22
Jan

Fed Cut Tuesday – Too Little Too Late?

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Two problems with living in an ivory tower: no windows and high elevation. The first makes it difficult to observe anything that is happening outside and the second makes those things, if you could indeed see or hear about them, seem very remote. The Fed cut rates 3/4 of a percent today in an emergency rate cut. The fire has been burning for some time and nothing has been done but to talk incessantly about how big the fire is, how bad it could be.  Over the weekend the global market got tired of waiting and, believe it or not, a global market meltdown was sparked by this comment made last Friday:

"I'm reasonably confident that French banks will weather this turmoil without major trouble even though they are clearly, like all banks, in the world still in the process of marking down assets," said Christian Noyer, governor of the Bank of France and a member of the European Central Bank's governing council,

 

The one bright spot: we just went through options expiration and have been resisting the urge to significantly add to positions. What long positions we do have will get slammed. We'll be keeping a sharp eye out for ridiculous moves but keeping most of our powder dry as this bloodbath will off many up. In general, the larger, more liquid, "household" names are the first ones to bounce back 

And now for the usual post which won't matter at all today but life goes on and so much knowledge.

Commodity Watch:

  • February Crude is trading off just over $2 to 3 this morning.
  • MEND Goes Hollywood. Nigeria's favorite rebel group has asked George Clooney, (yeah, that one), who has also just been named the U.N.'s Messenger of Peace to come and see the situation on the ground in Nigeria for himself. George, think, they kidnap people for a living, who will make Ocean's 20?
  • Mexico Reports Port Closures Again. Heavy weather closed the three main Gulf side export ports on Monday, no word yet if they have reopened. 
  • Natural Gas is trading back down towards the mid $7s, not for the reasons I originally thought but because buyers of anything are few and far between today. 
  • It was Damn Cold Last Week; This Week Seen As Coldest Of The Winter So Far. I'm still waiting for the forecaster's long prognosticated "WARMER THAN NORMAL WINTER" to get here.

hdd-012108.jpg

  • Last Week: Gas-weighted HDDs were a chilly 224. That's in line both "normal" of 226 and last year's result of 222. Note that last year's weather yielded a withdrawal of 166 Bcf. 
  • This Week: The CPC estimates HDDs jump to a much colder than normal 251 (normal: 224, last year: 228). Last year saw a gas storage withdrawal of 185 Bcf in the comparable week.
  • Imports Are Well Below Year Ago Levels. LNG import volumes were a paltry 0.5 Bcfgpd last week as prices here continue to not cut it on the world LNG demand stage...Asian and European prices continue to dictate the direction of LNG tankers. Canadian volumes also dipped falling to 8.2 Bcfgpd. This is likely due to the need for gas for heating in Canada which also seeing extremely cold weather and not yet the beginning of the long awaited decline in volumes from the North. In aggregate, gross imports were off 2.6 Bcfgpd which should just about offset YoY domestic gains in production.

ng-imports-012108.jpg

Stocks of Interest Today: (Again not that this stuff will matter in the mess that is today)

PBR announces yet another big drilling success, compares to Tupi.  Petrobras did not give reserve estimates on its Jupiter well in the Santos Basin but instead described the find as an ultra-deep, pre-salt gas and condensate find and said "The hydrocarbon-bearing rock is more than 120 metres thick, and this area's dimensions may be similar to that of the Tupi discovery." Tupi was the November discovery that launched the stock when the company characterized reserves there at 5 to 8 billion barrels (one of the biggest finds in the last 20 years). On any other day PBR would be a rocket ship on such a statement.

(BJS) reports in line quarter but 2Q guidance is low to estimates. The company is citing weak North American rates as did SLB and proffering numbers for 2Q of $0.55 to $0.57, below the Street's $0.59. 

4Q Earnings Calendar (earnings for the E&Ps don't really kick off until next week but here's the short list for the week)

4q-calendar-012208.jpg

Odds & Ends

Analyst Watch: (DEEP) cut from over to equal-weight at Johnson Rice.

111 Responses to “Fed Cut Tuesday – Too Little Too Late?”

  1. 1
    Sambone Says:

    8:39 am EST

    Crude Losses Narrow On Bullish Fed Rate Cut

    DOW JONES NEWSWIRES
    From MARKET TALK:
    1333 GMT [Dow Jones] Crude oil futures losses are narrowing on the Fed’s unexpected 75 basis-point cut of the funds rate, says a broker. Current moves in crude are “purely stock market related,” as participants assess the state of the US economy, he says. The rate cut is “bullish” for crude, but participants are currently selling into the rally, another broker says. Participants await the open of Nymex floor trading for signs of further direction. ICE March Brent -85c at $86.66/bbl, Nymex February light, sweet crude at -$2.52 at $88.05/bbl. (LAN) Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com

    [Dow Jones] Nymex crude jumps briefly above $89/bbl after surprise 75 basis point U.S. rate cut. Feb crude -$2.30, or 2.6%, $88.27/bbl after rising as high as $89.40 after the cut was announced. Prices were trading near $87 before the announcement.

  2. 2
    Sambone Says:

    General market – FYI
    Here are the “Circuit breakers” for the NYSE for this quarter.
    Dow drops 1,419 before 2 pm, then 1 hour halt. Between 2-2:30 pm, then 30 minute halt. After 2:30 pm, no halt.
    Drop of 2,838 before 1 pm, 2 hour halt. Between 1-2 pm, then 1 hour halt. After 2 pm, market closes.

  3. 3
    Sambone Says:

    9:18 am EST

    Nymex Crude Slumps, Shrugs Off US Rate Cut

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures slumped more than 3% Tuesday, shrugging off a three-quarter percentage point emergency U.S. rate cut, on concern it will not be enough to save the U.S. economy from recession.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down $3.24, or 3.6%, from Friday’s close at $87.33 a barrel. There was no settlement price Monday because of the Martin Luther King Jr. Day holiday. Tuesday is the last trading session for the February contract. March crude was down $3.11 at $86.81.

    Brent crude on the ICE futures exchange fell $1.23 cents from Monday’s settlement to $86.28 a barrel.

    Citing a weakening economic outlook, the Fed cut its target for the federal funds rate by 0.75 percentage point to 3.5%. The surprise rate cut came before a scheduled meeting next week and followed a broad sell-off in overseas stock markets. Nymex crude, which had been trading near $87 a barrel when the announcement was made, rose as high as $89.40 soon after before sliding back near $87. Prices had fallen as low as $86.11 before the rate cut announcement.

    “The cut gave us a bit of a bounce, but I think the pull-back shows the Fed might not be able to handle this by itself, and the question is whether this is too little, too late,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “There are signs that problems in the U.S. are starting to impact other countries, like China, which people have said could withstand a U.S. recession. I don’t think many people will get out unscathed, which is bearish for oil.”

    Front-month February reformulated gasoline blendstock, or RBOB, fell 7.32 cents, or 3.2%, to $2.2302 a gallon. February heating oil fell 7.34 cents, or 2.9%, to $2.434 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  4. 4
    Sambone Says:

    No place to hide, baby!

  5. 5
    Sambone Says:

    Dow has blown thru 1st support of 11,940, next support is 11,274.

  6. 6
    Brian08 Says:

    So this is what capitulation looks like…Ain’t that somethin’…

  7. 7
    zman Says:

    Bottom fishing time:

    COP Feb 70 Calls for $2.75 (with the stock down 6%)
    PBR Feb $105 Calls for $2.15 average (see today’s post regarding another massive discovery here)

  8. 8
    zman Says:

    Notice how PBR is off only over $1…if you didn’t see it in the post:

    PBR announces yet another big drilling success, compares to Tupi. Petrobras did not give reserve estimates on its Jupiter well in the Santos Basin but instead described the find as an ultra-deep, pre-salt gas and condensate find and said “The hydrocarbon-bearing rock is more than 120 metres thick, and this area’s dimensions may be similar to that of the Tupi discovery.” Tupi was the November discovery that launched the stock when the company characterized reserves there at 5 to 8 billion barrels (one of the biggest finds in the last 20 years). On any other day PBR would be a rocket ship on such a statement.

  9. 9
    TTupp Says:

    if my screen right? look at the spreads on dug. who in their right mind would buy those?

  10. 10
    zman Says:

    Hear ya on Dugh Tupp. I was looking at Puts there but man, no thanks! I’d write naked calls on it but I don’t have it in me.

  11. 11
    zman Says:

    Thinking about adding APA and DRYS here…and maybe XOM.

    Notice oil held its key technical levels so far. We’ve got cold weather and potential import problems (Mexico) – could boost oil back into the low 90s easily with a steadier market.

  12. 12
    TTupp Says:

    fslr hit my target pre-market ($150), too ba it didnt make me any money…

  13. 13
    zman Says:

    Took the COP earlier as they are gassy and should have an ok quarter on that, their upstream oil should definitely provide upside to estimates…and no one expects much out of the refining segment this quarter. Stock has fallen from $80s to $69 and they report tomorrow.

    Took the PBR after this big plunge and the Jupiter news in #8

  14. 14
    TTupp Says:

    tsl broke some serious support today

  15. 15
    zman Says:

    Re FSLR – I covered a little early (Thursday) but it was nice play.

  16. 16
    zman Says:

    check out COP with the comeback in progress

    TSL looks like a lot of solars

    SPWR reports this week…analysts are starting to turn more against them and ESLR.

  17. 17
    TTupp Says:

    front month vix futures (vix options deliverable) is severely squed from the spot vix. meaning futures traders thing this will not last into expiration. or something lol else.

  18. 18
    TTupp Says:

    you mean fslr re # 16?

  19. 19
    zman Says:

    T: No, ESLR , Evergreen Solar. I haven’t yet seen any creditable analyst rip FSLR for anything…still a love-in there.

  20. 20
    TTupp Says:

    also alot of conversion/ reversal opportunities out there on a lot of stocks, but most of the time the B/A spread will not warrant it

  21. 21
    zman Says:

    By the way, forgot to congratulate Brian on the DIA…nice job B!

  22. 22
    zman Says:

    COP of 4% now, PBR green. heh,heh, heh.

  23. 23
    zman Says:

    Nicky – wake up, penny for your thoughts.

    I’m betting she stayed up all night watching the futures.

    Oil off just $1 now at 98.47. Came within 0.06 of breaching tech support at $86 even last night.

  24. 24
    TTupp Says:

    did anyone see cramer get ripped a new one by cnbc’s fixed income guy?

  25. 25
    scoop006 Says:

    That was Rick Santelli

  26. 26
    Sambone Says:

    T – If it gets on youtube or I can see a repeat, let me know.

  27. 27
    zman Says:

    I’m sure it will be on youtube today.

    FSLR back to even on the day

    RIG and DO getting whacked still

    PBR up $2

    CLB up in here is a surprise

    everything else still down as you would expect.

    NFX has taken a nice trip from $55 to $47.50 in the last few days…that’s one of the ones to own for earnings.

    CHK put forth their 4Q date: Feb 21 so no rush to get in there. They may have reserves out a little earlier.

  28. 28
    Sambone Says:

    Overall market is recovering. Financials are all up. I guess the street expects the worst is over. My read is that this is a weak Bear market rally and then will head lower as time goes on. IMO

  29. 29
    zman Says:

    ZTRADE:

    RIG FEB $140 Calls for $1.30.

  30. 30
    zman Says:

    oil breaching $90 to the upside.

    I agree with Sam’s weak bear market comment. Time for people to start picking stocks and sectors again.

  31. 31
    zman Says:

    SWN trying to go green. Natural gas trading off $0.15 with today’s market, not the fundamentals. The first two of the tough comp series of storage withdrawals I’ve been talking about are going to end up being bested by this year’s big withdrawals, resulting in a bigger defictit to year ago levels and a reduction to the 5 year average as well. NOAA is now calling for warmer than normal weather Feb – April.

  32. 32
    zman Says:

    PTR approaching some very good support…at $140 the stock will have round-tripped a 5 month move to $260.

  33. 33
    TTupp Says:

    re ptr: good call buffet

  34. 34
    zman Says:

    they said he was going back in soon too

  35. 35
    zman Says:

    Denise, you around today? Curious to know how is your usually short, but recently turned bullish guy handling this?

  36. 36
    TTupp Says:

    EVERYTHING on my radar looks to be: roundtrippin’ a huge run; very oversold; approaching extreme support; on volume we haven’t seen since q1 06. and yet im still skeptical.

  37. 37
    TTupp Says:

    thats dow volume

  38. 38
    TTupp Says:

    who buffed z? i thought he got out of all of it it 260ish

  39. 39
    TTupp Says:

    smart market selling gs and ms? is their something wrong here? lunacy

  40. 40
    zman Says:

    T: Re Buffet and PTR. He did get out the way and I think was down in the mid to low $200s…Rumor is he may buy back in after this drop.

  41. 41
    ram Says:

    What’s with the Syracuse orange ZMAN?

  42. 42
    zman Says:

    latest crack spread data on the Refiners and Cracks tab. Last week was no help for the group save maybe SUN as NY harbor cracks actually increased. I want to own a few of these after earnings for the seasonal run in margins.

  43. 43
    Sambone Says:

    11:30 am EST

    Nymex Crude Pares Losses After Fed Rate Cut

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures pared big losses Tuesday after the Federal Reserve announced an emergency U.S. rate cut, sparking optimism that the severity of any economic downturn could be blunted.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down 55 cents, or 0.6%, from Friday’s close at $90.02 a barrel after earlier falling to a six-week intraday low of $86.11. There was no settlement price Monday because of the Martin Luther King Jr. Day holiday. Tuesday is the last trading session for the February contract. March crude was down 89 cents at $89.03.

    Brent crude on the ICE futures exchange turned positive, and was recently up 90 cents from Monday’s settlement at $88.41 a barrel.

    Citing a weakening economic outlook, the Fed cut its target for the federal funds rate by 0.75 percentage point to 3.5%. The surprise rate cut came before a scheduled meeting next week and followed a broad sell-off in overseas stock markets.

    Nymex crude, which had been trading near $87 a barrel when the announcement was made, experienced choppy trading immediately after the announcement but pared early losses after the U.S. stock market didn’t emulate huge drops seen in Asian markets. The Dow Jones Industrial Average was recently down 0.5%. Japan’s Nikkei Stock Average fell 5.6% and the Hong Kong Hang Seng fell 8.7% Tuesday.

    The Fed’s move “will certainly shore economic sentiment that has been driving prices lower recently and shift attention back to underlying tight fundamentals,” Harry Tchilinguirian, an analyst at brokerage BNP Paribas Commodity Derivatives in London, said in a research note.

    Analysts had expected the Fed to cut rates by a half percentage point at its meeting next week. The cut comes after President George W. Bush on Friday proposed a fiscal stimulus package, calling for tax incentives for businesses and tax relief for individuals to stem a slowdown.

    Crude oil prices have now slumped more than 10% since reaching an intraday record of $100.09 a barrel on Jan. 3, as concerns that the U.S. economy will slow outweighed continued demand strength in other countries. Prices are still historically high though, having surged 54% in 2007.

    Despite the more than $2 a barrel boost the rate cut gave prices, many analysts were skeptical of the impact that it will have on demand, underlining the seriousness of the situation that has prompted an emergency cut.

    “As much as it might help to revive the economy over the longer term, I think it only helps reinforce the idea that the economy is fragile and that oil demand in particular is in question,” said Tim Evans, an analyst at Citigroup in New York. “There are people out there who disagree and are looking to buy the dip, but that doesn’t mean it is a good reason to buy now.”

    Front-month February reformulated gasoline blendstock, or RBOB, fell 1.84 cents, or 0.8%, to $2.285 a gallon. February heating oil fell 2.74 cents, or 1.1%, to $2.48 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  44. 44
    zman Says:

    Ram – Pretty ugly isn’t. That my attempt to highlight my comments for Quarreyman who asked me to do so months ago. Never found an off the shelf package to get the job done so I went into the code over the weekend. Got a better color in mind. How about green, lol?

  45. 45
    freeflow Says:

    What do you think of getting in to APC for earnings Z? I’ve been watching that one fall from near 70 to 54 this morning and I’m debating being a holder during the Feb 5th call.

  46. 46
    zman Says:

    FF – I plan on owning APC without a doubt before the call.

  47. 47
    apbd Says:

    How about NE Patriots Red, White and Blue?
    apbd

  48. 48
    freeflow Says:

    Let me know when you get in. I bought some March 60’s with the stock at 58. I want to add to my position if you feel strongly about them.

  49. 49
    zman Says:

    Patriots = AFC = Bad for market, lol.

    FF – will do and I do.

  50. 50
    zman Says:

    We could still test today’s lows today or tomorrow.

    PTR is getting into that support now, down $14+

  51. 51
    Sambone Says:

    NE? Oh my God. How about Blue Devil Blue baby! That orange reminds me of Tennessee, which I can’t stand.

  52. 52
    zman Says:

    let’s just go with green, a color we don’t see enough of these days.

  53. 53
    zman Says:

    besides, I was going for a different UT and that looked burnt orange to me.

  54. 54
    ram Says:

    BLUE DEVIL BLUE??!! There is only one blue and that is CAROLINA BLUE!!

  55. 55
    apbd Says:

    Hey, I want my own color. We all should have colors.
    apbd

  56. 56
    zman Says:

    PBR would be over $115 if not for this market. They alluded to the Jupiter discovery over the weekend being the same size as the Tupi field which they think is 5 to 8 billion barrels.

    Now, I’ll tell you defining a field of that size with a single well is not possible but it does indicate they are very happy with the outcome so far.

    APBD – oh boy, that is a whole different can of worms.

  57. 57
    Sambone Says:

    Ram – Agreed, I can’t stand Duke either, but the background is already Carolina Blue. Duke is in the ACC is the only reason I recommend it. You could say UK, but I can’t stand UK any more than Duke or Rocky top and they are in the SEC, which doesn’t know how to play Basketball anyway. BTW Z, Blue and green don’t go together. LOL

  58. 58
    zman Says:

    In case you missed it in the post:

    http://africa.reuters.com/top/news/usnBAN032333.html

    Hopefully MEND will invite the rest of the hollywood intelligencia.

  59. 59
    zman Says:

    Florida (SEC) championship basketball last year.

    LSU (SEC) championship football last year.

    SEC = Olympic athletes,
    others = special Olympic athletes

  60. 60
    zman Says:

    market looks like its biding its time…trying to decide which way to break.

  61. 61
    ram Says:

    ZMAN – APC ready to run?

  62. 62
    zman Says:

    Ram – See #46 . Right now it all depends on direction of market.

  63. 63
    Sambone Says:

    Z – Love LSU and Florida rocks. ACC sucks in Football. I should have been talking only about those teams.

  64. 64
    ram Says:

    Fine ZMAN.

  65. 65
    Popeye Says:

    Very tempted to add the last K to my HK bag here.

  66. 66
    Sambone Says:

    Lunch is almost over. Looks to go green, but the last 30 minutes should tell the tale.

  67. 67
    apbd Says:

    Sam: When the ACC added BC to the mix, that made it a real league.
    apbd

  68. 68
    zman Says:

    Popeye – me too. Premiums on the Feb and Mar $15s not too bad right now.

    Re 66 – agree. If it runs into the close then the energy sectors do well and PBR rips

    COP fell from $89 to $69 in the last drop here. Earnings tomorrow. Refining going to stink but that’s well known. Upstream should have a very nice quarter…could drive a beat…not saying it will but the leverage from oil and gas prices being above the analyst estimates may not have completely been taken into account. Even a small miss unlikely to be cataclysmic as the shares have had this recent pounding.

  69. 69
    zman Says:

    Looking at Feb APC $60s if we get a pull back …watching the Dow and S&P more than the APC chart.

  70. 70
    freeflow Says:

    if we stay under 1320 on the S&P we may go down to 1250 again. Technically speaking.

  71. 71
    zman Says:

    Way OT: meg whitman leaving Ebay…won’t that be good for the stock?

  72. 72
    Sambone Says:

    Free – What I’m watching is the close. IMO if we are down after a 3/4 bhp drop, that isn’t good. On a postive side is that HD, TGT, ANF are up and most if not all the Financial stocks. The retailers are telling us that the consumer will be back into the market because of the rate cut and all is well. The banks are telling us that all is well and that the worst is behind them. The street is looking for another 1/4 rate cut next week with the futures telling us their is a 68% chance of that.

  73. 73
    doc Says:

    lONG TERM PUts Bought
    SPY PUTS FYSXB DEC. 09 $80 @$2.70
    QQQQ puts OZCMF JAN 09 $32 @$1.07

    My best profits have been buying “VERY” long term leaps I have double on QQQQ puts 09 $35,36,38 purchased months ago under $2.00.

  74. 74
    zman Says:

    congrats doc!

  75. 75
    Brian08 Says:

    Sam, RE: #72…Couldn’t agree more…ANF is one of my absolute favorite stocks, great company…But I digress…The financials have led us down to 12,000 and if they are up like a day today I view that as fairly bullish…

    I was actually thinking of buying at-the-money ’10 LEAPS on BAC…This situation reminds me of JPM in 2001 where they tanked straight to hell and within 2 years had more than doubled…

  76. 76
    zman Says:

    draft of sanctions against Iran agreed upon.

    http://news.yahoo.com/s/ap/20080122/ap_on_re_mi_ea/iran_nuclear

  77. 77
    zman Says:

    dollar only infinitesimally stronger today.

  78. 78
    zman Says:

    here comes the test

  79. 79
    ram Says:

    Is there a shade control knob for your green? My eyes are starting to burn.

  80. 80
    zman Says:

    first test passed.

    oil augers for a $90 close.

    nat gas just getting pummeled down $0.34…which is great because it does it before earnings and we can get an upswing if the cold lasts.

    how’s that Ram?

  81. 81
    ram Says:

    Oh, better. Thank you. Cold lasts? People are still consuming NG because we are still freezing! When does NG get the nod of being the clean burning fuel for creating electricity??

  82. 82
    zman Says:

    The U.S. gets about 1/5th of its electricity from natural gas and its gaining a little under a % every two to three years.

  83. 83
    zman Says:

    oil closed 89.70; down 0.81 with products slightly worse
    gas closed a whopping 32 cents to 7.67

  84. 84
    zman Says:

    Kite powered tanker:

    http://news.bbc.co.uk/1/hi/world/europe/7201887.stm

  85. 85
    Sambone Says:

    I like the Black Z

  86. 86
    ram Says:

    DITTO if it means anything.

  87. 87
    zman Says:

    thanks, dark green it stays. anything else useless I can do while the market continues to tread water before making a break for it you just let me know.

  88. 88
    zman Says:

    Mary B on CNBC this morning pulled up a chart of the BDI this morning as evidence of the global slowdown. She referred to it as “something called the Baltic Dry Index” and it was apparent she had never heard of it before.

  89. 89
    zman Says:

    hey, just found the red-headed weather girl that used to be on CNBC in the morning over on the Fox Business channel.

  90. 90
    Sambone Says:

    Question – Who watchs Fox business?

  91. 91
    zman Says:

    Sam I didn’t know I had it until I saw an ad. Last 5 minutes I’ve got to say I like the format better and the tech chick, well, I may buy some AAPL before the close for earnings …

  92. 92
    apbd Says:

    It always comes down to chicks.
    apbd

  93. 93
    zman Says:

    A – true, true, lol. I’m going to watch them until I see an energy segment, then pass judgment.

  94. 94
    freeflow Says:

    AAPL July 250’s are only 2.45

  95. 95
    zman Says:

    only $90 bucks out of the money, lol. I’ve tried longer shots I suppose. Course you don’t care if it goes to $250 ever, all you want is tonight’s $20 pop on Ipods exceeding 25 mm units and macbooks exceeding whatever level they need to exceed for the quarter.

  96. 96
    rseidman Says:

    Z: Aren’t you still holding APABB?
    Or did you sell?

  97. 97
    zman Says:

    RS – I had a brain error on that. Bought the Jan $105 calls but had the Feb 110 written down on my sheet. The 105s went out worthless and I don’t own the Feb 110s. Been mulling a re entry and will take a lower strike, probably 95 or 100 in the Febs or March.

  98. 98
    yona Says:

    re: fox business
    Alexis Glick – awesome
    but they seem to dumb things down alot

  99. 99
    doc Says:

    bt VLO Calls Jan. 09 $80 $2.10
    TSO calls Jan 09 $70 $1.10

  100. 100
    Sambone Says:

    Ok, here we go. So far today we have had a 457 point swing in the Dow. IMO if it is down over 100 or even 50 points at the close, that’s not good. In the past when Ben reduced, the market rallied quite well, thank you very much. But a down close doesn’t bode well for market emotions. 30 minutes and we’ll see.

  101. 101
    Sambone Says:

    3:26 pm EST

    Nymex Crude Pares Losses After Rate Cut

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures pared big losses Tuesday after the Federal Reserve announced an emergency U.S. rate cut, sparking optimism that the severity of any economic downturn can be blunted.

    Light, sweet crude for February delivery on the New York Mercantile Exchange, on its final day of trading, fell 72 cents, or 0.8%, from Friday’s close to $89.85 a barrel after earlier falling to a six-week intraday low of $86.11. Despite gaining more than $3 a barrel from its intraday low, it was still the lowest settlement for a front-month contract since Dec. 10.

    There was no settlement price Monday because of the Martin Luther King Jr. Day holiday. March crude, which will be the front-month contract from Wednesday, ended down 71 cents at $89.21.

    March Brent crude on the ICE futures exchange turned positive, and settled 94 cents higher at $88.45 a barrel. The contract fell $1.73 Monday.

    Citing a weakening economic outlook, the Fed cut its target for the federal funds rate by 0.75 percentage point to 3.5%. The surprise rate cut came before a scheduled meeting next week and followed a broad sell-off in overseas stock markets.

    Nymex crude, which had been trading near $87 a barrel when the announcement was made, experienced choppy trading immediately after the announcement but pared early losses after the U.S. stock market failed to emulate huge drops seen in Asian markets. The Dow Jones Industrial Average was recently down 1.3%, after opening sharply lower. By comparison, Japan’s Nikkei Stock Average fell 5.6% and the Hong Kong Hang Seng fell 8.7%. Both closed before the Fed announcement.

    “We seem to be glued to the hip with U.S. stock indices at the moment, had the stock market not reacted so positively, I think we would be $3 a barrel less” than where crude settled, said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates in Galena, Ill. “The response of the market was impressive, but I’m of the school of thought that when the Fed drops that much between meetings that it’s an act of desperation.”

    Analysts had expected the Fed to cut rates by a half percentage point at its meeting next week. The surprise cut comes after President George W. Bush on Friday proposed a fiscal stimulus package, calling for tax incentives for businesses and tax relief for individuals to stem a slowdown.

    Crude oil prices have now slumped more than 10% since reaching an intraday record of $100.09 a barrel on Jan. 3, as concerns that the U.S. economy will slow outweighed continued demand strength in other countries. Prices are still historically high though, having surged 54% in 2007.

    Despite the nearly $3-a-barrel boost the rate cut gave prices, many analysts were skeptical of the impact that it will have on demand, underlining the seriousness of the situation that has prompted an emergency cut.

    “As much as it might help to revive the economy over the longer term, I think it only helps reinforce the idea that the economy is fragile and that oil demand in particular is in question,” said Tim Evans, an analyst at Citigroup in New York. “There are people out there who disagree and are looking to buy the dip, but that doesn’t mean it is a good reason to buy now.”

    Front-month February reformulated gasoline blendstock, or RBOB, fell 2.28 cents, or 1%, to $2.2806 a gallon. February heating oil fell 3.48 cents, or 1.4%, to $2.4726 a gallon.

    While traders will continue to focus on equity markets and the health of the U.S. economy, their gaze will also fall on key U.S. inventory data due Thursday from the Department of Energy.

    U.S. crude oil stockpiles are expected to grow by 1.8 million barrels, according to the average of 10 analysts’ forecasts in a Dow Jones Newswires survey. If stocks gain, it will be the second straight gain after eight consecutive falls.

    Gasoline inventories are seen growing by 1.6 million barrels and distillate inventories, which include heating oil and diesel fuel, are expected to increase by 100,000 barrels. Refinery use is seen climbing by 0.1 percentage point to 87.2% of capacity.

    –By Matt Chambers, Dow Jones Newswires

  102. 102
    zman Says:

    Yona – agreed

    Doc – probably a safe bet, I don’t want to own them until closer (right after)earnings but with those leaps it won’t matter.

  103. 103
    zman Says:

    Sam – not a great close here

  104. 104
    Sambone Says:

    Yea, and that gives me that old sinking feeling. When the feds cut not 50 but 75 bhps, that tells me the steam is gone. maybe, just maybe that is a H&S on the Dow.

  105. 105
    Sambone Says:

    Postives are that the Dow is currently above it’s 1st support of 11,940 and the S&P is above it’s 1st support of 1291

  106. 106
    Sambone Says:

    Tini time! See ya tomorrow.

  107. 107
    zman Says:

    AAPL down $23 …why I stick to my knitting.

  108. 108
    zman Says:

    futures down another 1%

  109. 109
    scoop006 Says:

    Z Think it probable we test Teusday’s DOW’s low on Wed.

  110. 110
    zman Says:

    Saw the CNBC fast money crew touting PBR and COP earlier. Don’t if that’s a good thing or not these days.

    Scoop – I hope not and think we see a scary dip with a green close but its just a feeling. Asia is soaring, not sure why S&P off another 1.1% now… AAPL?

  111. 111
    zman Says:

    J – it is supportive over time as new shorts come in, pointing to the storage overhang, at least to the five year average and say “prices must fall”. But the drop yesterday was a function of economic fear, not weather. That data is pretty hard to pin down (impossible in any thing close to real time) so I expect that the words “protracted downturn” to need to come in to play before people take it seriously. At this point I would expect some of the shorts who’ve been around and wrong to cover after the economy gave them a lucky break…especially given the current weather. I had been thinking a pull back to mid $7s was in order but due to tough comps which the current weather is making less tough. Now I’d expect very near term prices to fall in a range of $7.50 or a little lower up to $8.25 with Spring falling into the mid $6s.

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