the price of oil.  Speculators were able to turn storms into market moving events in 2005 and, ever since then, have played the annual "hurricane card" whenever they need a boost in the fall.  The US consumes 140M barrels of oil per week, the entire Gulf produces less than 2Mb per day of crude, we have 1,700 Million barrels of petroleum in storage as of last week – this is completely ridiculous and, beyond ridiculous, it's criminal and only under this administration have speculators been allowed to get away with the single largest gouging of the American consumer in history.

Asia ignored the nonsense in the oil patch this morning as the Hang Send rose 289 points and the Nikkei added 304, pushing above the critical 13,000 line on a very strong day.  Housing Starts (up 19% in July) and Industrial Production numbers in Japan were better than expected, sending steel and real estate shares climbing as the government unveiled a stimulus package.   "A series of domestic positive cues helped the Nikkei today, but the next Wall Street session will determine the path for the Nikkei next week," said Kenichi Hirano, operating officer at Tachibana Securities.  The Shanghai Composite held flat but still under the critical 250 mark.  The Chinese market is anticipating government action to support the markets – it will be very bad if this doesn't happen soon. 

China did get some good news as they reached a $3Bn deal to develop oil fields in Iraq so, once again, mission accomplished boneheads!  This is a revival of a deal that was struck between Beijing and Saddam Hussein as deals with western companies, that were originally supposed to be completed in June, have fallen apart over political bickering and infighting with contractors that has sent Iraq's oil into the arms of the Chinese right under the nose of the Bush administration. China is also being courted by Russia's Medvedev for support for their political position in Georgia.   This will indeed be a great accomplishment for Bush's foreign policy if he can get Russia and China, historic enemies, to unite against us.

Europe is up about 1.5% ahead of our open, having liked what they saw in our markets yesterday.  Rising oil prices are keeping a lid on a big move but generally, things look well over there.  Russian Lukoil had a 64% rise in Q2 income as rising prices met with expanded output – a recipie that eludes the US oil cartel, who have cut production in order to cause those rising price and are being played for suckers as Russia and China continue to ramp up production at record paces. 

All these companies have access to the same global reserves, the big difference is that XOM, for example, spends 4 times more money on stock buybacks and dividends than they do on exploration and production versus NO money spent by Lukoil, CEO, PTR and others on stock buybacks or dividends.  There is global demand for oil so they follow the sensible business practice of producing more oil.  The only logical reason not to produce more oil is to create an artificial shortage and increase prices, the kind of criminal activity that can only be gotten away with in 21st centrury America.

We're off in the pre-markets as personal consumption dropped by 0.2% in July, much worse than the +0.2% expected.  Personal income dropped 0.7%, also worse than expected and this was the biggest drop since August 2005, a year we plunged in October (but then had a 2-year rally).  Of course we're coming off a 0.6% rise in consumption boosted by the stimulus checks so I don't think you can read too much into the consumption number but income is a big concern – but that's exactly what Obama was talking about last night, it's been going on for 8 years!  The PCE was also unpleasant at 4.5%, up from 4% in June (annualized).  Even excluding energy, the PCE is up 0.3%. 

I'm not too worried about that data unless we get confirmation next week, it's still all about the price of oil and any kind of positive day today would be a very good thing.