It was about 9 years ago that then-Federal Reserve chairman Alan Greenspan warned investors of "irrational exuberance." Then at issue was the run up of hi-tech stocks. The question is if we are experiencing a similar "irrational exuberance" with regard to the surge in crude oil prices.

I know the arguments that there is too much demand for the available supply, that oil is a finite resource and the world is running out of crude, and that very few new sources of crude have come online in decades. My question is, didn't the market know this 6 months ago? All of the sudden oil traders woke up one morning and realized that we had all these problems?

What I don't understand is that you can't have it both ways. You can't claim that the world has entered a sustained slow growth era, and yet continue to claim that strong demand is what is causing the surging price. If we do still see very strong demand than maybe the global economy isn't as bad as most think.

I am no technical analyst, but the way crude has been trading sure has the makings of a bubble ready to pop. It's one thing to slowly and steadily increase in price, like we have seen for the last 5-6 years. It's quite another to see it move straight up in a vertical line, like we have seen of late.

Investors beware. This sure seems like another example of "irrational exuberance."

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 6/29/08.

Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit

www.Minyanville.com

A few Random Thoughts on the action in crude:

• A finski (a $5 bill) ain't what it used to be - a 10% move at the beginning of last year. Now it's barely 4%.
  
  

• While I've been bearish on crude through the lens of deflation -- and I continue to believe all roads lead there -- "pure trading eyes" sees the sideways action for the last month.
  
  

• United States Oil Fund (AMEX: USO) $104-$113 are the parameters to watch (filling of the gaps versus upside breakout). You can drive a truck through that, I know, but I don't make the rules, I just try to play by them.
  
  

• Hands over eyes, sideways movement under resistance is a bearish churn. The same movement above support is a bullish base.
  
  

• My current position? Flatter than a sat on hat. And I like it that way... For now.

R.P.

Position in USO

Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.

• If the next generation Apple (AAPL) iPhone is effectively a handheld computer, is the personal computer space a place to poke on the short side?

• What's the franchise value for Sun Microsystems (SUNW, er, JAVA)?
  
  
• Maybe that's the problem. In this ADD, immediate gratification world, perhaps folks don't remember that JAVA used to be SUNW?
  
  
Woah. Nelly?


Given that funky looking Gold Fields (GFI) chart, should I stress that I'm playing name through defined risk calls?


• In addition to the note that when I unwind my short crude I'm goning to sneak out of my long metal play, too?
  
  
• While I grabbed some tertiary financial exposure this morning, why is "Good traders know how to make money while great traders know how to take a loss" repeating in my keppe as I watch the action and overhang in Lehman (LEH)?
  
  
• Speaking of ticker symbols with G's in the front and I's behind, when do I revisit Gannett (GCI), which I pared nicely above $30 and kept some for the thesis?
  
  
Speaking of pairs, how do I get long Jo, short Blair?


R.P.

Positions in LEH, GFI, GCI

With surging crude oil prices, and a slower economy, airline stocks don't rank high on investor wish lists. You don't hear colleagues standing around the water cooler singing the praises of the airlines. So what would make a sane investor contemplate purchasing an airline stock? I am not sure myself but if you take a long look at JetBlue Airways Corporation (NASDAQ: JBLU), you may feel like throwing the dice.

Mark Kreiger at SeekingAlpha.com has a really good analysis of why JetBlue stock is compelling. He says, " The airlines are responding to the fuel crises by doing all the right things such as utilizing fuel hedging programs, initiating capacity reductions and reducing overall costs."

Kreiger singles out JetBlue because their Q1'08 report soundly beat analyst estimates. The company has $1 billion in cash and has a book value of $6. Well above the approximately $4.50 price per share. More interesting is a potential short squeeze setting up on the stock. Kreiger analyzes this further at the site, and it's worth a close read.

If you believe that at some point crude prices will drop, and you are looking for a way to play that drop, you potentially may want to do some research on JetBlue.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/27/08.

Hedge Fund guru George Soros warned over the weekend, in an interview with The Daily Telegraph, that " the crude oil market had been significantly affected by speculation." Because of all the speculators driving the price of crude higher and higher, Soros went on to say, "Speculation... is increasingly affecting the price, the price has this parabolic shape which is characteristic of bubbles."

While I tend to disagree with Soros when he predicts that we are headed for a very deep recession, I do think that there isn't much justification to $130+ per barrel of crude. After all, the continuing cry of increasing demand falls short, when the big consumers of oil, are experiencing slower economic growth. After the Olympics, I wouldn't be surprised to see Chinese growth take a sharp fall as well, as many of the public works projects come to an end.

I think that potentially, we will see crude oil fall back to the $50-60 per barrel level.

Aaron Katsman is Senior Portfolio Manager of the Israel Growth Portfolio, of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/27/08

MAJOR PAPERS:

• Future crude oil supplies may be a lot tighter than thought. That is what the International Energy Agency in Paris is expected to find when it releases its assessment of the world's 400 major oil fields in November, according to the Wall Street Journal, a reversal from previous reports and is based on a lack of investment and aging oil fields.
• The Institute for Safe Medication Practices, a nonprofit safety organization, found serious side effects linked to Pfizer Inc's (NYSE: PFE) Chantix, a smoking cessation drug. Chantix, which has been banned by the FAA for use by pilots and air-traffic controllers, is already tied to psychiatric issues, including depression and suicide, according to the Wall Street Journal, and the report also points to heart trouble, seizures and diabetes.

OTHER PAPERS:

• The New York Times reported that the Jacksonville Police and Fire Pension Fund has accused American International Group Inc (NYSE: AIG), along with several of its executives, of inflating its stock price artificially by understating the company's exposure to the subprime mortgage crisis. According to the lawsuit, AIG's Q1 loss of $7.8B shocked investors because the insurance giant assured them that any losses on credit insurance "would be limited".
• Following speculation a Chinese entity would look to take a stake in Australian miner BHP Billiton Limited (NYSE: BHP), Huang Tianwen, the president of Sinosteel Corp, said the company has not formed a bid for the firm. The Australian reported that Chinese steel mills may look to buy into iron ore miner Fortescue Metals Group.

JetBlue Airways Corp. (NASDAQ: JBLU) opened higher this morning after the airline reported a first-quarter loss of $8 million, or 4 cents a share, narrower than analyst estimates of 7 cents per share. However, losses from competitors like United (NASDAQ: UAUA) and record-high oil prices have brought JetBlue stock down for a rough landing. If you think that the company's earnings are the real deal and it won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JBLU.

After hitting a one-year high of $11.99 in July, the stock hit a one-year low of $4.30 in January. JBLU opened this morning at $5.10. So far today the stock has hit a low of $4.50 and a high of $5.11. As of 12:40, JBLU is trading at $4.57, down $0.36 (-7.3%). The chart for JBLUlooks neutral and deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a December covered call at the $5 level. A covered call is an options position that combines the purchase of stock with the sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 34.4% return in eight months if JBLU is above $5 at December expiration. JetBlue would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.

While getting grilled by opportunistic lawmakers on Capitol Hill, about soaring gas prices and how senior executives are able to live with themselves knowing they are making such large profits, J.S. Simon, CEO of Exxon Mobil (NYSE: XOM), let the cat out of the bag. Responding to questions from Rep. Edward Markey as to why Exxon hasn't invested in alternative energy, the AP reported the following exchange:

"Why is Exxon Mobil resisting the renewable revolution," asked Markey.

Simon said his company, which earned $40 billion last year, had provided $100 million on research into climate change at Stanford University, but that current alternative energy technologies "just do not have an appreciable impact" in addressing "the challenge we're trying to meet."

With all the bad news out their I am reminded of the old adage that the best time to invest is "when there is blood in the streets." With gold over $1000/oz. , Carlyle Capital collapsing, the price of crude oil surging, the U.S. dollar at levels not seen in more than a decade, there is no doubt the news today is pretty bad.

With things so gloomy, the real question for investors is whether it's now time to step up to the plate and start buying stocks? While it certainly takes courage to buy stocks in the face of the financial storm that we are in the midst of, just like any patch of bad weather, at some point the sunshine will come out.

No one can say for sure if the stock market will drop another 20% from current levels. What can be said is that the market is sure selling at a large discount to where we were four months ago. I think that in the last century we have only had a handful of instances where the market dropped for four consecutive months. It just doesn't happen too often. Markets always tend to overshoot in both directions, and I have a feeling that we may have overshot on the downside.

With all of today's bad news, maybe it's time to buy stocks.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/13/08.

With crude oil well over $100/barrel, gold surging to $1000 per ounce and commodity prices at an all-time high, the question is whether the Federal reserve should keep dropping interest rates. While the bond market is pricing in a cut, should the Fed do it? The Fed's main mandate is to keep prices stable, i.e., to keep inflation under control.

Market watchers attribute the rise in commodity prices to surging inflation and are looking at these hard assets to provide a hedge.

"Every other day, we've got a new record," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore, told The Associated Press. "It's due to the phenomenon of investors getting into commodities, the hard assets, to find a safer haven and a hedge against inflation."

Over the past 12 months, wholesale prices rose by 7.4%, the largest yearly gain since late 1981. Clearly, the Fed is failing at its own core mandate. The Fed needs to return to what it is supposed to do and fight inflation. Inflation will be deadlier for the economy than a few quarters of slowing growth.

The fed should resist Wall Street calls for lower rates (to help bail them out of their own self-created problems), and focus on the greater issue of the economy. Fighting inflation is paramount to this goal.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.

With fuel prices reaching their highest levels since last June, many consumers are worried that by the end of the summer driving season we may actually see $4.00 a gallon. With crude oil moving over $100 a barrel, and with a market driven by speculators and not fundamentals, crude prices moving up are a self-fulfilling prophecy.

But is it possible that the opposite may happen? That prices drivers pay at the pump make actually decrease? The answer may very well be yes. Why? Inventories. The fact is that we have gas supplies that have quietly grown to their highest level in 14 years. With such a big supply, prices may drop. This isn't China, where everything is government controlled, and we have seen shortages on all kinds of consumer staples. In the U.S., the market more or less (except when lawmakers butt in and add taxes on gasoline) sets the price.

MAJOR PAPERS:

• The Wall Street Journal reported that analysts are looking to assess the significance of a new accounting problem at American International Group Inc (NYSE: AIG) which includes "material weakness" the company's auditor found that relates to subprime exposure.
• China Mobile Limited (NYSE: CHL) is expected to announce its support today for Long Term Evolution, a wireless broadband standard gaining strong momentum as the next-generation wireless technology for providing super-fast web surfing on cellular phones, the Financial Times reported.

OTHER PAPERS:

• According to the Associated Press, Petroleos de Venezuela SA said it has stopped selling crude oil to Exxon Mobil Corporation (NYSE: XOM). The decision, made "as an act of reciprocity" for Exxon's "judicial-economic harassment," will also include the suspension of commercial relations with the U.S. company.

WEB SITES:

• Reuters reported that The Walt Disney Company (NYSE: DIS) signed a deal to buy 20% of Net TV, a digital television company controlled by Spanish media company Vocento.

While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal reports, "Projects under way in Brazil, Saudi Arabia, West Africa, the Caspian Sea and the Gulf of Mexico will more than make up for natural declines from fields now in production."

If the information is accurate and oil demand falls due to an economic slowdown, prices for crude could drop over the next several years.

What is not clear is whether demand for oil in markets like China and India will continue to spike up. If the Chinese government is willing to underwrite the cost of gas and diesel for its industrial and consumer sectors, the use of oil in that country could continue to rise at an alarming rate.

Distorted demand, caused by the Chinese government, could be the wild card in oil pricing.

Douglas A. McIntyre is an editor at 247wallst.com.

The price of oil is falling, and it may stay down for some time. But prices could well remain in the $90 range.

Saudi Arabia has indicated that it could increase production by two million barrels a day, according to The Associated Press. President Bush has urged the kingdom to release more oil.

Signs of a recession in the U.S. would indicate that demand here should fall off as consumers cut back on purchases of gas and heating oil.

Even with these two pieces of news, oil trades around $92. There are factors that could keep it there which, in turn, could undermine a recovery in the U.S. economy.

With markets continuing their downward spiral, many investors think that it's time to step up and start buying some stocks that have been beaten down. Here are two hot Israeli stocks that have been cool for investors during the recent market sell-off.

Amdocs Limited (NYSE: DOX) is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and intentional customer experience at every point of service. The stock has gotten hit of late, but with a PE of about 18 and a PEG slightly under 1, the stock is looking attractive.

With the news that Sprint/Nextel Corporation (NYSE: S) is soft-launching a WiMax network, and picked communications software company Amdocs to build and maintain the Xohm Web portal and manage its customer service, billing, and other operations. The company is also gearing up to be the big winner in mobile phone billing as well, and that vertical could add significant revenue to the company.

Alon USA Energy, Inc. (NYSE: ALJ) engages in refining and marketing petroleum products primarily in the south central, southwestern, and western regions of the United States. The stock has gotten crushed as crude prices soared, losing more than 50% from its high. The company sports a low PE of just 6.25 and a PEG of 0.8. If crude prices stabilize, Alon will be a big winner.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has a position and owns stock in both DOX and ALJ and is long them both.He has no positions in any other stock mentioned as of 1/9/08.