6/25T9:27 Gary's Word...

Gary's Word: Dow Chemical bombshell...

DOW Dow Chemical to raise prices by as much as 25% in July (37.62)DOW will raise the price of its products by as much as an additional 25% in July in an effort to offset the continuing rise in the cost of energy and hydrocarbon feedstocks. The company also will implement a freight surcharge of $300 per shipment by truck and $600 per shipment by rail, effective August 1. The surcharge applies to North America customers buying chemicals, hydrocarbons and plastics where Dow absorbs the freight currently. Later this year a freight surcharge will be implemented in other geographic regions as appropriate. Furthermore, the company is moving ahead with plans to temporarily idle or reduce production at a number of manufacturing plants. In addition, Dow Building Solutions temporarily idled 20% of its European capacity for producing STYROFOAM insulation.

Gary:

"Dow is a massive intermediate goods producer...all of its products are bought by cos which manufacture end products..working capital needs to finance inventories and work in process(remember your accounting) by end product producers will go thru the roof..commercial paper mkts are dysfuctional and the banking system is out of capital...therefore, end product cos will have to raise prices as fast as they can but will have no choice except to lower production(will only be able to finance smaller output) and dramatically accelerrate layoffs..all other cos will follow Dow's lead...Conclusion: Respect the weekly head and shoulders pattern of the DJI(S&P and NASDAQ have the same patterns) and plan for a mkt crash this summer...you asked me what are the easy calls today..as Sinclair would say "this is it"...I think you should consider publishing this thought process on NEVER CROSS YOUR FINGERS as it represents the very essence of that title.."