Wednesday, May 28, 2008

Flip Flops

Are supposed to happen in politics. Look what President Bush had to say about Scott McClellan when he resigned as press secretary in 2006:

"One of these days, he [McClellan] and I are going to be rocking on chairs in Texas, talking about the good old days and his time as the press secretary. And I can assure you, I will feel the same way then that I feel now, that I can say to Scott, 'Job well done.'"
http://blogs.telegraph.co.uk/foreign/tobyharnden/may08/scott-mcclellan-george-w-bush.htm

Now that Scott has published his memoirs that are critical to Bush, this administration says:

“Scott, we now know, is disgruntled about his experience at the White House”
http://www.nytimes.com/2008/05/29/washington/28cnd-mcclellan.html?ref=politics

Oil, which was at $135 a barrel last week, fell back to $126 a barrell this morning, only to rebound to $131 after Morgan Stanley's Dick Berner said Brent oil could see $150.

"It seems that these big banks are driving oil prices, where instead it used to be the other way around," said Alaron Trading senior market analyst Phil Flynn.
http://www.oilwatchdog.org/articles/?storyId=20404

That's what happens at tops. Fundamentals get disconnected. Demand wanes but prices get propped by an outside catalyst, shaking out the bears and giving the bulls hope. Oil will fall back tomorrow. Just look at the action in the refiners as Western refining (WNR 11.45) closed up over a stick, and Tesoro (TSO 24.24) closed up 3%, with extremely heavy call options in the June 25 strike, indicating that it's time to start the rumour mill with the refiners, and that the cost of goods, oil prices, are heading down, and not up.

But back to Morgan Stanley and oil predictions. Dick Berner, today's oil bull, was famous for being the first investment bank predicting a recession which he did in December. His oil forecast today is $150??? I'll just go back to February 25th when he said that Brent crude would average $90! Here's what he said:

Higher US Inflation, Not Stagflation
February 25, 2008

By Richard Berner New York)

Our energy team and we now think that supply constraints are putting a higher floor under crude and refined product prices. If Brent averages $90/bbl this year, US retail gasoline prices (all grades) seem likely to average about $3.25 for the year, and in the spring driving season could hit $3.50.
http://www.morganstanley.com/views/gef/archive/2008/20080225-Mon.html

So three months later, after oil has made it's biggest dollar gain, in the shortest amount of time in it's trading history, after it has moved up 50% in three months, he now tells us it's going to $150?

So he Flip Flops.

But he has company.

John Mack, the CEO of Morgan Stanley, who personally gave $70,000 to Republican candidates, also raised over $200,000 for Bush's 2004 election garnering the elite "Ranger" status. This year he endorsed Hillary.

So he Flip Flops, just like his economist.

All these flip flops and no one is backing a winner! Their flipping and flopping will just back you into a corner!

But when Morgan Stanley writes off $16.1 billion dollars the last few quarters, maybe you can be flip about flopping your calls!

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