The media is doing their best to talk us into another recession. If they have their way we will find ourselves in a full-blown economic decline. I don’t know about you, but I refuse to let the people who report the news determine my destiny. In a nutshell – I can’t afford another recession. I have been through 3 since I started speaking and training full time in 1973.

So, what can we do to limit the impact of the economy on our success, lifestyle and income? We can wait and see! We can worry! We can whine and moan! We can settle for less! Or, we can use this time to get better, smarter, wiser, more effective and, yes, successful. There have been economic shifts in the US and the world for years. This is nothing new. However, I have observed the reactions of hundreds of salespeople and organizations during the past 25+ years, and generally, one of two things happen to salespeople and/or the organizations they work for.

They can do less, feel out of control, circle the wagons, cut back, and generally focus on how ‘bad’ everything is. These salespeople and organizations tend to get less of their share of the available business during these times and after.

The other groups work harder, smarter, more effectively and focus on what they can do. You guessed it – this group may not set sales records, but they emerge better equipped to take advantage of the increase in business when it comes. And it always comes. After every recession for the past 70 years, there have been economic booms.

So, what can you do regardless of what happens ‘out there’?

1. Focus on what is working.

2. Avoid naysayers.

3. Read instead of watching TV.

4. Get up earlier every day.

5. Make one or two extra calls every day.

6. Plan better and more frequently.

7. Look under every rock for new business.

8. Re-activate past clients.

9. Improve your after-sales service on existing customers.

10. Attend a sales seminar that can refine your skills. (Mine is 3/26 – 3/27 in Charlotte. A few seats remain.)

11. Go to bed an hour later (I am assuming by getting up earlier and/or going to bed later you will be using the time to beat the competition.)

12. Get focused.

13. Waste less time with poor prospects.

Although many people don’t realize it, open bidding at the New York Mercantile Exchange in New York City sets the price of crude oil. For all intents and purposes, this open bidding, or open outcry, is actually the same as an auction. The New York Mercantile Exchange, the Chicago Board of Trade, or any other futures exchange for that matter, is no different than a great big financial Ebay.

Oil Companies Setting High Prices

It is in vogue to think of rich, evil, oil companies setting high prices on their product, but actuality this is not what happens. It is true that oil companies participate in the bidding, but anyone is free to participate. Besides the oil companies bidding for crude oil, many investors/spectators are also involved in the process.

Fundamental and Technical Trading

When speculators, or companies who are hedging, bid in the open market on futures exchanges, they attempt to predict future prices by using two different types of indicators.

The first types of indicator speculators/hedgers will use are fundamental indicators. In other words, they attempt to determine what the given supply will be in the future for a certain product. They will also attempt to predict what the future demand will be for the same product. If they are accurate, they will be able know whether the price of this commodity will rise or fall.

The second types of indicator speculators/hedgers will use are technical indicators. With technical indicators, investors feel they can simply look at charts and predict whether the price of the commodity is rising or falling.

In the case of crude oil, some time ago fundamentals indicated that its price would be rising. However, there is some controversy about just how high the fundamentals tell us the price of crude oil should be right now.

As far as technical indicators are concerned, when the price of a commodity has gone on for a while in one direction or another, these indicators will no longer be useful because all they do is tell you which way the price is headed. They say nothing as to how far it should go.

The Tech Stock Boom

In the 1990′s, there was a tech stock boom. Very shortly into this boom, tech stocks became overbought. In other words, the tech stocks were not, in reality, worth the high price they were selling for. A year or so later, they became extremely overvalued. That didn’t stop their price surge though, because the price of tech stocks were increasing very rapidly, they were making money for people. So, more buyers kept coming into the market.

Tech stocks made millionaires out of a lot of people. All a speculator had to do was buy tech stocks, and then hopefully sell them before it was too late. After a few years had gone by, tech stocks were so expensive, new investors just couldn’t afford them. Without new buyers coming into the market, the price of the tech stocks stopped appreciating. When that happened many speculators saw no purpose in holding onto their tech stocks. So, naturally they started to sell them.

As you probably remembered, the tech stock market suffered a complete crash once selling became the trend. The NASDAQ tumbled from 5,000 to 1,100. During this time, fortunes were lost. Once the NASDAQ had settled around 1,150, the price of tech stocks had found their equilibrium. In other words, after bouncing around a bit they started to trade at their true worth.

This is the Crude Oil Price Boom

The crude oil market, which right now is trading at approximately $98 per barrel, looks exactly like the tech market boom just before its bubble burst. Other parallels can be drawn between the tech market bubble of the 90′s; the housing bubble of 2005-2006 and what the crude oil market is going through right now.

It looks very much like the price of a barrel of crude oil just has to hit $100. There is no real fundamental reason behind it except for it appears to be what the market psychology is dictating. Once it reaches $100 per barrel, I can’t see what possible indicator would tell anyone that this would be the time to invest in it.

While I, or no one else can predict the future; I can look at the past with the best of them. When I look at what’s going on in the crude oil market, I just can’t distinguish anything different from what happened to the tech stock market of the ’90s, and more recently the housing market.

While a cult of Peak Oil adherents fret about the end of the hydrocarbon age, we’ve been focusing on trends that will provide buffering to the upcoming declines in oil production. Don’t get me wrong, I’m not saying that Peak Oil won’t happen, however the dreaded peak may turn into a downward sloping plateau supported by higher prices. This high price plateau should buy the planet enough time to start thinking about conservation and using alternate energy sources.

One little known fact about the oil business is that the majority of the oil discovered to date will never be produced. Engineers use the term “recovery factor” to describe what percentage of the “original oil in place” or OOIP will be produced. In the United States it is estimated that 66% of the oil discovered to date or the OOIP is left in the ground.

State oil companies control approximately 80% of the world’s oil reserves. The vast majority of these countries are not friendly towards the United States.

The discovery of giant oilfields today is hampered by the fact that giant oilfields are the ones that are discovered first in an exploration cycle. The longer we look for them the less likely we are to find them. Giant fields are usually discovered first.

Matthew Simmons has pointed out that as much as 70% of our daily oil supply comes from oilfields that were discovered prior to 1970.

Of course new technology can increase the size of the discovery universe by allowing drilling in increasingly hostile conditions. For example, 75% of Brazil’s oil reserves are under at least 400m of water. Without deep water drilling technology this oil would never be produced. Brazil’s recently announced Tupi discovery is a good example. It occurs in ~2100m of water. Petrobras (PBR), controlled by the Brazilian government, owns 65% of this ~8 billion barrel field.

A confluence of factors are pointing to a developing boom in enhanced oil recovery (EOR) projects. Increased oil recovery is going to require the implementation of EOR technology on an epic scale. Investors should take note.

There is no doubt that a new generation of oilfield hackers will be getting much more oil out of mature oil fields.

According to Schlumberger’s Oilfield Glossary, the three major types of enhanced oil recovery operations are:

1)chemical flooding (alkaline flooding or micellar-polymer flooding).

2)miscible displacement (carbon dioxide [CO2] injection or hydrocarbon injection).

3)thermal recovery (steamflood or in-situ combustion)

We have found public companies active in all 3 categories and will be profiling them over the coming weeks.

Ancient Greece provides evidence of banking with Greek temples and some private and civic entities, conducting financial transactions such as loans, deposits and currency exchange. Credit also existed whereby a moneylender in one Greek port would write a credit note for the client who could “cash” the note in another place. There are records of loans from the 18th century BC in Babylon that were made by temple priests to merchants. Effectively the world’s first ever banks were the religious temples which were the absolute centres of the respective communities.

Charging interest on loans and paying interest on deposits became more highly-developed and competitive in secular Ancient Rome – ‘secular’ is important to note as the major religions of the day considered the charging of interest to be immoral. The expansion of trade and commerce, especially into Europe, facilitated the need for the increasing provision of financial services.

In Britain, the modern age of banking began in 1640 when King Charles I, needed cash to pay the English army that was being raised to fight against Scotland, seized the gold bullion that many merchants and nobles had placed in the Tower of London for safe-keeping. The 2nd Bishop’s War soon ended the British Parliament returned the bullion back to its owners.

Following the Bishops war in 1642, further warfare broke out with the Great Civil War between the King and Parliament. London was considered the stronghold of Parliament and was the safest city in the Kingdom. This meant led to mistrust of the government and people who did not wish to have their bullion seized by one side or the other placed their gold in the hands of goldsmiths in the city, who naturally had their own methods of safe-keeping.

In Britain Goldsmiths were considered the first private bankers. When depositors banked their gold they received ‘goldsmith’s notes’. These notes essentially were the first bank notes. People were willing to accept payment by these notes as they knew they backed 100% by a deposit of gold.

Current and future developments in banking are linked to the world-wide-web and a vast expansion of trade and commerce which have given rise to an emerging form of banking. Internet communities, functioning similarly to ancient communities, have been established to connect lenders and borrowers. Their aim is to cut out the banks. However looking at the size of lends in these communities and the lack of more complex lending ability or products we are confident that banks and banking staff will remain as important as ever far into the future.

Charging interest on loans and paying interest on deposits became more highly-developed and competitive in secular Ancient Rome – ‘secular’ is important to note as the major religions of the day considered the charging of interest to be immoral. The expansion of trade and commerce, especially into Europe, facilitated the need for the increasing provision of financial services.

Current and future developments in banking are linked to the world-wide-web and a vast expansion of trade and commerce which have given rise to an emerging form of banking. Internet communities, functioning similarly to ancient communities, have been established to connect lenders and borrowers. Their aim is to cut out the banks. However looking at the size of lends in these communities and the lack of more complex lending ability or products we are confident that banks and banking staff will remain as important as ever far into the future.

Many people are calling for a new energy bill to be passed through congress. This is because of the new growth in the demand of transportation coupled with increase gas prices. The United States domestic oil production is slowly decreasing which means that the American public must depend more and more on foreign oil supplies. These increasing oil prices have an adverse impact on the United State Economy including the stock market. It is essential that the United States develop a energy plan that allows for increasing transportation while helping the United States move away from dependence on foreign oil supplies. In the past year the price of oil has increases substantially. Since last summer crude prices have increased a staggering 45% since the start of the new year. During that time a barrel of oil from West Texas reached an all time high of 45.04 on the New York stock exchanged. Even though the Organization of Petroleum Exporting Countries have also been increasing their production of crude oil. Earlier last year it was assumed that rising gas prices were because there was an increase in the world’s demand for oil followed by political unrest in south American countries. However, gas prices have not only stayed high have continued to increase. There were also several Iraqi pipeline problems having to do with the kidnappings in the Middle East during late 2005. In the previous campaign for president, Bush and Kerry went head to head discussing energy issues. Both are well aware that the ability to be secure in our oil and thus the nations energy supply is essential for the economy and for the stock market. We are in desperate need of a long term national energy that that will reduce our reliance on foreign oil. The nature of oil, and foreign affairs is so complex it is hard to develop a straightforward plan to resolve all problems while meeting each party’s needs. Certainly, any instability in the parts of the world were the majority of our oil comes from is going to make gas prices rise. It has been suggested that instead of seeking new oil supplies perhaps we should seek out new technology to utilize renewable resources. Certainly, it would be exciting to be part of a something that is actually good for the planet, and encourage the healthy growth of companies which are looking out for the future of America. Additionally, there are investment opportunities in alternative fuels. While these companies are still working on their technology and their companies are just beginning to prosper it is the perfect time to buy low and wait for them to develop. Soy beans, refurbished fast food vegetable oil, hybrid cars, and companies who are attempting to create more public transportation in cities where public transit is lacking are all great places to look for investments. Of course this would be part of a long term investment plan. However, knowing that you are having your country, the environment, and making money can more then make up for the slow profit trickle.

Since the last G7 meeting about two weeks ago the price action of the US Dollar suggests that an important bottom may have been reached against the Euro. The Euro made an all time high against the Dollar at just above 1.6000 only three trading days ago. The 1.6000 level was a widely anticipated one by forex traders. Early Thursday morning on April 24, 2008 we are just under 1.5700, so a sharp reversal in underway at the moment.

The same type of price action can be seen in Dollar Yen. From a recent low of under 100.00 the Dollar is trading about 104.00 this morning and looks ready to move quickly to challenge the 105.00 level.

While a few day trading action does not make a trend the Dollar’s new strength must be respected. While the FED reserve will probably cut interest rates again at its’ April 28th and 29th meeting forex and bond traders expectations are now that the rate cut will be only by 0.25 basis points instead of the 0.50 basis point cut expected just a few days ago.

This change in sentiment is caused by the increased inflationary pressures that are occurring in the US and indeed around the world. With a lower Dollar helping to accelerate the increase of all imported goods into the US inflation has flared up in an alarming way, especially in crude oil prices and food prices.

The Fed has a tough decision to make at its next meeting. A 0.25 point rate cut would signal that the rate reduction business is over and that the Fed will begin to focus on fighting inflation even if it means that the economy slides further into a recessionary phase.

This is what the forex markets seem to be anticipating and would explain the sudden strength in the Dollar. Once the Fed actually increase rates you can expect to see the Dollar zoom to the upside. We could be back to 1.3500 Euros to the Dollar.

Interestingly enough once the Fed starts to increase interest rates the stock market will likely take a big hit and the tendency of the risk trades in Dollar/Yen to track movement in the stock market would be broken.
This means as stocks and bonds fall the Dollar would tend to rise.

Certainly, it is too early to tell if an important top against the Dollar has been reached by the Euro. The Eurozone economies have their inflation rate kicking to the upside too and seem to be willing to raise rates in an effort to bring the inflation rate down. It is therefore possible that the US will begin to increase rates but will be confronted with increased rates from the Eurozone as well.

It is the interest rate differentials between the Euro and Dollar that traders will be focused on. If the interest rate differential begins to widen in favor of the US currency you would expect that the Dollar will gain ground against the Euro.

One of the most significant trades that exist today is the carry trade on the Japanese yen. A basic description of the yen carry trade is that traders borrow yen in Japan at low interest rates, convert the yen into another currency, and invest the funds at a higher interest rate. The trader then earns the interest rate spread between the two currencies, but bears the risk that the yen will appreciate before the loan is repaid.

Though the risk from currency fluctuation is significant in relation to the interest rate spread, over time the interest spread earned on a carry trade can also be significant. While textbook carry trades involve risk free interest bearing assets, there is no reason why traders can’t use the borrowed yen to purchase other financial assets such as U.S. or European equities and corporate bonds. For many years Japan has been a major source of cheap leverage for international financial markets.

The derivatives instruments available today have enabled traders to synthetically create carry trades without engaging in loans with Japanese banks or handling actual yen currency. This has increased the ease with which traders can access this carry trade and has increased its magnitude and importance.

The global financial markets have become so integrated that individual central banks and governments no longer have control over their own financial markets. When a central bank raises interest rates to cool their financial markets some traders will simply access leverage through an alternative currency at cheaper rates. This can curb the impact that central bank interest rate hikes may have on local markets.

It is impossible to measure the total size of the yen carry trade, but it is clear that it is absolutely massive. This fact highlights the concern of what will happen if the Bank of Japan raises interest rates significantly. The Bank of Japan has been threatening to raise rates for years, but many see it as “crying wolf”.

If the Bank of Japan actually did significantly raise interest rates it could undermine the cheap leverage that has been available for so many years. The unraveling of these trades could no doubt have a remarkable impact on global financial markets. First, the yen could rally as traders are forced to purchase the currency and repay the yen based loans. Second, the proceeds used to purchase the yen would likely come from the sale of assets previously bought with yen based leverage.

Gone are the days when national economies could be examined in isolation. International financial markets have evolved into a single global economy and it is important to watch the Bank of Japan in addition to the local central bank.