Tuesday, October 26, 2010

Oil and The Humanities

Here is a link to a hysterical video regarding the value of an advanced degree in the humanities.

Thrilled does not begin to describe how I feel seeing the message making its way out into Blogsphere.

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So... back to Oil and energy equities and the markets...

TPTB have clearly decided to smush the US$ in an effort to increase exports... clearly these nitwits don't read my blog... Oh, well... there are no macro solutions, only micro solutions...

My sense is that while the U.S. IS in grips of an ongoing and long lasting credit contraction, not all commodities will fall in line.  Oil, me thinks, is at the head of that list.

The Energy SPDR, XLE, is back to where it was when Oil was $55 per barrel, and given the price of Oil is nearly $30, or nearly 60%, higher today... well, my bet is that these 2 have likely diverged as much as they are going to. The U.S. might be headed toward third world status... that does not mean you have to join in the effort.  If Oil prices only remain here and head no higher, they probably harm credit expansion while also increasing the prices of energy equities... if they head much higher it most likely be due to a steepening in the decline in Oil imports, and that would be an unmitigated disaster for credit expansion.

If that happens, keep an eye on JNK, the Junk bond ETF.  Junk has had an unbelievable rally and some smart folks think Junk's been blown into a bubble by our friends at the Fed... personally I am agnostic on that... BUT if you start to see JNK heading south I would be looking to get flat energy equities UNLESS Oil, the commodity, is doing well. (That was purposely ambiguous as I am not making a recommendation, only an observation and a method of confirmation... that may or may not work or be accurate.)

I am long the US$ and have been for a few days... when the index got down in the low 77's and only 3% of the market was bullish on the US$ I figured that was good enough for me... I THINK, not sure, just THINK that if the US$ catches a bid here it won't be too terrible for Oil, and if it sinks further Oil will take off the low $90's(?).  Its a pretty good hedge.  And yes, they could both go up together, and less likely they could both go down together...  For you Gold Bugs... it wouldn't take much US$ appreciation to do some damage in that market place... trees, contrary to newsletter opinion, do NOT grow to the sky... as always, when I am wrong I am gone... or very hedged.

I am going to maintain, hedged and unhedged, positions in energy equities for the foreseeable future as I think the opportunity for some kind of energy shock by the end of 2012 to be very, very high.  I don't want to miss it by being too cautious.  That's not an investment for widows and orphans... and I reserve the right to change my flippin' mind...

So watch JNK, XLE, and the price of WTI along with the US$ Index.... should be interesting.

6 comments:

K said...

The link doesn't work.

Greg T. Jeffers said...

Sorry, I fixed it. Hysterical

Bill said...

Bur,
(this is a continuation)

Those aren't actual numbers. Saying there is money and proving you can find the money to solve the issue are two different things.

What are the actual numbers and how long would it take to bring us out of debt, meet our unfunded liabilities and provide the services you say we can afford?

The $13T debt - how would you raise taxes and how long would it take to pay this off?

$100T unfunded liabilities - how would you raise taxes and how long would it take to bring these liabilities into the black?

Please don't say there's enough money. Show us. If it's there and it's so simple then show us the math. Otherwise, quit saying it. It's not as obvious to the rest of us.

Anonymous said...

I really enjoyed that video. I worked at multiple colleges/universities and much of this rings true to me. Especially the job prospects/adjunct life and people trying to pump up their C.V. by publishing rehashed nonsense that almost no one ever reads--even in their field of study.

I used to advise students, and I didn't like to piss on people's dreams--but most students head their heads in the clouds and focused on 'wants' rather than the self-discipline and effort to try and make a reality of their wishes.

I choose not to continue to work on a Ph.D, even though I wasn't in the humanities, but it was just a matter or economics/debt/and a desire to have a family/relationships rather than be a slave for academia for another 4 years, trying to get by on R.A/T.A. income of about 15k.

I still see some value in college, but for most a two year degree would be more than sufficient, socialization and fun remain the highest priorities for most 'students' and they help pay the bill for the colleges for the few that are highly motivated/creative in their given fields.

All the schools focused on body counts, and I found these to be the most political/ego driven places to work you could ever imagine. Too many experts at 16th century French Literature think their uneducated opinions on many other topics should be bowed down to. With the current data, College degrees aren't even good as "Work permits" anymore...welcome to Costco's I love you.
-Meiyo

Tom said...
This comment has been removed by the author.
Tom said...

Not exactly the same thing, but this link was on marginalrevolution today, and it's related enough to be germane I think:

http://www.slate.com/id/2272621/

(Executive summary: law students kick off, because it's somebody else's fault that there aren't enough law jobs for them.)