£250 million army of census snoopers set to hit the streets

With Census Day taking place on Sunday, the Office for National Statistics is preparing to send out 35,000 ‘field staff’ to force people to fill their 2011 census in, at a cost of £250million - half the entire budget of £500million. After the shambles of 2001, when over three million people did not fill in their forms, the ONS is keen to get a more complete set of results at any cost. The ONS explained their role yesterday: '"Their objective will be to obtain a return from each of these households, either by helping them complete the questionnaire (explaining the...

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Peaceful Saudi Streets Won’t Curb Oil Prices

Don’t expect all hell to break loose in Saudi Arabia when demonstrators hit the streets today in a planned show of strength. Protests are likely to be subdued, according to a Rick’s Picks subscriber who lives there.  “You need to take what the news and Internet are saying with a grain of salt,” he wrote. “I am currently living in Saudi and have been talking to the locals the past few weeks. Everybody I have talked to does not believe anything will happen this weekend, nor do they want change. I am not saying nothing is going to happen, but that is the ground report. Everybody I have talked to, regardless of which Muslim religion they practice, loves the king and is grateful for what has occurred in thecountry over the past generation. You need to remember that these people were 98% nomads less than 30 years ago.” 

The “experts” would indeed have us braced for the worst. “Although most political analysts predict any demonstrations to be swiftly – and perhaps bloodily – suppressed by the government,” the Financial Times reported, “any hint that the protests enjoy wider-than-expected support is likely to spook investors once again.” We suspect that even if Riyadh remains relatively peaceful, however, that crude oil prices will continue to head higher.  A short while back, we wrote here that the spike in crude caused by mounting troubles in Egypt and Libya would seem relatively tame in comparison to what we might see if Saudi oil production were to come under threat. While we still think that’s true, we now expect a quiet weekend in Saudi Arabia to ultimately have little impact on energy markets that seem likely to remain in the grip of speculators. They are quite obviously determined to keep squeezing until the fever breaks, but will it? The Saudi demonstration is not the only one planned for today. There’s another in Bahrain, where Shia protestors are planning to march on the Sunni-dominated royal court in Riffa. That doesn’t sound like a very mellow mix. And in Libya, the battle could drag on indefinitely, perhaps turning even uglier if the country’s energy resources come under attack in an escalated conflict.

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Prohibitive Air Fares

Concerning the technical picture for crude oil futures, we are currently using a Hidden Pivot target at 109.17 as a minimum upside projection for the NYMEX continuous contract.  So far, it has gotten as high as 106.95. If the pivot fails to contain the rally, however, the breakout could go all the way to $151 before it hits a pocket of supply deposited on the charts as crude fell from a frenzied, all-time peak at $188 recorded in the summer of 2008. Even if this Middle East-driven short-squeeze does not break any price records, the persistence of tensions in the region is apt to keep quotes quite buoyant for the foreseeable future. Under the circumstances, we should tune out the ostentatious sighs of relief on Wall Street whenever stocks rise on a day when oil prices have fallen. The two are connected, for sure, but any bullishness based on cheaper crude is bound to be short-lived.  Fuel costs have already pushed air fares so high that airports are going to seem relatively deserted this summer.  How will the stimulus-addled stock market react if gasoline is headed toward $5 a gallon, as seems plausible?

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What Wall Street’s Really Worried About—Make No Mistake, It Isn’t You

By Mitchell Clark, B.Comm.

The stock market is definitely in need of a correction/consolidation and the catalyst could be a combination of events: conflict in North Africa; the end of 2010 fourth-quarter earnings season; a generally tired market; and higher oil prices. Even though the stock market has gone up tremendously, investment risk is the same now as it was six months ago—high to very high.

We’ve got geopolitical events to deal with, already high commodity prices, low housing prices, high unemployment, and the sovereign debt issue, which is a simmering risk that could wreak havoc in currency markets. It’s a wonder that stock prices have gone up at all.

Still, business conditions for corporations remain positive and that’s the single most important piece of economic analysis that investors should be focused on. While events around the world do matter, Wall Street has always followed its own ethos, and it’s different from Main Street. That’s why you often see a rising stock market when economic news is weak.

Readers know that I’m long the stock market, although I view the current state of things as a bear market rally. Just owning the S&P 500 is good enough in this regard. If you want to be speculating for capital gains, the single best area for stock pickers remains precious metal stocks. Investing in gold has been and will continue to be a good idea for equity investors and I feel so strongly about this that I’d be a buyer right now, even though many of the best stocks in the sector have already appreciated substantially. I always prefer the buy-low-and-sell-high investment strategy, but as an investor with money to make bets, you have to roll with what the market offers. The best time to have made new gold stock picks was quite a few years ago, obviously.

I’m not worried about higher oil prices affecting domestic economic activity. It would take quite a while for high oil prices to kill this recovering economy and they would have to be well over $100.00 a barrel (WTI) for this to happen. What I am worried about are inflation and interest rates. This story is happening abroad, but not yet at home to the degree that economic activity would suffer. But the probability for a change in the interest rate cycle is increasing and this is what Wall Street is worried about. As long as the Fed says everything is fine (which doesn’t mean it’s right) and there’s no need to make any policy changes, the outlook for stocks is positive. Once the tone from the central bank changes, my view will be shifting significantly.

Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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