Chavez gets macho with US over oil - Breaking News

Reuters via tvnz.co.nz ^ | April 19, 2006 | Reuters

[RightWhale]

Nobody, least of all the US would be at all interested in attacking Venezuela. Or Iran either, all things being equal. Or Iraq or anyplace else, but sometimes a foreign country starts to be obnoxious and dangerous and there is no choice.

[HereInTheHeartland]

All he has sto do is wait out President Bush.
President Hillary will make him a guest of honor in the Lincoln bedroom.

[economist-student]

To break the price of oil, the best bet would be to raise interest rates so (15-30% a la Volcker) drastically as to encourage deflation. In one or two years the economy will be back in shape and based on sounder fundamentals (more manufacturing companies, and more savings)

Price deflation is going to come anyways, either in real terms or in nominal terms (a lot less likely, and I mean a LOT).

Here's a quote from Keynes on Inflation (the father of inflationist policies):

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity (or fairness) of the existing distribution of wealth. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

[Eric in the Ozarks]

Too scary for me. I'm buying first line energy stocks.

[economist-student]

ConocoPhillips is probably the most undervalued Energy stock (and compare it across other industries and you'll find Conoco's balance sheet to be among the strongest)

Cheers,

[SAJ]

I haven't looked yet, but it's possible that the NYMEX-traded crack spreads, whether 3:2:1 or others, **might** have tradable options. If this should be the case, it really ought to be duck soup to design a profitable trade. As my futures mentor, Don Wren (who has taken multi-millions out of the futures mkts from 1965 through to today) has said over and over again to me, and I quote exactly:

''There are only three types of traders. Those who know what's going on, those who don't know but think they know, and those who don't know but don't know they don't know. You don't have to know what's going on. You have to fade all the traders in the last two groups.''

Don is a very aggressive, VERY successful trader. I'm a passive trader; as an ordinary thing, I usually intend to profit by other traders' misplaced greed. Circumstances alter cases, of course, and now I'm taking a very hard look at exploiting mispriced cracks.

All that full disclosure aside, and asking you as a pro, what can possibly be wrong about buying 1-yr straddles on a 3:2:1 crack? I've no idea where this crack might go, only that it's going to go SOME effing where, and bigtime.

I know that you're an on-the-ground spot mkt pro, and I'd very much welcome your thoughts on possible crack trades in future, if you'd care to offer any. '

[SAJ]

I haven't looked yet, but it's possible that the NYMEX-traded crack spreads, whether 3:2:1 or others, **might** have tradable options. If this should be the case, it really ought to be duck soup to design a profitable trade. As my futures mentor, Don Wren (who has taken multi-millions out of the futures mkts from 1965 through to today) has said over and over again to me, and I quote exactly:

''There are only three types of traders. Those who know what's going on, those who don't know but think they know, and those who don't know but don't know they don't know. You don't have to know what's going on. You have to fade all the traders in the last two groups.''

Don is a very aggressive, VERY successful trader. I'm a passive trader; as an ordinary thing, I usually intend to profit by other traders' misplaced greed, as opposed to riding (say) silver, or WTI, or Brent, or whatever to the moon. Circumstances alter cases, of course, and now I'm taking a very hard look at exploiting mispriced cracks.

All that full disclosure aside, and asking you as a pro, what can possibly be wrong about buying 1-yr straddles on a 3:2:1 crack? I've no idea where the cracks **might** go, only that they're going to go SOME effing where away from present levels, and bigtime.

You're an on-the-ground spot mkt pro, and I'd very much welcome your thoughts about possibilities regarding assorted crack trades in future, if you'd care to offer any. '

[TASMANIANRED]

Totally freaking insane.

[SAJ]

Apols to you and JimRob for the double post (hangs head).

[Schwaeky]

Yeah, just replace the steering wheel, remove the dead carcasses, and drive it to the junk yard to remove the usable parts...

[DennisR]

What a psycho...

[Old Professer]

Give this another week and Castro will be breaking our balls, we'll be wringing out the mops at McDonalds to gas up our vintage greasecars:

[Eric in the Ozarks]

I work the bottom of the bbl because there are fewer experts in this field. I can make a mistake and still survive because the trade is not nearly as volatile.

[SAJ]

Unless I'm much mistaken, you'll have an opportunity twice or three times this year to see for yourself that parabolic markets behave in exactly the manner I described. In silver, almost certainly. Probably in gold. If our idiotic and feckless gov't keep screwing up, there'll be a similar situtation in one or another of the energy mkts. Sugar is a possibility, too.

FWIW, I've made a particular study of this type of market. If you have access to historical prices, you can check out the behaviour of parabolic mkts for yourself. If you haven't, you can get such access at Time & Timing. Take the free 30-day trial; you'll be astonished at what you'll learn (and at how screwy the pundits commenting on commodity prices are).

Just by the by, I'll be writing an article for (probably) Active Trader magazine on exactly this topic, trading at the end of parabolic markets, perhaps in the next week or two. The next issue (May) of Option Trader magazine will contain (feature? I hope(g!)) an article of mine on non-seasonal trading which you might perhaps find of interest.

Good trading to you!

[nicollo]

Thanks for the info. If you post your articles or links thereof here at FR, please ping me.

[SAJ]

Not certain, but I believe Mr. Robinson frowns on posting one's own articles -- you know, 'vanities' and that sort of thing. Almost surely, I can likely e-mail them to you, but the author agreement is a little odd in some ways. Let me check with my editor.

[proud_yank]

PING – Hugo is at it again!

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[MaineVoter2002]

You can thank a democrat for the high prices of oil. They have been wanting gas to be at $5 a gallon for years but now they blame Bush in USENET / GOOGLE POLITICAL NEWSGROUPS for $3 a gallon! Makes me sick!