By Rick Glaze
As I reported last week, the Standard & Poor’s 500 stock index is up nearly 3 percent since July. But not all groups have participated in the rise, and even stock market leaders have had spotty returns. This leads professional traders to wonder if the upward move is sustainable. After all, a perusal of the front page of The Mercury News or The New York Times one day could convince you that things are pretty bad: Mrs. McGillicuddy lost her job over in Teaneck, N.J., Cal lost another football game, or some reporter just figured out that New Orleans was built 3 feet below sea level and President Bush wasn’t the one who did it.
But seriously, back to the markets - in the first few days after Labor Day, trading volume picked up in leading stocks and more groups firmed up. This is very positive and could be seen as a rally-confirming event. As I mentioned last week, stock valuations based on earnings have been at the low end for the last several years. Since corporate earnings are the chief driver for stock prices and low valuations translate to bargain prices, this can be seen as a positive situation.
A big news story last week was the successful test oil well in the Gulf of Mexico. The well produced at a steady, seemingly profitable level after running to the surface from more than 5 miles deep. Conservative estimates are that this underground store can produce more than 50 percent of current U.S. oil reserves. Of course, new systems must be perfected to get the crude to land from about 175 miles offshore.
Imagine what would happen to international strife and turmoil if our country were able to release the stranglehold that the unstable Middle East has on us because of our ridiculous oil dependency? I believe that rogue regimes that have the Neanderthal concept of bombing civilization back to the 3rd century would see the oil money that finances that dream dry up. Every twist and turn in these areas would not affect our lives and families.
As a last note, don’t forget what brought us to this current disastrous situation. It was years of a public energy policy of “don’t do it.” That is, don’t do anything. In the 1960s considerably over half of our oil use was domestic; now domestic consumption is less than 20 percent.
