Crude continues it's blistering rise. Remember, I told you here first. We're approaching a price we haven't seen since the gulf war. Brent (which is much better as a wet barrel indicator) traded above 24 dollars today. WTI is banging on the psychologically important level of 25 dollars. If we trade above that kabang, we go higher. Heard also today that the Iranians picked up ten million more barrels of floating storage which would bring thier total to nearly 38 million barrels of oil on the water.

Heating oil is next to start flying off the meter. Everyone thinks that because stocks are high, that heat is doomed to the cellar. Guess again, heat's gonna fly here soon. Last week the expectations were for a build of 1.5 million bbls. instead we only built 400k. They call this a clue. Another clue came in the form of a heads up I got today. Many, many of the utilities that use fuel oil are stocking up and lining up extra cargos/pipe movements for year end. This is gauranteed to spike Nov and Dec heat. Never mind the weather, combine this with J. Q. Public's 300 gallon tank, which shall remain full for the entire winter. Yikes. It's a screaming buy.

Meantime on the financial front:

The lies and spin just keep comming. Slick Willy's boys are hurting for talent now that Bob Rubin's gone. They can't seem to resonate with any of the boys on the street anymore. It's almost like everyone suddenly woke up. Gotta hand it to Rubin for being hitting his departure on the money (pun intended). Any good trader worth his salt would rather be early than late, but not Rubin, he was right on time. Just soon enough to avoid being associated with this debacle.

We've got a market that has pinned it's hopes on G-7 intervention on the dollar/yen despite the fact that the BOJ will have none of it. We've got a new Sec Treas who can't stop jaw-boning to save his life. Larry Summers sounds like Ron Popeil on speed. "the Yen doesn't matter" "y2k doesn't matter" "inventories are fine" "no changes in policy". "For the low low price of 99.95 yen you can have your very own US greenback which comes with a commemorative memorial plaque which shows a graph of the US trade deficit."

Hey a bit of advice here Larry, "shut the fuck up". You're starting to give away the plot line.

When last we left our intrepid pimply faced fund managers they were poised over their screens debating the merits of buying more worthless stocks than they already held. Phil McCracken manager of the Ben Dover Fund Group was quoted as saying "It's not that I think valuations are not absurd. I'm not saying that. And I know that these companies are built around a house of cards. It's not that I feel guilty taking pensioners money and slamming it into companies that have never reported anything but losses. It's just that Muffy and I just settled down in our new Greenwhich estate a half mile from the train station and we're thinking of having 2.5 kids soon. Since my bonus gets paid on assets under management, I'm not going to do a thing until I know that bad-boy is secure. This market is screaming weakness and by God no one's gonna fuck with my bonus. I don't care how many old, young, or helpless bastards...I mean..uhm...that is to say...Over the long haul...stocks have proven to be associated with growth provided that the investor takes a long term view..blah...blah...blah..."

Craven Morehead, manager of the Ricardo Cabesa Funds, was interviewed on the veranda of his sprawling Westchester estate. The MSNBC bubblevision correspondent Maria Imaginemenaked Bartiromo breathlessly asked Mr. Morehead his opinion on the current state of the economy. "This economy is solid Maria, much like my forearms and net worth wouldn't you agree?" He continued "Look the Fed wouldn't raise rates now to save Al Greenspin's mom from a certain train wreck. In fact, we all know that they're completely hosed 'til the end of the year. Any little ticks in liquidity could blow this thing to the moon, and they don't wan't that. I mean look at the statements by Larry Summers for God's sake. You don't see him blathering about technical levels like those pansy's you work with over there at MSNBC (Microsoft No Bubble! Communications). He's a man's man. A real player. May I say also that you look ravishing this evening Maria." But what about Y2K Craven? "Look, it's all bullshit essentially. I mean the government, the federal government led by John Koskinen just came out and said we're home free. Big Al even said it and he's the guy that I think, I think um broke that damn mainframe pc thingy in the first place...didn't you hear that he did that Maria?" Uhm no Craven I hadn't heard that. Well this is Maria Bartiromo and Craven Morehead til tommorrow when we'll examine how the chip makers plan to make money even with out a plant to make chips....."

Thus endeth my opinion on what the real deal is.

For educational and research purposes only:

Dollar Up Vs Yen; Pre-G7 Tensions Mount (Reuters) The dollar snaked higher in early trading Thursday as tensions mounted before a key international weekend meeting which traders expect may shape the Japanese yen's near-term fate. - Sep 23 10:38 AM EDT

OPTIONS - G7 risk bolsters demand for yen options (Reuters) LONDON, Sept 23 (Reuters) - Short-dated dollar/yen options were in demand on Thursday ahead of a Group of Seven meeting at the weekend and as the dollar struggled to maintain a feeble foothold above last week's 3-1/2 year lows. While the demand for dollar/yen options was of little surprise, given the likelihood the dollar would break away in one direction or the other after the G7 meeting, focus in the euro/dollar market shifted to time decay from event risks, traders said. - Sep 23 8:16 AM EDT Fed's Mcdonough Says Dollar/Yen Exchange Rate Is at "Good" Level for U.S. Economy (Reuters)- Sep 22 10:15 PM EDT

McDonough Says Dollar Level No Threat (Reuters) Federal Reserve Bank of New York President William McDonough said Wednesday the dollar's current exchange rate against the yen posed no threat to U.S. economic expansion. - Sep 23 1:24 AM EDT

Mcdonough Says Highly Likely "Superb" U.S. Economic Performance Will Continue (Reuters)- Sep 22 10:25 PM EDT

Mcdonough Says Fed Policy Has Achieved its Goal of Price Stability (Reuters)- Sep 22 10:16 PM EDT

NY Fed's McDonough-rate change due to Y2k unlikely (Reuters) NEW YORK, Sept 21 (Reuters) - Federal Reserve Bank of New York President William McDonough said on Tuesday he does not expect that the U.S.- Sep 21 11:40 AM EDT

Alert: Mcdonough-market Reaction to Y2K Repo Changes as Good or Better Than Expected (Reuters)- Sep 21 11:02 AM EDT

Alert: Mcdonough Does Not See Any Unusual Flows in Treasuries Due to Y2K Distortions (Reuters) - Sep 21 10:56 AM EDT

Alert: Ny Fed's Mcdonough-rate Move Due to Y2K Inventory Effects in Q4 Seen Unlikely (Reuters)- Sep 21 10:54 AM EDT

If you don't read Jim Cramer's theStreet.com, you should. it's at www.thestreet.com

These guys are good. Really good. Gotta takem with a grain of salt but they work hard and gather real intel. Here's what I think's going on these days followed by a Cramer piece for educational and research only.

Rushin' to Do a Little Lending By James Padinha Economics Correspondent 9/22/99 3:01 PM ET The (Happy Happy Joy) Joy Luck Club JACKSON HOLE, Wyo. -- The nugget below appeared on a wire yesterday.

New York Federal Reserve Bank President William McDonough reiterated the Fed's stance that it is prepared to enhance liquidity in the run-up to Y2K. McDonough repeated that starting Oct. 1, the Fed will implement a "no questions asked" policy at the discount window. How ... cheeky.

Really. Can you even imagine?

To Russi... No. Wait. To Springfield. With Love. Interior. Daylight. A discount window somewhere on the East Coast.

A young, sharp-dressed, sunglassed woman approaches a Nice Fed Lady behind the cage.

Nice Fed Lady [perky]: Morning! How can I help you?

Young Woman [removing sunglasses]: Hi. I'd like to borrow some money under the No Questions Asked policy.

NFL [perkier still]: Very good! Can I please have [reaching for small yellow Post-it] your name?

YW [putting glasses back on and pointing overhead]: The banner there says No Questions Asked.

NFL [smiling, nodding]: Yes ma'am! We wrote it that way [cocking head slightly, crinkling nose, hunching shoulders] to make sure that no one would be afraid to come in and ask for funds!

NFL [still smiling]: There are actually four questions I need to ask. All [glancing down at Post-it] short ones! Name?

YW [hesitant]: Natasha Gurfinkel Kagalo... no. Wait. Lucy Edwa... no. Wait. Svetlana Kudryav... no. Wait. Tatyana Yelt... no. Wait. Simpson. Lisa. Da. I mean Yes. Lisa Simpson. Yes.

NFL [scribbling]: Very good! Firm?

YW [pausing]: The Bank of New Yo... no. Wait. Menate... no. Wait. Bene... no. Wait. Springfield Nuclear. Yes. Springfield Nuclear.

NFL [scribbling]: Very good! Amount of loan? In billions?

YW [immediately]: Four-point-tw... no. Wait [bringing finger to temple, tapping]. Eight-point-four. Yes. Eight-point-four billion dollars.

NFL [scribbling]: Very good! Purpose of loan?

YW [thinking]: Writing down laundering losse... no. Wait. Congressional payof... no. Wait. Upgrades. Yes. Power-plant upgrades.

NFL [scribbling]: Very good! [Swinging around to pass Post-it to green-visored clerk behind her, turning back to woman] Your loan will be ready [pointing toward sign that reads Pick Up Here] at the far end of the counter in a few minutes. Meantime please relax [pointing toward lush lobby] in our waiting area. Tinkling the small silver bell will bring [cocking head, crinkling nose] a butler with tea service!

YW [unimpressed]: Thank you. [Thinking] Do you by chance know of anyone else who extends loans like this?

NFL [beaming]: Yes ma'am! That would be the IMF! It's just three blocks down. Or [pointing toward a door stamped In Case of Extreme Emergency Only] feel free to use our tunnel!

YW [grinning]: Thank you.

NFL [suddenly remembering something]: And oh! Miss Simpson?!

YW [turning, holding breath, concerned]: Yes?

NFL [excited]: I just love the scent you're wearing! And it seems to be all the rage with the young women these days -- I smell it on nearly everyone who comes in here! Do you mind terribly revealing the name of it?

YW [exhaling, relieved]: Of course not.

YW: It's called Stoli.

Roger and Me

Firms are not raising prices but rather are meeting increased demand with more efficient production. Thus Fed Governor Ferguson yesterday.

And one wonders.

Why weren't firms producing as efficiently as they could in the first place?

The way many folks talk about productivity these days, one could be excused for coming to the conclusion that firms have ever at the ready a big bucket of neater and newer tools and gadgets and processes -- one from which, whenever they run into some fresh overseas competition or consumers who decide on a whim that damnit-we-just-don't-feel-like-paying-more-anymore, they can pluck to produce a little productivity boost at will.

And that's just really hard to swallow.

I get too many notes from too many managers to argue that productivity growth isn't accelerating smartly in certain areas.

It most certainly is.

But the bucket-dipping notion? That the option to just suddenly jack up productivity however much they need to in order to counter production or cost problems is always available to firms?

Uh-uh. No go.

That just don't sit right.

Side Dish

I find it hard to accept that even over the long run equities are no riskier than government bonds. Thus Burton G. Malkiel, author of A Random Walk Down Wall Street, commenting on Dow 36,000, by James K. Glassman and Kevin A. Hassett.

-- Gordon (g_gecko_69@hotmail.com), September 24, 1999

Answers

ROTFLMAO, That was outstanding Gordon, best post I've seen in a while.

-- Nikoli Krushev (doomsday@y2000.com), September 24, 1999.

Gordo,

whew! where did everybody go?

Do you have this effect on everyone?

I-for one am going to go back and re-read, I think I may be able to glean something out of this. But could you do me a favor (seriously)? I am going to come back to this thread and look for your response.

Can you give it to me in laymans terms-----Please!!

-- D. Butts (dciinc@aol.com), September 24, 1999.

Gordon,

Thanks, that was rich.

Hey on the subject of petroleum products and shipping. Have you heard anything about where the non-compliant tankers are going to be deployed? Specifically R-D cancelled agreements with non-compliant super-tankers, where did they go?

-- no talking please (breadlines@soupkitchen.gov), September 24, 1999.

"I find it hard to accept that even over the long run equities are no riskier than government bonds."

Doh slap to the mid-brain for anyone who has an IQ over 50. Herein ends the lesson.

-- BigDog (BigDog@duffer.com), September 24, 1999.

English Version

Crude Oil is moving up Hitting and blowing through key technical indicators, especially N. Sea Brent. Most people focus on WTI (West Texas Intermediate or Nymex contracts) as opposed to Brent. Brent since it is much more physically oriented market tends to reflect the physical markets much better globally than WTI. WTI can sometimes experience a disconnect effect with the rest of the world and even more when BPA controls so damn much of the scene these days. The Iranians are signing up so many damn tankers you'd think they wanted to start their own crude oil navy.

Heating oil is cheap Right now the world thinks there's this glut of heating oil. It's already disappearing into what I like to call tertiary storage. Secondary storage = petroleum tank farms and terminals. Tertiary storage = your home heating oil tank. I think the world is missing the fact that three separate articles have now run on the idea of "filling up your gas tank and your heating oil tank" at year end. These appeared in the globe. The API actually did studies on this to determine how we (the industry) would do with a run to fill tertiary storage. The short answer, we can to a certain extent. It will definitely impact price.

Monetary Policy is In Deep Do-Do The world figured out that we were overvalued to the extreme a few months back. Bob Rubin did too. He saw the endgame and bailed in time to get rich on Goldman.com's IPO and his replacement is not quite as smooth as Bobby was. He stepped on the fiscal equivalent of a bouncing betty with this Yen thing. He's in a tight spot. However where Bob Rubin would have been cool and calm, this guy sounds like he's about to wet himself in his press releases. He's over doing it. Therefore he's giving away the game. And the game for him is to reassure everyone that all is well in our bubble economy when it cleary is not. Hence all the jawboning.

Wall Street Melts Down It's really sad to listen to crap that these dorks say every morning on the way into work on Bloomberg radio. The interviews are ludicrous. One out of ten is meaningful and mentions the comming liquidity crisis. The rest babble on about what a screaming buy the dot.com's are, or the tech's are or whatever piece of crap they hold the most of. Meantime, we are in deep, deep trouble in market land. The market internals suck. The thing is really teetering and basing all it's hopes on whether the G-7 will intervene over the weekend. Vegas odd's say no. I say no. I hope I'm wrong. If I'm not then the Yen Dollar goes to 100 and maybe 95. And we get our ass kicked on Monday real hard. This is the likely scenario.

Fed Spins Extra Fast and Furious The article from Cramers web site was meant to point out just how far off the beaten path we are on Y2K and monetary policy. There IS NO PRECEDENT for what's going on here. Unlimited discount window? Blank checks? I admire their balls, but please admit that you're that scared and that's why you're taking these measures. You don't want the worst to happen and maybe Joe and Jane public you should see how damn serious this whole thing is by examing the moves we're making behind the scenes. Instead Joe and Jane are watching Maria (honestly I can't blame them) and trying to figure out which tech stocks to buy or sell today.

Hope that helps.

As far as vessels. I saw that the CG busted about 150 vessels during their 9999 "drill" and stopped em cold. They are forcing them to produce Y2K plans and documentation or they can't sail. Interesting that they found so damn many on the water isn't it? My guess is that shipping will slow to a real crawl just on the frozen zone alone and then really be FUBAR once we start trying to make up for lost time after we've safely "transitioned" the actual millenium date. Most ports are planning a safe time out period which will creat a real windfall for the shipping industry. Let's see what's the demmurrage rate on every vessel in the world for four hours? A big freakng number.

-- Gordon (g_gecko_69@hotmail.com), September 24, 1999.

Thankyou!!!!!!!

-- D.B. (dciinc@aol.com), September 24, 1999.

Gordon

Great read! You are missing a calling somehow.

"Hey a bit of advice here Larry, "shut the fuck up". You're starting to give away the plot line. "

I seen Larry getting interviewed by Lehrer on the News Hour and he was waffling about the yen - dollar issue saying it was none of his business. Look at the "fundementals" he says.

The press blames the market fall on Microsoft pres. saying that the tech stocks are over valued. Wierd.

Any comments on this, Gordon?

Oh and now Brown is going to get the IMF to sell gold to a central bank and save the third world nations from debt. No doubt trying to achieve what the BOE bank sale didn't.

Being rather new at this second guessing global economic leaders, I have to wonder what rock they climbed out under.

-- Brian (imager@home.com), September 24, 1999.

Gordon,

Maria B is too petite to imaginehernaked. OTOH, there's TWC's Kristina A. :-)

Meanwhile, back in the oil patch, between 3rd quarter 1998 and 2nd quarter 1999, Chevron's 10Q reports to the SEC reported "mission-critical third party relationships" dropping from 1,200 to 800. The reports contained no explanation of the changes in those numbers. I am not asking you to expain the change, not do I offer any guesses; I simply mention the changes as an interesting oddity.

Jerry

-- Jerry B (skeptic76@erols.com), September 24, 1999.

BTW, I'm not picking on Chevron. It's simply that they are one of the very few companies that I have noticed give quantitative info regarding suppliers/customers in the Y2K sections of their 10Qs/10Ks. Others that I have noticed e.g. Sears, Dupont, Pepsi, were not in the oil patch.

Jerry

-- Jerry B (skeptic76@erols.com), September 24, 1999.

Ohnoshesnot Jerry!

-- Andy (2000EOD@prodigy.net), September 25, 1999.

Gordon, LOL!, keep 'em coming!

-- Andy (2000EOD@prodigy.net), September 25, 1999.

You were on about crude prices and I will watch (maybe play) the heating oil futures.

This combination of another economic crisis precipatated by the swooning of the US Market and Y2K will have a disasterous synergistic effect.

-- Mike Lang (webflier@erols.com), September 25, 1999.

The Yen/US$ exchange rate has fluctuated substantially this decade. Here are a few selected monthly average rates:

Foreign Exchange Rate: Japan
(Yen/US$), Average of daily figures
Noon buying rates in New York City for cable transfers payable in foreign currencies
Source: G.5 Release -- Federal Reserve Board of Governors

DATE Yen per $

1990.12 133.89
1991.06 139.75
1991.12 128.04
1992.06 126.84
1992.12 124.04
1993.06 107.41
1993.12 109.91
1994.06 102.53
1994.12 100.18
1995.06 84.64
1995.12 101.85
1996.06 108.96
1996.12 113.98
1997.06 114.29
1997.12 129.73
1998.06 140.33
1998.12 117.07
1999.06 120.72
a recent daily close:
1999.09.24 104.xx

As you can see, the US dollar had fallen with respect to the Yen, bottoming in 1995 much lower than currently, and subsequently recovered. On the other hand, the recent fall has been much more rapid so far this year than in the early part of this decade, and many other circumstances are different today than in 1995.

Just a few data points, you get to draw your own conclusions. :-)

Jerry

-- Jerry B (skeptic76@erols.com), September 25, 1999.

Gold Posts Biggest Gain in Decade as European Central Banks to Limit Sales By Vaughan Scully

Gold Prices Soar as European Central Banks Act to Limit Sales

Sydney, Sept. 27 (Bloomberg) -- Gold prices posted their largest gain in more than a decade after a group of European central banks said they will limit sales from their official reserves to 400 metric tons annually for the next five years.

Gold for immediate delivery jumped as much as US$17.75 an ounce, or 6.6 percent, the largest one-day rise in at least 15 years, to US$286.50, its highest price since May 7. The move outpaced the 3.4 percent gain for gold following the stock market crash in October, 1987. ``As far as the market is concerned, it's very positive,'' said Chris Hunt, manager of bullion services for Bank of Western Australia in Perth. Concern that new sales could emerge, driving gold prices down further, ``is now removed,'' he said.

A group of 11 central banks around Europe, as well as the Bank of England, the Swiss National Bank and the Swedish Riksbank, who together hold for about half the world gold reserves, pledged to limit their sales to those that already have been announced. Gold sales by central banks, particularly from England and Switzerland, helped push gold prices to a 20-year low of US$251.95 an ounce in August.

The surge today comes after a one-week rally that pushed gold prices up US$13.75 an ounce, or 5.4 percent, after a sale of 25 metric tons by the Bank of England drew unexpectedly strong demand and above market prices.

With central bank sales now under control, the balance of supply and demand appears much more favorable to higher gold prices, Hunt said. ``The market can reasonably absorb'' the 400 tons of gold to be divested from official reserves, Hunt said. ``There's a probably seven to 10 percent drop in production because of the low prices. Add to that exploration is at five, six or seven-year lows, and it leaves a handsome gap for the sales to fill.''

Central banks have sold between 80 metric tons and 600 tons a year for the past decade, Hunt said, so the future rate of sales is ``nothing unusual.''

-- Andy (2000EOD@prodigy.net), September 27, 1999.