17
Mar

Monday Morning And All’s NOT Well

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Monday Meltdown Recipe: 

  • On Friday Standard & Poors said "the worst is behind us" in reference to sub prime loss disclosures.
  • Paulson Defends (BSC) Rescue; Dodge Comments Regarding Other Banks. On Sunday morning, Treasury Secretary Paulson said the U.S. financial system is "more fragile than we would like right now." No kidding. According to Thomson Financial he was directly asked whether other financial institutions are in similar shape to Bear and he responded with "Well, our financial institutions, our banks and investment banks are very strong and I'm convinced that they're going to come out of this situation very strong."  He's not telling us something...
  • Fed Emergency Rate Cut. Sunday evening the Fed cuts the discount rate by 25 basis points to 3.25%. That's odd, on a Sunday, with no new news to be seen anywhere? Hmmm... Bet we get another 75 basis points on Tuesday.
  • Fed Turns on the Printing Presses. Turns out Sunday was a busy day at the Fed with the creation of a new lending facility that will allow investment banks to borrow directly from the Fed. In the past, only commercial banks had access to the Fed's funds. Double hmmmm...
  • Bear Stearns Is Taken Under for $2 per Share. JP. Morgan agrees to purchase 85 year old Wall Street stalwart Bear Stearns for $2 per share, backed by a Fed guaranteed loan of $30 billion. This values BSC at $236 million, down from $7.45 billion last Tuesday (when rumors began to spread about their imminent demise). ZComment: Circling back to Paulson's comment about the financials coming out of this situation very strong I have to say I'd agree, as long as he's talking about the ones that get to pick off their competitors at five cents on the dollar with a government backed loan, yea, sure.
  • Dollar Plunges To New Lows Vs The Euro. The Euro hit $1.5905, new record high, last night. Paulson, by the way, reiterated his prior statement that "a strong dollar is in the national interest"....so what gives here?  The U.S. doesn't defend the dollar, hasn't since the housing bubble popped and isn't likely to in the near future. So how about a little less rhetoric and little more thought? I guess that's all my tax dollars can afford at this point since they are, after all, paid in dollars.
  • Goldman Sachs Gets Its First Sub-Prime Sliming. (GS) is said to be on the verge of taking its first hit due to sub-prime troubles, a nearly $3 billion charge over an investment in a Chinese bank.
  • Asian Markets Open Down 3-5%.
  • S&P500 futures are down 2.4% pre market...
  • Nicky's Levels As of Sunday Night: "SPX has good support at 1250.  Next stop after that is 1244."
  • Fed Meets Tomorrow; Futures Imply A Further 100 Basis Cut This Week To 2% Discount Rate. Feels like 80's Japan around here.

Commodity Watch (time for a little pro: 

  • Crude Oil: Feeding on further doom for the dollar, crude traded as high as $111.80 in pre market action before a bought of profit taking and recession selling hit sending crude down nearly $5.
  • Natural Gas: After a promising close on Friday (if you're short) gas followed crude's lead up , then down and is now off a further $0.20 to $0.30 to $9.75, breaking various levels of technical support.
  • Weather Watch: It's warming up quickly. Last week's HDDs came in at 151 versus an expected 144.

weather-031708.jpg

Here's a link to the weekend post if you missed it.

Subscriber Requested Stock Looks. Not much of anything is going to look interesting today and I'm catching up on some reading.

  • EVEP - still working up.
  • (WRES) - interesting name, had not looked at it in quite some time and spent a few hours doing so last night after becoming more interested than I thought I would be. The stock is growthy but tiny so that's not such a feat and I want to check out a few more issues before rendering an opinion. Like anyone drilling in California, they have to worry about the activist groups as much or more than you do the geology and they have their share of bark eating eco-freaks crying noisy, smelly oil at them. Anyway, look for a standalone piece later this week.

Odds & Ends

Analyst Watch:  Merrill ups a variety of oil service names to buy from neutral including (HAL) and (BJS) while boosting their 2008 oil and gas forecasts to $102 and $9.25 respectively,

 

96 Responses to “Monday Morning And All’s NOT Well”

  1. 1
    Sambone Says:

    8:57 am EST

    Nymex Crude Falls Over $2 On Profit Taking

    Dow Jones Newswires

    LONDON — Nymex light, sweet crude futures fell more than $2 in London trade Monday, as traders took profits from an earlier rally to a new record high of $111.80 a barrel.

    Crude prices reversed amid a mild pullback in the dollar from record lows against the euro and other currencies Monday. But analysts remained alert to further oil price climbs, particularly if crude oil and other commodity prices continue to prosper on the slide in the dollar and struggling equity markets.

    “The asset classes where the funds can see a return continues to shrink,” said Jim Rintoul of TheOilTrader. “It’s leading them towards oil, gold and other metals.”

    At 1250 GMT, the front-month May Brent contract on London’s ICE futures exchange was down 240 cents at $103.80 a barrel.

    The front-month April light, sweet, crude contract on the New York Mercantile Exchange was trading 300 cents lower at $107.21 a barrel.

    The ICE’s gasoil contract for April delivery was down $30 at $967.75 a metric ton, while Nymex gasoline for April delivery was down 664 points at 262.30 cents a gallon.

    —By Nick Heath; Dow Jones Newswir

  2. 2
    Sambone Says:

    Hmmm. Wonder if the circuit breakers will come in today.

  3. 3
    zman Says:

    People are already starting to bottom fish…I’ll wait.

  4. 4
    yona Says:

    people or ppt?

  5. 5
    zman Says:

    Natural gas has broken the up trend which began 2/4.

  6. 6
    zman Says:

    Today’s move in CHK just filled a gap in the chart created last Wednesday by an upgrade. E&P stocks finding a bottom here.

    ppt?

  7. 7
    Sambone Says:

    The only thing holding this market up today is the short sellers. This thing is going to be a slow burn.

  8. 8
    zman Says:

    rates now indicating 1% cut price in fully, possibility of 1.25% cut.

  9. 9
    Sambone Says:

    PPT = Plunge Protection Team or Presdident’s “Working Group on Financial Market’s”
    http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm

  10. 10
    zman Says:

    ppt, oh, you mean PPT or Ben, Bush, and Paulson. Kind of like the opposite of a BOP.

  11. 11
    Sambone Says:

    That’s right, the Brain Trust!

  12. 12
    Sambone Says:

    10:01 am EST

    Nymex Crude Lower As Financial Markets Convulse

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures plunged as much as $5 a barrel Monday, hit by wholesale profit-taking following the latest all-time record high, as traders contemplated carnage in other markets unleashed by the buyout of Bear Stearns Cos. (BSC).

    Light, sweet crude for April delivery has since pared its losses and was recently $2.81 lower at $107.40 a barrel on the New York Mercantile Exchange. May Brent crude on the ICE futures exchange were $3.61 lower at $102.59.

    Nymex crude had overnight hit a record $111.80 a barrel as the dollar tumbled. Oil has managed to shake off the weight of gloomy economic data as investors seek a hedge against inflation and the weakening dollar in hard assets.

    With Monday’s selloff, some traders were wondering if crude oil was turning a corner or simply taking a breather. The front-month crude contract fell as low as $105.11 once New York trading got underway.

    “We just think it’s a function of the stock market being so sloppy,” said Scott Meyers, senior trading analyst at brokerage Pioneer Futures in New York. “It was so strong overnight, and it just gave way.”

    Since oil future prices began skyrocketing in late August, the market has seen minor corrections brought on by concerns about the overall health of the global economy. But these worries have been pushed aside repeatedly by the belief that emerging economies such as India and China would make up for any demand shortfall experienced in the U.S. Investors’ rush toward commodities in search of a safe haven for their funds also has reinforced the asset class’ immunity to the contagion that has spread throughout other markets.

    “A weak global scenario and weak economic picture might give way to weak demand,” Meyers said.

    The entry of speculative funds into the oil market has helped drive their record sprint, said Mike Fitzpatrick, an analyst at MF Global in New York.

    “I’m just guessing with this reversal we have seen, maybe they’re beginning to retreat from even these markets,” Fitzpatrick said.

    While Monday’s drop is significant, oil prices remain at lofty levels. Analysts have long complained that prices no longer reflect underlying supply and demand fundamentals, which means that trends are difficult to predict even in the face of apparent patterns — such as declining output or steady demand — in the underlying commodity.

    “So will this be the week crude oil “corrects’?” analyst Stephen Schork said in his latest energy markets newsletter. “We have little doubt that the present and future fundamental outlook is unfavorable. However, this is a market that divorced itself from the fundamentals back in September.”

    Front-month April reformulated gasoline blendstock, or RBOB, was down 9.16 cents, or 3.4% at $2.5978 a gallon. April heating oil fell 3.65 cents, or 1.2%, to $3.11 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  13. 13
    Sambone Says:

    Endless Summer For US Gasoline Demand Ends

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — The endless-summer phenomenon of rising U.S. summer gasoline demand has ended.

    For the first time since 1991, the weak economy and high prices will snuff out year-to-year growth during the peak driving season, according to a U.S. government forecast.

    In the near term, oil traders are puzzling out how long the seemingly endless-winter scenario of soaring, record-high heating oil prices will continue.

    Propelled by record high crude oil prices above $110 a barrel, average retail prices of gasoline, diesel fuel and home-heating oil are the most expensive ever.

    Though the calendar says springtime is a week away, the weatherman says temperatures through the remainder of March will be below normal in the Northeast U.S., the world’s largest heating oil market.

    The surge in Nymex heating oil futures prices, which topped $3.22 a gallon Friday, comes as refinery outages have cut supplies and amid rampant global demand similar fuels.

    Retail diesel fuel prices in 13 states and Washington, D.C., topped $4 a gallon Friday, spurred by rising heating oil futures, which are hedging proxy for the fuel.

    U.S. stocks of distillate fuel, comprising diesel and home-heating oil, are at a three-year low, according to government data.

    The main driver of record petroleum products prices is the runaway price of crude oil, which has swung in a 29% high-low range in the past six weeks, between $86.24 and $111.00 a barrel.

    April delivery crude oil futures prices settled Friday at $110.21 a barrel, off 12 cents in the first decline in a week. On Thursday, when prices hit the $111 record, all 75 Nymex listed crude contracts, through December 2016, topped $100 a barrel.

    Highest Spread Vs Gasoline
    Heating oil futures settled at a record $3.1465 a gallon, up 2.17c Friday and traded in a 10.4% intraday high-low range in the week. Gasoline futures inched up 0.66c to $2.6894 a gallon, just below record highs earlier in the week. Front-month heating oil’s spread to gasoline widened to a record 45.71 cents a gallon Friday.

    The cost of crude oil makes up 68% of the cost of a gallon of gasoline and 62% of a gallon of diesel fuel, according to the Energy Information Administration, and record high prices are sapping demand.

    For the first time in 17 years, U.S. gasoline demand this summer won’t rise from the previous year, according to latest EIA’s Short-Term Energy Outlook. On average since 1992, the average year-to-year rise in gasoline demand in the peak driving season (April-September) has been more than 129,000 barrels a day.

    But EIA sees flat demand at 9.44 million barrels a day this summer for the most widely used fuel in the world’s biggest oil consumer.

    “The lack of growth in gasoline demand is the result of both high prices and the weak economy,” said EIA analyst Tancred Lidderdale.

    Sluggish demand won’t preclude the possibility that retail gasoline will have a spring/summer fling with $4 a gallon in some regions. In the coming driving season, EIA sees prices averaging $3.365 a gallon, nearly 15%, or 40 cents a gallon above a year ago. Prices of regular gasoline are expected to top out on a monthly average of $3.48 a gallon in May, which suggests weekly prices are likely to be higher in the month.

    According to AAA Fuel Gauge Report, gasoline prices nationwide averaged a record $3.28 a gallon Friday, up 73.1 cents from a year ago.

    Keep On (Reduced) Truckin” Lidderdale said about one-third of U.S. gasoline consumption is work-related, so a slowing economy “would directly impact this component of gasoline demand.”

    U.S. retail diesel fuel prices were a record $3.938 a gallon nationwide on Friday, according to AAA Fuel Gauge Report, up $1.194 a gallon from a year ago.

    EIA said diesel prices, expected to average a record $3.48 a gallon in the current quarter, are expected to jump a further 3% in the second quarter to average $3.60 a gallon.

    Lidderdale said U.S. distillate demand is expected to be sluggish through most of 2008, with the weak economy impacting diesel demand from truckers, before recovering in the fourth quarter on heating demand and signs of a recovering economy.

    Strong global demand for distillate fuel from Europe, where diesel is the favored motor fuel, to Asia and South America has helped to dramatically impact prices at the pump in the U.S.

    Last May, with tight gasoline supplies heading into the driving season pushing up prices, diesel was selling for 35 cents a gallon less than gasoline. In February, the average retail diesel price was 35 cents above gasoline.

    Europe Calls Distillate Tune
    Latest data show the U.S. exported 230,000 barrels a day of distillate fuel in December, the most in the month since 1995 and 54% more than a year earlier. Post-winter, U.S. distillate exports tend to increase.

    With a few more weeks of winter, U.S. total distillate stocks are at their lowest level nationwide since 2004 for this time of year, while ultra-low diesel stocks are the lowest since December 2007. On the East Coast, home to the world’s largest heating oil market, distillate stocks are at their lowest March level in three years.

    Gasoline stocks, meanwhile, are at the highest since 1993 for this time of year and the relative level of stocks to demand is 10% above the five-year average.

    Oil analyst and China-watcher Paul Ting said diesel fuel demand in the world’s second-largest oil consumer jumped by by 17.4% in January, when severe snowstorms struck.

    Antoine Halff, analyst at NewEdge USA LLC, said the push and pull of the tightly linked gasoline and diesel markets are impacting supplies and prices on both sides of the Atlantic.

    “To some extent, the counter-seasonal trend in gasoline-distillate spreads is self-perpetuating,” he said.

    Because U.S. gasoline fundamentals are poor (weak demand/high stocks), European refiners are left without a typical outlet for the gasoline they produce. Those refiners, in response, reduce operations in order to produce less gasoline. But in doing so, they also produce less of the desired distillates, “thereby strengthening distillate prices on both sides of the Atlantic,” he said.

    “Strength in U.S. heating oil futures is largely driven by European tightness,” he said, and is likely to continue in the short term. “But demand relief is on the horizon, as the unwinding of the U.S. heating season will leave markets more fully exposed to a continued downturn in U.S. trucking activity and the broader economy.”

    (David Bird is senior energy correspondent for Dow Jones Newswires)

    –By David Bird, Dow Jones Newswires

  14. 14
    zman Says:

    PPT more like dysfunction junction.

    Sharon E on CNBC confirming crude and other commodities off on forced profit taking to meet margin calls in other areas.

    Sam – why Lehman getting hit harder than rest, problem there next I guess? Maybe GS owns 3 or 4 of the existing banks when this is over?

    Still happy to not add yet, thinking about APR APC $60s and NFX, EOG, maybe COP…

    nat gas down $0.28, UNG puts waking up.

  15. 15
    xweto Says:

    Z says “nat gas down $0.28, UNG puts waking up.”

    Now that they’re awake can you make ’em do some push ups to get ’em back in “shape”!

  16. 16
    scoop006 Says:

    Z Took some APA April $120c this AM

  17. 17
    zman Says:

    X – me no have that kind of swing.

    Scoop – great or at least similar minds think alike, I have a 3.80 bid in for the APADUs now, LOL!

  18. 18
    zman Says:

    ZTRADES:

    COP April $80 CALLS taken for $2.02.

    APA April $120 CALLS bought for $4.30.

  19. 19
    zman Says:

    XOM going positive.

    Oil down 1.70, worst was off $5
    NG down 0.13, wo3rst off $0.33

  20. 20
    zman Says:

    saw this earlier, CME acquiring NMX.

    http://www.marketwatch.com/news/story/cme-group-buy-nymex-holdings/story.aspx?guid=%7BD302D9CC%2D5ED1%2D4331%2D9592%2DE8DF21D13DC9%7D&dist=TQP_Mod_mktwN

    hurdles:
    1) reg approval may be tough to get in this environment
    2) memberships must be bought in, see story. Bet you have many hold out for a better price given how hot commodities have been.

    Shares of both are off, could be a good rebound in NMX if deal concerns rise or if CME recovers with a broad market rally tomorrow.

  21. 21
    zman Says:

    ZTRADE: Added APC April $65 calls for $2.20.

  22. 22
    apbd Says:

    Sam:
    Congrats on SKF. You buy the next round of green beer.
    Anyone think it’s time to start nibbling on GS?
    apbd

  23. 23
    zman Says:

    S&P approaching LOD.

  24. 24
    Sambone Says:

    Z – LEH, next weakest sister. GS, I’m not nibbling on any of these things. GS announces tommorow. I wonder how hedged they are? I might miss some, but I can sleep at night.

  25. 25
    zman Says:

    Sambone – just wondering, Denise’s guy Kass was buying LEH this am at $27. I’m not touching these things either. They don’t even seem to understand their own on and off balance sheet risk. Energy getting sold to pay for the damage in other sectors, continue to think it is largely an opportunity except for the refiners which have a ways to fall still. Wow, TSO at 27!

  26. 26
    scoop006 Says:

    Z At $27 TSO still a no go?

  27. 27
    apbd Says:

    They’re picking them off one at a time.
    Whose next after LEH? Will GS be the last man standing?
    apbd

  28. 28
    zman Says:

    Scoop: RE TSO

    Cracks still look ugly, just too much gasoline around. For instance with this fall today, oil is off about 3.8% while gasoline is off 5.7%. Heating oil is off as much as crude. With gasoline being the 2 in the 3-2-1 crack it will weigh heavily on margins…gasoline just continues to underperform. I’m waiting for sustained underproduction to occur before trying again here.

    TSO’s cheap on earnings estimates but those are dropping so maybe not so cheap. If it were just the stock, I’d say sure, buy and hold, good company, going to be higher some day but they are facing tough EPS comps for 1Q and 2Q and likely 3Q now. Same really can be said for VLO and the rest of the group but at least VLO will have better margins via its greater ability to process less valuable crude.

    Sambone – any thoughts on AP’s ?

  29. 29
    Sambone Says:

    Z – I am gettibg interested in LM though.

  30. 30
    zman Says:

    BSC oil and gas conference on 3/20? Wonder if that’s still on.

  31. 31
    Sambone Says:

    AP’s?

  32. 32
    zman Says:

    question #27

  33. 33
    zman Says:

    WILDZTRADE: March EOG $120 Calls with the stock off $7. Obviously high risk.

  34. 34
    Sambone Says:

    Maybe I’ve said it here, but I believe a major bank will fail this year. Hmmmm, we saw Paulson step up to JPM and ask that they take out BSC. This market reminds me of Japan in the late 80’s. I think we’ll see more of the Hedgie’s go out, and then it will hit a major bank. C and MER are sketchie right now with their balance sheets. AP – More to come, this party aint over yet.

  35. 35
    Sambone Says:

    I don’t usally listen to analysts, but this lady seems to have a hot hand recently.

    Shares of banks may fall by half, Oppenheimer & Co.’s Meredith Whitney said. The analyst, who correctly predicted Citigroup Inc. would cut its dividend, wrote in a report that financial shares will tumble as investors focus on “tangible book value,” resulting in lower valuations.

  36. 36
    uop Says:

    z:

    APC, COP, APA: you go for apr CALLS or PUTS ??

  37. 37
    zman Says:

    Morning U – those are all calls.

    NG at new LOD

  38. 38
    uop Says:

    oil and refiners are worth shorting ??

    why the are you bullisk on APC,COP etc

  39. 39
    uop Says:

    why has the financial world done such a poor and distatsreous job ?

  40. 40
    Sambone Says:

    U – Greed

  41. 41
    zman Says:

    COP is cheapest of majors and most NG leveraged. Stock has not discount $7 NG let alone current $9.50. Good buyback there. I trade them from time to time.

    APC – ditto on not discounting oil and gas prices. Plus it has a very interesting story and top notch management. Estimates will be coming up here and at the other E&Ps with mark to market revisions for 1Q prices and higher assumptions for the rest of the year. I like buying them on dips.

    NG down to 9.33 (down 4.8% and exceeding crude’s drop) and trading some very large size all of the sudden.

    Sam – Agreed re Greed.

  42. 42
    zman Says:

    Turns out Gordon Gecko was wrong. Greed is not good.

  43. 43
    Sambone Says:

    U – Gordan Gekko
    “Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.”

  44. 44
    uop Says:

    cannot be only GREED,

    so many bad decisions by the whole bunch, are these the young ones or the old ones or both ?

  45. 45
    Sambone Says:

    U – All

  46. 46
    Sambone Says:

    More good news, Thank you SIV’s CDO’s LMO’s, etc, etc and so on.

    http://www.auburnjournal.com/detail/79466.html

  47. 47
    zman Says:

    U – agreed, not as simply as just greed but I think that’s the driver. Wall Street demands unsustainable growth rate which prompts management to take on more risk.

    What makes me laugh is that the Financial Sector Analysts (who rate the other firms) and fund managers have been saying to buy the Financials and sell Energy Stocks since the Fall. Nice job fellas. The companies I play around in are seeing improving fundamentals both on the top line in terms of price and volume and also in the cost arena where inflation has become more muted. Balance sheets are 10x better than they were just 5 years ago.

    These fund managers were basing the trade idea on the fact that the Financials had already fallen quite a bit and that energy was near its highs. I say to them, down stock price down not = cheap and energy being up does not necessarily make it historically expensive.

  48. 48
    uop Says:

    Z:

    had great problems today and over the weekend to load your website, it just did not want to finish.

  49. 49
    uop Says:

    LEH, CME, ICE,BSC,

    I AM GETTING DIZZY

  50. 50
    zman Says:

    U – that’s odd. Any trouble today? Always shoot me an email at zmanalpha@gmail.com so I can look into it and post the site on the backup page. Performance on the internet is not geographically ubiquitous so sometimes someone Florida or New York has no access trouble, while someone in Texas may have trouble.

  51. 51
    zman Says:

    Uop – other things to try or take note of. Clear cache, restart browser, and take note of the processes along the bottom of the browser window to see if you can see where it hangs. Thanks.

  52. 52
    uop Says:

    it moved up only 30 % and was stuck, this morning is first time I got into it.

    I am at the moment operating from CA, not AZ.

    are you making $$ on your UNG puts ?
    I am close to be in the green.

  53. 53
    zman Says:

    In the green on the $47s, even on the $46s, still dead on everything lower.

  54. 54
    zman Says:

    NG down .76 at 9.11, UNG hit worse , dow 8%. Wow, didn’t Cramer just say $16, lol?

  55. 55
    uop Says:

    CHK: has resistance at 44.3,

  56. 56
    scoop006 Says:

    HEADLINES ON THE DRUDGE REPORT=Cramer tells caller not to sell BEAR STEARNS stock before collapse. No wonder CNBC did not bring hom out today for his opinion

  57. 57
    zman Says:

    Not that it matters but just saw Goldman raised COP to buy this morning, while cutting HOC and MRO to neutral. Sounds like a valuation call but my contact with a contract at GS is out.

    I saw Cramer on Friday say it would be taken out lower than its current price (then about $28). He just didn’t say how much lower. Don’t watch insanemoney often so didn’t see the bit about the caller…gotta love the Drudge.

  58. 58
    uop Says:

    Giving money to GS or BSC only serves to put more money into commoditiy speculation and the fees they generate are taken out of the skin of good companies looking to make deals and new companies looking for financing and go into the pockets of the top 1/10th of 1% allowing them to outbid us for homes, cars, boats and other silly things that rich people like to waste money on. That’s why the financials must die – they caused the bubble and they profited from it, unless they drown in the backwash they will simply do it to us again. The best thing that will come of this will be oversight that will “wreck” the financial industry and put them under tighter controls. Believe me, unless you are offered private placements in good companies on a regular basis, the investment bankers are not doing you any favors – they suck up the Fed’s generosity and use the liquidity to their own advantage, wasting 90% of the government’s efforts.

    PHIL is right with this.

  59. 59
    zman Says:

    big bottom fishing effort going on in NG right now. Volume can’t touch that reached in the sell off so I’m sitting tight with some higher offers out there for my near the money UNG puts.

    Scoop just sent me the cramer link. For Shame Jim.

    http://www.businessandmedia.org/articles/2008/20080317110946.aspx

  60. 60
    Brian08 Says:

    Is this the breakdown in gas you’ve been looking for Z?

  61. 61
    zman Says:

    Brian – yes. If it holds $9 into the close or oil holds $105 I’d expect a commodity bounce…if not, lookout below. Like I was saying this weekend, these are quick and leveraged profits and suddenly people are weather shorts everywhere.

    ZTRADE: $46 MARCH UNG PUTS sold for $1.75, up 21%. Still hold the $47s and the lower, worthless 40,42, 43 strikes.

  62. 62
    Brian08 Says:

    Yeah I figured Z…They took me outta the big portions of the shorts I had on them both…I couldn’t take the pain…

    I wonder if they could put Cayne’s worth up now on CNBC…LOL…I feel bad for the individual shareholders, but I am SOOOOOOOOO glad he is getting screwed…

  63. 63
    zman Says:

    B – saw no golden parachutes there either.

  64. 64
    Brian08 Says:

    Good…Bout time these morons start to feel the pain they are causing the “Average Joe”…Hope they all wind up destitute…

  65. 65
    zman Says:

    ZTRADE: Out UNG $47 Puts for $2.70, up 170%. Still hold the near worthless 40,42, 43 strikes.

  66. 66
    zman Says:

    wow NFX unreal drop, killing my March $55s

  67. 67
    uop Says:

    charts say UNG will fall more,

    i guess you keep the apr puts ?

    my DUG are moving up too.

  68. 68
    zman Says:

    Uop – unfortunately I don’t have Aprils UNG on. Am thinking about it on a possible bounce tomorrow.

  69. 69
    zman Says:

    NG closed at 9.09, down 0.77 or 8%. Nice start. I’d bet we get a bounce tomorrow if the broad market doesn’t fall apart. Then I may take April puts.

  70. 70
    scoop006 Says:

    AZ If GS disappoints on earnings you think the overall market goes south?

  71. 71
    scoop006 Says:

    #70 Sambone may I have your thoughts

  72. 72
    zman Says:

    XOM again trying to go green with Dow.

    Scoop – yea, that would do it. I was thinking of a what if the Fed only gives 50 bips tomorrow as people are starting to say they might. With a 100 priced in, seems like that would disappoint equities, rally the dollar and sink oil further which I would take gas lower, probably $8.50 first stop after breaking 9 with ung into the 41, 42 land.

  73. 73
    Denise Says:

    Good afternoon gentlemen-
    Catching up-kids on spring break ect….
    My T/A lady on spring break also-
    Mr K is getting bullish- he says more bullish than he has been in years-Has a new way of articulating it which I will try and share-(I have followed him for yrs and he is a glass half empty kind of guy)
    As of now 8-7
    First Number is his short term trading view second number he calls his intermediate
    These are bullish and he is buying-Leh
    he traded up about 7 pts

    Sam-did I correctly read you were looking at LM?

  74. 74
    Sambone Says:

    #71, yep

  75. 75
    zman Says:

    Wow, IOC down $2. tempting, tempting.

    Energy stocks starting to react to suddenly but singularly green Dow. That would be the greater % of JPM relative to its position in the S&P, plus HPQ and T.

  76. 76
    Denise Says:

    Mr K just went to 9-7
    Take heed when he gets like this
    extemely unusual-he says he is to busy buying to post

  77. 77
    Sambone Says:

    D – yep, window shopping, doing my DD

  78. 78
    zman Says:

    Hey D, thanks for the piece you sent earlier. Been buying into April E&P calls and killing off some of my suddenly profitable UNG puts today.

  79. 79
    zman Says:

    back in 25 minutes

  80. 80
    Sambone Says:

    2:10 pm EST

    Nymex Crude Below $105/Barrel On Economy

    By BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude oil futures hit an 11-day low as traders took profits on fresh fears that problems in the credit market would undermine the rest of the U.S. economy.

    Light, sweet crude for April delivery traded $5.66 lower at $104.55 a barrel on the New York Mercantile Exchange. The intraday bottom of $103.23 was the lowest price seen since March 6. Brent crude on the ICE futures exchange traded $5.33 lower at $100.87.

    Futures had traded as high as $111.80 earlier in the day, then fell more than $5 Monday morning. A brief recovery followed, but crude soon plunged below $104, for the first time since March 7. The action closely followed the performance of U.S. equities, which were hit hard Monday by the announcement that J.P. Morgan Chase & Co. (JPM) would buy Bear Stearns Cos. (BSC) at a bargain-basement price.

    “The bubble has burst,” said Phil Flynn, a broker with Alaron Trading in Chicago.

    Much of the money that has entered commodities markets over the last two months has come as a hedge against the dollar, which has weakened in part on fears about the health of the U.S. economy. The dollar hit new lows against the euro early Monday, but recovered, helping to deepen losses in oil and metals.

    The Federal Reserve cut its discount rate by 25 basis points in an emergency meeting Sunday, with a cut to its base rate widely expected to follow on Tuesday. While these moves are intended to boost the economy, they are likely to weaken the dollar further as a side effect. That could lead to renewed gains for oil, wrote Peter Beutel, president of trading advisory firm Cameron Hanover.

    “As long as it remains the operating paradigm, oil prices are likely to advance in response to lower U.S. interest rates and dollar values,” he wrote.

    But Flynn said that the Fed’s willingness to take extreme action may have convinced some investors that the worst is over. Traders using oil as a hedge would therefore be likely to leave the market, he said.

    “The stock market didn’t collapse totally, we didn’t have a black Monday,” Flynn said. “Maybe that means the Fed got its hands around this issue, and it’s time to lift off some of those crude oil hedges.”

    Front-month April reformulated gasoline blendstock, or RBOB, recently traded down 20.5 cents, or 7.6%, at $2.4840 a gallon. April heating oil traded 13.66 cents lower, or 4.3%, at $3.0099 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  81. 81
    Denise Says:

    Sambone-for you -he is good! have read him over 10 yrs-might be time to book those profits
    http://finance.yahoo.com/tech-ticker/article/7271/Four-Signs-Financials-May-Be-Bottoming?tickers=BSC,LEH,GS,MS,JPM

  82. 82
    Denise Says:

    Z- Did you hold your UNG puts?
    wondering your opinion on how low NG will go? still short

  83. 83
    Brian08 Says:

    Oil is down $4+ today, but the dollar is down against the Euro…I thought oil was going up because of weak currency??? LOL 🙂

  84. 84
    Sambone Says:

    D – This guy may be the brightest star in the heavens, but I’m gonna stay with my SKF. I feel like there is more news to come. After the fed cuts tommorow, I’m looking for the market to test it’s lows again at some point. Today? Who knows, this doesn’t make sense to an old war dog like me. Thursday should be very interesting. Talking heads say the commodities market is a bubble and time to get out. Ask Z what they were recommending last fall, buy the banks, sell XOM.
    One more thing, I read the item on Cramer and BSC. I think he was talking about having an account at Bear, not owning the stock.

  85. 85
    Denise Says:

    Looks like money flowing to pharma
    hmmmm….

  86. 86
    Denise Says:

    Z-could it be time to dip a toe in the refinery area? thinking vlo?

  87. 87
    zman Says:

    Denise – sold near the money for nice tidy gains. Still hold UNG 40, 42, 43 at a loss. Net on the whole deal = about 0 if those expire worthless now. May add April puts on a bounce tomorrow.

    B – Re 83. Robbing peter to pay paul. Margin calls for financials and other junk is forced selling of the one thing that was up, commodities.

    D – traditional flight to safety re Pharma. I remember CNBC talking about MRK and PFE in this light a month ago. Nothing but lower since.

  88. 88
    zman Says:

    D – Refiners tempting only because they are down so much. Cracks are just getting punished however (see #28 above). Gasoline off 6.6% today with crude off 4.3%…that’s horrible. Heating oil the only thing holding them up and seasonally that won’t last. We could see all time record highs on “finished gasoline” in storage Wednesday. I’m holding off.

  89. 89
    scoop006 Says:

    Z Thoughts on PBR April $110?

  90. 90
    Denise Says:

    Z-pharma is now cheap and has yield-may last awhile-good for a trade

    How low do you think NG will go? $8?or so

  91. 91
    zman Says:

    Scoop – its worth more I think based on the recent discoveries that really have left the price of the stock. I was a bit extended or I’d own it.

    Denise – what happens to pharma if Obamaton gets into the White House? Sounds like the U.S. government negotiating for drugs with a stick and no carrot.

    Re NG. I think it may take a near term shot at 8.50 if it can sink $9 (with a close below it.)

  92. 92
    Sambone Says:

    3:37 pm EST

    Nymex Crude Down Sharply As Bear Stearns Capitulates

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude-oil futures closed sharply lower Monday as chaos infecting U.S. equities and other financial markets hit commodities hard.

    Light, sweet crude for April delivery settled $4.53, or 4.1%, lower at $105.68 a barrel on the New York Mercantile Exchange. The percentage drop was the largest since Aug. 6, and the intraday low was last matched on March 6. May Brent crude on the ICE futures exchange settled $4.45 lower at $101.75.

    The April contract managed to hit $111.80, the eighth straight session where a record was set, in electronic trading Monday. But futures quickly plunged by more than $6 from those levels. Prices were reacting to an across-the-board selloff in reaction to J.P. Morgan Chase & Co. (JPM) agreeing to buy Bear Stearns Cos. (BSC) at an extremely low valuation.

    The deal, along with the Federal Reserve’s emergency cut to its discount rate Sunday, provided the clearest evidence yet of serious problems in capital markets. Declines in banking sector stocks led to a wider drop in equities, with the Dow Jones Industrial Average at one point off 1.6%. That in turn caused investors to pull out of other markets, including commodities.

    “People liquidate positions because they need money for other things,” said Mark Waggoner, president of Excel Futures in Huntington Beach, Calif. “Sometimes they just bail out of everything.”

    The energy complex was particularly hard-hit, including a 6.9% drop in reformulated gasoline blendstock, or RBOB, futures. This is the biggest drop for the front-month contract in its Nymex trading history.

    This isn’t the first major decline for crude futures since they took off in late January. April crude dropped 2.9% on March 4, only to settle at an all-time high the next day. Analysts and traders said Monday’s selloff was different, however.

    “It’s been pretty much a one way market for a long time, and it can’t go on forever,” said Tom Bentz, with BNP Paribas. “At some point, you’re going to get corrections.”

    Bear Stearns temporarily supplanted the dollar as the main force behind oil prices. Record lows hit by the dollar against the euro have regularly sent oil to new records, but a new all-time low failed to have a lasting impact on Monday.

    The Federal Reserve is widely expected to be planning a large cut to its base rate on Tuesday, in an attempt to provide support for the U.S. economy. Cuts tend to weaken the dollar as well, which could abruptly stop the commodities selloff, said Peter Beutel, president of trading advisory firm Cameron Hanover.

    “A 100-point cut could in fact push the market right back up,” Beutel said, nevertheless referring to Monday’s activity as a “warning…that even when the dollar is getting pounded, the market can in fact drop.”

    Front-month April RBOB settled 18.52 cents, or 6.9%, lower at $2.5042 a gallon. April heating oil settled 7.81 cents, or 2.5%, lower at $3.0684 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  93. 93
    Sambone Says:

    Tini time

  94. 94
    Brian08 Says:

    Z, yup about the robbing thing…The only thing that has been up to pay those margin calls…

  95. 95
    coco Says:

    from the CFTC website…March 17, 2008: We regret publishing ICE Futures US FCOJ (CFTC #040701) commitment reports dated March 11, 2008 which had errors. Corrections to the commercial short positions and non-reportable short positions have been made. We thank those users who informed us that the reports might be wrong.

  96. 96
    zman Says:

    so they do report some ICE contracts, those being frozen concentrate orange juice. will look to see if there is a separate spot for ICE ng.

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