• Bank of America Corp. (NYSE: BAC) intends to pay back $45 billion in loans it borrowed from the U.S. government through the Trouble Assets Relief Program (TARP) by the end of the year, The Financial Times reported. And it intends to do so by accelerating its program to raise capital. Sources told the FT that BofA is on track to raise more than $35 billion by the end of September.

• Brazil’s unemployment rate fell to 8.9% in April from 9.3% in March, Bloomberg reported. “The labor market stopped getting worse, that’s definitively good news,” Julio Gomes de Almeida, a consultant at the Brazilian Research Institute for Industry Development, told Bloomberg.

• Taiwan’s economy shrank a record 10.24% in the first quarter, as a result of slowing exports and a lack of private investment. Taiwan’s statistics agency cut its full-year growth forecast but also believes the worst is over.  “I think we have more or less seen the bottom for Taiwan’s GDP, in terms of dollar value, in the first quarter. We will start seeing improvement in the second, third and fourth quarters this year,” chief statistician Shih Su-mei told a news conference, Reuters reported.

• Emirates airline posted an 80% drop in full-year profit, and gave a grim short-term assessment. “As we move into the new financial year, the outlook is not improving,” Chairman Ahmed bin Saeed al-Maktoum said in the statement, Bloomberg reported. “Although fuel prices are dropping, demand for business and first-class traffic is still weak in many markets.”

• The dollar fell to its lowest levels against the euro since January and dropped versus the yen yesterday (Thursday) as Treasuries fell and gold prices increased. The spread between yields on 10-year notes and Treasury Inflation Protected Securities (TIPS), reflecting the outlook among traders for consumer prices, reached 1.73%, the highest level since September, raising inflation fears as the U.S. budget deficit widens, Bloomberg reported.

• Workers will hold a ratification vote on an agreement reached by General Motors Corp (NYSE: GM) and the United Auto Workers (UAW) union leadership on contract changes and restructuring $20 billion in debt owed to a trust fund for retiree healthcare, Reuters reported.  Details of the tentative agreement are being withheld until GM workers are briefed on the proposed new contract, which was reached after a round of talks involving representatives of the U.S. Treasury, the union said in a statement.

• The Conference Board’s index of U.S. leading economic indicators rose 1% in April, more than forecast. A separate report showed manufacturing in the Philadelphia area shrank in May at the slowest pace in eight months, signaling the deepest recession in 50 years could end later this year, Bloomberg reported. The leading indicators gauge registered its biggest gain since November 2005, the Conference Board said today. The index points to the direction of the economy over the next three to six months.

• Copper lost as much as 4% yesterday (Thursday) before narrowing losses near the close, Reuters reported.  The metal, often seen as an economic barometer, was dragged down by a drop in broad market sentiment amid fresh signs of economic weakness. Copper for July delivery on the New York Mercantile Exchange’s COMEX division slipped 5.55 cents to settle at $2.0510 a pound.

Source: Investment News Briefs Friday, May 22, 2009

The Dow Jones Industrial Average was up 26.2 points, or 0.32% as of 11:00 a.m. today (Thursday), while the Standard & Poor’s 500 Index was up 4.58 points, or 0.52%.

The surge was prompted by an increase in U.S. wholesale prices, which allayed concern over deflation. Producer prices rose 0.3% in April after falling 1.2% in March. Food prices posted the biggest gain, soaring 1.5% – enough to offset a 0.1% fall in energy prices. Excluding food and fuel prices, so-called core-prices climbed 0.1%.

The rise in producer prices accompanied an increase in import prices, which climbed 1.6% in April, the government said yesterday. Producer prices and the cost of imports comprise two of the three major gauges of inflation. The third measure of inflation, consumer prices, is scheduled for release tomorrow.

The rise in U.S. equities was further supported by a solid earnings report from Wal-Mart Stores Inc., the world’s largest retailer. Wal-Mart posted a profit of $3 billion, or 77 cents a share, in the quarter ended April 30, up from 76 cents a year earlier, matching analysts’ forecasts, according to Thomson Reuters.

Net sales for the quarter fell 0.6% to $93.4 billion, but the company blamed that decline on the negative impact of a stronger dollar, which dented international sales. Wal-Mart’s international operating income fell 16.2% to $880 million on an 11.1% drop in sales to $21.3 billion.

However, international operating income at constant exchange rates was $1.13 billion in the three months ended April 30 on sales of $26.1 billion.

“In almost every country we grew the top line faster than the market despite the strong dollar and a recession that is even deeper in some countries than it is in the United States,” said chief executive Mike Duke.

Wal-Mart’s resilience offered a modicum of comfort to the retail sector after a report yesterday showed retail sales fell 0.4% in April, the eighth monthly decline in the last 10 months. Retail sales tumbled 1.3% in March.

Retail sales have been badly battered by a sharp rise in unemployment. And data from the Labor Department today furthered illustrated the frailty of the current labor market.

Initial claims for unemployment rose by 32,000 to 637,000 in the week ended May 9, from a revised 605,000 the week prior, the Labor Department said.

The economy has shed about 5.7 million jobs since the recession began in December 2007. Payrolls fell by 539,000 in April, as the jobless rate climbed to 8.9% – its highest level since 1983.

Source: Producer Prices and Wal-Mart Results Give the Market Edge Over Weak Jobs Data

Inflation, a lack of production growth, and a weaker dollar will create justification for rising prices. Frontier Oil (NYSE:FTO) is worth a look.

Oil is slowly regaining the attention of savvy investors. After dropping into profit-erasing territory just two months ago, the value of the world’s most valuable fuel source is slowly and quietly on the rise. Investors watching the action are getting in on some great trading opportunities.

Frontier Oil (NYSE:FTO), with a market cap of just under $1.5 billion, is considered a small fry in an industry dominated by behemoths. But that does not mean it does not offer a huge profit opportunity.

As inflationary fears rise, the nation’s economy returns to growth and the government does its best to bump up the price of any pollution-emitting fuel source, companies like Frontier will see their share prices grow.

Read the full article here at TFN: Frontier Oil: Buy low, sell high

This from Money Morning:

Many of my neighbors here in Oregon are enjoying the big decline in gasoline prices, particularly those who still own SUVs, pickup trucks or any of the other fire-breathing, piston-clanking monstrosities I’ve seen on the road recently.

And no wonder. Gasoline prices in our neck of the woods have fallen between 60% and 70% since July, when oil closed at a peak price of $145.29 a barrel. Here in Oregon, that means that my wife and I don’t feel like we’ve been mugged every time we fill up.

But what happens when the prices start going up again? Global demand for oil will fall this year for the first time since 1983 as the world financial crisis saps demand, the International Energy Agency said a week ago. That has some people believing that prices will remain low.
But I wouldn’t bet on it – at least not for long.

The Organization of Petroleum Exporting Countries (OPEC) is making loud noises that it wants to see $75 a barrel again soon, which would represent a 70% increase from the $43.60 a barrel where oil closed yesterday (Tuesday). OPEC, supplier of more than 40% of the world’s oil, is ready to make a “big” cut in supplies when it meets in Oran, Algeria, today (Wednesday), Venezuelan Oil Minister Rafael Ramirez told journalists.

How much of a production cut we’ll see is anybody’s guess, depending on who does the cutting and who actually abides by the agreement over time. But we’ll know very shortly.

Russia recently announced, after years of going it alone, that it wants to actually join OPEC. Now OPEC has asked Russia to cut oil output by between 200,000 and 300,000 barrels a day to help revive prices, OAO Lukoil Chief Executive Officer Vagit Alekperov said in Moscow on Monday. And Russia may well do just that.

A price of $60 to $80 a barrel would be consistent with a global production cut of about 2.5 million barrels, and that’s a figure apparently supported by OPEC representatives we spoke to.   Leonid Fedun, OAO Lukoil’s deputy chief executive officer, noted in a recent Bloomberg News report that “there is a consensus [among members] to reduce production.”

This highlights something that’s often missed in the Western media, where the price of oil is typically associated with the price of gasoline and how that price impacts driving habits. According to CNN, MSNBC and a whole host of others, evidently that’s what matters to us.

But in OPEC-producing countries, it’s a different story. There the price of oil is more typically associated with external trade relationships and hard currency requirements that are policy level decisions often made at the expense of individual concerns. And I don’t have to remind you that most OPEC member countries don’t exactly specialize in freedom of choice, so the odds are high that what the energy ministers want, the energy ministers will get … but that’s a story for another time.

Here’s one other point to consider: With all the media’s focus on OPEC, there’s been little mention of China, India and the whole host of emerging markets that are still experiencing double-digit growth in oil demand. That’s not going away.

The bottom line here is that it would behoove interested investors (and people who like to drive less fuel efficient cars) to hedge any potential future rise in gasoline prices sooner rather than later. Here’s one quick and dirty way to do it.

If you drive 20,000 miles a year and your car gets 30 miles to the gallon at a time when fuel costs $1.75 a gallon, you are looking at an annual fuel bill of $1,166.67. If OPEC gets its wish and oil rises by 70%, gas prices may rise in tandem. Therefore, buying the equivalent share value of your projected annual fuel expenditure in such exchange-traded funds (ETFs) as the United States Oil Fund LP (NYSE:USO), the iPath S&P GSCI Crude Oil Total Return Fund (NYSE:OIL) or the United States Gasoline Fund LP (NYSE:UGA) could be just the ticket.

As prices rise, so, too, will the value of your investments. If prices fall further, you’ll obviously lose money, but you’ll be paying less at the pump at the same time.

Granted, what I am proposing is not a perfect hedge. Among other things, there are potential capital gains to contend with when you sell 12 months from now – taxes, transaction costs and a whole host of other variables that could come into play. At the same time, you could simply alter your driving habits, which, of course, would change the value of your calculations midstream.

None of that really is material, though. Hedges are never perfect.

But they do offer you a chance of “being in the neighborhood” when it comes to protecting your wallet from what could be vastly higher oil prices to come.

Source: Pledge to Hedge: Three Ways to Lock in Low Gas Prices Right Now

This from Investment U:

When I started driving, gasoline still contained lead and regular was selling for 29 cents a gallon. My father remembers 10 cents a gallon.

While it’s highly unlikely we’ll ever see those prices again, you could see gasoline below $1 a gallon, and it just might hit $0.75 a gallon. It might not be in time for Christmas, but the Easter Bunny might leave it in your Easter Basket.

That’s not just wishful thinking on my part: The International Energy Agency’s (IEA) most recent monthly forecast (released just yesterday) indicates year-over-year global oil demand will shrink in 2008 for the first time in the last 25 years.

Why? Developed nations are skidding into recession and emerging nations have hit the brake pedal on economic growth. And when the United States – by far the largest oil user in the world – cuts back, the ripple effect is devastating to producers.

Oil-laden tankers are backed up at U.S. oil unloading terminals, waiting to unload. At the same time, the nation’s most recent oil inventory report shows that storage tanks are brimming with crude oil, gasoline and heating oil. But that doesn’t mean there’s no money to be made here. In fact there are a number of opportunities to profit in oil right now.

Global Oil Demand – OPEC Cuts Production

OPEC is scrambling to cut production of oil. Chances are good that they won’t cut far enough or fast enough. Supply destruction will continue to lag demand destruction for the foreseeable future. And that sets the stage for a continued softening of pump prices as well as heating oil.

And then, of course, there will be the cheaters: You can expect rogues like Venezuela and Iran to continue to pump and sell as much oil as they can possibly suck out of the ground, since there is little production accounting oversight on the part of OPEC. It was a big problem the last time we had an oil crisis back in the 1970s.

How low could it go? Merrill Lynch is on record predicting $25 a barrel. It has a fairly good chance to go even lower, before supply cuts catch up with global demand slowdown, which is still occurring.

How long will it stay low? It’s hard to say, but any increase in global economic growth would provide a boost in demand and a subsequent rise in the price of oil. Current economic forecasts, while mixed, don’t show much of an increase until the latter half of 2009 – or even early 2010.

For now, though, demand is still falling, with October alone registering a steep 8.3% decline in crude prices. Simple math says that if crude prices are cut in half from here, so, too, could the price at the pump. Car dealers with rows of gas guzzling SUVs on their lots would be jumping for joy.

But just like $147 a barrel was artificially high, so, too, would be $20 a barrel on the low side. As prices begin to stabilize in late 2009 or early 2010, oil will likely return to a trading range of $80 to $100 a barrel. It would begin to slowly rise from there as the global economy climbs out of recession and economic growth rekindles.

2 Places to Put Your Gas-Savings Cash

Naturally, there are a few ways to put your growing mound of gas-saving cash to work:

• Shares of Autonation, Inc. (NYSE:AN), one of the largest car dealer networks in the country, are off 50% from their 52-week highs. Any sustained reduction in the price of gasoline will likely have a positive impact on car sales, particularly in the hard-to-move segments of the market like low-mileage SUVs, vans and pickups.
• A more direct way to play this would be to pick up a few shares of Valero Energy Corp. (NYSE:VLO) that’s been bouncing along in a tight trading range of $15 to $20 a share since mid-October. Its profits are tied directly to the spread between the price of crude oil and the price of refined products (known as the crack spread). A widening spread bodes well for refiners like Valero.

While I’m not sure I’d be running out to buy a big SUV anytime soon, it’ll certainly be easier on the wallet when pulling up to the pump. But don’t get too comfortable with cheap gasoline. Prices will eventually revert to their natural mean. And in the case of oil, it will eventually be higher.

Source: Global Oil Demand: Are You Ready for Gasoline Under a Buck a Gallon?

If this were a strategy submitted a decade ago, it would be understandable. Instead, it shows the utter lack of executive insight at General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler. Once again, fuel prices are going one way and Detroit is heading the other. If I recall, this has happened several times before.

Granted, the proposals were submitted under a cloud of incredible political pressure, but that is no excuse for the horrific plans submitted by the Big Three.  What concerns me the most is their caving to the “green” crowd.  Mark my word.  It will be the touch of death for Detroit.

It will cost much more than $15 billion, $25 billion or even $35 billion in government funding to get Detroit producing high-demand green vehicles. For proof, all we have to do is head to another section of Washington.

Won’t somebody please pay attention to us

Last week, the Electric Drive Transportation Association held an expo at the Washington Convention Center. Walk around the floor of the show and you will see booths from operations as small as mom-and-pop shops to as large as the folks pleading to Washington.

The theme throughout the exhibition hall is unified; the industry will not survive without the help of Washington. The industry association is calling for increased tax incentives and government assistance programs. Most of all, it wants the federal government to lead the charge by converting its more than half a million vehicles to green models.

In other words, the free market will not allow the industry to grow and expand, so Uncle Sam should intervene. We all know that line of thought will only lead to trouble.

As investors, there is a strong tendency to want to invest in the “greening” of America. But time and time again, the market has knocked the industry to its knees.

For long-term buy-and-hold investors, the industry is an absolute death trap. For speculative investors with the stomach to stand incredible undulations, there is some profit opportunity, but you had better sleep with a buy and sell button under your pillow.

The fact that Detroit is caving to the government’s pressure is a surefire sign of desperation. Detroit will get its money this week, but it will be a mere pittance of what the industry needs if it wants to succeed.

If the nation wants a green economy, let the free market dictate the winners. Trying to transform General Motors into a producer of “green” technology is the equivalent of asking Exxon Mobil (NYSE:XOM) to start drilling for spring water. It is not going to happen.

Uncle Sam needs to sit down and let the free markets take charge. If he doesn’t, I have a feeling somebody will knock him down.

Source: Going “Green” will Destroy Detroit

This from Investor’s Daily Edge:

This past May I wrote an article for Unplugged entitled “81 Billion Reasons Why Gas Affects The Economy”. In that article I talked about how much rising gas prices were siphoning out of the economy each year. Well now the opposite reaction is happening.

Here is the meat of that article:

According to the Bureau of Transportation Statistics, there were 135,399,945 licensed automobiles in the United States as of 2003. The owners of these vehicles have less money to spend as the price of gas has soared in the last six months. What impact does this have on the economy – and on your investments? Let’s do the math and find out.

If the average driver drives 1,000 miles per month and gets 20 miles per gallon, they are using 50 gallons of gas per month. According to the Department of Energy, the national gas price has gone up $1.00 on average since October. That means the average driver has $50 less per month to spend on items other than gas. This may not seem like a huge difference, but let’s take the next step.

Multiply the number of cars nationally (135,399,945) by $50 per month. That’s an additional $6,769,997,250 going into our gas tanks each month and not getting used for other items. That is $81 billion on an annual basis.

Fast- forwarding to today, we see that the average gas price has fallen from over $4 a gallon to under $2 a gallon. So let’s take the same math from the article in May and carry it out to see how much American consumers are saving thanks to the fall in gas prices.

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If the average for gas was $4, and the average driver used 50 gallons of gas, this would mean $200 a month for gas. Now we see $2 gas, so the average driver is spending $100 per month for gas. Now take this times the number of cars nationally (135,399,945), and you can see that overall consumers have the ability to spend $13.5 billion per month on items other than gas.

Do you think this might stimulate the economy? You bet it can. Over $162 billion annually to be spent on something other than gas, combined with a little boost to consumer confidence with the leadership change in January, and I think you see the U.S. start the recovery process in mid-2009.

I have used round numbers in this example in order to keep it simple, but the amount of money that has been freed up thanks to oil and gas tanking is astounding. A few weeks ago during a CNN radio interview, the host asked me where consumers were going to get any money to spend this holiday season. I would say that a potential boost in spending of $13.5 billion would make this holiday season a little brighter for retailers.

Expectations are pretty dire for the retailers, and with good reason. But if the actual numbers come in at or above expectations, we could see the overall market rally and this in turn would provide another boost in consumer confidence.

The hill is steep, so the economic recovery isn’t going happen overnight, but the ball could be rolling up the hill now.

Source: 162 Billion Reasons The Economy Will Improve In 2009

This from Today’s Financial News:

Regardless of this man’s selfishness, I eventually pulled up to the pump and put five gallons of gas at $1.93 each into my tank. A ten-dollar fill-up was more than enough to put a smile back on my face.

It would have taken twice that to fill my tank, but I took a bet that prices would be even lower by the time I needed to refuel. I saved five gallons of tank space for gas at $1.85 in just a couple of days.

So far, my prediction is paying of. After nose-diving from the $60 handle, crude prices dipped below $50 this morning. It is the first time in nearly 24 months that we have seen prices that low.

With crude prices dropping, it is no wonder other components of the energy sector are plunging as well. Most importantly, the price of a gallon of gasoline on the wholesale market dropped by more than 6% this morning to trade at $1.034.

Natural gas dropped almost a dime to a level where $6.644 will get you 1,000 cubic feet. And for all you folks waking up to sub-freezing temperatures and snow flurries in the Northeast this morning, you will be glad to know heating oil declined by 5.33 cents to $1.706 per gallon.

In a time when America is facing a major recession and job losses are reaching monumental levels (542,000 workers applied for first-time unemployment benefits last week), falling energy prices are a greatly needed silver lining for consumers. Just imagine if we were still paying $4 per gallon of gas. It would not be pretty.

Our gain is their loss

For the folks depending on record-high oil prices to fuel their economy, the situation is downright horrid. If Venezuela is in financial trouble, then the situation in Russia is downright catastrophic.

Investors should be drooling on their shirts looking for ways to take advantage of Moscow’s troubles. In the office this morning, we were debating all the opportunities face investors. We came up with at least half a dozen great opportunities. As we gather our thoughts and complete our research, we will share what we know.

For now, take a look at the Market Vectors Russian ETF (NYSE:RSX). It invests directly in about 30 Russian securities. It gives investors an easy way to play a market that is down nearly 80% so far this year.

As energy prices continue to drop, Russia’s economy will slow even further. With about 40% of its revenues dependent on the energy industry, the government is in a desperate situation.

When it compiled its 2009 budget earlier this year, Moscow used $95 oil as its base figure. With prices about half of that figure, the country is sitting on a serious deficit. To make matters worst, the country has already lost nearly $100 billion in its emergency reserves thanks to efforts to shore up the ruble and preserve what is left of its economy.

I may have started the day on a bad note waiting to pump cheap gas in my truck, but Russia is about to start 2009 in absolutely horrendous shape.

If I could only make one investment during this entire crisis, I would take a significant short position in the Russian economy. The ETF mentioned above gives investors a fantastic opportunity to do just that.

Source: Oil and Russia: Check out the Market Vectors Russian ETF (RSX)

• Influenced by online retail giant Amazon.com Inc. (AMZN), web-based auction site eBay Inc. (EBAY) announced it would be reducing listing fees for sellers who choose the set-price “Buy it now” option. It’s a huge shift for eBay, but management hopes the changes will increase inventory and attract more buyers seeking the ease of “one-click” shopping, BusinessWeek reported.

• The Mortgage Bankers Association announced the level of mortgage applications is at its lowest point in eight years, as lending standards remain tight despite the drop in housing prices. The decline was due in part to the lack of new construction the nationwide association said, the Tampa Bay Business Journal reported.

• The Federal Deposit Insurance Corp. yesterday (Wednesday) announced plans to modify loan terms for IndyMac Bancorp Inc. (OTC: IDMC) customers in an effort to keep people in their homes and avoid foreclosure, CNNMoney.com reported. The FDIC has targeted 25,000 customers who are most delinquent on their loans and will begin working with them to provide more affordable payments and reduce investor losses.

• U.S. crude oil for September delivery settled 45 cents higher at $114.98 a barrel yesterday (Wednesday) after a day of volatile trading in which prices swung from between $112.61 and $117.03. The decline in gas stockpiles pushed prices higher, while the surge in oil supplies pulled oil lower, according to Neal Dingmann, director of equity research at Dahlman Rose, CNNMoney.com reported.

• Shares of Suntech Power Holdings Co. Ltd. (ADR: STP) shot up over 12% yesterday (Wednesday) with a gain of $4.62 to close at $41.75. The China-based solar energy company reported expectation-beating second quarter earnings and raised its guidance for the rest of the year, Forbes reported.

• Warehouse retailer BJ’s Wholesale Club Inc. (BJ) yesterday (Wednesday) reported fiscal second-quarter earnings increased to $36.5 million, or 61 cents a share, from $36.3 million, or 55 cents a share, for the same period the year prior. Earnings per share included a 5-cent boost from non-sales related cost cuts, Bloomberg News reported, and shares dropped almost $3 to close at $37.71.

• Hewlett-Packard Co. (HPQ) reported fiscal third-quarter 14% jump in profit that thrashed Wall Street expectations. HP said it earned $2.03 billion, or 80 cents per share, in the latest period, up from $1.78 billion, or 66 cents per share, a year earlier. Excluding one-time charges, HP’s profit was 86 cents per share, three cents higher than the average estimate of analysts polled by Thomson Reuters.

• The Tennessee Valley Authority yesterday (Wednesday) approved an electric rate increase of 20% — the hike largest in 34 years The Associated Press reported. The TVA cited sky-high fuel costs and a three-year drought that has sharply reduced its ability to generate cheap hydroelectric power. Most of the rate hike is a temporary fuel adjustment charge that varies quarterly, though TVA officials predicted the charges would continue to grow through smaller increases in the future.

Source: Global Investing Roundups Thursday, August 21st, 2008

Companies with large distribution networks have redesigned their shipping schedules, crafting more efficient routes that accommodated larger truckloads.

The upshot: Gasoline sales tumbled during the first half of the year as domestic demand fell to its lowest level in five years.  In fact, the U.S. Department of Transportation reported that Americans drove almost 5% less in June than a year ago, and also said that the buses, subways and light-rail systems that make up the nation’s public/mass-transit systems climbed by 3.4% in the first quarter of the year.

Lately, U.S. gasoline stations have been forced to adjust their prices (again) after prices at the pump dropped below $3.80 a gallon – a hefty decline from the prices of $4 a gallon and higher that motorists were forced to deal with as the summer driving season began.

Even in China, oil imports dropped substantially in July on shrinking global demand. (It will be interesting to see if – and by how much – the Summer Olympic Games affect these numbers. And even if the games prompt a spike in demand, some analysts are now predicting that a post-Olympic economic “lull” will afflict Mainland China – watch for our analysis of that theory in an upcoming issue of Money Morning).

This energy-price conundrum doesn’t stop there, either, as such geopolitical “wild cards” as the Russian invasion of Georgia continue to whipsaw prices. Even with such tensions, however, energy traders brushed aside concerns about major supply disruptions – not the response we would’ve seen just a few months back. Late last week, in fact, oil prices took cues from the newfound strength in the dollar and dropped below $112 a barrel, a number not even imaginable in mid-July, when crude-oil prices reached a record level of $147.

All’s well on the Energy Front, it seems.

Don’t you believe it (as we’ve said on more than one occasion during the past year).  In the near term, crude-oil prices could well keep declining … but it’s only going to take one “real” scare – a terrorist attack, or some sort of event that creates protracted supply worries – to cause oil prices to spike in a big way.

And in the long run, demand is going to keep rising in such emerging-market countries as China and India. That can only send oil prices higher. [For a related story on oil prices in today’s issue of Money Morning, please click here].

On the Horizon

The July inflation report (Part II) will be reported tomorrow (Tuesday), with the release of the wholesale price gauge, the Producer Price Index (PPI).  Since energy prices have declined in recent weeks, analysts should take these numbers with a grain of salt, as the July data still will reflect the previously higher levels.

Of greater relevance, perhaps, is the Index of Leading Economic Indicators, due out Thursday. The leading indicators often serve as a foreshadowing of future activity so U.S. Federal Reserve Chairman Ben S. Bernanke and friends should take note of that report.

More retailers post earnings this week, including Limited Brands Inc. (LTD), The Gap Inc. (GPS), AnnTaylor Stores Corp. (ANN), and The Home Depot Inc. (HD). By now, however, most investors realize that consumers remain cautious about the economy, and that most related companies (other than discounters) have continued to struggle.  Maybe the lower gas prices will help turn things around for these and other businesses in the coming months – that is, as long as the current trend in energy remains “friendly.” [For a related story on consumer sentiment in today’s issue of Money Morning, please click here.]

We’ve all watched as the once-pristine reputation of former Fed Chairman Alan Greenspan has been tarnished by the credit crisis, and by some of his recent public pronouncements that were aimed at putting the blame on others (possibly impacting book sales). But that’s okay, as investors are now eagerly awaiting the authorized biography of the “real” market maestro – Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman Warren Buffett. The book, “The Snowball: Warren Buffett and the Business of Life,” published by Bantam Dell Publishing Group, is due on bookstore shelves Sept. 29.

Market Matters

While certain optimistic analysts claimed that the worst of the credit crisis had ended, the latest news from the financial front indicated otherwise.  Swiss banking giant UBS AG (UBS), fresh off $5 billion in new mortgage write-downs, will divide its investment banking and wealth management operations into two separate units – and some analysts believe it may look to sell off the banking arm over the next few years.