Warning; there is enormous volatility in commodity and energy prices

April 19,2006

Hello,

The market continues to push up commodity and energy prices ,unlike many I have been and remain very bullish on energy stocks .I have frequently called this the “Energy decade” ,like the 1990’s was the Technology decade. Global pressures on commodity prices have similarities to those on energy. Higher risk has been associated with countries that produce these products along with the underinvestment in the infrastructure it takes to acquire process and transport these products. Warning; there is enormous volatility in commodity and energy prices, so for most investors the long term view is a better vantage point.

It looks like two of the main issues keeping a lid on market, raising interest rates and inflation seem to finally be favoring investors. Recent data suggest inflation remains modest and the FED has begun to indicate that the period pervasive rate increases may be at an end. This led to yesterdays huge one day rally .As you know I have long maintained that the enormous increases in productivity the last 6 years has kept both rate raises and energy price increases from doing any significant damage to the US economy or generating more than modest inflation. Nice to see the FED is finally on board and may be the catalyst for a very large upward move in the market I have been anticipating for some time.

The chess game continues with Iran , despite the recent discovery by the mainstream media the Iran is a major issue in the war on terror the chess game has being going on for some time. War games, missile tests, diplomacy and so on everyday bring in new moves by Iranians and counter moves by the Bush administration looking to prevent the Iranians from acquiring nuclear missile technology. To consumers and investors the question is how will all this activity impact our oil supplies? But remember high prices over time bring on additional supplies and makes alternatives more appetizing.


James
www.jamesfoytlin.com