Tropical Storm Alex to BP’s Rescue
I Want my life back! I am not the only one as plenty of fishes, birds, and people also want their life back that BP plc (ADR) has taken away. Not to Worry because BP feels sorry, so sorry that it is donating oil spill revenue to charity (the National Fish and Wildlife Foundation). BP said it would provide $5 million to the group immediately, Based on a current futures price of $77.83 a barrel, the collected oil is worth about $1.2 million. BP hopes to cap the well by August.
With the CEO now out of the picture time to get back to work and stop this drilling insanity. Hmm maybe not thanks to a federal judge who has overturned the Obama administration’s 6-month moratorium on new deepwater offshore drilling projects. What's the reason for overturning the decision?
The Interior Department said it needed time to study the risks of deepwater drilling but U.S. District Judge Martin Feldman said in his ruling the Interior Department assumed that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.
Come on there has to be more to this story and thankfully there is. Like many judges presiding in the Gulf region, Feldman owns lots of energy stocks, including Transocean, Halliburton, and two of BP’s largest U.S. private shareholders — BlackRock (7.1%) and JP Morgan Chase (28.3%). Here’s a list of Feldman’s income in 2008. How can he stop drilling when his heart is fully soaked in oil? He can't because Industry ties among federal judges are so widespread that they are beginning to endanger the courts’ ability to conduct routine business.
More great news! We don't need to head to Italy to see the amazing Leaning Tower of Pisa because BP pipe is tilting more.
The Deepwater Horizon riser package that sits on the seabed a mile below the ocean surface weighs over 450 tons, including the 48-foot-tall failed blowout preventer. National Incident Commander Thad Allen announced that the riser package is tilting “10 or 12 degrees off perpendicular (On June 10 it was only tilting by about 2 or 3 degrees). Engineers and geologists fear the stack atop the well could tip over if the well integrity further degrades, leading to the “unlikely, but not implausible” scenario of “oil gushing through the sea floor.”
Hey you say, its unlikely and worst case scenario and BP will get things rolling before something worse happens. What else coulg go wrong? everything is already factored for the worse.
Oh wait! More Great news just arrived! Tropical Storm Alex comes to the rescue (or not) of BP. The ECMWF model is the most aggressive in developing this system, taking it into the Gulf of Mexico as a hurricane next week. The NOGAPS model keeps the storm weak and farther south, predicting that 93L will bring heavy rains to northern Honduras as a tropical disturbance or tropical depression on Friday and Saturday. But either way this will be fun to watch.
Here is the graph of Invest93 (Tropical Storm Alex)
Check out some previous BP Posts:
BP Cares about the small people June 17
BP now stands for Bad Publicity June 14
Thats all Folks,
-K
Nightly Recap 4-9-2010
Market Summary:
DOW +70.28 (10,997.35) Briefly Touched 11,000
S&P +7.94 (1,194.37)
Nasdaq +17.24 (2,454.05)
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Disclaimer:
Open Positions: SRS at 5.97
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Nightly News Links
US Economy:
Bank Failures and Puerto Rico (Calculated Risk)
It appears the FDIC is getting closer to taking action in Puerto Rico. Three banks on the island holding more than $20 billion of assets are in trouble ... It appears the remaining healthy banks in Puerto Rico don't have the capacity to acquire these troubled banks - and most banks not in Puerto Rico just aren't interested.
Crazy Expensive Stuff That's Helping Push Sotheby's Back Towards Nosebleed Heights (BID) (Business Insider)
Sotheby's (BID) is back and the sales are as hot as ever. The auction house, a viable predictor of major market turns, is officially telling us its back to pre-Lehman levels.
Many million dollar pieces are even fetching bids twice the amount predicted, as wealthy buyers appear more than ready to spend again.
Back on March 14th I wrote an article about (BID) as a Market Leading Indicator. Click here to check it out.
World Economy:
U.K. Produce Prices Soar in March (Econompic)
Oil prices rose above $86 a barrel Friday on a weaker dollar and after robust U.S. retail sales in March pointed to growing consumer demand in the world's biggest energy market. As can be seen, this jump is almost entirely due to the cost of energy (it has not yet fed into other goods / services) and elevated producer prices will be difficult for businesses to pass through to end consumers.
More Links on the Greece Fiasco:
1.Greek Short term debt spikes to 21%
2.Fitch Downgrades Greece To BBB-
Interesting Links:
10 Psychological, Valuation, Adapative Investing Rules (The Big Picture)
Everything cycles: Recessions turn into recoveries; bull markets give rise to bear markets. Every rally that there ever was or there ever will be eventually ends. Adapt to this truism or lose your money. - After a collapse (i.e., a 55% market sell off), most of the terrible structural news that existed before the collapse is reflected in prices. Let it go. (Plenty more good ones at the link above)
Southpark: Cartman as Jim Cramer of Facebook
Kudos to Matt Trivisonno for finding this video and finally some straight talk about China.
China is dependent on us, we're working in order to keep Chinese people working. The Chinese think that we are suckers and are laughing at us.
Check the video below for 4 well spent minutes.
Have a Good Night
-K
Nightly Recap 3-31-2010
Market Summary:
DOW -50.79 (10,856.63)
S&P -3.84 (1,169.43)
Nasdaq -12.73 (2,397.96)
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Disclaimer:
Open Positions: SRS at 5.97
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Nightly News Links
US Economy:
Ben Bernanke's Mortgage Buying Will Be Missed (Until Round 2 Begins) (Business Insider)
The mortgage backed security (MBS) purchase program began in earnest on March 18, 2009, when Fed Chairman Bernanke announced an expansion of the program to the size limit of $1.25 trillion. The result of that program saw the S&P 500 rise 55.08% between March 18 and today (March 31, 2010), its end. What will the world be like after?
Obama to Open Offshore Areas to Oil Drilling for First Time (NYT)
The proposal — a compromise that will please oil companies and domestic drilling advocates but anger some residents of affected states and many environmental organizations — would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean.
Chicago PMI Dissapoints (Econompic)
Investors were also disappointed Wednesday by a survey of Chicago-area purchasing managers that showed U.S. business activity continued to expand in March, but at a slower pace than the previous month. The Institute for Supply Management-Chicago said its business barometer slipped to 58.8 in March, from a nearly five-year high of 62.6 in February. Economists expected a reading of 60.8.
Still, Croft noted that a reading above 50 still reflects expansion. "We think the economy is marching forward here, but not at an extremely fast pace," he said.
ADP Employment... Not Yet "Back in Black" (Econompic)
While many are waiting for Friday’s Payroll figure to tell them the state of the US labor market, I’m going to rely on today’s ADP report as a better gauge. That is because it is private sector based and thus won’t be distorted by the likely 100k+ adds of government census workers and the “methodology used to construct it” takes out most of the impact of the Feb snow storms and March snapback. It turns out that +40,000 was a bit optimistic as ADP showed a contraction of another 23,000 jobs. If these figures are to be believed (we will see "official figures" Friday), then we may have to wait for April for the private sector to stop contracting.
Market Call:Down(Zen Trader)
On a daily time frame I received my sell signal today and picked up DXD & SDS. We’ve been trading in a range with multiple distribution days this past week and it appears we’re in for some more selling. Could I be wrong and we rally? For sure. However, a number of other signals are pointing down.
World Economy:
European Unemployment to 11 1/2 Year High (EconomPic)
Euro zone inflation was much higher than expected in March and the unemployment rate reached 10 percent in February, data showed on Wednesday, highlighting the fragility of economic recovery.
The IMF Warns About German Banks... And That's Bad News For France's Too (Business Insider)
Mike O'Rourke of BTIG spotlights some interesting comments from a recently released IMF report (.pdf) on Germany:
“Simulation exercises suggest that German banks could suffer significant losses from commercial real estate investments in the U.S. and Spain, and more generally from exposures to Southern Europe. The simulations also suggest that a reassessment of risks associated with claims on Southern Europe could have a large impact on capital flows within Europe, as German (and also French) banks would significantly reduce their foreign claims to restore capital ratios.”
Interesting Links:
The Story Of Bottled Water (2010)
The Story of Bottled Water, released on March 22, 2010 (World Water Day) employs the Story of Stuff style to tell the story of manufactured demand—how you get Americans to buy more than half a billion bottles of water every week when it already flows from the tap. Over five minutes, the film explores the bottled water industrys attacks on tap water and its use of seductive, environmental-themed advertising to cover up the mountains of plastic waste it produces.
Have a Good Night
-K
Nightly Recap 3-29-2010
Market Summary:
DOW +45.50 (10,895.86)
S&P +6.63 (1,173.22)
Nasdaq +9.23 (2,404.36)
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Disclaimer:
Open Positions: SRS at 5.97
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Nightly News Links
US Economy:
Seasonality Map for April, 2010(MarketSci Blog)
On the link above is a map of expected strong/weak days for the U.S. market for April, 2010 based on historical seasonality patterns. "I want to make clear that I do NOT think that seasonality alone is sufficient to justify a trade; however, all of the seasonality plays included in this report have been powerful enough and consistent enough that I do think they should be one of many tools in the trader’s toolbox."
Have commodities outpaced fundamentals?(Investment Postcards)
Have metal prices and the prices of other commodities such as oil outrun the underlying fundamentals? The significant strength of the US dollar since December last year has capped rises in commodity prices. However, metal prices continue to be driven largely by Chinese demand, with China’s manufacturing PMI for new export orders and total new orders leading metal prices. The risks of investing in commodities are increasing as we move forward. The metal markets currently smack of speculation and manipulation. Metal stocks on the London Metal Exchange are currently at levels similar to those at the height of the global liquidity crisis
World Economy:
Euro Trashed (New York Times)
Germany and other “euro-optimists” hoped that the introduction of a common currency and the global economic competitiveness it spurred would quickly lead to sweeping economic and societal modernization across the union. But the opposite has occurred. Rather than pulling the lagging countries forward, the low interest rates of the European Central Bank have lured governments and households, especially in the southern part of the euro zone, into frivolous budgetary policies and excessive consumption. In short, the euro is headed toward collapse.
Greek CDS's Exploding After Horrible Debt Auction, Greeks Blame Weak Demand on Easter(Zero Hedge)
Greek CDS are moving 10 bps wider from 293 to 303 bps as demand for the bailed out country's bonds was much weaker than expected. Greek weakness is spreading to other European countries: The cost of protecting other euro zone government bonds from default were also mostly higher. The German 5-year credit default swap rose to 30.1 bps from 28.9 bps. In the meantime, and in keeping with the Greek tradition of scapegoating, the very weak demand for the new 7 Year issue was blamed on... Easter. About 175 institutions bid for a slice, sources at the lead managers said, compared to 400 investors for the 10-year issue.
"It is Easter week in Greece and Europe and this explains why demand may seem a bit softer, with the book growing at a slower pace compared to the previous 10-year bond issue," said a source at one of the five banks leading the issue.
Japanese Production Takes a Breather(Econompic)
Japan’s industrial production retreated in February, snapping an 11-month winning streak that helped to secure a recovery from the country’s worst postwar recession.
Factory output declined 0.9 percent from January, when it rose 2.7 percent, the most in eight months, the Trade Ministry said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a 0.5 percent drop.
The slide is unlikely to last as Asian demand for the country’s electronics and machinery continues to fuel exports, Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo, said before the report was published. Factory output and exports have yet to return to their peak set two years ago, and the recovery remains plagued by deflation.
Have a Good Night
-K
Is The Oil Bubble Ready To Burst?
Bubbles Always Have a Limit where they can no longer grow and sustain the hype.
I have seen oil run up like many of you have but without owning a car it hasn't hurt my wallet yet.
I've been thinking of investing in an oil shorting stock (Exchange traded Fund in this case.)
Symbol: (DUG) which bets that oil will go down. The ETF that bets for oil is (DIG) and the top 10 holdings are listed below. DUG basically almost shorts all those companies and more.
Source: ProShares
Here is my usual chart showing the trend reversal the past few days.
It broke through the 50 day moving average and might make a modest run.
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An interesting chart showing that the oil price has touched base with the total oil consumption just like the 1980's bubble.
Source: SmartEconomy
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Disclaimer: I have not invested into DUG yet but it is getting very interesting.