Dribbling the Cat (Part II)

"Quit with the bouncing already..."

 

Wikipedia: The term "dead cat bounce" is derived from the idea that "even a dead cat will bounce if it falls from a great height".   

The President has lost his 'Dead Cat Bounce' following the DNC post-convention Love Fest.  For the next forty-nine days he'll "Dribble that Cat" to increase his chances of reelection. 

Now is the time to bang that kitty up and down until he makes some approval ratings magic happen. 

The magic began in yesterday's edition of "Dribbling the Cat (Part I)" regarding the Fed's Quantitative Easing 4. 

The magic continues here in Dribbling the Cat (Part II)...  Pain in the Gas

USAToday.com, September 17, 2012: 
Oil prices plunge 2.4%, below $97 now

NEW YORK (AP) -- Oil plunged more than $4 per barrel in a short time Monday afternoon, erasing the gains made last week when the Federal Reserve unveiled new steps to boost the U.S. economy.

Benchmark crude fell $2.38, or 2.4%, to finish at $96.62 on the New York Mercantile Exchange. It was the biggest percentage decline since July 23. Oil dropped below $95 per barrel during the rapid sell-off before recovering a bit.

Traders were unsure of the cause of Monday's price drop. Some questioned whether an errant trade or another rumor about a release of oil from the Strategic Petroleum Reserve was to blame.

Chris Grams, a spokesman for NYMEX operator CME Group, said there were no technical glitches behind the price drop.

The White House has been considering tapping the Strategic Petroleum Reserve to stem the rising cost of crude and gasoline. A little over a week ago, Reuters reported the Obama administration was considering a release much larger than the 30 million barrels from last year.

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Well, isn't that special?  Crude oil prices began to fall today based upon rumors that the Obama Administration was going to release MORE THAN 30 million barrels of oil!  Why would President Obama want the price of gasoline to fall now, vs. any other time in the recent past?

Pound that cat. 
Pound that cat. 
Pound that cat. 

Hey, there's an election coming up!  And somebody needs some polling improvements to bolster their base and win over the 'weak-minded-only-paying-attention-to-today's-news-voters.' 

Democratic Slogan:  "An uninformed voter is Our best supporter."

But, I'm wondering, does anyone in the Administration think about what the purpose of the Strategic Oil Reserve is, you know, other than buying votes? 

1.  Is it for lowering the price of gas in the near-term?
2.  Is it for making the President look like a 'nice guy'?
3.  Is it part of our nation's 'Rainy Day' oil-filled 'Mason Jar' buried in the back yard?
 
Of the three responses above, only Number 3 comes close to the original intent of the Strategic Oil Reserve. 

According to Wikipedia:   
The Strategic Petroleum Reserve (SPR) is an emergency fuel storage of oil maintained by the United States Department of Energy. It is the largest emergency supply in the world with the capacity to hold up to 727 million barrels. 
...

The United States started the petroleum reserve in 1975 after oil supplies were cut off during the 1973-74 oil embargo, to mitigate future temporary supply disruptions.

According to the World Factbook, the United States imports a net 12 million barrels (1,900,000 m3) of oil a day (MMbd), so the SPR holds about a 58-day supply.

However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, making it a 160 + day supply.

To be fair, G. W. Bush released oil from the Strategic Oil Reserves following Hurricane Katrina in 2005 to augment interrupted supplies from the Gulf.  President Obama also released oil once before following the conflict in 2011 when the "beautiful bloom of Muslim Brotherhood Democracy" took root across the Middle East during the 'wonderfully organic' Arab Spring movement. 

So I guess the real question is:  Should the President be messing with the Strategic Oil Reserves fewer than 50 days out from a National Election?

That answer, of course, is a resounding Yes!

Unless, of course, you ask people who are paid to track this stuff...

 
WSJonline, September 11, 2012:
Release of Oil Stocks to Lower Prices Is Crude Idea

Oil has returned to the political agenda as Western governments grapple with soaring energy prices, but observers say a release of emergency oil stockpiles would have only a limited effect.

Prices of both U.S. benchmark West Texas Intermediate and Brent crude have soared around 15% since the start of July, turbo-charged by expectations of more monetary easing from the Federal Reserve this Thursday and geopolitical tension in the Middle East.

And in the U.S. over the past month, gasoline prices have risen uncomfortably near $4 a gallon—a level last reached in 2008 just before the recession hit and prices crashed. The level is generally viewed as a pinch point for consumers and has been accompanied by widely publicized comments from White House officials that the U.S. is again considering tapping its oil stocks.
...

With a U.S. election just two months away, speculation in the market has reached a fever pitch that the U.S. could act unilaterally to release emergency stocks or even push for a coordinated release.

...

However, in recent years governments have increasingly seemed to view the release of oil stocks as a political expedient, rather than an emergency measure, analysts say.
 
The last time discussions of a reserves release made the headlines was back in March—just ahead of the French presidential election and when the price of Brent crude oil rose above $120 a barrel.

"There's a shifting paradigm in terms of how people see strategic stocks, and to be more precise, how the current U.S. administration sees strategic stocks," Mr. Tchiliguirian said.

A potential release is like a "Sword of Damocles" hanging over the market, Mr. Tchilinguirian added. Whether it will happen is uncertain, but if it does prices will fall.
 
However, the impact of a stock release on prices is difficult to predict and the more frequently it is used, the less effective it becomes as a tool, say analysts.
 
Last year's release of stockpiles to make up for a Libyan export shutdown during the country's civil war brought down prices only briefly. U.S. oil futures fell some 5% initially but bounced back higher within a week.

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Prediction?  The President will open up the Strategic Oil Reserves sometime in early October. 

Reasons given may include: 

* Ongoing instability in the Middle East, 

* In response to some man-made, or to a weather-born phenomenon interrupting normal production of crude oil, or, perhaps, 

* The greatest natural disaster of them all, the lack of a coherent National Energy Policy and refusal to explore oil reserves 'locally'

Ah, but what do I know?  I'm just a guy sitting in his PJ's at 5:46 in the morning connecting the dots.  The dots mostly lead to the same place - an empty chair, adorned with an empty suit jacket, worn, on occasion by the empty, vapid man in the White House.

Not that there's anything wrong with that...

 

Dribbling the Cat (Part I)

"The cat, it bounces no more..."

1 thousand million = 1 billion
[Keep this in mind.  We'll get back to it shortly - I promise.]

In May of 2011 I wrote a post called, "Bouncing the Cat" regarding the the President's approval 'Bounce' when he went in (guns blazing, face painted, wearing wicked cool custom Air Jordan Presidential Combat Boots) to personally kill Osama Bin Laden. 

I had almost forgotten that the President killed Bin Laden until a short while ago multiple DNC speakers told me that "The President of the United States killed Bin Laden!" and, um, some other MAJOR achievement that I just can't seem to remember.  Hmm, what was that OTHER thing?

Begin random sequence of likely 'Presidential Success Stories' possibilities in 3, 2, 1...

• Focused like a laser on the economy?
• Developed a cohesive energy plan for the Nation?
• Lowered gas prices to Bush/Clinton/Bush Era levels?
• Saved Social Security?
• Extended the shelf-life of Medicare?
• Lowered unemployment to Bush Era levels?
• Secured our borders?
• Cut our Deficit in half by the end of his first term?
• Lowered the sea level?
• Made the World a 'Safer Place'?
• Was a better President than Jimmy Carter?

Nope.  None of these things seemed to have ever happened during the past four years.  So what was the OTHER major accomplishment they talked about during the DNC in Charlotte?

That's funny, nothing springs to mind.  Oh well, time to moo-ve on.  I could spend the rest of today focusing on the worthwile things the President didn't achieve, but I ONLY have a day to cobble this post together, and list of stuff the man couldn't, or wouldn't do, might take the better part of a week's typing. 

Regarding his other major achievement?  I'll keep that running as a sub-routine in the back of my mind.  Maybe it will come to me, maybe not.  We'll see...

However, since it is critical to the post which follows, let's spend a moment together to gain a better understanding of what the "Dead Cat Bounce" is, before proceeding, okay?


Wikipedia: The term "dead cat bounce" is derived from the idea that "even a dead cat will bounce if it falls from a great height". 


Soooo, let's look at what the President IS up to these days. 

"Bouncing the Cat" is no longer enough to get his approval numbers up.  Bin Laden, at last glance, is still dead, and presumably 'back to' Whale Chow at this point in time (it's a 'Circle of Life' thing, I don't have time to go through the details here...  Just go with it, okay?) 

The President is fully-involved in the "Dribbling the Cat" to increase his chances of reelection.

How do you Dribble a Cat?  Great question!  Thanks for asking! 

First you take advantage of any tool at your disposal in an attempt to bolster your faltering  economic and personal reputation.  Then you slam them 'really hard' (think basketball) into any flat surface in your general area.  With any luck - they bounce.   

Being President of the United States has perks - let's take a few moments and check  out one of them.

1.  You can have friends print worthless dollars in an attempt to 'spur the economy'.  In essence, you reach into your left pants pocket and pull out your wallet.  You notice that you have no cash so you... 

Reach into your right pants pocket, pull out your check book and... Viola! 

Problem solved, checks are written, you 'economy' looks brighter and you feel really good about your innovative method for dealing with your 'Economic Malaise'. 

This is referred to as Quantitative Easing.  Ben Bernanke has done it before - it is not a good thing.  The Carter Administration did it also (what an odd coincidence.) 

You KNOW it's not a good thing when even CNBC knows it's not a good thing...  


CNBC.com, September 14, 2012 -- Fed's 'QE Infinity': Four Things That Could Go Wrong

The Federal Reserve's latest stimulus target is intended to rouse the housing market, generate wealth and drive down unemployment, all of which conceivably could happen.

But it will be the assortment of unintended consequences that all the money printing and price-boosting — even outside of the obvious inflation risk — will have that will keep Fed Chairman Ben Bernanke awake at night.

So while investors were busy Thursday and Friday buying up stocks and metals and selling bonds and the U.S. dollar, financial experts were sizing up what "QE Infinity" also might bring to the economy and marketplace.


1. Moral Hazard, Washington Version

Bernanke has time and again exhorted lawmakers in the nation's capital to get serious about fiscal reform and economic growth.

But with Thursday's announcement that the Fed will engage in quantitative easing for as long as it takes to get the economy rolling again, he may have taken the onus off Washington to put its own house in order.

That's dangerous, considering Congress and the White House need to reach deficit-reduction goals or risk falling off the fiscal cliff of mandated tax increases and spending cuts.

"My sense is that Ben and his colleagues at the Fed do not expect much support from a trade policy that would be more growth-oriented, from fiscal policies that would be more longer-term," former Fed governor Kevin Warsh said on CNBC. "So they've got to be worried about these things, and they are trying to compensate for these other failings."

Result: The dollar [.DXY  78.78    -0.06  (-0.08%)   ] will continue to tumble because of Fed policy. In another time, that would give policy makers time to act while conditions improve, but if Washington stays in gridlock there could be no end in sight for U.S. currency weakness.


2. Moral Hazard, Wall Street Version

The concept of moral hazard essentially means the rewarding of bad behavior.

But it also extends to the notion that somebody will be there to support you no matter what. The Fed, with its perpetual QE, seemed to appoint itself as the stock market's nanny for years to come, even though the Standard & Poor's 500 [.SPX  1465.77    5.78  (+0.4%)   ] and Dow industrials [.DJIA  13593.37    53.51  (+0.4%)   ] are within a few percentage points of historical highs.

"The real unfortunate impact of this latest Fed action is to continue to propagate the idea the economic recovery remains on life support and the U.S. stock market is simply on a sugar high," said Jim Paulsen, the perpetually bullish chief market strategist at Wells Capital Management in Minneapolis.


3. Hurting Confidence

With the latest round of easing, the Fed's balance sheet will soar past $3 trillion and could get to $4 trillion in electronically generated cash before everything is finished.

In doing so, it has created a good news-bad news scenario: The good news is that the Fed is willing to go to extreme measures to pump up the economy; the bad news is that the economy needs it.


4. It May Not Work

All of the economic progress Paulsen cited may be valid, but there's still the reality that $3 trillion in new liquidity — along with more than $800 billion in fiscal stimulus — has generated the worst recovery since the Great Depression.

So is it worth the aforementioned risks if the economy will continue only to creep along, as it usually does after financial crises?

"This is the nuclear option for them. This is a never-ending weapon that is being fired at the middle class," said Fed critic Michael Pento, the founder of Pento Portfolio Strategies and an economist concerned with the effects QE is having on future inflation and on savers who are getting no interest on their deposits.

"If the unemployment rate stays elevated, as I know it will, and inflation eclipses (Bernanke's) 2 percent target, what is his next move? What part of the Fed mandate takes precedence?" he added. "Economic growth comes from more people working and more people becoming productive, and all the Fed can do is destroy our currency's purchasing power."...

"It's a bold move, but we're skeptical that it will have a significant impact," said David M. Darst, managing director and chief investment strategist at Morgan Stanley Smith Barney. "These (measures) are all useful, but they obviously do not alter the longer-term outlook in a meaningful way."


So how MUCH (remember the empty-wallet example above) money is Ben Bernanke looking to pump into the US Economy to get it humming in time for the November election?

40 THOUSAND MILLION DOLLARS (a.k.a.:  $40 Billion)

One time?

Nah, 40 THOUSAND MILLION DOLLARS per month.  For as long as it is deemed necessary to reelect the President.  Your tax dollars (you haven't paid yet) at WORK!!! 

Will this create long term economic stability?  Um, no.  As pointed out above by David Darst, "These (measures) are all useful, but they obviously do not alter the longer-term outlook in a meaningful way."

And if these measures do not alter the longer-term outlook, what might we have coming up in the nearer term? 

Oh, that Election thing.

Tomorrow, you'll hear more cat dribbling as the President takes on ENERGY.

It'll be a gas.




   

'Bouncing' The Cat

This, from Wikipedia:  The term "dead cat bounce" is derived from the idea that "even a dead cat will bounce if it falls from a great height".


Also:  Dead cat bounce is a Wall Street term that refers to a small, brief recovery in the price of a declining stock.

I've heard quite a bit over the past two days about President Obama's approval rating jumping 10% following the announcement of UBL's (or OBL's) departure from this plane of existence. 

Within hours of UBL's (or, you know, OBL's) death proclamation by President Obama the media lit up their multiple outlets with stories about the focus of THIS President on the primary objective of the War on Terror (not sure, can I still call it the 'War on Terror'?  If not, please accept my apologies.) 

This new talking points objective?:  The death of ONE MAN.

Oh, now I get it. Sunday evening the War on Terror morphed into the War on Bin Laden. 

Thanks for sharing the news with us, CBS, NBC, ABC, HuffingtonPost, NY Times, and Fox News.  No, seriously, 'Mission Accomplished'.  It's good to know that after almost ten years, the loss of thousands of soldiers' lives in combat, Billions of dollars spent that we were, 'wrong' the whole time.  

So while the death of ONE man holds the hopes of our [IRONY ALERT] Nobel-Peace-Price-winning President Obama's approval resurrection, let me ask you this:  What's next?

The President is taking his first trip to 'Ground Zero' today to bask in the adoration of the grateful American Nation.  GW Bush declined the invitation to attend this 'Love' (or perhaps, 'Death') Fest in Manhattan, to his credit.

Today's trip to Ground Zero will usher in the decline of President Obama's approval 'bump'.  Soak up the sun oh great pontificator, dispenser of truth, protector of America, and 'sensitive to the needs of the Muslim burial proceedings' President Obama - for as the sun sets today, your approval rating will as surely begin its descent.

For a while Pew and other sources will be focusing America on the greatness of this man, but I looked at another poll. A poll which I believe will outlast the momentary glow of the President's accomplishment (watching his announcement Sunday evening - HE did it all, apparently, with some small amount of support by the military).  

The 'Other Poll' was a Rasmussen Poll from April 25th, 2011.  In this poll, only 25% of Americans believe that America is heading in the right direction.  One year earlier this number stood at 33%. 

Yeah, yet more 'change you can believe in'.

As the glow from his beneficent countenance fades from LCD's all across America this evening, Americans will once again be concerning themselves with the business of America - working, caring for their families and paying their bills.  And once they do, they will remember, and focus upon why three out of four of them are 'concerned' about the direction of our nation is heading on.

Then, the bounce ends, and the approval of that multi-lived 'Cat' in the White House once again...

Falls.

Couldn't happen to a nicer guy.

p.s.:  My hat’s off to the people who actually made this happen, the military, the CIA, and those serving at Gitmo who got the information which lead intelligence ‘down the road’ to Pakistan.


 

p.p.s.:  Giving President Obama credit for the feat of  ‘getting Osama’ is like giving credit to the guy who answered your phone call for making, then delivering your pizza, uphill (both ways) in a snowstorm, in less than 15 minutes while the pizza is still ‘piping hot’.  The phone answerer (a.k.a.:  The President) ’took the order’ as others did the heavy lifting to pull it off – yes, the guy answering the phone was NOT the team which made, or delivered the pizza.  It was merely the 'Kid' who answered the phone. 

p.p.p.s.:  Please remember to TIP your pizza delivery people, your CIA, and our Members of the US Military.  If I remember correctly, President Obama and Harry Reid told the American people less than one month ago that they did not want to PAY these people serving in our Armed Forces.  In retrospect, this doesn't seem right, now does it?

These people, after all, work for a living.  They get the call.


UPDATE 9:10PM:  Oh, oh, Rasmussen did another poll. 


You can access it HERE