Surprising Bullish Run in stocks in the wake of rising crude prices

Stock markets all over the world have been bullish for past few days. There has been an almost all round rise in indices. This market behavior is surprising to say the least. It looks as if the businesses are going to be net gainers due to current rise in crude prices. Even if that were true for business houses always pass on the rising cost plus an additional margin for profit to the ultimate consumers, it is the common consumer whose residual surplus is sure to decline with rising expenses on petroleum products.

Of course continuance of the bullish run on 4th April 2011 indicates that the bullish trend would continue until 8th May 2011, when planets again come to occupy a decisive turning point. 9th May 2011 might well turn out to be another grey Monday as it might herald the dawn of another round of recession. If that turns out to be the beginning of the next sixty year economic cycle such as had begun after the end of Second War, then the world could not have been worse prepared for the crisis.

Investors need to be cautious and suppressing their greed must retain liquidity. A little gold and cash in the bank locker never harms. It has the added advantage of remaining accessible to you even if your bank were to go bust as moratoriums on deposit accounts never apply to contents of your locker. Your relationship with your banker in case of a locker is that of a lessor and lessee. Thus contents of your locker shall always remain accessible to you even if the bank was to go bankrupt.

Take advantage of the current bull run as it is likely to sustain for a few weeks. Block your profits in gold and hard cash kept in a locker and you will be best prepared for the crisis that seems to be looming ahead later in 2011 and to last till early months of 2012.

US reluctance to check crude prices

Strange is the stoical silence officially maintained by US while the world suffers with uncontrolled rise of crude prices. The reasons could be many but in order to put them in perspective one would need to go a little backwards in history. Petrol and diesel vehicles have been in use for a few generations but petroleum became a strategic product only after second world war when the world witnessed what wright brothers flying machines could achieve in their new avatar as airplanes.
Still the crude prices remained quite stable through 1950s and 1960s. It was largely due to Bretton woods accord and virtual monopoly of US Dollar as the currency of international trade. However, all was not well and US was printing more dollars than it gold reserves could permit and due to all countries denominating their international trade in dollars the US was exporting inflation to other countries. Almost all currencies of the world were pegged onto US dollar and all was quite well with the world until US unilaterally rescinded from Bretton woods accord. Readers not familiar with this part of history will find my lecture notes quite useful accessible by clicking here
Now US may be shying away from constructive action to check crude prices because of a bad conscience for having caused it in the first place. Or it could be that US speculators are equal partners in the windfall gains made by arbitrary spurts in crude prices. In any case the time has come when US has to own its responsibility and take constructive action the way it has always done.

Crude Prices - Will the world never react?

Crude prices have been holding the world to ransom time and again. Every time crude prices begin their skyward movement economies of the world go in a tizzy. Governments try to economize and so do business houses. Jobs are cut and tax rates rise resulting in the vicious spiral of unemployment causes recession which again causes rising unemployment. But does anyone who matters really care?
The answer seems to be in the negative because during last couple of decades since Oil Producers formed a cartel and began to arm-twist the world the action by the rest of the world has been conspicuous by its absence. Though it is not that the rest of the world and UN are incapable of appropriate action. They could bring even Saddam's Iraq around to behave with the food for oil program. Why can't they act until it is too late and human sufferings have caused an irreparable damage.
Markets of the world especially the stock markets are going to be in a tizzy on 4th April 2011. Whether it is due to rising crude prices is debatable but surely rising crude prices would serve to add proverbial fuel to the fire. There may not be many who would believe that markets could go in a tizzy in less than a week from today but my readers would do well to be forewarned by a reading of  March 2011 Issue of my news letter Astro-Finance.