Tuesday, April 25, 2006

What is driving the stock market now ?- April 25 .

It is a given that the market does not like uncertainty. Some of the past weeks predominant uncertainties that moved the market were: Energy prices, "2 I" WARS- Iran & Iraq, Interest rates rumors that Fed may be ready to apply the breaks. For the moment none of these are showing resolution and as the Administration & Congress flounder further there is little light at the end of the tunnel. Some exaggerations of these uncertainties are that the price of gas at over $3.00 & is turning off the public - investors are getting spooked. Certainly the gasoline price mess is worsening as the refineries and gas distributors attempt to change the new paradigm of blending ethanol and getting it into the pumps. The driving season is upon us & lots of SUV's & trucks are rolling. The conversion is difficult as ethnol can not be transported as easily as other liquids, has a shorter shelf life. has a vicious affinity for warter, & worst of all it is less efficient than that being replaced. Brazil took over 15 years to work out of their problems with ethanol and the US is attempting to do it in 15 days- no way hosa! With a few areas having no gasoline this can create panic. If many folks start to "fill em up" we are in for rough times and $4 gas will be breached quickly. Some major producers of vegatable oils are converting facilities to ethanol but not in 15 days. One problem may not make a financial crisis but congress returning and yelling price gauging and excess taxation will create all the PR needed to make most believe things are bad and want to get out of their positions. Now the last thing the market needs is to loose complete faith in our system and Bush's rating of 32% and Cheney ratings in the teens is not a precursor of confidence in the system. If it's broke folks want to fix it QUICK, so where is the hopeful " light of wisdom?" I'm not sure either. Oh! we'll just have a congressional hearing and blame the illegal immagrints !

2 Comments:

Blogger Pete said...

No, this does not mean one should bail out of the stock market. I am fully invested in small caps with momentum. No none of my holdings are dependent on the price of gas and may even benefit by high gas prices. I'm holding internet gaming co., Gigamedia. Yes spend yopur money while at home on the internet and no traveling?

5:24 AM  
Blogger Pete said...

Seawall U are right O&G shareholders like high oil & gas prices as this drives up the stock price as you assumed. Thanks for your comments on Bush- I fully agree with you. He is for big Cos and the O&G industry. Yet the Cos are doing little to make Bush look good. 11 billion subsidy to O&G industry in '05 energy bill.

5:31 PM  

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