Adjusting to $7 per Gallon Gas in America (PDF)

“Compare driving behavior in the United Kingdom with driving behavior in the United States. Over 90% of American households use a car to get to work, while over 60% of US households own two cars or more. By comparison, just 60% of British households use a car to get to work, while less than 25% own two or more cars. Moreover, Americans drive their cars more. They make four trips a day while Brits make two. And last, some 30% of Brits don’t even own a car. In the US less than 10% of households don’t own a car.”

All these guys jumping on the $200 a barrel bandwagon brings out the skeptic in me, but the trend is their friend and I won’t call a top in crude earl until I see a turn (the same turn everyone else will see).

I can report that the recent 17% gas price hike (to $3.37 a gallon) here in Beijing has done absolutely zilch to curb demand, and I remain stalled in bumper to bumper traffic every day.

On a purchasing power parity basis, $3.37 a gallon is a fortune to the average Chinese, but as I’ve noted again and again never think of the “average” Chinese. There are now at least 100 50 million Chinese who live like Americans: they have big houses/apartments, big cars, plasma TVs, big fridges, washer-dryers and they certainly don’t bat an eye when paying $3.37 at the pump.

Only one in five urban households in China owns a car — stay long Energies.

Drop me an email if you’d like to join the club.

Chart last updated through July 1, 2008

Related: Animated Trading Lesson from the Box: Short UAUA

I like to post intraday charts following massive bloodbaths, so here is crude followed by the dollar, bonds, stocks, and gold. (Fellow chart fiends love reviewing these, I think.) This plunge wasn’t completely unexpected if you were paying attention to other markets around the world and Lowry’s (abysmal) numbers.

Gratuitous horn tooting: I mentioned on Tuesday that crude would probably break out to the upside given recent failed trade set-ups from the Box.

Here’s a monthly chart of the 13-week T-bill Index going back ten years. Looks like boom, bust, boom, bust to me. Can someone explain if this is the result of central bank meddling or what? Tinfoil hatters, please control yourselves in the comments. :-)

Here’s a ten-year view of the Brazilian Real. A case of Zero to Hero. See the devaluation back in January 1999 and the long terrible slide to four in October 2002. Reviewing monthly charts is a good way to grasp big trends; it’s something I recommend you do to form and maintain your perspective, and currency charts are especially telling.

The Box has had a quiet June finding only ten with-the-trend set-ups so far this month. It also has found 17 countertrend ideas, which I encourage subscribers to ignore. Nevetheless, I think it’s always good to pay attention to all the ideas, especially when they fail.

Last Friday the Box suggested getting short two Energy sector stocks (PDE and FTI). Both ideas were deeply countertrend and were ignored by subscribers, but the fact that both trades triggered and failed is useful information, I think.

It leads me to expect that Crude will break out of this range on the high side. (Coin toss?)

Ten selected Carlinisms to celebrate the recently departed man:

“One tequila, two tequila, three tequila, floor.”

“Fighting for peace is like screwing for virginity.”

“The only good thing ever to come out of religion was the music.”

“If God had intended us not to masturbate he would’ve made our arms shorter.”

“…the baby boomers: whiny, narcissistic, self-indulgent people who have a simple philosophy: ‘GIMME THAT! IT’S MINE!’…these people were given everything, everything was handed to them, and they took it all, sold it all.”

“Ever wonder about those people who spend $2 apiece on those little bottles of Evian water? Try spelling Evian backward.”

“If a man stands in the middle of the forest speaking and there is no woman around to hear him . . . is he still wrong?”

“Why do they lock gas station bathrooms? Are they afraid someone will clean them?”

“Do infants enjoy infancy as much as adults enjoy adultery?”

“If you try to fail, and succeed, which have you done?”

Share your favorite quotes from George Carlin in the comments, if you’d like.

Rupee Steepest Slide Since ‘93 Repels Funds on Prices

“The difference between India and other BRICs is that Russia is a net exporter of oil, while Brazil is the world’s biggest exporter of beef, coffee, orange juice and sugar. China posted a record $262 billion trade surplus in 2007 and has $1.68 trillion of currency reserves.

India imports about 75 percent of its oil, which has almost doubled in price in the past year. The rising cost added to the shortfall in the country’s current account, a broad measure of trade and investment flows. The deficit widened to a record $13.4 billion in 2007.”

Barclays, Deutsche Bank, and Goldman are all looking for 43 or 44 in the rupee. I’m willing to go a little farther out on the Fibonacci projection limb and say 46+ is in the cards.

(Note that the weekly Sequential nailed the low at the beginning of the year.)