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Treasuries For Sale Or Rent

Mon, Jun 22 2009, 05:59 GMT
by Phil Flynn

Alaron

Treasuries for sale or rent. The buck ain’t worth but 50 cents. More rules, more czars, more debt. I won’t let you make those risky bets. Ah but, more powers I have found will let me push entrepreneurs around. I’m a country of means by no means king of the Fed.

If you have seen one bubble you have seen them all. Tim Geithner defending the administration asking for sweeping regulatory powers while the government racks up record debt with him saying that we still need to do more. The Treasury announced a jaw dropping 104 billion dollar debt to auction shaking the concept of fiscal responsibility to the core. Commodities are becoming more valuable as the market wonders if the Fed would know a bubble if it popped in its face.

Still the oil market wanted to be optimistic about better than expected economic data from the Conference Board’s Leading Economic Indicator and a much better than expected Philly Fed number. Or maybe oil just has no confidence that the dollar can stay strong. Yet then oil got into a fascinating tug of war with natural gas as oil kept trying to drive higher while natural gas pulled lower. Part of that was the natural gas injection that was much higher than expected and reminds us that demand is weak.

But It isn’t just the weekly gas number that has attracted the attention of the gas market but a long term outlook and the mood set by a report by the Potential Gas Committee that said without government assistance (how is that possible?) the amount of technically recoverable and proven U.S. natural gas reserves climbed to 2,074 trillion cubic feet last year, up 35 percent from 2006. The report by the said the United States holds a potential 1,836.4 tcf of natural gas compared with the group's previous estimate of 1,320.9 tcf. This is the highest natural gas resource estimate in the committee's 44-year history.

China has been buying commodities as a hedge against inflation and a hedge against US record spending. Dow Jones is reporting that there is more evidence of China's growing energy imbalance with news from China's Securities Journal that May coal imports were 9.43 million tons, more than double year-earlier levels. "Surging imports in the first few months this year can't be (interpreted as) booming demand in China as refined copper was used as a substitute for scrap copper and copper alloy" which were in short supply due to weak prices. Dow Jones reported China's appetite for copper in 2009 won't likely be as large as last year despite Beijing's industry-supportive measures.

We still like the long side! Call for the latest updates and to open your account at 800-935-6487 or email me at pflynn@alaron.com. Oil is legging up!

Buy August crude at 7000 - stop 6790.

Bu August heating oil at 18700 - stop 18500.

Buy August RBOB at 19300 - stop 18900.

Buy August natural gas at 4120 - stop 3290.

Published on  Mon, Jun 22 2009, 06:00 GMT