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

Next up was the much neglected Current Picks page that wasn't updated since May 15th. That is now checked off the list and also an improvement in the look of the current picks page was done. Here is a before and after shot.

Next up on that page is to have a visual chart for at least the main indices but don't expect it anytime soon.

Getting away from general information and into market talk. It seems like 6-10-2010 was a turning date for the majority of the symbols that my system tracks. The S&P is up 31 points (nearly 3%) since then. One thing i noticed is that 1139 is strong resistance if it the market gets that high.

Seeing this i decided to have some fun by plugging in BP stock into the system and i'll let the chart speak for itself. Keep in mind BP rig exploded April 20th.

The Futures are up 13 points (1%). Only scheduled news is for Bennies counterpart Trichet to speak at 12:30pm.  Unscheduled news? well the US navy moving around in the Red Sea and the Israeli crafting a new "do not bring into Gaza" list.

Update: Oh and what's this? Far offshore, crews drill into Gulf to stop oil (AP) Relief well? Ay Dios Mio!! The only little people left after this will be BP shareholders and pension funds. They dont know how much oil is underneath there... oh wait one relief well might not be enough because the aim has to be precise so lets drill about 50 and deplete the oil ASAP and when the bottom of the gulf becomes an empty cavity without the oil and collapses on itself it'll look like a humongous version of  the Guatemalan Sinkhole and lets not mention the Mega Earthquake a crashing of the seafloor would create but wait lets add some tsunami for a topping . I realize i'm being a bit unrealistic as this takes time but lets put it this way,I might still be alive when it happens and it will not be pretty.

Make Money!!

-K

Did you hear that? BP cares about you so much that if you are in the Gulf of Mexico and for the next century your fishing or tourism business is doomed.. BP has put together $20 billion dollar fund for your damage It is truly truly truly sorry. Oh and If you weren't affected by BP but are part of US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System then BP is truly truly truly sorry for you as well because the 12% dividend yield that you saw a few days ago will be reduced to 0% so they can spread that wealth to the victims.  You can enjoy your -50% gain in BP stock now.

But wait I forgot to mention one benefit of this disaster. BP has hired cleanup workers to clean things up and this good news for the people of the Gulf.  Hey you just got promoted from fisherman to fish rescuer, Congrats!!  Just sign here on the dotted line ...........   and just make sure to not get sea sick from the delicious fumes because your complaints and health information will never be part of BP's record.

BP attempted to deny and conceal links of its oil spill to illnesses, after initial reports of oil cleanup workers who were getting sick due to extended exposure to oil and dispersants. Fishermen have complained of “severe headaches, dizziness, nausea and difficulty breathing” after working to clean up the spill, and one said BP did not provide protective equipment. But BP CEO Tony Hayward brushed off illness concerns, suggesting “food poisoning” might have been the culprit.

Although Louisiana state records indicate that at least 74 oil spill workers have complained of becoming sick after exposure to pollutants, BP’s own official recordkeeping notes just two such incidents.

You all should feel sorry for BP Because it will take anywhere from 100 days to 365 days for BP to make back the $20 billion in profit while the victims sit at home and receive checks.
Ok fine that's less than a year's worth of profits... But this is just a fund for economic damage, and won't protect it against all sorts of other legal costs. According to NYT legal costs and criminal fees could hit at least $63 billion.   WHOOPS!    Hey NYSE:BP stock... you will be missed when you hit $19 but on the bright side! You'll be a teenager again full of energy (pun intended) !

And now for a mini change of subject.  Senate has now accepted an expanded Fed audit. The House proposal allows repeated future audits of discount window and open market transactions, whereas the Senate proposal had only allowed a one-time audit. Of course this is just a grain of salt and even when it's passed it might be years before we see any audits.

BP plc (ADR) has concluded that its “top-kill” attempt to seal its broken well in the Gulf of Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well. The real doomsday scenario here… is if that casing gives up, and it does come through the other strings of pipe. Remember, it is concentric pipe that holds this well together. If it comes into the formation, basically, you‘ve got uncontrolled [oil] flow to the sea floor. And that is the doomsday scenario. -Naked Capitalism

The U.S. Coast Guard gave BP Plc 48 hours to find more capacity to contain its leaking oil well in the Gulf of Mexico after scientists and researchers doubled their estimates of the spill’s size.Based on government estimates, the drillship isn’t capturing as much of the spill as BP predicted earlier this month. In a June 4 interview with CBS, Suttles said the system would be capable of capturing as much as 90 percent of the flow.

If BP does not comply with this order, and cannot give a satisfactory reason why, this will put them further on the back foot in their meeting with Obama next week. Readers are correctly cynical as to whether the Administration will live up to its tough words, but the groundwork is being laid, which would make failure to follow through even harder to defend.

Separately, BP said its board will meet June 14 to discuss whether to cut or defer its second-quarter dividend payment following the spill. This is causing BP's Major British Shareholders to Ditch The Company While American Ones Are Staying. Major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank. US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System – have held their stakes in the company despite the dramatic fall in the share price.

If you think BP is a good buy right now check out this article: The Ultimate Contrarian Bet: BP

Lets see what today has in store for BP and the rest of the market.

Happy Trading

Update 1pm : - Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP Plc (BP) to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast.

Update 3:30pm: To demonstrate that it’s responsibly taking care of the oil spill and listening to public complaints, BP has touted the fact that it has set up call centers to handle the response. However, one of the operators at the BP Call Center in West Houston has revealed that she and the other 100 employees are just PR props; BP isn’t actually doing anything with the thousands of calls it receives: "“We’re a diversion to stop them from really getting to the corporate office, to the big people,” said Janice. … Because the operators believe the calls never get past them, some don’t even bother taking notes."

The Data is out and during Q1 household debt contracted 2.2% annually while State and local government debt expanded at 4.25% annually. The financial sector "shed" ~$1.3 trillion in debt (on an annualized basis) in Q1. Is anyone surprised the federal government added almost that same amount? -EconomPic

From 8:30 to 10 am some exciting news come out such as the retail sales data and consumer sentiment. You can check up on them at the Economic Calendar.
Retail Sales Fall, But Not As Bad As Reported Demand plunged at building-material stores, reflecting the end of a government appliance rebate, and sales fell at auto dealers, in contrast to industry figures which showed a gain.  Subtracting those outliers we still have a decline, which shows weakness. Just not as weak as early reports would indicate.

The BP Oil Disaster has become large enough at the moment to cover Albania which now makes Albania the New Frontier for Oil Investors.

Keep in touch using the comment box and even make your pick for the World Cup Champion to be crowned July 11th.
I hope you like the new speed of the website thanks to our seamless move to a new host.

Make some money and think before you hold into the weekend.

-K

There is much surprise that the German government has declared a ban on naked short selling, including CDS, as of midnight tonight, with no prior notice or the niceties demanded by the banks when government chooses to act. This action seems to have perturbed some and confused many.

Germany is claiming that this move will stop the Speculators

The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, German financial regulator BaFin said today in an e-mailed statement. The step was needed because of “exceptional volatility” in euro-area bonds, the regulator said.

HMMM Where oh Where Have I heard this story before...  Oh Yeahh.. September 20, 2008 German regulator bans short-selling in financial stocks

Germany on Saturday halted short-selling in financial shares, when investors borrow company stock to sell it, following the example of Britain and the United States. The ban affects 11 shares including those of AAreal Bank, Allianz, AMB Generali, Commerzbank, Deutsche Bank, Deutsche Boerse, Deutsche Postbank, Hannover Re, Hypo Real Estate, MLP and Munich Re.    BaFin, said short sales were banned with immediate effect until the end of the year, underscoring that they could lead to huge losses in the current global financial turmoil.

Roll Back to May 18, 2010....

Allianz SE, Deutsche Bank AG, Commerzbank AG, Deutsche Boerse AG, Deutsche Postbank AG, Muenchener Rueckversicherungs AG, Hannover Rueckversicherungs AG, Generali Deutschland Holding AG, MLP AG and Aareal Bank AG are covered by the short-selling ban.   “Massive” short-selling was leading to excessive price movements which “could endanger the stability of the entire financial system,” BaFin said in the statement.

I wonder what happened last time they tried protecting the banks? Well I will examine it below but what's that I hear you say? This Time is Different?  It sure is!!
During the last Crisis we had Lehman go bankrupt and Bear Stearns collapse.  Two years later we don't have any financial institutions going down. We Have Countries that are crumbling and their "shareholders" (taxpayers and citizens) revolting.    Greece is Bear Stearns because of the trillion dollar bailout and Portugal might as well become Lehman because unless Europe is willing to print a trillion for every country they bail (which I know they can if they want) and euro dropping to parity and beyond with the dollar.... someone will have to hold the bankruptcy stick.

Anyways Lets look at how the last short selling ban affected the financial institutions they tried to protect.

I'm using Dow Jones Germany Index for a Benchmark as to compare returns.

Oh myyyyyy Germany Saved the day as speculators were on the sidelines watching and missing out on 18 to 65% gains (its what you do when you short and if you're not familiar just Google "selling stocks short")

The Previous ban was 3 months and the protected stocks crashed an average of 46%. The New Ban will be around 11 months and will crash how much? It will crash aplenty so I will not make an exact percentage call on this one. But I will be doing one thing this time around though.  I'm putting German Financials on a Bank Watch List that I will check back on April 1st 2011.

Make plenty of money these next few weeks even if my blogging is sporiadic at best. (Offline life always comes first)

-K

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 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.

www.youtube.com/watch?v=Se12y9hSOM0

Have a Good Night

-K

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

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

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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.