Tuesday, March 25, 2008

Play that funky music white boy.

My prediction: Until we get this energy mess addressed, stocks as represented by the whole market/indexes aren't going to do anything worth writing a Page One Wall Street Journal article about.

On a side note, ever notice how white (and generally older) the Peak Oil establishment is? Sheesh. [Okay, some exceptions, but generally..] This mostly has to do with them being older oil types, I know.

Next prediction: Peak oil ain't gaining real traction until we pull in some hot chicks.

And maybe we need a band.. [My suspicion is that most people hear the lyrics of Sheryl Crowe's song as suggesting gasoline will be FREE, whee!, rather than understanding the message.] I digress.

Oh, if and hopefully when we realistically address the energy issue (way, and I mean, -WAY- simpler said than done), the market will rock, I predict.

WSJ: Stocks Tarnished By 'Lost Decade', U.S. Shares in Longest Funk Since 1970s;
Credit Crunch Could Prolong Weakness


Over the past 200 years, the stock market's steady upward march occasionally has been disrupted for long stretches, most recently during the Great Depression and the inflation-plagued 1970s. The current market turmoil suggests that we may be in another lost decade.

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.

CNBC: Pickens: Oil Going to Remain Above $100 a Barrel.


Pickens thinks it's a mistake to follow daily price changes too closely.

"I can't play day trades, whether it's down one day, up the next, the volatility just eats my lunch," he said. "I've got to make a far-out play and stick with it."


Pickens says he's bullish on natural gas as well as oil, and he has a portfolio to prove it.

"My...picks for natural gas would be Cheaspeake Energy Corp [CHK], XTO Energy Inc [XTO], Sandridge Energy Inc [SD], and, if you're going to play the natural-gas fueling deal, you'd go to Clean Energy Fuels Corp [CLNE], on the Nasdaq," he said. "If you're going to play oil, on the domestics, I would say that Continental Resources [CLR], and Denbury Resources Inc [DNR] are the two best, plus Suncor Energy Inc [SU] the Canadian oil-sands one. Those are all in my portfolio."

CNBC: T. Boone’s Energy Plan.

CNBC: Oil Firms 'In Liquidation,' Says 'Peak Oil' Advocate.


All major oil firms, he said, are "overlooking the fact that they are actually in liquidation, their production has been in decline for several years [and] no matter how much money they intend to spend, they just can’t get ahead of their [production] decline curves. And their proven reserves are shrinking very rapidly.”

WSJ: Saudis' Big Gas Supply Looks Like It Is a Mirage.


Saudi Arabia's boast that its southern desert region contains vast reserves of natural gas is facing growing skepticism, amid a string of exploration setbacks by international oil companies operating there.

The kingdom had hoped that gas in the Rub al Khali, a vast desert that translates into English as the Empty Quarter, would be a key source of fuel for its booming economy. If the region turns out to be as empty as its name implies, Saudi Arabia runs the risk of a gas-supply crunch within the next decade at today's rate of demand.

Wednesday, March 19, 2008

Bernanke Begins (2008).

Genre: Drama / Crime / Thriller

Tagline: It's not who he replaces but what he does that defines him.

Plot Outline:

Gotham is in crisis. The citizenry has lost confidence, the market's in a panic, home-less are everywhere, and the city's headlines are dominated by news of Bears running wild. Heck, it's gotten so bad, even The Joker's moved out!

Where's Batman? Can he save the day?


Ben Bernanke -- Batman

Hank Paulson -- Robin

Jim Rogers -- The Joker

Ben Stein -- Himself

Okay, all kidding aside, I think we're seeing a moment where the Fed gains some traction, Ben Bernanke gains the market's confidence, the US financial authority reboot gets a little breathing room, and some of the dollar bears/market bears/gold bugs reign in their horns [and maybe it's time to go short gold, the euro, or the yen for a while].

The difficulties aren't over, but the relative bottom may be in.

Sunday, March 16, 2008

For that price, I'd have &^%$#@ bought Bear Stearns.

I was thinking I'd be buying Goldman Sachs this week, instead I'll be buying JPMorgan.

I'm not a fan of the financials (actually I hate 'em), it may not even be the bottom, and it's probably going to be a while before the smoke clears, but you have to admire this trade that Jamie Dimon just made.

How amazing is it that they kicked this guy out of Citibank? Makes me want to short Citi for good measure.

Bloomberg: JPMorgan Buys Bear Stearns for $2 a Share After Clients Flee.

Friday, March 14, 2008

In energy we trust. Everybody else pays cash.

Almost time to buy Goldman Sachs, I think.

CNBC: Bear Stearns Gets Funding to Restore Confidence.


Bear Stearns received a secured loan facility from JPMorgan Chase as part of steps it is taking to shore up the market's confidence in its operations.

JPMorgan Chase will provide a secured loan facility for an initial period of up to 28 days allowing Bear Stearns to access liquidity as needed.

The Fed, through its discount window, will provide non-recourse, back-to-back financing to JPMorgan Chase, the commercial bank said. JPMorgan said it does not believe this transaction exposes its shareholders to any material risk.

"Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity," said Alan Schwartz, president and chief executive in Bear Stearns, in a written statement. "We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

Wednesday, March 12, 2008

Aubrey McClendon Still Buying.

Aubrey McClendon, CEO of Chesapeake Energy continues his campaign of aggressively buying his companies' stock.

The company was on a large on-shore leasing spree for a while, accumulated a significant inventory, and now is working on bringing it's natural gas to production. It's been steadily rising up the list of American natural gas producers; it's now at number 3. It has a lot of debt, but with natural gas prices doing well, a lot of drilling ahead of it, a successful hedging program, and even a respected weather team, they look like they have a lot of room to run.

I own some already, and may buy a bit more on a dip.

Tuesday, March 11, 2008

World's central banks hit the gas.

This move in oil to $109 has been pretty awe inspiring, and it even stomped all over a bearish call by Boone Pickens.

It wasn't terribly clear what was behind the move, as inventories are trending up, and gasoline demand appears to be backing off, but now we know.

The world's central banks are hitting the gas.

CNBC: Fed Leads Coordinated Move to Boost Liquidity.

Now that the cat is out of the bag, I tend to think that this oil rally will temper.

Saturday, March 08, 2008

Surprise: Matthew Simmons on Fast Money.

I've never seen the Fast Money traders as rapt, sober faced and quip-less as this appearance by Matthew Simmons, where Matt makes more jokes than this usually boisterous crew do.

The reason, of course: If he's right, and oil has peaked, it has implications for virtually every aspect of our economic system and lifestyle.

Among his comments, he says oil has probably peaked, it will get scarcer, prices will rise, and he gives the example of how in London they are paying $9 a gallon for gasoline, which equates to $378 a barrel for oil.

Surprise Friday indeed.. Video half way down the page.

CNBC: Surprise Friday.

Thursday, March 06, 2008

No law at all in Deadwood.

Some people, me included, would argue that the root of our current problems lies with the 'see no bubble' policies of Alan Greenspan as Fed Chairman. Internet bubble, real estate bubble, ARM bubble, it was all good under Easy Al, who couldn't stand to see a party end on his watch, even for the greater good, and even though he was supposed to be 'the law'. Heck, he even pimped some of this stuff himself - Take an ARM at a generation low in interest rates folks - forget the hangover, I've got something for that too!

One glaring example:

USAToday, Feb 24, 2004: Greenspan says ARMs might be better deal.


Federal Reserve Chairman Alan Greenspan said Monday that Americans' preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.

While borrowers can refinance fixed-rate mortgages, Greenspan said homeowners were paying as much as 0.5 to 1.2 percentage points for that right and the protection against a potential rate rise, which could increase annual after-tax payments by several thousand dollars.

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said.


But that's the past, and we live in the present, with a burst debt bubble and consequences like these:

Citigroup to Pare Mortgage Holdings by $45 Billion.

Credit Swaps Thwart Fed's Ease as Debt Costs Surge.

Agency Mortgage-Bond Spreads Rise; Markets `Utterly Unhinged'.

Homeowner Equity Below 50% for First Time Since 1945.

As Dollar Tumbles, Should Fed Stop Cutting Rates?

Foreclosures at record as household wealth falls.


The upside of a crisis is that there will be opportunity. To mix metaphors, we're in a forest fire, the dead wood and the good wood is burning, but ultimately this is the way the forest rebuilds. Wait for the bankruptcies though.

MarketWatch: Scion Capital shuts Asian funds to focus on U.S.


Scion Capital LLC, a $1 billion hedge fund firm run by Michael Burry, is shutting its Asian funds to focus on opportunities that will be created by a U.S. economic slowdown.


"The primary motivation for this move is that I foresee a significant opportunity to invest in dramatically undervalued distressed assets and out-of-favor businesses over the next several years," Burry wrote.

"The sheer magnitude of the troubles facing the leading companies in what is still the world's largest and most significant economy cannot be missed," he explained. "The global credit bubble has burst, and the world has not yet learned the full impact."


Extra credit: Al Greenspan or Al Swearengen?:

"God rest the soul of that poor family .... and pussy's half price, next fifteen minutes!"

Saturday, March 01, 2008

"All the nat gas stocks are buys."

He said it, not me.

As in, Guy Adami of CNBC's Fast Money commenting on EOG Resources, which he thinks is a bit rich valuation wise; he prefers APA. Recognize that you are betting against Boone Pickens here, at least temporarily.

CNBC Fast Money: Stock Pops & Drops.