WSW – Monday, September 6, 2010

If you are expecting global warming stuff, it’s here:

Canonical in reverse date order:

https://chiefio.wordpress.com/category/agw-and-gistemp-issues/

Intro page with favorites:

https://chiefio.wordpress.com/gistemp/.

Input Data Issues:

https://chiefio.wordpress.com/category/ncdc-ghcn-issues/

This posting is about the other thing I do, looking at investment markets. Prior postings in this series are available here: https://chiefio.wordpress.com/category/wall-street-week/

Posts with some relevance to trades, but not in the format of a full WSW analysis, are available under this category:
https://chiefio.wordpress.com/category/economics-trading-and-money/

The charts in this posting are live charts, so my comments will describe how it is now, but in a week it will be showing new data and a new week. Since I think it is more important to be in touch with what the market is doing NOW than to preserve the historical chart, this is, IMHO, a reasonable choice. Just don’t be surprised if the chart I describe is not the one you see a few weeks from now! If you would like to see the historical chart, you may enter custom date ranges on the charting tool at www.bigcharts.com

Wall Street Week – Monday, September 6, 2010

The best and worst of the week? The best includes those things most written off on the theory of a ‘double dip’ recession. Real estate, metals, paper, labor. And long term consumer goods like furniture that you can always stretch for another year. Insurance has made a bit of a bounce back too, as hurricanes have failed to destroy the East Coast of the USA and as folks with jobs are likely to by life insurance.

10 Best Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Business Training & Employmen...	9.87%  
  DJ US Nonferrous Metals Index	9.37%  
  DJ US Paper Index	9.34%  
  DJ US Forestry & Paper Index	9.34%  
  DJ US Recreational Services Index	9.28%  
  DJ US Life Insurance Index	7.89%  
  DJ U.S. Industrial Metals & Mining...	7.81%  
  DJ US Full Line Insurance Index	7.55%  
  DJ US Real Estate Services Index	7.38%  
  DJ US Furnishings Index	7.29%  

Some bets were major losers. But notice that only the very first one, Booze, was actually a loser. Here’s the worst places to have been:

10 Worst Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Distillers & Vintners Index	-0.60%  
  DJ US Nondurable Household Products...	0.98%  
  DJ US Food Producers Index	1.13%  
  DJ US Gold Mining Index	1.34%  
  DJ US Multiutilities Index	1.38%  
  DJ US Food Products Index	1.47%  
  DJ US Semiconductors Index	1.68%  
  DJ US Food & Beverage Index	1.70%  
  DJ US Gas, Water & Multiutilities I...	1.72%  
  DJ US Utilities Index	1.73%   

Dumping the ‘safety trade’ of stuff we must buy (food, beverages, utilities, gas, water) and gold miners weakening.

It is always possible that some of this was just “short covering” prior to the start of a long weekend. There was good news in the “news flow” though, so I suspect we’ll be needing bad news flow to turn this run around.

The Long Term Context

This is a very long duration chart (5 years) of NYSE and one of the S&P 500 (SPY). They will not change much from week to week (just one tick mark) so guides longer term attitude.

Same as last time:

Notice that we’ve slowly rounded over into a flat trend line. The moving averages are pointing sideways. We’re going nowhere…

Though I’d add that the shorter term trend is for a small rise. Slow Stochastic is looking like a reversal, and with MACD flattening into a sideways, perhaps with a crossover to the topside “soon”, we’re left with the DMI as “red on top” to caution us that any positive run is a new thing and not in keeping with our longer term context. Yet.

5 Years, NYSE

5 years, NYSE

Spiders (S&P 500) looks very similar. Sideways mostly with risk of down, but with a present trend of a trade higher.

We continue to have ‘bear market be out or short’ indications. RSI is still ‘stair steps down’ from an approach to near 80. Williams %R has bounced off the midline, so that’s a ‘short term trade in’ while Rate Of Change is nearly neutral. OK, on a very long term chart, a short term ‘trade in’ can be weeks long.

SPY 5 year weekly tick, RSI, Williams %R, ROC

SPY 5 year weekly tick, RSI, Williams %R, ROC

What Is Our Asset Class Context?

Let’s look at the S&P 500 largest stocks in America compared with some other kinds of assets; a 20 year+ maturity bond fund, oil, gold, Yen.

Asset Class Races

Asset Class Recent Race

SPY       The S&P 500 ETF
GLD       Gold ETF
USO       Oil ETF
FXY       Japanese Yen currency fund
TLT       20 Year U.S. Treasury Bond fund
FXE       Euro currency ETF
SLV       Silver fund
BZF       Brazilian currency ETF
EWA       Austria ETF
WOOD      A wood and paper products fund

Bonds (TLT) have had a double top “failure to advance” and a closer look showed it’s time to be out of long term tradable bonds. (No, you don’t need to sell your $50 savings bonds, especially those with an inflation adjustment, just the long term bond funds are at high risk.) More detail here:

https://chiefio.wordpress.com/2010/09/04/bonds-are-not-safe/

We still have some action in gold, but it is looking a bit weak now too. Silver is on a bit of a rocket ride (being both a precious metal and an industrial metal it can do well in the transition times). Despite massive central bank intervention, the Japanese Yen is still rising along with the Euro and the Brazilian Real.

We note that the SPY main ticker of the graph shows a clear “buy” signal with the MACD crossover toward the upside with “blue on top” AND the DMI/ADX showing “blue on top”. This is in the context of RSI about mid-way from the center line to the bottom, so we may be in a simple sideways market that will ‘roll’ between range bound limits.

Australia, as a resource country, is also rising very nicely. This implies the metals and miners ought to be doing well, too.

What about Brazil? A Closer Look.

Brazil has rapidly taken a spike up. Friday it had a bit of weakness, but not enough to reverse the indicators. DMI is clearly “blue on top” and MACD is slightly above zero and slightly “blue on top”. India, Mexico, China all taking a step up. The Emerging Markets trade is back on. I’ll need to do a shorter term race of them to see who’s fastest out the gate. For now I’m just back in ‘the usual suspects’. When markets move fast, you just buy what you know first, then optimize later.

Brazil the EWZ ETF vs the BZF currency ETF

Brazil ETF vs Currency Race

EWZ  - Brazil
BZF  - Brazilian Real currency
FXI  - China
EWA  - Australia
EPI  - India - WIsdom Tree fund
EWC  - Canada
EWW  - Mexico
GUR  - Middle East Fund

This next chart has a couple of the other ‘trade’ indicators on it. Slow Stochastic (that isn’t very slow), Williams %R (that usually tells you the same thing as MACD, but sometimes more clearly), and “momentum” that is like Rate Of Change, but sometimes seems to move a bit faster.

Brazil EWZ with Slow Stochastic, Williams %R and Momentum

Brazil EWZ with Slow Stochastic, Williams %R and Momentum

Slow stochastic has hit the top, meaning that the run may be getting old. But in new hot runs, it can also signal a ‘get out’ too soon. Williams %R is still saying ‘be in’. Given the context with MACD, I’m biased for staying in. At least a couple of more days while things clarify. Formally, the DMI at below 20 says to ignore the MACD and go with the Slow Stochastic (that would be to trade out today and reenter in a few days as slow stochastic makes another cycle. Given the holiday and the longer settlement times form it, I’m staying in rather than risk trading out, then not having settle cash in time to get back on a new ride.

OOTUS – Out Of The U.S.

See the racing stocks tab for currencies and for foreign emerging stock markets for the latest moves.

The Euro looks like a ‘flat weave’ sideways. Not much force to the movements and gently rolling. For now. The British Pound has soundly trounced it, despite a bit of weakness against the dollar lately. Yet, at the end, even the Pound is showing a touch of a rise. The important bit, for me, is how many of these currencies have beaten the dollar (above the zero line) and how they mostly have an uptick in the last week.

Currencies race

Currencies race

Like that Swiss Franc too… Time to be out of the US Dollar, but not sure the Euro is where I’d put it…

Gold 1 year daily chart

Gold 1 year daily chart

Last week, in an update, I’d said:

Technically the chart says to still be in Gold, but if a lot of the hedge funds who are in gold start selling to move into moving stocks, this could drop fast. I still like silver and copper better, and even platinum and palladium as they are both precious metals and industrial metals.

That’s still my position. I was putting together a ‘precious metals’ posting when the run started and I got sucked into active trading of stocks, but it’s still in progress. When platinum starts to move, it does so for the duration of the recovery. Plenty of time.

Some Selected Emerging Markets

Indonesia Fund 1 Year Chart

Indonesia Fund 1 Year Chart

This chart compares FXI – China 25 big stocks, EWZ – Brazil, EWO – Austria, EPI – Wisdom Tree India fund, and the Indonesia fund.

IDX  Indonesia Fund
FXI  China
EWZ  Brazil
EWO  Austria ('emerging Europe proxy)
EPI  India with dividends and growth fund

Indonesia has managed to break above that old ‘double top’ so I’m back in. MACD is weaving sideways (that means ‘steady’) above zero (that means steady up). And DMI is back to ‘blue on top’. I’m back in Indonesia, though not with a large position.

VIX the Volatility Index

Vix has plunged. Very bullish for stocks. If it gets a bit lower, you can buy options with some safety. Time to “sell volatility”.

Volatility Index and Related

Volatility Index and Related

VIX  - Volatility Index (not a ticker, you can't trade it)
VXX  - Short term VIX futures ETN (a ticker you can trade)
VXZ  - Medium term VIX futures ETN (a ticker you can trade)
FXY  - Japanese Yen
SH   - "Short" sell of SPY
SPY  - S&P 500 benchmark
IYT  - Transports, a leading sector
XHB  - Homebuilders, a leading sector and "canary" 
XRT  - Retail

The Dollar

This is a ‘US Dollar UP” trade chart of UUP. The down bet is UDN.

Dollar Trade -UP

Dollar Trade -UP

Indicators saying to be out of the dollar.

Ideas of the Week

Looking to optimize my positions. This upside move happened so fast I got ‘bought in’ to a lot of ‘the usual’ rather than selecting what was moving best. So I’m enjoying the holiday and doing some homework.

What does the 10 day hourly chart say is happening now?

Here’s a 10 day houly chart of the Dow 30 Industrials (DIA), the S&P 500 (SPY), the Nasdaq tech companies (QQQQ), the Russel 2000 (RUT), and both a Brazil fund (EWZ) and an Australia fund (EWA). It also has a ‘short fund’ (SH) on the chart so you can see what being short this market is doing right now. We also have EWO, an emerging Europe Austria fund, EWW for Mexico and IIF for India.

10 Day Hourly Interval Broad Market

10 Day Hourly Interval Broad Market

Well, with RSI nearing 80, we can expect a minor correction ‘soon’. If you missed this run, that would be the time to buy in.

It’s interesting to note how EWA Australia lead this charge with a spike up, then more or less flat. Also odd that Brazil faded a bit toward the end of the day Friday. I also like the way RUT (Russel 2000) kept on rising. I bought some RUT (via UWM the leveraged ETF) and I’m loving it ;-) One of my “go to” tickers when a market run starts to get away from me.

Other Asset Classes

The 6 month asset class race:

Asset Class Race

Asset Class Race

SPY  S & P 500 US stocks
GLD  Gold
EEM  Emerging Markets
FXY  Japanese Yen
JJC  Copper
TLT  Long term bonds 20 year+
USO  U.S. Oil
DBA  Agricultural basket
SLV  Silver
WOOD  Wood / Timber

EEM is a general emerging market basket. It’s rising nicely. Metals are up, and I note that green DBA Ag line rising sharply. There is a lot of ‘talk’ on the financial shows about ag lately, so I’ll be putting up a special ag posting Real Soon Now. Oil does look like a low point for a good time to get an entry. IF we have an economic recovery, oil will rise. I always hold some oil and gas trusts as a hedge against my natural consumption, but add more when it’s cheap. Probably time to revisit a special oil posting as a bottom fishing guide… Oil usually drops in September (with sporadic hurricane spikes). So wait for a hurricane scare, then on the “relaxation” after the miss, buy oil. Sell on the next hurricane… At the end of the season, hold through the winter heating spike.

So what happened in the Tech Market relative to world markets?

Tech vs Other Markets

Tech vs Other Markets


QQQQ  Nasdaq 100 mostly Tech companies
DIA  Dow Jones 30 Industrials
SPY  S & P 500 largest companies in the U.S.A.
MDY  Midcap  (Middle sized in terms of market capitalization)
RUT  Russel 2000 - a collection of 2000 companies from small to large.
EWZ  Brazil fund
EWA  Australia fund
EWO  Austria fund
EWW  Mexico fund

Starting to show some leadership again. Chart says to be in. QQQQ or QLD for leverage. But remember our longer term context. We’re not in a bull market yet. This is TRADE in, and be ready to exit on bad news and indicator reversal.

Were Bonds a good idea?

OK, lets take a peak at the Bonds Race but with TBT (the “long term bonds” short sell ETN – that is, the thing that “shorts bonds”) as the main ticker symbol:

Bonds - TBT to Short Them

Bonds - TBT to Short Them

It looks to me like bonds have had a ‘double top’ failure to advance and are now trading down. TBT is looking like a nice, if slighlty risky, trade to ‘short bonds’ ahead of the rush.

What About Oils?

Some Selected Global Oils:

The Oil Majors Race

The Oil Majors Race

XOM  Exxon Mobil - Largest, U.S. / Global
COP  Conoco Philips - U.S.  with Russian exposure
CVX  Chevron Texaco - U.S.
PBR  Petrobras - Brazil
PCZ  Petro Canada HAS NOW MERGED WITH SU SUNCOR
BP   British Petroleum
STO  Norway
E    Eni Italy
TOT  Total - France
RDSA  Royal Dutch Shell
IMO  Imperial Oil - Canada Oil and Oil Sands
SU   Suncor - Canadian Oil Sands
SSL  Sasol - South African Synthetic Oil Company

We’ve got buy indications on the oil majors. I’ll be easing out of my oil trusts and into more leveraged oils like the majors (and PBR in Brazil).

Some Near Oil and Oil Related Comparisions

What about oil service companies and Brazilian sugar / alcohol?

Oil Services and Oil Related

Oil Services and Oil Related

Oil services and related doing nicely. I need to do a chart of SGG, sugar, vs USO, oil; and deciding how best to allocate between ag and oil. So much to do, and only one holiday day.

SEE the SEA!

As economic recovery happens, the ‘bulk carriers’ will float to the top. DRYS and related. Baltic Dry Index drives them.

Shipping Comparison

Shipping Comparison

I’ve taken an early and small position in the cruise lines RCL CCL along with a ‘tiny’ marker position in a shipper and a modest position in TeeKay Tanker Shipping TNK with a 10% dividend (even though the chart says to be out of it, I’m playing a ‘dip’ on price action). Yeah, a bit early, but I sometimes need the ‘nibble buys’ to remind me to keep an eye on a sector… Of them, I like the cruise lines more.

Here is the RCL / CCL cruise lines chart. You can see how these have much more range (or “beta”) that the S&P 500 SPY fund:

Royal Caribbean Cruise Lines, Carnival C.L., and SPY S&P 500

Royal Caribbean Cruise Lines, Carnival C.L., and SPY S&P 500

The cruise lines can have a lot of ‘juice’ but can juice you in either direction…

The REITS race – Real Estate Investment Trusts

Looks like the bottom is in. They are starting to rise. RSI is stair steps up from near 20. MACD is blue on top and crossing to positive. DMI is blue on top. Looks like “good to go” from the indicators.

UPDATE: [ I’ve got a ‘tiny’ in PLD Prologis a logistics REIT and some small Mall REIT positions now. The Healthcare REITS are probably ‘good to go’ but for emotional reasons I’m not in them. Never trade something where you have emotional baggage…]

REITS Race

REITS Race


PEI  Pennsylvania Real Estate - Mall REIT (REMOVED to make better graph)
VTR  Ventas - sr. care, nursing homes, hospitals
PSA  Public Storage - junk storage units
BXP  Boston Properties - office REIT on BosWash corridor  
HCN  Health Care REIT -  extended care, senior care, medical offices
HCP  Health Care Properties - ex. care, senior living, Dr. offices
PCL  Plum Creek Timber - lumber and trees REIT
SPY  S & P 500 broad stock market benchmark
RPT  Ramco Mall REIT
PLD  Prologis - logistics 

IF you look at the 3 month performance, REITS have been doing nicely.

3 month
Top Performer  DJ US Travel & Tourism Index (5759)

10 Best Performing Industries
  Industry Name	Percent Change (over time selected)  

  DJ US Travel & Tourism Index	45.26%  
  DJ US Nonferrous Metals Index	22.50%  
  DJ US Tobacco Index	19.12%  
  DJ US Real Estate Services Index	18.93%  
  DJ US Diversified REITs Index	18.69%  
  DJ US Commercial Vehicles & Trucks...	17.58%  
  DJ US Residential REITs Index	17.26%  
  DJ US Retail REITs Index	16.96%  
  DJ US Platinum & Precious Metals In...	16.52%  
  DJ US Speciality REITs Index	16.48%  

Notice how many of those lines have REIT in them. I need to search those groups and pick out the good ones…

Conclusions and Likely Actions

Tuning up what I bought to more closely match what is moving fastest. (Some “rotation”). Watching for either a confirmation signal on the run, or a ‘trade out – it was just a short week flash’ signal. Probably more REITS and more Shipping, with a bit less Brazil. But the charts will tell me. Also some more ‘recovery’ play planning. For now it’s mostly just “metals”, but some industrials like CAT and DE would help. Oh, and I need to revisit the Ag play.

Automated Stock Screens

OK, nobody ever said anything one way or the other about the software based stock ticker selection, so I’m deleting it. Maybe I’ll make a special posting out of it from time to time…

Stock Indicators – what and how


If all this talk of indicators is leaving you wondering what the heck I’m talking about, hit the link in the heading of this paragraph and there is a bit of an explanation.

Click for Disclaimers, Disclosures, and Where To Get Charts

Remember that on any stock or ticker I say I’m looking at, you don’t just go buy it. You wait for a stock entry indication to get the best possible entry into the position.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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10 Responses to WSW – Monday, September 6, 2010

  1. boballab says:

    Question: What impact do you see if the administration gets it wish and raises taxes on oil and energy companies to pay for the Obama 5 year err I mean 6 year infrastructure plan.

    The administration is proposing to pay for the project by hiking fees on oil and gas-drilling companies. An administration official said the job impact wouldn’t be felt until next year.

    Read more: http://www.nypost.com/p/news/national/baracky_road_98uEcATt88dveHFmpBFK8H#ixzz0yq6cw4HT

    My guess would be to see and even larger jump in Petrobra (the company that Soros keeps investing in) while US oil companies take it in the shorts.

  2. Jeff Alberts says:

    The way it’s being phrased in the MSM (CBS News at least) is that there will be no more tax breaks for oil and nat gas production, not tax hikes. One might say that’s the same thing, but I don’t see it that way.

  3. KevinM says:

    Started to respond to the break/hike comment, but sheer revulsion that someone could be so accepting of government’s first claim on income has overcome me.

    Punishment lust for those who have more, or even seem to have more, is an evil thing.

  4. E.M.Smith says:

    @boballab: Basically yes. The oil majors will shift activity to places like Brazil, Nigeria, and don’t forget Iraq. You will see more deep water drilling in the Gulf of Mexico out near Cuba, and from non-US companies, to get the same oil out but free of US “issues”… The major “hit” will be on USA based oil drillers and support companies. (Can you guess why Transocean RIG moved HQ to Switzerland?… as a deepwater driller they are now free of the USA for most of their actions. Big in Saudi.)

    So I’d be reluctant to buy an oil services bundle, but folks OOTUS like RIG and SLB schlumberger would gain. USA costs for just about everything will go up (as fuel for delivery of everything goes up) and in general the USA takes a hit compared to places like China and Brazil.

    All in all, it’s a terrible idea. I’m certain Obama and The Dimocrats will embrace it whole heartedly.

    @Jeff Alberts: For an economic analysis, they are the same. Only the political questions are different. (i.e. is it GOOD or BAD to punish one sector more or less than another? Ought we to reward the paving companies with a $50 Billion “infrastructure” stimulus at the expense of the waitresses and nurses of the economy?…) So while it’s interesting to endlessly debate “When is the removal of a break a tax increase?”, the economic impact on industry is the same. Costs go up, supply goes down, customers pay more, more money passes through government hands. Basically, the derivative is what matters, not the initial state, for trading especially.)

    @KevenM: Then you ought not to become an economist. One must be able to DESCRIBE what is happening and ANALYZE the impact dispassionately. Only after that, when asking “Given what happened, is it a good thing?” does one bring in questions of fairness or morality. They can not be allowed to color the analysis, no matter how dear they are to you. So I can cheerfully ask questions like “What would be the economic impact of mandatory euthanasia at age 65 on the GDP and on net national wealth creation? On Federal budget imbalances?” etc. And get reasonably valid answers. THEN and only then, pointing out how hideously immoral it would be. That is the point where you transition from Economics to Politics (with the transition zone being claimed by both as “Political Economy”) and blend in a bit of religion, ethics studies, and sociology…

    So as a trader, I may very well hate, loath, and despise the notion of a “rape the rich” (as it will hit corporations and markets and thus my lunch money tomorrow. Quite literally. How much I have to spend on groceries changes month to month on markets moves…) but the way I will make money is to DISPASSIONATELY assess the impacts and probabilities and move my bets / trades accordingly. THEN act politically to try to prevent the thing I’m betting on, if I’m morally against it.

    If you do those in the reverse order, it is very hard to bet right. (I once got to explain why, if I despised GMO as an un-Godly risk to us all from a very immature technology, I was buying Monsanto shares. Simple: they were winning. My first goal is to make money off of it. Then if I wish, I can use that money to fight GMO approvals… )

    Oddly, I find myself both in metals and Petrobras PBR / PBRA via my own system, and finding that I’m betting along side Soros in both. Odd. My antithesis in terms of politics….

    Though I do note that Democrats seem better able to bet their wallet first and morals second than do Republicans. Fight fossil fuels while betting on Petrobras? No problem for Soros.

    At any rate, my “oil money” is all bet outside the USA. No domestic US oil for me as long as Obama and the Dimocrats are running the show in DC. Too much Sovereign Risk.

  5. boballab says:

    @Jeff Alberts

    Looks like that is just the CBS spin because besides the link to the NY Post that I gave pointing to hikes on Oil and Gas companies there is this take from WaPo:

    White House officials said the $50 billion in new government spending would be the first installment of a six-year transportation strategy that would include investments in high-speed rail and air traffic control. To pay for it, the administration would raise taxes on oil and gas companies.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/09/06/AR2010090602161.html

    To me if you want to watch the oil market just follow George Soros who is heavily invested in Oil Companies. Matter of fact when the Obama administration announced the first drilling ban, within 2 weeks afterwards Soros increased his stake in PetroBra. If anyone believes that Soros didn’t know that Ban was coming I got a Bridge for sale in Brooklyn. Soros funds the Center for American Progress which just so happens that it’s director is one of the “official” advisors to Obama:

    http://www.whorunsgov.com/barack_obama_advisers

    Starting way back on Mar 31, 2010 Soros was dumping Oil/energy companies that were mostly tied to US oil/gas production, cutting back on Global companies such as Hess that have US vulnerabilities but buying up Canadian Oil Sands and of course Petrobra. See:
    http://seekingalpha.com/article/209263-soros-is-bullish-on-petrobras-suncor-and-directv

    Just a note Soros also thinks the economy is not recovering:

    Love or hate his politics, there is no doubt George Soros is one of the brightest investment minds of the past few generations.

    Hence, when you have Soros on one side saying we have only begun the second stage of the financial crisis, and on the other hand you have “Unicorns and Butterflies” Bernanke telling us all is well (kumbaya!) [coming off one of the worst economic forecasting records the past half decade], you can guess which side one might be better off listening to.

    “The collapse of the financial system as we know it is real, and the crisis is far from over,” Mr. Soros said at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”

    NYTimes DealBook has a full transcript of the speech Soros gave at the Institute of International Finance in Vienna. Remember, you can choose to accept the red pill or the blue pill. If you choose the blue pill, Ben Bernanke has solved all your ills… if you choose the red, please read on for some excerpts.

    http://seekingalpha.com/article/209690-soros-financial-crisis-act-ii

    So if EM starts seeing “whale” activity in the precious metals (Soros hedge fund has its largest investment in gold) and oil markets, it’s probably Soros.

  6. Jeff Alberts says:

    @Jeff Alberts: For an economic analysis, they are the same. Only the political questions are different. (i.e. is it GOOD or BAD to punish one sector more or less than another? Ought we to reward the paving companies with a $50 Billion “infrastructure” stimulus at the expense of the waitresses and nurses of the economy?…) So while it’s interesting to endlessly debate “When is the removal of a break a tax increase?”, the economic impact on industry is the same. Costs go up, supply goes down, customers pay more, more money passes through government hands. Basically, the derivative is what matters, not the initial state, for trading especially.)

    Making us spend more for oil/gas is something this administration is wont to do, it seems. I believe Obama even said so before he was elected (maybe it was just after, don’t remember for certain). I guess my take is, the oil companies don’t need the tax breaks, they probably shouldn’t get them. And if the Gummint is worried about price increases, they can always do away with the federal tax at the pump. But I know that won’t happen either.

  7. boballab says:

    But, but the federal taxes at the pump is to pay for road repair and construction, so if we removed that tax what would pay for the needed infrastructure……

    And yes Obama said he wanted energy prices to skyrocket, but that was through his Cap and Tax scam err scheme, followed up by EPA administration putting a fee and fine on CO2 emissions.

  8. Jeff Alberts says:

    But, if they’re taking the tax breaks away from the oil companies, they can use that for roads, and not tax us.

  9. boballab says:

    @ Jeff Alberts

    And thus another fails Governmental Logic 101: You never get rid of a tax when you can double dip on the same problem (well in this case triple dip).

    Also it’s not taking Tax breaks away from Oil companies that they are talking about, it’s what they call Loopholes in the Tax Code:

    Obama said the plan would be “fully paid for” and would not add to the deficit, although senior administration officials haven’t released details on the financing other than to suggest it could come from closing tax loopholes used by oil and gas companies.

    http://abcnews.go.com/Politics/president-obama-labor-day-agenda-job-growth-ideas/story?id=11554930

    Even though they can have the same effect, repealing a Tax Break and closing a Tax Loophole are two different things.

    Tax Breaks is where a person or company was paying a tax at one point but then through either regulation or legislation gets to stop paying a portion of their tax bill. The Tax law is not changed in any way, they just stop charging the tax for a set period of time for certain activities.

    Closing a Tax Loophole on the other hand is where the government starts getting Tax revenue from places they never got Tax Revenue from before ie a new Tax in effect.

    What Obama is proposing is in reality a new tax on oil and gas, they are going after revenue the government has never gotten before, not restoring something they once had.

  10. Jeff Alberts says:

    I was speaking facetiously. I know damn well they’re not going to get rid of, or drastically reduce, a major revenue stream.

Comments are closed.