Thursday, August 10, 2006

3 Items that we watch

Less than 24 hours after I called oil a bubble the price of crude dropped over 3% and gasoline even further. I wish I could claim it must be my legions of oil hedge fund readers, but I don't think so.

The papers are saying its concern over reduced jet fuel usage if travellers avoid planes after terrorists were caught planning another strike. That reasoning seems like groping for an excuse to me, the jet fuel effect wouldn't even cancel out the recent supply restriction from BP shutting down the trans-Alaskan pipeline. I would guess it's just speculators using an excuse to take some money off the table, which seems to confirm my suspicions about oil.

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A recent economic survey by the Wall Street Journal shows economists are more bearish on growth and more worried about inflation. I've been saying for some time that inflation will rise and even have an investment position based on this concern. With the slowing GDP it's not clear how much inflation we might see, but the economists surveyed have finally raised their estimate to 3.3% CPI increase this year. In June the CPI rose at a 4.3% annual rate.

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Lincoln Electric CO, a stock in the Finance Wonk BUY portfolio, issued financials last friday. I am glad to say that margins are rising and the cash is still flowing in. The stock still appears to be a good buy so I'm keeping it on the BUY list and holding my position.

Invest well,

FW
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