Reader Note: We sincerely apologize for the down time of our cloud server yesterday. But, like the old saying goes, “Into every life, a little mean time between failure (MTBF) must fall.” It just fell on us Monday.
You know who the smart people are, right? They’re the folks who suspected that the price of oil (and gasoline) would fall and put it to some good personal use.
Say, for example, you’d been over to Fuelly and been thinking about a Hummer H2. Nice ride – if you own an oil well. That is, until here recently.
You see, oil this morning is down to a 44-handle. That’s simply trader-talk for the digits to the left of the decimal point being 44. It means 44-something.
But don’t give up on the Hummer, yet. We are likely to see a 30-something handle on oil, too. So in your spare time this morning, you can blow off even more work by doing some shopping over here.
There are only a few times in a person’s life when you can use economics savvy to buy a car.
One time is when the value of the US dollar is about to collapse. In that case, you can run out and buy a Porsche Turbo (been there, done that) and simply drive and enjoy because if you time it right, the price of the Porsche will go up faster (from purchasing power of the dollar being watered down) than you can possibly drive it.
I’ve gone that twice now: More money out of 911s than went in.
The other time is like now: Cars that have had traditionally low prices because of poor fuel economy suddenly look for doable. A large displacement hemi sounds like a fine plan, to me.
The same Oil Effect is clearly visible in the personal aircraft market. When fuel is high, airplane costs are low. When we bought out old Beechcraft, fuel was running $6.75 per gallon and the plane cost $19,500. (We poured another 18K into it, but that’s a three beer whine you can do without).
But now, the same plane is fetching $28-$35 thousand. It’s all because of fuel.
As of this morning www.airnav.com (one of the most useful pilot sites out there) reports that the Andrews County Airport (north of Midland, TX) had the lowest fuel price in the state: $3.31 for avgas (100LL). Seeing prices like that gives me the urge to go somewhere.
The reason that passenger aircraft fares have not come down is because of hedging. Big airlines have been willing to buy futures contracts in order to prevent price shocks. The downside of this strategy is that when oil prices do collapse, for people with their own airplane (a decent used plane is less than a new Camry) can get around the country cheaper than flying commercial.
And that’s great news for pilots like my friend James up in Nashville who drives a twin Baron. Twin engine planes, which had been going for $50-$60 thousand because they were financial suicide at $7.50 fuel, like we paid up in Montana a couple of years ago, sudden seem like a dream come true when prices are down in the upper $3-somethings.
As a result, light twin prices have gone up (just eyeballing prices here) 25% in the past month to 90 days. Besides, what’s cooler than having a multi-engine rating? (Aircraft Multi-Engine Land, or AMEL as opposed to the ASEL rating which I’ll leave to your immense powers of deduction to figure out what that means.)
If the low fuel prices continue (and remember, the Saudis are talking in terms of years to keep new US production and technology off the streets) tghen we can look forward to what should be one of the b est summer vacation seasons EVER.
So if you and the missus bought that backwater motel, this’d be the year to keep perfect books, show a big profit and dump it and run.
If the Saudi’s had good business sense and really wanted to befriend the American middle class, they would have taken out newspaper ads to explain this to the “little people” but since we read the news for that we can use, forego the snooze or you will lose. Burma-Shave! (For those to young to remember, reading assignment: The Verse By The Side Of the Road: The Story of The Burma-Shave Signs and Jingles.)
The Futures Are Before Us
(ahem, so to speak) What they argue is that the Dow will claw back most of yesterday’s loss, but there’s something much more important going on.
Remember Robin Landry’s concerns about S&P 2,030 and how if we take that out, then we could head down quickly? That’s still in the cards even with the futures showing 20,30-something when I looked.
That’s because when a critical support level falls, we will often see a drop (like we just had) and then a rally that comes back and “kisses the underside of the trend” and then resumes down from there.
So up today, then sideways through options and then next week we can head down again. Just in case you misplaced the memo…
Few Conflicting Views on Blowing “The March”
My acerbic comments on the Obama administration blowing it were not universally welcomed Monday. One reader noting:
But really George, do you really think we needed to heat up Air Force one and incur all the security risks, not to mention the expense, just to join a parade? Or are you just throwing red meat to the base? Seems a bit goofy to me, no? Mike.
The answer, Mike, is that international politicking is a lot like poker: You learn just as much about what a player “is holding” by what they don’t bet, as much as when they do.
An Op-Ed from our friend “warhammer” underscores the point:
One can logically there is a very clear reason why the POTUS, vPOTUS or SecState Kerry were not at the French rally against terror.
At a recent speech to the UN, Obama made the following quote (link follows):
“The future must not belong to those who slander the prophet of Islam”
Did the president and his senior leadership believe that was what the Paris unity march was all about? Are we wary of painting a huge target on our nation and U.S. Interests abroad by morally supporting our nation’s first true ally?
History will be the ultimate judge on this situation. As for now, the global media, America’s allies and more significantly, our foes, have had ample time and reason to form their own opinions.
First, the inexcusable non-action when the U.S. Embassy in Libya was under siege. Our ambassador was ultimately murdered in cold blood, along with several other U.S. Citizens and no rescue was ever mounted. Similarly, zero pressure was ever placed on Iran for its continued violation of UN nuclear weapons treaties. Then, the failure to act in Syria when the infamous red line was crossed by the Assad regime with the use of chemical weapons. Next, a caving on international principals when Russia annexed the Crimea and supported armed aggression against Eastern Ukraine by Russian backed separatists. Finally, this diplomatic apostasy which paints every American in poor light with France, Germany, Israel, the Palestinian people and countless other freedom loving people.
Obama’s lame excuse for his absence in France was that the short notice and security protocols made the trip for he or Biden impossible. My question is, if security was suitable for Netanyahu, Merkel and Abbas, what’s so damn special about Obama?
American power has taken a sever hit, possibly a mortal wound on this series of gaffes. In the game of global power, during the past six years America has consistently ceded its position of moral leadership. When history books are written in the years to come, this period will surely go down as the point when America hit the slippery slope to being a second class power. Trust has been broken, perhaps irreparably. We all will pay the price.
For the conspiracy minded, perhaps the PTB wanted this outcome all along. Obama was given the Nobel Peace Prize mere months into his presidency. How can a man of peace wage war? Unable or unwilling to accept the wise council of his military and civilian leadership, this hubris consumed man fired six generals and gone through three SECDEFs. Obama wages a more aggressive campaign against his domestic political foes than avowed enemies of the state!
My heart is sinking when I consider the evil that courses across the Middle East, with massacres of innocents, countless women raped, plundered and murdered, and children taken into slavery, all while America sits idly by on the sidelines unwilling to commit. One might argue it is none of our business. To that I would say, in very short order, it will be.
Meanwhile: A Texas congressman down in the Galveston area compares Obama to Hitler, but I think Chamberlain is closer. But, we shall keep an eye on the Reichstag Buildings just in case. Still, the point that Obama has more power than King George III (which led to the AmRev) is not completely without basis.
Two important follow-ons to this story. First, the conspiracy crowd is getting “worked” on the story real heavy. Discount reports that this was a Western-engineered false flag by at least 95%. Why? Well, the West is simply not that smart to begin with.
And Muslim extremists need to temper their approach because the West will monetize anything. Charlie Hebdo will run more than 3-million copies, looks like…got yours?
Flight Safety Issue
I’m just waiting for the FAA drone pilot licensing…then I take another bite at the apple…
And so, another morning ends on this note:
A fast reporter, that he was
Insightful fellow that’s because
He’d had his coffee, got a buzz
and needs a Burma-Shave.
More after this…