Sunday, April 10, 2011

Itz Week End Review 4-10-11

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 Once again, despite Middle East violence, congressional tug of war over our budget,collapsing US Dollar and $112 a barrel for WTI crude oil the stock market was basically flat for the week.
Next week is the start of earnings season with Alcoa (AA), JPMorgan (JPM) & Google (GOOG) leading things off. On the economic front, we have April options expiration, CPI, PPI, Beige Book & then the following week WTI Crude Oil expiration.
  The story this week was oil...with Brent over $126 a barrel and West Texas Intermediate finally hitting ITZ's target of $110, last electronic traded quote of $113. Whatever reason one places on WHY oil is rising, the concern remains who will win this race. At some point either oil will put us back into a deep recession or oil will put in a blowoff top and the premium will evaporate.
Oil was not the only commodity making headlines, ITZ fave 'silver' is within 57 cents of an all time high at $40.93. The high back in 1980 of $41.50 came on an attempt by the Hunt brothers to corner the silver market.  But $41.50 back then is not the same as today's inflation adjusted price, if adjusted for inflation silver should trade at $111.46 inflation calculator That's not even taking into consideration the Gold / Silver Ratio currently at 36, historically it has been as low as 20:1 chart link  So, doing the math that means adjusted for inflation gold @ $1475 should be at $3962 and a 20:1 ratio put silver at $198 an ounce! Not saying it will get there, but if one wants to compare peak (1980) to current 'peak' this needs to be considered. Lets not neglect WTI oil peaking at $40 a barrel in 1980 inflation adjusted to today's price $107.
So bottom line, with oil over $100 for several weeks now, how long will it take before it impacts the recovery? With earnings season beginning, estimates call for high $90s on S&P earnings, jobs seems to have turned towards improvement. The next few weeks will decide if things are really on the mend or we're heading back into recession.


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