Sunday, February 13, 2011

Itz Week End Review 2-13-11 Oil, Gold, Silver, Doug Kass & More

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The world witnessed a historic event as the Egyptian people won their freedom Friday. But amid the euphoria that has continued on the day after Mubarak's fall, many insist that a new era for Egyptian politics has begun, and that the fortunes of Suleiman and Shafik are waning. It may take six months to a year to organize a presidential election. Even leading up to Mubarak's decision, just 12 hours earlier he gave a steadfast speech, vowing to remain as president until September, when his term was up. The markets were on edge, things could have gone either way, it could of been a bloody outcome, but instead turned out to be a peaceful. But one has to ask, just because Mubarak has exited, have things really changed? Suleiman and the military still run the show and who is to say they will allow elections? Note that the markets will have that trepidation in mind. There are quite a few analysts that believe these things won't happen or at least won't happen in the quoted timeframe. The military has been in charge behind the scenes in Egypt for the last 60 years but they always had a front man to take the heat. The civilian population is currently happy with the military but they do want a democratic government. The military may not want a truly democratic government because it would restrict their power.
It remains to be seen if any of the planned demonstrations will gain any traction the adjoining Arab countries, but the potential for another country to flare up is definitely there. These demonstrations could be new bricks in the bull's wall of worry. Investors will have to find something else to worry about. If and when a new president and gov't comes into office many will wonder if Egypt will hold to their treaty with Israel? Will this contagion spread and how much power will radical groups in the region gain?

Oil prices have been volatile over the last 2 weeks, first rallying on fears and then retreating on news the Egypt crisis had ended. The U.S. WTI contract fell to $85.28 at the close. Meanwhile the Brent contract rallied +56 cents to $101.43. The difference reflects the buildup of supplies at the WTI delivery point at Cushing Oklahoma. The WTI contract expires in seven days. The Brent contract has become the global standard for crude since it is not impacted by storage issues. Friday Afternoon, the CFTC Commitment of Traders NYMEX Light Sweet Crude Oil number for Feb. 8th came out. >>LINK It saw on the Non-Commercial side a weekly decrease on shorts by 12,799 with a +165,508 net long position, while the Commercial's (Smart Money) adding 24,230 shorts for the week and a Net +221,010 Short position.

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, including the response on the floor when Mubarak resigned, and looks ahead to where oil, gold and other commodities are likely headed next week.

Saudi Arabia is the largest oil consuming nation in the Middle East. In 2009, Saudi Arabia consumed approximately 2.4 million bbl/d of oil, up 50 percent since 2000, due to strong economic and industrial growth and subsidized prices. READ.... OPEC sees no supply shortage? Read.... What numbers are they basing supply estimates on? read more... follow Itz Stock Chartz daily updates on Twitter

For now it appears that things have subsided in the Middle East, but we may see a flareup again in Greece. European and IMF debt inspectors told Greece Friday to privatize euro 50 billion (C$67 billion) in state assets and push through a punishing overhaul of government-run institutions in the next few months to keep the country's troubled finances afloat. >>LINK The problems from the EU no longer on the headline news doesn't mean the problems have been solved. This should rekindle the gold market.

Both precious metals are expected to move higher in 2011, but which is the better buy? Phillip Streible of Lind-Waldock and Jeffrey Christian of the CPM Group weigh in.

Tips on parlaying price increases into profits, with Lee Munson of Portfolio Asset Management and Jim Iuorio of TJM Institutional Services.

Considering the global events of the week Egypt & China rasing interest rates alonng with the Cisco news...the S&P 500 continues to steam ahead. Fund managers claim they are forced to buy stocks because of the largest fund inflows in over two years. An estimated $16 billion flowed into equity funds in January and those flows are still in progress. Bond funds have now seen three consecutive months of outflows for the longest streak in more than two years. Over $32 billion has flowed out of bond funds. The Transport Index closed @ a new high and is set to break out. This is a bullish sentiment indicator and should continue to push stocks much higher. We could see some selling prior to the FOMC meeting on Wednesday and don't forget Friday is Options Expiration.

Below are several Itz Pix Portfolio holdings that had some major moves recently.

The top four threats to the bull market, with Doug Kass, Seabreeze Partners Management.

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