MINISTRY OF DISINFORMATION - BULLARD SPEAKS

http://www.bloomberg.com/news/2011-03-26/u-s-1st-qtr-gdp-may-not-be-as-strong-as-expected-bullard-says.html

Fed Governor Bullard spoke earlier this week in France and as usual he has been tapped to attempt to send out feelers about future Fed policy.  What I've noticed is that Bullard is sent out to discuss future Fed strategy to test the reaction of markets and sentiment.  This speech is no different as he makes efforts to spin that the economy is improving and perhaps we just don't need the remaining QEII.

From the Bloomberg article -

"St. Louis Federal Reserve Bank President James Bullard said policy makers should review whether to curtail a plan to buy $600 billion in Treasury securities, noting that the U.S. recovery may not need that much stimulus.

“The economy is looking pretty good,” Bullard said to reporters in Marseille, France, on March 26. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short,” he said, referring to the second round of so-called quantitative easing.

I'm not buying what Bullard is selling here, or probably better stated, I'm not buying the suggestion that the Fed is desiring to remove QE from markets because they are healthy and ready to get back on track.  I believe that the Fed is actually concerned about commodity prices and the impact it is going to have on corporate margins and also the ability of the market to function with $100 oil.

OIL IMPACT
Bullard continues

"The oil price increases so far are “not enough to derail the U.S. recovery at this level,” Bullard said. “If oil prices stabilize where they are, we’ll be fine.” Prices would have to go substantially higher for there to be a “significant and material effect,” he said.



“We have to weigh those in the decision” on whether to stop the Fed’s QE2 program earlier than planned, Bullard said.

Hmmm.  So if you are the FED and you are concerned about higher oil prices that could impact the recovery what would you do?  Right!  You might talk about how you are going to end the one program that is the cause of all of this commodity inflation!  You don't have any intention of stopping early, but you would at least send out your lacky to talk about the possibility. 

FED STRATEGY
So, if Bullard is trying to signal that the FED may begin to wean the markets of its fiat version of crack, what would be their steps to attempt to detox the market and kick the habit?

"While the economy may still suffer shocks, the “balance sheet should be contingent” and the Fed should be ready if the economy turns down, he said.

“If the economy is as strong as I think it is then I think it may be reasonable to send a signal to markets that we’re going to start withdrawing our stimulus, and I’d start by pulling up a little bit short on the QE2 program,” Bullard said. “We can’t be as accommodative as we are today for too long, we’ll create a lot of inflation if we do that.”

If the Fed opts to start withdrawing stimulus and tighten policy, it should start with the “balance sheet” by selling bonds first, then changing its wording about keeping interest rates near zero for an “extended period” and then raising interest rates, Bullard said.


Bullard has warned since last July about a risk of Japanese-style deflation in the U.S. while calling for purchases of Treasury securities to reduce the threat. Bullard, 50, voted in favor of the Treasury purchase program in November and has rotated this year into an annual non-voting position.

You need to read that statement again --- "We'll create a lot of inflation if we do that".  Yes, for once Bullard and I are in total agreement.   If the Fed doesn't act they will create a lot of inflation (have created a lot of inflation).  What he doesn't say is that they have already created a lot of inflation in asset price terms (stocks and commodities) and we've discussed how this has led to the two year rally from the depths of the abyss and also led to the oil and food price rallies that have caused unrest and misery throughout the world.  Recall that Bernanke likes to say that he can inflate stock prices, but never admits to the inflation of food and fuel prices. 


TRAPPED BY A CREATION OF THEIR OWN MAKING
The next few months are going to be entertaining as the Fed starts with their balance sheet like Bullard suggests.  We'll see exactly how much appetite there is in the world market for over-priced treasuries that provide below market interest.  The FED is in a box and we'll get to view what impact selling bonds has on the market while the Treasury is trying to sell more and more bonds to meet the budget requirements of the ever-growing beast called the US Government.  The Treasury and goverment needs rates to remain low because we cannot service the debt if interest rates rise to market based rates, and I believe that we'll be able to witness just how handcuffed the Fed is once they try to remove themselves.

SINCE WHEN DOES THE FED TIME ANYTHING CORRECTLY?
We should all be very worried about Bullard's last statement below.

“It looks like inflation is bottoming out and if we continue that, I think we will have gone past” the worst, he said. “We seem to be turning the corner there, but I would want to see more data on that.”

I haven't seen a Fed Chairman that has been able to engineer a move in the economy that didn't overshoot one way or the other by injecting too much liquitity or tightening too much.  It is frankly just too hard.  If Bullard says that we are at the bottom of the inflation turn, it is probably more accurate to state that we have already made the turn and it is too late.

This week the FED did sell $2 Billion of their bonds yesterday under the TOMO program.  This is a very small amount, but could be construed as a test sale in the market.

http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE

I believe that the best FED approach would be to announce that they see significant improvement in the economy and that the QEII program will be strategically altered by changing their allotment of allocated money.  This would be done by reducing the remaining purchases on a monthly basis,  but should then suggest that the progam is not ended, in fact, it is extended through year-end with the remaining portion of the $600 Billion as ammunition.  In addition, they plan to begin asset sales from the balance sheet with the expectation that they will raise interest rate at the end of the year or early 2012.  By proceeding in this manner, they essentially make the statement that the economy is getting better, they will try to improve their balance sheet, but they stand ready anytime with already approved liquidity to step in if markets seize up (or in the eyes of the Fed, if stock markets decline).


TRADING UPDATE
What are markets thinking about the notion that Bullard says that inflation might be around the corner?

TIPS

USO

 

Today and tomorrow make up the period we often call "window dressing" period where portfolio managers begin buying the hot stocks and selling the losers because they are required to disclose their positions at the end of the quarter.  Portfolio Managers don't want to answer questions like "Why didn't you own NetFlix?" if they can help it, so they go out and buy those stocks that have performed well and they sell the ones that haven't.  This has the effect to push up the market leaders over the last few days of the quarter.  It is often noted though that these same managers unwind those same positions near the beginning of the quarter.  If you don't like it, sell it!  I mention this so that we are clear to avoid getting sucked into the bullishness of these next couple of days.

I am concerned about commodities right now and therefore suggest that you do not add to new positions over the next couple of days.  Copper is extremely weak and most commodities follow the trend created by copper.  There are some very fundamental and specific reasons (specific to copper), but that doesn't mean that a big drop in copper won't bring the rest of the commodities market down too.  There are rumors of Chinese businesses buying copper and storing it in warehouses in the effort to then borrow against that asset because they cannot get traditional bank financing as the government has tightened loan availability.  There is talk that there is a huge amount of copper supply just sitting essentially as a funding source.  If copper declines significantly there will be effectively a margin call against those copper supplies and businesses will be forced to sell at the prevailing market rate to get out of their positions.  This squeeze could get really ugly really fast.  This is just another item to watch over the next couple of weeks.

JJC (copper etn)

GOATMUG

 







 

CHARLIE SHEEN, GASOLINE, AND OTHER THINGS

We've had a few headlines over the last few weeks that have moved markets.  We've seen a tremendous drop in assets after the earthquakes in Japan and the following nuclear drama that continues to unfold.  Since the initial drop we have seen a swing back to the upside which has bears in knots again and dip buyers loving life.

SOLAR FLARES OR JUST THE BOILING POINT?
As I've taken a few days to review the coming end of the first quarter, I can only shake my head and affirm that something other worldly is going on.  A few days ago I postulated that perhaps it was an increase in solar flare activity that has the world going nuts.  I mention this in jest, but there is a lot of study that has been conducted that does find a correlation between solar activity and human unrest, natural disasters, and even serious market corrections. ( http://journal.borderlands.com/2000/sunspots-and-human-behavior/ ) Think about it, we have absolutely no idea what affects the masses or provokes them to take action at a specific date and time.  The seeds for all of the things that have been going on have all been there, it just happens to all be going nutty at once.  Here is a partial list of the maniac behavior being exhibited on the earth currently;

A)  Charlie Sheen is absolutely freaking bonkers.  It may have been a media hype job, but there is some piece of absolute wackoness in that guy and the switch just got tripped.
B)  Riots in just about every country on earth with the exception of nations filled with fat sheep (USA comes to mind - but of course I forgot about the non-sheep unionites in Madison that are rioting because their ability to rip off the taxpayer is being removed).
C)  Union riots in Madison
D)  Japanese earthquake
E)  President Obama is more of a war-monger than the Bushes.  How about attacking Libya and their tyrant and then getting cold feet?  Ooops!  How many civil wars will we start through Fed policy and foreign policy blunders?
F)  Irish interest rates push through 10% and people still own the stuff?  I'm sure they are good for it just like Portugal, right?

(UGA) - TRADE UPDATE
I wanted to do a quick post that would highlight several of the areas I've been in and also positions that I'm watching.  As I highlighted back at the beginning of the year, energy and commodities would be themes I felt would benefit from the continued use of QEII.  All the way back on January 17th, I identified that one of my favorite trades for the year would be UGA.  http://goatmug.blogspot.com/2011/01/january-macro-update.html (go to the end in the TRADING UPDATE section).

We all know the reasons for this trade;
A)  Weak dollar
B)   Emerging country use of cars is growing exponentially
C)   US Summer price fundamentals (seasonal increase) through the first half of the year and $4.50 gas is reachable.
D)  Technical chart strength at the time as price action went through the $40 level.

What has occurred since that time has been exactly what I highlighted but the trade has also benefited from the Middle East unrest.  This really isn't a post about how great the call was, especially since I did not anticipate the riots and think that we are way ahead of where I thought we'd be after just two months.  At this point we see oil at $105 and gasoline is trading at $3.05.  I've included a link here from Yahoo News that shows that US gasoline inventories have actually declined for several weeks.

(UGA) - RISKS
The risks to the trade are that we continue to see rising oil reserves and that translates into larger stockpiles of gas.  Other risks include that idea that uncertainty and unrest go away, all rioters are placated with billions of petro-dollars, and also that the US dollar catches a bid. Given that I actually see a case for an announcement that QEII will be extended to late August (not more money, but more time), I think that the dollar bid catching is not a worry, and if anything our foreign policy actions will create more unrest in the Middle East in the coming weeks and months.  Even the collapse of Ireland or Portugal may have the impact of driving up the dollar, but I don't think it does much to stifle the move up in gas during the next few months. 

(UGA) - TARGETS
Previously I had indicated that $40.00 was our support and the initial price target for UGA was $52.00.  Please examine the chart below and find that the upper range of the trade is $67.00.  I personally won't be around to see $67.00 in the trade, because I will have a forced time stop here where as we reach the middle part of August I will begin selling.  No matter what, I do believe now that $60.00 is in the cards for this trade.  Levels to watch include the minor overhead resistance at $50.00 and also at $52.00.  I have a stop set for $45 on this trade.

WEEKLY CHART (3 YR)

EMA 14/40 CHART / WEEKLY

HOMEBUILDING - WHAT A GREAT BUSINESS!

Meanwhile, we have seen new home sales continue to go lower as the competing inventory of existing homes and tough credit standards impairs the ability of the new construction market to improve.

http://finance.yahoo.com/news/New-home-sales-slowest-in-at-apf-1641198396.html?x=0

I've included a chart for the homebuilders (XHB). These guys have rallied strongly since the summer of last year (what didn't?) but have stalled over the last month.  The bulls really need to push this to $19 and even through $20 to make this chart workable for me on the bullish side.  From a longer term perspective I like that the 14 EMA is way above the 40 day EMA (in the weekly chart below).  On the other hand, if $17 were to be penetrated here, $14 is a meaningful target.   

From a fundamental perspective this trade may be one where investors are betting that the homebuilders just can't do worse, so you might as well buy them.... that worked well back in 2009, I guess it could still hold true.  My concern for homebuilders though is that the inventory of existing homes continue to get cheaper and there is going to be a point where buyers just don't or can't justify building when there are perfectly good used homes with all the window hangings and landscaping done already.  I think the really wealthy are still building their dream homes, but poor folk and middle class folks are just doing perfectly fine with better priced alternatives.  If commodities continue to sky-rocket, construction costs for homes will make the choice a no-brainer (not to build.... I think we are pretty close to being there already - welcome to the new normal right?). 

BE CAREFUL!

GOATMUG

WHY AMERICA IS GREAT

I found this website earlier today and was simply struck that this is another fine example of why America is the best.  Only in America can people have the freedom to create art, own websites, write books, and win or lose in their daily lives.  Cynthia Crawford is clearly winning, perhaps even bi-winning if you will. 

http://etsculptor.com/blog/about/

I've often commented that I love what I do because I get to visit with people that make money by simply noticing a need where others don't, sort of like walking along a busy street and finding a $5 bill lying there as all others simply pass it by.  America is a wonderful place because we do have the freedom to be unique (or from the DNA of an alien species).

GOATMUG



JAPANESE UPDATE / WHAT TO DO?

Obviously the devastation in Japan is horrible and impacting markets with the Nikkei down over 11%.  The country is smashed and so many folks are simply trying to survive.  I have a friend and client that is in the Navy that is stationed in Japan that I exchanged emails with last night and I am compelled to share some of that with you.  He is on the mainland about 30 miles south of Tokyo on a base.  He is there with his family of 4.

At this time, they are safe and have all the supplies they need including food, water, and strong shelter.  They have electricity and Internet access so they are connected.  In addition, they say that winds are actually blowing towards them from the damaged reactors and therefore they have been stuck in their homes and told not to go outside for the last day.  Winds are predicted to stay on this path for one more day and then reverse to blow out to sea.

I contacted them to see if I could help in some way.  As I received emails from both he and his wife it became clear that they are psychologically impacted in a great way.  After each paragraph, each of them asked that we would pray for the families and people in the North.  They probably didn't do it on purpose, but they each repeated this request throughout the email.  In times like these when you don't have a way to pray, all you can do is pray to Jesus that he would intervene and save as many people as possible.

I've attached a link to pictures here.  They are sobering.

You can find more astonishing pictures here;
http://www.dailymail.co.uk/news/article-1366395/Japan-tsunami-earthquake-Haunting-mages-450-Britons-feared-missing.html

The obvious question that some will then raise is what can I do as I sit in comfort in the USA?  Many will give to the Red Cross and other organizations.  Those organizations are already mobilizing and working to begin assisting in the hardest struck areas.  We always hear that much of the budget for the Red Cross and other large organizations are spent on overhead, and I would agree, but guess what, they are often ready at the drop of a hat.

If you wanted to consider another charity, please think about Somebody Cares America.  SCA is an incredible faith based organization that goes to the ends of the earth to assist in disaster assistance.  When the earthquakes hit in Indonesia, SCA was called by the government and asked to coordinate the relief effort.  This is amazing since the group is a Christian organization, AND is staffed with a minimal number of full-time employees.  I use this as an example because it just shows how good they are and how highly respected they are for providing direction and distributing aid throughout the world.  They are unique in that they attempt to find local leaders to funnel aid and money to directly so they can provide assistance and serve the needs of the community.  In the aftermath of hurricane Rita, SCA didn't roll in and try to create their own infrastructure, they found a church that was big enough to become a distribution center and then served the congregation and the pastor so they could minister to the needs of the community there.  This is unique as most help organizations simply look to take control of the situation.  This may work in the very short run, but in the long run, the SCA model creates relationships where the community can be served in greater ways than just passing out ice or food. 

In this complete disaster scenario in Japan, they will seek to provide whatever needs they people have from food, clothing, medical care, and shelter.

You can read more about Somebody Cares America here at http://www.somebodycares.org/ and http://www.somebodycares.org/pages.asp?pageid=64986

The group is mobilizing to enter Japan and needs your help in funding those efforts to help people that are in desperate need.

GOATMUG

MARCH MACRO UPDATE - ALL SIGNS POINT TO WHERE?

We've experienced a 3% drop from the highs since February 18th.  While the 3% drop isn't too significant it certainly feels different than trading has felt over the last year or so.  The fundamentals continue to show a mixed to improving economy although the fuel that has propelled the economy over the last several months is schedule to be discontinued by June when QEII will be halted (perhaps).

Over the last month we've seen surging food and commodity prices that have been been the final straw that unleashed riots and discord throughout the middle east and emerging world.  Oil pierced the $100 level and now we must keep in mind the impact that these high costs will have on the fragile economies of the world.  Finally, the Japanese quake and unfolding disaster there will make the world economy more nervous than ever.  

TOTAL RAILS - http://railfax.transmatch.com/
Rails continue to outpace last year's tonnage with the exception of a downturn in grains and food transportation.

RAILS - AUTOS
We have seen an increase in autos that have been shipped in the last week.

RAILS - SCRAP
Scrap shipping continues to be just on pace with last year.

CANADIAN PACIFIC -
CP has recently underperformed last year's shipping totals and that continues to be the case.  In fact, CP's stock price too has been lagging relative to those other rails and has dropped more significantly compared to the likes of KSU or CSX. 

SCRAP INDEX - http://www.scrap.net/cgi-bin/composite_prices.cgi?id=100000&num=5
The Scrap Composite Index showed its first drop since the second quarter of 2010.  It does appear that there is a seasonal component to the drop if you look at the previous year-end, but it is worth watching. 

HOME PRICES - http://www.realtor.org/research/research/ehsdata
NAR reported another drop in the average home price for the month of January to a shocking $206,700. 
The highs in July of 2010 were pegged at $231,700 which highlights the correction we've seen of $25,000!  If you recall the months of June and July were the cutoff dates for the first-time home buyer tax incentives where buyers could get an extra $6,000 to $8,000 towards their home purchase courtesy of the US government (you and me).  What a complete waste!  We are now below the February 2010 lows.  In other words if you were dumb enough to buy a home based on the home buyer credit, you are close to being underwater.

MOODY'S /  MIT TRANSACTION INDEX (COMMERCIAL REAL ESTATE) - http://web.mit.edu/cre/research/credl/tbi.html
The Moody's MIT real transaction index dipped in December by almost 1 percent, although the entire 4th quarter was quite strong.  In total, the rally is not impressive, yet you've got to keep hope alive and any rebound is great.

MONSTER JOB INDEX - http://about-monster.com/employment-index
The Monster.com Job Index rose to a level of 129 in the month of February which is a 7 percent increase over the previous month.  The year over year growth is only 4%, but is positive.  The rebound is needed as it halted a 4 month slide.  The number of listings are well below the September 2010 levels.

FOOD STAMPS (SNAP DATA) - http://www.fns.usda.gov/pd/34SNAPmonthly.htm
December's SNAP (Foodstamps) data release shows up that there is no let up in the amount of Americans that are taking the government up on available programs to feed the poor.  December showed a 1.12% increase over the previous month and now indicates that there were more than 44.1 million people accepting assistance which is a 13.1% increase from the beginning of 2010.  Back in October of 2010 we saw a slowing in the rate of folks on the food stamp roles, however December marks the second straight month of an increasing rate of usage (the rate of change is increasing).  Obviously this information is dated and hopefully the numbers out of the Monster Employment Index can arrest these startling figures.  My heart is breaking for these people.  If you have any desire to see what is happening right here on US soil to your nation's children, please see the post we completed earlier this week - POVERTY IN THE USA - WHAT NO ONE WANTS TO SEE.

CFO OPTIMISM SURVEY - http://www.cfosurvey.org/11q2/PressRelease.pdf
The Duke / CFO Magazine CFO Survey was released last week and it shows that the bean counters in American businesses are more optimistic than last quarter about the economy.  They also suggest that capital spending will increase, and they predict that dividend distributions will actually be much higher.  There were a couple of reasons to pause though as they stated that they don't see much improvement in the job outlook and that any evidence of inflation could damage their outlook.  Hum.  It seems like this is more of the same here.  Company makes more money, company does not hire more employees.  One other note, the firms CFOs stated that credit conditions were improving, except for smaller firms.   

UCLA FUEL INDEX SURVEY - http://www.ceridianindex.com/
Growth in fuel usage has been slowing since January in this index.  This indicator usually follows movements in the overall indices and therefore I do not use it as a predictive tool, but more of a confirmation of overall economic activity.   

COPPOCK TURN INDICATOR
The Coppock Turn Indicator has stubbornly held its negative outlook since it flashed a sell signal all the way back in June of 2010.  If the Dow can move higher than 12125 to close for the month of March it will actually flip to bullish.  As I often comment, I think we've seen that the Coppock is pretty unreliable, but I am keeping it updated for entertainment purposes only.  Perhaps we'll see the Dow at 10500 again soon, but clearly the indicator missed out on a 2000 point ride north since then.

US FINANCIAL CONDITIONS INDEX - http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND
As we have seen over the last several months, whenever the US Financial Conditions Index eclipses the 0.0 mark it stalls out.  The zero level indicates that the economy is expanding, thus leaving recession behind.  Each time we've seen the FCI hit the 0.5 level it is slammed back and these last several weeks have been no exception.  I perceive this as a warning sign that the economy is still not out of the woods, although perhaps another $600 Billion of QE III might get us up to 1.0 at least, don't you think?  As of Friday the index was back at 0.148.

BALTIC DRY GOODS INDEX - http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
The Baltic Dry Goods Index did see a reversal over the last month and has rebounded strongly.  I am guessing that part of the rebound has been directly related to stockpiling of dry goods such as grains as a result of the unrest in the Middle East.  The timing looks pretty good as an explanation for the significant move up in spot rates.

US DOLLAR - http://www.bloomberg.com/apps/quote?ticker=DXY:IND
Is that a tick up I see?  Strange.  While it is odd to see the dollar move up, I would suggest that this actually could be something we might see continue for a week or two more as this correction in equity markets develops.  We did see the dollar fall on Friday.  The dollar is at a critical place here where it needs to find support.  If not, we could easily see it usher in a new blast lower to areas not previously seen.  The push lower would cause renewed spikes in precious metals and other commodities like copper and oil.

6 MONTH LIBOR -  http://www.homefinance.nl/english/international-interest-rates/euribor-rates-6-months.asp
As we noted earlier last week, 6 Month Libor continues to move higher.  There have been rumors of interest rate hikes in Europe, as a move to stave off inflation, but the weakness in the banking system there simply makes me think that it cannot be done.  We are seeing lots of talk, but little real action.

TRADING UPDATE
In favor of getting this post up for the beginning of the week I am going to cut things a bit short and make every effort to post over the next couple of days a deeper look at specific areas where trading is at a critical juncture. Overall, markets for the last couple of weeks seem to be consolidating and trying to churn through some new selling. The selling hasn't been overwhelming, but heck, it is new to actually see selling! Remember, in our 2011 Forecast we identified March as a critical month due to the idea that big players would not wait to exit markets as QEII terminated. In other words, big funds and hedgies weren't going to wait for June to roll around before exiting positions. If the FED quits buying treasuries then that means that they quit exchanging those treasuries for dollars which somehow find their way into other speculative assets (food and other commodities anyone?). It would not be too hard to believe that we may see a decline in the thrust upward in many of these very frothy "investments" if the fund managers and primary dealers suddenly think that they may lose their source of fuel.
I don't want to get too over zealous though because markets are still weak enough that all it would take to see a huge snap back rally higher is an announcement from Fed officials that weakness is too great to stop these open market actions and QEII will actually be extended with a new batch of electronic cash. I also think that the Japanese disaster is just about enough of an excuse to put all free-market exercises on hold for another 6 months. There will always be a reason to extend an pretend as long as you have a printing press at your fingertips!

Overall, as I mentioned at the top of the post, information is mixed to improving. The overall job picture is getting better, but that doesn't mean that incomes are up. The CFO survey indicates that there are areas where there will be job growth, but as they see it, jobs won't be the big winner in the next quarter. Housing just can't get better and the decline in home prices are really troubling.

I will leave you with this last nugget that I put together with Robert Schiller's Irrational Exuberance data at http://www.irrationalexuberance.com/ . What I'm highlighting here is that we are at P/E levels that have been experienced around 6 other periods in the last 90 years. In each instance, stock markets corrected pretty significantly after those levels were reached. Now this is not to say that the correction is immediate (for goodness sakes, look at the 2000's!), but it is sort of like the treasury trade where we know that we are at historic lows and it is a pretty good bet that we'll see higher rates in the future. In the same manner, we know that we are at high P/E's and there is a safe bet somewhere and at some time that suggests that they will go lower and so will the markets. This is just one more warning that should be going off in our minds that there is risk in this system and we need to be fully aware that things could break down. The obvious question is simply when.

As markets open we should see Japan drop significantly with a carry through of the decline to as much as 10% in coming weeks. There will probably be a rebound due to printing of liquidity. One quick note on oil and other energy fuels, we should also see a drop in oil as there will be a drop in economic activity in Japan and Asia as a result of the disaster. I see this as temporary as the unrest in the Middle East is not going away and I continue to watch for the Saudis to demonstrate and attempt to overthrow their leadership. If any momentum is built in that country, oil and gas will rocket higher.

GOATMUG