18
Dec

Thursday Skeleton Post

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Intern #2 Watch: Curan Gray was born at 1:50 pm CST yesterday. 7 pounds, 8 ounces, 20 3/4 inches. Healthy and seemingly happy as is his mother. THANKS SO MUCH for the kind words and best wishes on the site and via email. That meant a lot. Thanks also to BOP for relaying some of my thoughts when I wasn't busy staying out of the way.

Still at the hospital so I'll be brief. I expect to be back to my overly wordy and graphic self by Monday and I'm only going to hit the highest of the high points tonight.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Preview
  4. Odds & Ends

Holdings Watch: No changes yesterday.

Commodity Watch:

Crude oil fell $3.54 to close at $40.06 yesterday after OPEC's "severe" production cut failed to wow. More on that in a bit.This morning crude is trading just under $39. Bear in mind that the January contract expires tomorrow and that the steep contango is resulting in some pretty wide spreads between even the first and second months (February is currently trading over $43).

  • OPEC Watch: In short, they blew it. The size of the cut was fine at 2.2 mm bopd but they over-played their hand with the headline cut of 4.4 mm bopd since September which was an obvious attempt at shock and awe. Furthermore, Saudi apparently took on less of an incremental cut that it previously appeared. By resetting the quotas back to September levels, the amount of production Saudi has yet to cut to reach their But the real problem I had with the announcement was the continue willingness of the non-OPEC nations to belly up to the bar and cut. Russia hinted it would and then didn't. It still looks unclear as to what Azerbaijan's intentions are.
  • EIA Inventory Report Review: Again, apologies for the lack of graphs but the quick take aways are:
    • utilization fell back away from those incomprehensible season highs of last week. Refiners may be getting the message that there is no reason to make product at a loss. On Tuesday I noted a number of maintenance and other snags that were taking production off line so we may see that number fall again next week. Should be good for products and cracks, especially as gasoline demand continues to creep up. Isn't this more fun with the graphs? I think so too. Anyway,
    • crude imports aren't really backing off the way you'd expect with the October cuts from OPEC, confirming that compliance with those cuts is little better than 50%.
    • fuel demand remains low across the board, with distillates faring worse than gasoline at this time as the exports market has clearly started to suffer.
    • In a nutshell, the demand side continues to leak weak with gasoline demand inching up and distillate demand inching off. Not a lot there to push crude up.

Natural gas $0.13 to close at $5.61 yesterday, mostly in response to crude but also due to a slightly warming forecast and fear over the potential for another disappointing gas storage number today. This morning gas is trading flat prior to inventories.

Natural Gas Storage Preview:

  • My Number: 80 to 100 Bcf on the back of 200 gas-weighted HDD's. Normally I'd be look for a 130 + Bcf withdrawal with that kind of weather but it appears a combination of weakening industrial demand and reduced fractionation which boosts the gas stream are contributing to poor withdrawals.  
  • Saw one comment the Street was looking for 108 Bcf which in light of the last three weeks of 60 ish Bcf pulls on pretty cold weather seems agressive.

Odds & Ends

Analyst Watch: Nothing significant on the analyst front that I see.

 

107 Responses to “Thursday Skeleton Post”

  1. 1
    Sambone Says:

    Weak Demand Keeps Oil Prices Near $40 A Barrel

    Crude oil futures are bouncing back after settling just above $40/bbl yesterday — but only by a little. Concerns about weak demand continue to put downward pressure on the market, even after OPEC announced a 2.2 million b/d production cut. January crude trades at $40.16/bbl, up 10c. )

    Crude Up; Demand Fears Sweep Away OPEC Cut

    By Lananh Nguyen

    LONDON — Crude oil futures gained modest ground in London Thursday but fears over demand erosion continued to depress market sentiment.

    Bargain hunters emerged to take advantage of earlier price weakness, which was triggered by disappointment over the Organization of Petroleum Exporting Countries’ 2.2 million barrel a day production cut announced Wednesday.

    “Demand is still the key factor; you can tinker with production numbers, but you cannot force customers to buy,” said a crude oil broker in London.

    At 1137 GMT, the front-month February Brent contract on London’s ICE futures exchange was up $0.78 at $46.31 a barrel.

    The front-month January contract on the New York Mercantile Exchange was trading $0.52 higher at $40.58 a barrel after earlier dropping to $39.19 a barrel, the lowest level since July 2004.

    The ICE’s gasoil contract for January delivery was up $4.75 at $475 a metric ton, while Nymex gasoline for January delivery was up 284 points at 103.39 cents a gallon.

    OPEC Wednesday unveiled its largest-ever production rollback, in an aggressive attempt to constrain oil supplies amid a backdrop of collapsing demand and rapidly-falling prices.

    But OPEC’s move wasn’t enough to arrest oil’s slide to the lowest level in more than four years.

    “The (market’s) verdict was a resounding vote of no confidence in the cartel’s ability to curtail production given its previous tendencies to backslide on commitments,” said Edward Meir, an analyst at MF Global in New York.

    But market participants shouldn’t be so quick to shrug off OPEC’s latest rollback, warned other analysts.

    “Although yesterday’s cuts do not become effective until January and will take up to two months to be reflected in the system, should members achieve a high level of compliance there is every reason to believe the market’s oversupplied condition will ease,” said David Hart, an oil and gas analyst at investment bank Hanson Westhouse in London.

    “Although the market remains highly skeptical, we think it is underestimating the determination of OPEC to underpin prices, and we expect the hard evidence of this determination to emerge in the next few months,” said Collins Stewart analysts in London.

    OPEC will be watched closely in the medium term for evidence that its members are adhering to agreed production targets.

    “OPEC will have to stick to agreed quotas and reduce supplies as swiftly as possible,” said Andrey Kryuchenkov, vice-president of commodities research at VTB Bank Europe in London.

    “Provided these cuts materialize, output would be reduced by around 4% of world demand,” he added. In the short term, Kryuchenkov expected volatile trading ahead of Christmas holidays and said it would take some time before risk aversion and negative sentiment dissipate.

    In other news, China will cut gasoline and diesel prices by 13.9% and 18.1% respectively from Friday — a move industry executives and analysts expect will boost the country’s flagging oil demand. The National Development and Reform Commission, China’s economic planning agency, said gasoline prices will be cut by 900 renminbi ($131.82) a ton and diesel prices by CNY1,100/ton.

    —By Lananh Nguyen, Dow Jones Newswires

  2. 2
    Sambone Says:

    Congrats to all on Curan Gray – Touchdown!

  3. 3
    rseidman Says:

    Congratulations Z and wife!

  4. 4
    Coug1984 Says:

    Congratulations Z and best wishes to the entire family!

  5. 5
    reefguy Says:

    Congrats to z and family! Curan is cool name.

  6. 6
    BirdsofpreyRcool Says:

    Congratulation Z and Mrs. Z.

    Good thing you don’t need sleep much as it is!

  7. 7
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures traded lower as production cuts and a
    sharply weaker dollar failed to obscure the weakening global oil demand
    outlook.
    Light, sweet crude for January delivery traded $1.47, or 3.6%, lower at $38.59
    a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures
    exchange traded 24 cents lower at $45.29 a barrel.
    The oil market quickly decided that the Organization of Petroleum Exporting
    Countries’ production cut of 2.2 million barrels a day was not enough to remove
    excess supply from the market. Demand is on the decline in most large
    economies, outpacing the barrels OPEC agreed to remove from the market in
    October. U.S. oil inventories have risen in 11 of the last 12 weeks, and stocks
    at Cushing, Okla., the delivery point for Nymex crude futures, are about
    500,000 barrels from a record high.
    OPEC’s latest cut has a better chance of exceeding the amount of demand that
    will be lost in the coming months due to the economic downturn. Until the
    market sees proof that OPEC members are complying with their reduced quotas, in
    the form of falling inventories, oil prices are unlikely to rise, analysts
    said.
    “People will certainly notice when OPEC cuts kick in,” wrote analysts with
    Tudor, Pickering, Holt & Co. in Houston, adding that their forecast for an
    average oil price of $57.50 a barrel in 2009 is counting on an effective OPEC.
    Oil prices are also dropping in the face of a severely weakened dollar,
    normally a strong support for crude futures. The euro, which traded at $1.30 a
    week ago, reached as high as $1.4720 on Thursday. Currency traders priced in
    the Federal Reserve’s intention to bring interest rates close to zero and
    increase the availability of dollars as a form of fiscal stimulus.
    A weaker dollar often sends investors into the oil market as a hedge, but with
    little threat of inflation and abundant signs of weakening global oil demand,
    currency is playing a smaller role in commodities.
    Oil prices have declined more than 70% since July, but had paused for nearly
    two weeks in the mid-$40s.
    The next stop for oil is likely around $35 a barrel, according to technical
    traders, who use long-term price movements to predict where crude futures will
    settle next. Refiners’ profit margins are also starting to improve, which could
    encourage additional buying of oil for near-term delivery, boosting the
    front-month futures price, said Dean Hazelcorn, a trader with Coquest Inc. in
    Dallas. The margin for gasoline production has turned slightly positive, after
    being mired in negative territory for weeks.
    “We really should be coming into a comfort zone,” said Dean Hazelcorn, a
    trader with Coquest Inc. in Dallas.
    Front-month January reformulated gasoline blendstock, or RBOB, recently traded
    down 12 points, or 0.1%, at $1.0043 a gallon. January heating oil traded 34
    points, or 0.2%, higher at $1.4459 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    12-18-08 0932ET

  8. 8
    BirdsofpreyRcool Says:

    Here’s what i am seeing: a massive, 2-day, sustained rally in credit. huge moves off the lows last friday. giganticous!

    Here’s what i am not seeing: stocks going along with the credit rally.

    Here’s what this means: stocks are massively underperforming credit. This makes no sense. If this credit rally is real, then the riskiest assets (stocks) should go up. Credit market traders are scratching their heads, wondering how credit can continue to rally without equity participation… So, if the credit rally is real, it will be confirmed by stocks. If the stock market doesn’t go along, credit will probably “puke very fast” (trader-talk).

    Bottom line: markets are broken. But, what else is new?

    IG +214 bps (remember when it hit 292 last friday??)

    HY 76 5/8 THIS is up about 8 full points from last friday. Frickin’ HUGE move in the high yield bond index.

  9. 9
    BirdsofpreyRcool Says:

    IG 219 1/2 bps… widening back out, with stocks being down.

  10. 10
    BirdsofpreyRcool Says:

    Strike that… stocks are marginally up. I give up. Markets are a total mess today.

    That said, it’s great to see the Investment Grade Index back below 250 again.

  11. 11
    PackMan Says:

    BOP, perhaps stocks rallied in advance of the credit rally.

    As I recall IG 219 is still pretty darn high.

    I remember you puking over IG 175 or so.

  12. 12
    BirdsofpreyRcool Says:

    Remember those Kansas City Southern Railroad bonds issued Monday night? They are 5-year, non-call 3 yrs, Senior unsecureds that came with a 13% coupon and were priced at a discount to par of 88.4050 to yield 16.5%.

    Well, those bonds have moved up over 4 points and are now offered at 92.75 for a yield to worse of 15.12%. Nice rally. Wish i had bought some of ’em.

  13. 13
    tater Says:

    I don’t remember if it was last month or previous to that, but didn’t the changeover from the near month crude to the next month result in a big jump just like it is apparently about to do tomorrow? Just saw the mini Jan contract at $37.90 and the Feb at $43.15, around a 10% differential. Is everybody at CNBC going to poop themselves tomorrow over the HUGE jump in crude due to OPEC announcement, or some other goofy made up reasoning?
    I am almost positive this same thing saw a good jump in the oil names, which would make today a good set-up day to get long (if this were to repeat). Does anybody remember this, or am I having one of those almost-Altzeimers moments like when I go get the paper without my pants on?

  14. 14
    BirdsofpreyRcool Says:

    packman – the puke range has been adjusted downward. used to be, anything over 150 was just “too wide for reality.” That reality window has shifted. The “oh-sh*t” level is now about 245… with, “we’re scr*wed” around 280. It’s all relative value… and it just keeps moving around.

    I mean, who’d of thought Kansas City Southern would have to pay 16.5% on their senior notes??

  15. 15
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures dropped to a new multi-year low as
    swelling oil inventories dragged the market lower.
    Light, sweet crude for January delivery traded $2.12, or 5.3%, lower at $37.94
    a barrel on the New York Mercantile Exchange. The intraday low of $37.71 a
    barrel is the cheapest oil has traded since July 1, 2004. February Brent crude
    on the ICE futures exchange traded 62 cents lower at $44.91 a barrel.
    Oil prices have fallen 13% in two sessions, as traders embraced the assumption
    that producers will not be able to reduce supplies to match sinking demand. The
    latest plunge came after the Organization of Petroleum Exporting Countries
    agreed to cut 2.2 million barrels a day, matching market expectations but
    offering little hope for an immediate tightening of inventories.
    The supply overhang may take months to dissipate, said Lawrence Eagles, head
    of commodity research with JPMorgan Chase & Co. (JPM), in a conference call.
    Full OPEC compliance with the latest cuts would reduce supplies enough to send
    oil back above $70 a barrel, but that scenario is unlikely, he said.
    Come February, when demand typically slows as U.S. refiners undergo seasonal
    maintenance, “we will see the market start to slip away again from OPEC,”
    Eagles said.
    JPMorgan on Wednesday slashed its forecast average oil price for 2009 to $43 a
    barrel, from $69 a barrel.
    Oil inventories at Cushing, Okla., the delivery point for Nymex crude, are
    approaching record levels, rising 46% in the last month.
    Crude futures are likely to stabilize after the first quarter, as non-OPEC
    producers begin to reduce output, Eagles said. Several producers have announced
    significant cuts to their 2009 budgets, as they deal with a tight credit market
    and lower cash flow as oil prices fall. Production should begin to decline as a
    result, Eagles said.
    “We shouldn’t get overly bearish even if we see a surplus,” he said. “It will
    probably come under control in the first quarter of 2009, with automatic
    stabilizers kicking into place from non-OPEC producers.”
    Front-month January reformulated gasoline blendstock, or RBOB, recently traded
    down 75 points, or 0.8%, at 99.80 cents a gallon. January heating oil traded
    down 1.25 cents, or 0.9%, at $1.4300 a gallon.
    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    12-18-08 1022ET

  16. 16
    BirdsofpreyRcool Says:

    packman — good point about the equity rallied first, comment. But, there was too much of a lag between when stocks rallied off the lows and bonds rallying now. Markets usually move more in tandem. Also, bonds are still cheap to stocks, so you could get a heckuva credit rally and stocks could stay where they are. But, it doesn’t (usually) happen that way.

    The rally in credit is on very light volume. Unless stocks play along, the fear factor will creep back into bonds. This sets up the perfect environment for a Bear Attack. Frankly, I expect to see the Credit Bears “allow” this rally. Wait to see if the usual flood of new bond issuance gets done the first 2 weeks in January. If there is any weakness or flinching, the Bears will stage an attack. This makes sense. They will be able to short from a higher level by waiting.

    Although it sounds like conspiracy theory (which is right up there with alien kidnapping in my book), coordinated attacks by Global-Macro Funds is a very real thing. And almost impossible to “prove.” We know what they do from the carnage they leave behind. BearStearn collapsed under the weight of too many bad, leveraged mortgage bond bets. So it was easy for the Bears to pick on. Lehman didn’t have to go… but the Bear community whipped up a frenzy that resulted in a run on the bank. Merrill and MorganStanley knew they were next. Hence, the BofA merger and the move to regulated bank status, respectively.

    But… i digress….

  17. 17
    BirdsofpreyRcool Says:

    Wow… here’s one that has me ROTFLMAO:

    “Credit Suisse Said to use Illiquid Securities to Pay Bonuses”

    anyone want a CDO for Christmas??

  18. 18
    VTZ Says:

    That’s what they deserve for xmas.

  19. 19
    PackMan Says:

    BOP – basically its all a crap shoot these days IMO

  20. 20
    1520sbroad Says:

    nat gas – draw of 124bcf

  21. 21
    BirdsofpreyRcool Says:

    vtz – that’s why it’s so darn funny. “you want some holly with that CDO?”

    packman – no argument from me.

  22. 22
    BirdsofpreyRcool Says:

    HY 77… this is up, a lot.

  23. 23
    BirdsofpreyRcool Says:

    from the z-berry:

    124 bcf, good but odd number

  24. 24
    1520sbroad Says:

    east = -91
    west = -11
    producing = -22

  25. 25
    Popeye Says:

    That West # will be bigger next week if the weather is any indication.

  26. 26
    Sambone Says:

    ZURICH, Dec 18 (Reuters) – Credit Suisse Group AG CSGN.VX:
    * Introduces new bonus system in investment banking – sda agency
    * Managers to receive big part of bonus in form of illiquid paper – sda agency
    * New bonus system for about 2,000 investment bankers – sda agency
    * Wants managers to carry risk for about 5 billion SFR – sda agency
    * Confirms new bonus system

    Thu Dec 18 15:45:54 2008

  27. 27
    Pete Says:

    VLO moving—- announced production cuts

  28. 28
    mahout Says:

    Taterman,

    Sounds like today might be a good day to buy.
    Why don’t you train the dog to get your paper? He’s carrying less weight now.

    VTZ,

    That’s what they deserve for Christmas. Big laugh!

    BOP,

    Alien kidnapping. If we could just get them to take Bernanke.

  29. 29
    VTZ Says:

    Call me a grinch I guess 🙂

  30. 30
    BirdsofpreyRcool Says:

    Lennar CEO on the tape after reporting company’s 7th straight loss on housing slump. Saying “home prices are free-falling.” He says “govt help needed to stop downward spiral.”

    hmmm…. wasn’t “gov’t help” in housing part of what got us into this Fine Mess?? You can’t swim against the laws of supply and demand for very long. Too much housing inventory. Time, demographics, price adjustment, and low interest rates will take care of “New Home Sales.” Guaranteed. But, as CEO of any large company these days, I guess your duty is to appeal to the US Govt for help. The private sector has completely lost it’s will to make “tough choices.” Draw your own conclusions here…

  31. 31
    mahout Says:

    BOP,

    I’m thinking of asking the Givermint to help me to buy a new Suburban. That will help GM and sure help me. Who says i can’t make the tough choices. To ask for a bailout or not is a tough choice these days.

  32. 32
    orion Says:

    SUN and VLO up nice.. Based on? production cuts?
    My Jan target for SUN was $40 so I’m not playing at the moment. Like both of them as companies though.

  33. 33
    mahout Says:

    BOP,

    Some company managements kept their houses in pretty good order and some did not. When i hear home prices are free falling, pretty much an exageration, i say good. That’s what has to happen at this time. There’s no getting around it. Prices have to fall on houses and the inventory has to be worked down, period. It’s very hard on a lot of people but that’s what has to happen and will happen.

  34. 34
    Sambone Says:

    LONDON (Dow Jones)–Crude oil exports from the Organization of Petroleum
    Exporting Countries, excluding Angola and Ecuador, are forecast to fall by
    180,000 barrels a day in the four weeks to Jan. 3 compared with the previous
    four-week period, U.K.-based tanker tracker Oil Movements said Thursday.
    Shipments from 11 of the OPEC members are forecast to reach 23.880 million
    barrels a day, up from 24.06 million barrels a day.
    Roy Mason, head of the consultancy, said winter is normally a strong season
    with rising shipments, so the gradual drop may suggest the series of OPEC cuts
    are starting to take effect.
    “The fall is slow, moderate but we’re still reaching the low point of the
    year, December, a month when we would normally see high winter demand,” Mason
    said.
    Tanker data is closely watched as market participants try to gauge whether
    OPEC is rolling back production, and whether there are signs the economic
    slowdown is affecting oil demand.
    Recent sailing estimates are thought to reflect achieved cuts to date of
    between 1 million and 1.5 million barrels a day, against a target of just over
    2 million barrels a day decided in September and October, Mason said.
    Late Thursday at the conclusion of its meeting in Algeria, OPEC said it would
    cut output by a further 2.2 million barrels a day from January.
    While this may be the group’s deepest cut ever, it failed to impress the oil
    market Wednesday. Front-month Nymex January crude oil, which expires Friday,
    fell to a four-and-a-half year low after the cut was announced.
    Shipments from key Middle East OPEC producers are projected to fall by 110,000
    barrels a day to 17.10 million barrels a day in the four-week period to Jan. 3
    from 17.21 million barrels a day in the four weeks to Dec. 6. Most of those
    shipments are expected to come from Saudi Arabia.
    Oil Movements forecasts OPEC exports based on spot and term chartering of
    crude oil from OPEC member countries, except Angola and Ecuador.
    -By Angela Henshall, Dow Jones Newswires

    Dow Jones Newswires
    12-18-08 1130ET

  35. 35
    BirdsofpreyRcool Says:

    mahout… as long as you’re asking… put ME on the list for one of dem Giver-mint Suburbans! I’ve screwed up just as much as the next guy. I de-SERVE the handout!!

  36. 36
    BirdsofpreyRcool Says:

    you know… we could have a political food fight here today, if we wanted… not that we do… but we could! z is helpless right now… trying to sleep… ha! 😉

  37. 37
    BirdsofpreyRcool Says:

    oil below $38 puts me in a fighting mood.

  38. 38
    VTZ Says:

    Dam the Liberal-led coalition!! Oh wait, nobody cares about the politics up here in our igloos… mine has interwebs.

  39. 39
    BirdsofpreyRcool Says:

    File this one under “The Most Useless Headlines I’ve Seen Today”:

    “Madoff Removed From U.K. List of Financial Providers (Update 1)”

    uhhhhh…. roger that!

  40. 40
    Sambone Says:

    Real food fight

  41. 41
    BirdsofpreyRcool Says:

    vtz – but, didn’t the Canadian liberals bad cow farts? I mean, aren’t they, like, the largest contributor to Man-Made global warming??

  42. 42
    BirdsofpreyRcool Says:

    make that “ban cow farts”…

  43. 43
    VTZ Says:

    No they’d just tax the oil sands more to make up for it.

  44. 44
    BirdsofpreyRcool Says:

    sam, wow! A History of War, as told by the Hamburgers. In the end, only the bugs survive.

    I think i’ll skip lunch today.

  45. 45
    BirdsofpreyRcool Says:

    ok… i see your food fight, and one up you with this new headline:

    “Rep. Cummings Says AIG May Come Back To U.S. For More Money”

    bring out the ketchup!

  46. 46
    BirdsofpreyRcool Says:

    IG 220 bps

  47. 47
    Sambone Says:

    Hmmm, better than a political food fight IMO. But you are right, we can get away with murder today since the Z man is sleeping.

  48. 48
    Sambone Says:

    I like this headline better!

    “Mercenary Guards Jump Ship as Somali Pirates Remain Undeterred”

    http://www.bloomberg.com/apps/news?pid=20601109&sid=akZu86OC5JsI&refer=home

    I like my headline better, “How to get paid and not earn it!”

  49. 49
    BirdsofpreyRcool Says:

    How about:

    “Obama Vows Regulators Will Crackdown on ‘Greed and Scheming’ ”

    That must make a few senators quake in their (snow) boots!

  50. 50
    BirdsofpreyRcool Says:

    sorry… my head CDS trader (IG index) just went home for the rest of the week. We’ve got the B-Team on the field. Only, no one really feels like playing anymore.

  51. 51
    ram Says:

    Tater, if you’re out there, what chart info do you have HK?

  52. 52
    BirdsofpreyRcool Says:

    From a very smart, boutique, investment research shop… more along the lines of “bonds are CHEAP”:

    We have been bullish on credit since mid-October; and although there is little visible improvement in aggregate spreads, there is an accelerating improvement on the security level.

    Not only is this dynamic crucial to ongoing improvement in the stock
    market; but the recent Fed actions and statements are causing a tectonic shift in the mortgage markets that will necessarily result in a refi cycle greater than expectation.

    Though we hedge our bullishness with use of the word “tactical” when it comes to stocks: the rally in credit is most assuredly a strategic, long-term play.

    Along these lines, we have begun harping on necessary industry-wide changes that bomb traditional asset allocation consultancies (that restrict manager investment up and down the balance sheet) back to the Stone Age. The risk-adjusted divergence in credit over stocks will emerge as a great and defining embarassment to their supposed
    “value-add”.

  53. 53
    BirdsofpreyRcool Says:

    from the z-berry:

    Rally monkey likey crude?

  54. 54
    pearl1301 Says:

    BOP – know this is off subject, but would something like lqd or hyg be a play?

  55. 55
    md Says:

    Congratulations to Z and family

  56. 56
    BirdsofpreyRcool Says:

    pearl – YES!! Thank you for pointing this out. Everyone should put those ETFs on their screens. Especially the HYG. If that doesn’t rally significantly in January, then it’s gonna be a long 6 months (at least).

    thanks again.

  57. 57
    BirdsofpreyRcool Says:

    pearl – and that wasn’t “off subject” at all. It completely goes to the heart of understanding where we are right now.

  58. 58
    md Says:

    BOP
    Is the CDO universe out of the woods.
    Are you familiar with Institutional Risk Analytics (IRA). He says lots more pain to come in 09.

  59. 59
    mahout Says:

    Sam,

    Great food fight! Those hamburgers are tough but the bugs win in the end.

    BOP,

    Love to join you in a poltical diatribe but Z might have one eye open or might read it later. So for now i’m non-political, but you know what i think of those lousy (censored).

  60. 60
    pearl1301 Says:

    BOP – thanks..get a good idea every once in a while..too bad it hasn’t registered in my portfolio…tried to short TLT and buy TBT and have been burned…

  61. 61
    BirdsofpreyRcool Says:

    md – can’t say the structured product is out of the woods, no. There is still a lot of leverage that needs to unwind. An awful lot of the leveraged vehicles will hit bottom when housing does.

    First, we need to get corporate credit flowing again. Primary, industrial, widget-maker borrowers. Then, watch for home prices to stop falling. That’s when it should be over.

    We’re not there yet. That’s part of what makes the comments by the Lennar CEO so irritating. Anything that artificially props up the home price market is just prolonging the credit market pain and uncertainty. This is NOT the same thing as “keeping qualified borrowers in their homes.” It’s just about letting asset prices move to where they need to clear the mrkt. Just like Mother Nature, you can’t mess with Supply/Demand curves for too long.

  62. 62
    BirdsofpreyRcool Says:

    mahout – smart move. z is watching… even as we speak. but, the fun part is that he can’t do anything about it (right now). 🙂

  63. 63
    elduque Says:

    30 yr treas. at 2.56. Now if that isn’t crazy, I don’t know what is.

    TED 1.58
    BDI 829

  64. 64
    BirdsofpreyRcool Says:

    one comment about watching the HYG and JNK ETFs (both follow the high yield market)… you have to ignore the first 10 minutes and the last hour, and only look at the bid price. That eliminates the affect of retail trades and market-maker tricks.

  65. 65
    elduque Says:

    How about 2.55 is that crazier.

  66. 66
    ram Says:

    bexp 3.72 -.25
    chk 16.24 -.15
    do 63.17 -4.23
    gmxr 26.34 -.66
    hk 16.44 -.07
    cop 53.14 -.28
    ne 23.71 -1.53
    wlt 18.68 -1.73
    ung 23.50 -.07
    fslr 139 -2.94
    oih 76 -3.01
    djia 8759 -65
    s&p 903 -1.5
    xom 79.39 -1.71

  67. 67
    Sambone Says:

    nah, I want to buy a 10 year treas and get 2.05%.

  68. 68
    reefguy Says:

    40- Looks like the equity markets when the E and P companies have to meet ceiling tests at EOY. Which ones are left standing….

  69. 69
    md Says:

    BOP
    GM:Bush considering orderly bankruptcy.
    So they’re going the DIP route.

  70. 70
    mahout Says:

    Sam,

    Off subject:

    Walmart starts selling iphones on the 28th. Have to think this will increase iphone sales just on the basis of the awesome amount of foot traffic by the displays. Obvious stategy is to gain market share as quickly as possible relying on gaining new Apple devotees that will from then on buy only Apple products. I am a bull on Apple’s future but haven’t bot yet.
    Any words of wisdom for me? Is it too early to buy Apple or is now the time. It has taken quite a haircut. Lex Luthor says stay away because it is consumer dependent and they won’t spend like they used to. Do you have any feelings on this subject?

  71. 71
    crysball Says:

    The Oil & Gas Journal is offering (as followup to their Webinair conference on the Bakken) a 100 page printed ‘BAKKEN PLAYBOOK’ which they claim has everything you would ever want to know about the Baaken…….including TFS …price is $99.95

    here is the link for those who might want to order it: https://store.hartenergy.com/index.php?main_page=product_info&cPath=72&products_id=226

  72. 72
    BirdsofpreyRcool Says:

    md – Gettelfinger really blew it when he said “NO” to any concessions by the UAW. If they had given, even a little, the Senate would have given them money outside of a BK filing.

    As it is, look at the FedEx announcement today. Wages (in the real world of non-automotive) are coming down. Detroit is just in stone-cold-denial.

    It’s all very sad really. But, an orderly restructuring under Chapter 11 is really what they have been describing all along. It accomplishes everything that needs to get done, and gives the taxpayer priority status in the capital structure. It’s what makes sense. Any reorganization (in or out of BK) has to result in plants closing down. There is just too much auto-building capacity. So, we (taxpayers) can continue to float the above-mrkt wages of the union and management for 3 more years (until the 2011 UAW contract is up), or we can deal with it now. Either way, the end result will be much the same… just comes down to cost to the taxpayer at this point. IMHO.

    Market won’t like it, tho.

  73. 73
    crysball Says:

    Re 2008 World LNG Business.

    This weeks O&G Journal has a large [48″x36″] printed insert on the World LNG business with maps & graphs.
    Nice Wall Hanging for those interested.

  74. 74
    BirdsofpreyRcool Says:

    that said, the mrkt has already priced in a GM bankruptcy a while back. well, the bond market has anyway.

  75. 75
    BirdsofpreyRcool Says:

    IG 224 bps now

  76. 76
    Sambone Says:

    Man,

    I’ve been putting in orders (GTC) all along at $85.00 on AAPL. Stock has been as high as $202 and a 52 week low at $79.00. Ok, what do they do? They sell computers, Iphones, Itunes, etc. Are these items as important as toliet paper? No, but they will still sell something as time marches on. This company has no debt and 20 BILLION in cash. I think they will survive and WHEN the turn in the market happens, I think this thing will go up.
    What you have to understand is that this market is not thinking rationally. It is ALL on emotion. Earnings don’t matter anymore. Take for example DUK. What do they do? They make electricity. They are regulated. The are guaranteed a 15% return. The stock was as high as $20 and now is selling under $15, with a 6% yield. You’ll pay your electric bill before you’ll pay your mortgage.
    Hope that helps.

  77. 77
    ram Says:

    ZMAN – Imagine all the numbers above posted with a more negative bias now. With all due respect, could be scuds-a-plenty for tomorrow. I “hope” I am wrong.

  78. 78
    mahout Says:

    BOP,

    I don’t disagree.
    All Gettelfinger had to do was just give them a date to make the concessions they said they would make, but he would not give them a date. Promises, promises, but drag your feet. (Somewhat like OPEC isn’t it?)
    It is my understanding that it is not the workers’ take home pay that is the problem. It is the mountain of huge liabilities for pensions and health benefits that make the companies not viable. And of course a judge is the only one who can deal with that.
    You know how long it takes lawyers and judges to get anything done. When BK is declared, many will postpone the buying of a GM or FORD or CHRYSLER car or truck. Or simply switch to TOYOTA or HONDA, etc.
    In the real world the OEM parts suppliers and the dealers, already hurting, will have to lay off employees and close their doors, won’t they?
    I drive down Bell road here and see going out of business signs on both sides of the road. And many businesses are hanging on by their fingernails right now. If a whole bunch of more unemployment is added to our troubles right now a lot more businesses will have to shut their doors also. The level of national fear will increase and people will not open their pocketbooks for anything other than bare necessities.
    I do not disagree with what you say. I guess what i argue for is to consider the timing of going thru the ringer for GM and whoever else in the industry. Wouldn’t it be better to get the housing crisis solved before putting the Auto industry thru the wringer?

  79. 79
    Sambone Says:

    FYI – Started buying BGR today. Closed end, energy related, selling at a nice discount, paying me to wait for energy to turn.

  80. 80
    BirdsofpreyRcool Says:

    mahout – you’ve summed up the non-BK argument nicely.

    However, if people won’t buy a GM car b/c they are worrying about a BK… i’m not sure that fear goes away with a bailout. I guess I’ve watched automotive attempt to “restructure” itself for so long now, that i have lost any faith in it’s ability to do so… without an overseer. And any overseer with any real power triggers the “change of control provision” on the GM bonds and CDS. I suppose there are ways around this, but so far, i’ve heard none (that don’t involve some sort of congressional rewriting of contract law).

    The US is the only country with a Chapter 11 alternative. It was designed for situations just like this. The company keeps it’s doors open and people employed while the reorganization process is hammered out.

    Let’s be clear here… i do not WANT to see ANY US company go BK. Now, or next week. But, the US Treasury is monetizing the last thing on it’s balance sheet (the US Taxpayer). That money is not bottomless. I want to get the best use (make the smartest decisions) with my money. It is the last line of defense for us as a country. Next step: have to sell off hard assets… like land and resources. We do not want to get to that point.

  81. 81
    mahout Says:

    Sam,

    It does help very much. Many thanks.

  82. 82
    Dman Says:

    tater, related to your #13, will USO pop just because of the new front month?

  83. 83
    mahout Says:

    BOP,

    Sure can’t argue with what you say. You are right. And right in not having faith in their being able to restructure themselves. Enough is enough.
    One thing bothers me though. What if during the Chapter 11 for GM say, the independent OEM suppliers go out of business. With no parts all assembly lines will stand idle, no production at all, even for Toyota and Honda. If we go the Chapter 11 route for GM, it would seem that the entire industry would have to be included. Is this possible and feasable. If so, it might be the answer.

  84. 84
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures prices tumbled to a new 4 1/2-year low
    Thursday, falling nearly 10% to below $36 a barrel as worries over collapsing
    global oil demand continue to trump OPEC’s efforts to prop up the market.
    Light, sweet crude for January delivery on the New York Mercantile Exchange
    settled down 9.6%, or $3.84 a barrel, at $36.22 a barrel. That’s the lowest
    settlement price since June 29, 2004. The price hit an intraday low of $35.98 a
    barrel.
    Amid the steep drop, which has slashed crude prices by 25%, or $11.76 a barrel
    in five days, some analysts repeated that $30 crude may be in sight.
    Brent crude on the ICE futures exchange settled down $2.17 at $43.36 a barrel.
    OPEC on Wednesday announced a 2.2-million-barrels-a-day cut in oil output
    starting Jan. 1, in response to the implosion in global oil demand, ballooning
    inventories and tumbling prices. The cuts come on top of pledges to reduce
    supplies by 2 million barrels a day beginning in September that have yet to be
    fully implemented, raising doubts about adherence to the new agreement.
    Global oil demand this year is expected to show the first decline in 25 years
    and many analysts see a further drop in oil consumption next year.
    Adam Sieminski, chief energy economist at Deutsche Bank in Washington, D.C.,
    said Thursday he expected global demand to fall 1 million barrels a day, or
    1.2%, next year.
    The combination of weak demand and rising inventories will lift stock levels
    in the major industrialized nations, like the U.S., that comprise the
    Organization for Economic Cooperation and Developnment, to 58 days of cover by
    the third quarter 2009, putting “even more pressure on OPEC to trim output” and
    requiring further agreements to slash supplies.
    Stockpiles are sufficient to cover 57 days of demand, but OPEC aims to shrink
    that to around 52 days.
    Sieminski, in a client report, reiterated his view that oil prices will
    average $47.50 a barrel next year – less than half of the 2008 average – with
    prices dropping toward $30 a barrel “on a temporary basis.”
    “There is a tremendous overhang (of oil inventory) in the market and
    tremendous doubt” that OPEC will cut output enough to erode the stockpile, said
    Stephen Schork, analyst at the Schork Report in Villanova, Pa.
    But front-month crude oil futures settled at a record $5.45 a barrel discount
    to the second-month contracts, and with prices rising further out on the curve,
    refiners have tremendous incentive to build inventories further. “It pays a lot
    of money to put oil in storage today,” Schork said.
    The Nymex January crude contract expires at Friday’s settlement and was under
    severe pressure from mounting inventories at Cushing, Okla., the delivery point
    for Nymex contract.
    The Energy Information Administration said Wednesday that crude oil
    inventories at Cushing rose 20.8% to 27.5 million barrels in the week ended
    Dec. 12. At nearly 58% above a year ago, the surplus in stocks is the biggest
    in 3 1/2 years.
    Crude prices are now more than 75% below the all-time high of $147.27 a barrel
    reached in July, brushing off concerted efforts to halt the plunge as the
    recession grips ever tighter in the U.S. and beyond.
    An accelerated late drop in crude pulled down petroleum products prices that
    were strong relative to crude through most of the day.
    Front-month January reformulated gasoline blendstock, or RBOB, settled down
    4.26 cents a gallon, or 4.2%, at an eight-day low of 96.29 cents a gallon,
    after trading as high as $1.0475 a gallon.
    January heating oil settled down 6.96 cents, or 4.8%, at $1.3729, well below
    its session high of $1.4880 a gallon, and at the lowest level since May 24,
    2005.

    -By David Bird, Dow Jones Newswires

    Dow Jones Newswires
    12-18-08 1527ET

  85. 85
    tater Says:

    Just got home. I was playing the Ahole by bidding at a foreclosure auction. Didn’t get the property, but the whole thing felt kind of seedy. Oh well.
    Ram, the HK trade is very goofy with the options plays. Can’t really give a good intra-day read on that one, not today. The swing high is so high in comparison to the low targets that I don’t like to comment on where I think it could wind up because we are talking 20% moves that feel incomprehensible. Sorry for the non-help.
    Dman, that was really my question to you. I don’t have an answer, but I did buy some USO today.

  86. 86
    Sambone Says:

    The only good news on crude being down is the old Chavez is going to have a hard time going forward. Mexico is going to have a hard time also.

  87. 87
    ram Says:

    I am not buying a GM car because they are relatively expensive and dealerships are not dealing. I told them the price I would pay for an Acadia. Sales person stated they are not in the business of losing money. The car is still there. Therefore, I beg to differ…..

  88. 88
    Dman Says:

    tater, yeah I know you were asking the same thing, I was hoping you’d figured it out in the meantime!

  89. 89
    Sambone Says:

    Ram – Sounds like the banks with their foreclosed homes.

  90. 90
    tater Says:

    So how far do move at 20 minutes to go?

  91. 91
    Sambone Says:

    Down 350 is my bet. I know, ask Maria!

  92. 92
    sane Says:

    Sam, I bid on a foreclosed house a few months back. They looked at me crazy at my offer. Found out they asking a ridiculous price for it. I could have built a new home the same size for less. It is still sitting vacant today.

  93. 93
    ram Says:

    SAMB – You’re not kidding. I told this story last year:

    Last Dec. I found out the home I was renting was in the mature stages of Forclosure and I was still paying rent. I’ll never know why that is not deemed criminal! Imagine paying rent for six months to an owner who was not paying the bank – really irritated me. I attended the auction for the home and the bank was asking original home price plus unpaid taxes. Homes at that time in the area were at least 33% less. No one bid. In fact, of the 120+ items auctioned that day, commercial and residential, none were bid on. The home, owned by Chase Mortgage, is still waiting for a buyer.

  94. 94
    Sambone Says:

    Banks are funny animals. So far the bean counters won’t let the house go at below market prices, because they still have it on their books at full value but nonperforming. Remember most of these puppies are tied up in CMO’s, SIV’s, etc. Nobody knows what to do with them. What it’s going to take is like the old Refco when the S&L’s went out. The Government had liquidators to get the excess property off the books and sold at fire sells, but got it off the US books..

  95. 95
    Sambone Says:

    Two good web sites on the problem is here; These guys know their stuff.

    http://www.doctorhousingbubble.com/

    http://mrmortgage.ml-implode.com/

  96. 96
    mahout Says:

    Z and all,

    In the $30’s today for Cl was enough to get me to start buying again. After all from $147 down to $36! How much further can it fall before it just shuts off a big chunk of supply?

    Bot IOC @11.85 to replace what i sold in September @22.65. They are about to drill into the target limestone on their new gas well. Highly speculative but I think they’ve found quite a lot of NG.

    Bot APA @70.37 to replace part of what i sold in September @109.44.

    Bot NFX @19.90.

    Bot HK @16.25.

    Bot GMXR @26.70.

    Sold SD @6.10. for a small profit to switch the money into GMXR which i like much better at this time.

  97. 97
    Dman Says:

    Just bought some ERF, down slightly more than USO & pays a dividend while this whole mess plays out.

    In the interview that someone here linked to a few days ago, Matt Simmons was (to be blunt) freaking out about the effect current prices are having on crude production just around the corner. Said that there were only a few weeks left at those prices before the effect of projects being shelved would make a supply crisis inevitable. Prices are now a good deal lower so I’d say that crisis scenario is baked in.

  98. 98
    Dman Says:

    I forgot to add to #97: as Z would say, “Price takes care of price” … but I would add “not without some serious chaos shortly”

  99. 99
    ram Says:

    The oil market really thumbed its nose at opec and company.

  100. 100
    Sambone Says:

    One other thing in regards to our patch, alot of taxloss selling is going on. I did some today.

  101. 101
    Dman Says:

    OPEC blew it big-time with the 4 million headline that turns out to mean 2.2 million. That kind of puffery just looks weak and the market is treating them with contempt, which they frankly deserve.

  102. 102
    pearl1301 Says:

    fyi..rimm going nuts after hours…

  103. 103
    Bleemus Says:

    SWN SW Energy announces capital program and guidance for 2009 (25.42 -1.64)

    The co announces a planned capital investment program for 2009 of approximately $2.0 billion, including approximately $1.5 billion of planned investments in its Fayetteville Shale play in Arkansas. The company’s 2009 capital program includes approximately $1.78 billion for its exploration and production segment, $220 million for its midstream segment and $40 million for other corporate purposes… Southwestern is targeting 2009 total oil and gas production of 280 to 284 Bcfe, an increase of approximately 48% over the company’s current forecasted 2008 production of 190 to 192 Bcfe (using midpoints). Approximately 229 to 232 Bcf of the 2009 targeted gas production is projected to come from the company’s activities in the Fayetteville Shale play, up from approximately 127 to 130 Bcf in 2008.

  104. 104
    mahout Says:

    Ram # 87,

    If you are still there, my friend, my expert called today. He found a new Suburban available with a $16,000 discount. I said: no way, i’m looking for a much better discount than that. Probably at an auction of the cars from a bankrupt dealer. We have had 2 go under already here. He agreed it was wise to wait a little longer. Dealer situations are shakey right now. That salesman you talked to may not even work there much longer. Depending on what happens, of course, some outstanding oportunities may present themselves. That’s what i think anyway. Yes, they are very expensive, too expensive. That’s why we need a great deal.

  105. 105
    1520sbroad Says:

    to all – ny/nj/ct weather on the train platform tomorrow morning likely to be snowy/wintry mix. could be an interesting one as we flip to the new contract month. Looks like similar weather for next week too.

  106. 106
    mahout Says:

    Z and all,

    We know that price takes care of price.

    Just a little math: From 147 to Zero is a drop of 147. Zero is an unreasonable assumption for the low in the Cl price.
    I think 30 is a reasonable assumption for an ultimate self correcting low. But lets use 25 to be more conservative. From 147 to 25 is a drop of 122. Since we have dropped today to 36, we have already dropped 111 out of a total of 122. That is a 91% drop of the potential maximum drop. This gives me comfort enough to start buying again. Coupled with the “feel” that it is already in a bottoming process and the fact that when economies begin to recover supply will have a hard time keeping up with demand, i think it’s reasonable to commence buying again. But i realize this is still a crazy world right now. Trading is on emotion, not on fundamentals and all stock prices are manipulated.

    Best of luck to all.

  107. 107
    Jay Reynolds Says:

    House vulture..

    Used to buy REO (bank owned houses) in Austin, TX a few years ago.

    Since I had a background in biology, I’d go in, photo doc the spreading black mold, turn in 50 page property rehab report to the bank and they would no longer have plausible deniability of the spiraling devaluation and liability/”hazard” their house had become. Got a few of them for about 20% of their ARV (after repaired valuation) numbers.

    Otherwise, thinking about turning off about 95% of my production next week, my break even is WTI = $56 for gross numbers.

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