29
Apr

Wednesday – Oil Inventory Preview + RRC Earnings + More Stuff

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In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crude Oil Inventory Preview
  4. Stuff We Care About Today
  5. Earnings Watch -RRC, BHI
  6. Odds & Ends

Holdings Watch:  Busy day yesterday. The $10KP and Wiki tabs are updated

  • SWN - Added 10 SWN May $40 calls for $0.40. See results breakdown in post. Conference call about to begin. I continue to hold the SWN $35 calls bought yesterday.
  • SWN - Added another 10 SWN $40 Calls (SWNEH) with the stock at $36.40 for $0.35 while listening to the conference call. They are pointing to some pretty hefty drilling cost savings down the road.
  • HK - Took another 2/5ths (20 contracts) of  the HK $24 Call position off the table for $1.25 (up 105%) with the stock at $24. I continue to hold the remaining $24s, as well as some $22.50s and some $25 May calls here.

  • HK - Sold the HK $22.50 call position for $2.10, up 95%, small position but the stock has had a good 4 day run and it would probably give quite a bit back on a dip. Still holding the remaining $24s and $25s.

  • SWN - Added another set of SWN $40 calls for $0.55 with the stock up 10% even. Brings average cost on the day to $0.43.


Commodity Watch:

Crude oil fell $0.22 to close at $49.92 yesterday. This morning crude is trading back up between $50.50 and $51 despite yet another bigger than expected crude build being reported last night by API (see details below).

  • Hugo's Guys Are Nutbags Watch: Venezuela's oil minister implied rates will be renegotiated with oil service companies "or else". See story here.

Natural gas bucked the falling market trend, rising slightly on expiration. The June contract takes over as the front month today and looks like this and way too bearish. This morning gas is trading slightly green at $3.45.

  • Big Picture Watch: Pretty good presentation from RRC talking about the decline in rigs and its impact on gas production. Their thoughts echo those of SWN's yesterday on long term gas price equilibrium price being in the $6 to $8 range and they see gas volumes falling 13% by year end and volumes taking a year to start rising again once rigs move back up (which they don't see happening without a gas price above $7). This pretty much gels with my thinking and that of EOG, these guys call baseline decline of the U.S. as 30% per year (yep, you gotta replace that each year just to stand still, let alone grow) and it can be argued that declines are actually closer to the high 30%s.

 

Oil Inventory Preview

API Watch:

  • Crude: Up 4.6 mm barrels
    • Utilization was down 1% (could be or could be smoothing between the week's should be rising now)
    • Imports off near 600,000 bopd
  • Gasoline: Down 2.6 mm barrels
  • Distillate: Up 1.5 mm barrels

ZComment:

  • This was roughly proportional with estimates for this mornings numbers.
  • Looking at the individual parts, they look a bit odd (forced). If refinery throughput fell back it would not take as many barrels out of demand as imports did out of supply. Non a wildly divergent set of numbers from what could be done but looks like smoothing between 2 weeks.
  • On products, the dip in gasoline makes sense in light of the lower utilization. Oil likely to open a little off in the morning all other things being equal (down about 40 cents post close now).

 

  • VLO basically said domestic diesel demand is dead but that exports remain solid and poised to grow. Have to trust them on that as the EIA data does not offer that kind of granularity.
  • Normally this time of year we see inventories bouncing about before turning lower as demand for the summer driving season cranks up. For this particular week, the last 5 years have on average seen a build of 2.5 mm barrels in crude stocks, a smaller build to gasoline (although its frequently a small drawdown as well) and unchanged distillate inventories.
  • Important number today will be gasoline demand, data from API implies it ticked up

 

Stuff We Care About Today

Earnings Watch

RRC Reports In Line Results; Plans Remain On Track

Note: This is not one the usual suspects we talk about around here. It gets mentioned from time to time and I aim to change that going forward. They are a gassy player, with a strong history of production growth, low operating expenses, a decent balance sheet, strong hedge position for 2009 and good sized positions in the Marcellus, Barnett, and Nora area.

The 1Q09 Numbers:

  • Production: 415.8 MMcfepd, up 12% YoY (previously announced); 88% natural gas
  • Revenues of $276.4 mm vs $253 mm expecte
  • LOE per Mcfe of $0.93, strong.
  • EPS of $0.24 (ex items) vs $0.21 expected. Note the lack of a write down ...  successful efforts account vs full cost.
  • CFPS of $1.00 vs $0.97 expected

Guidance:

  • 2009 previous guidance of 10% YoY growth was not mentioned in the press release however,
  • they did say they expect to exit 2009 with Marcellus shale volumes of 80 to 100 MMcfepd, up from 30 MMcfepd at the beginning of this year and
  • they see doubling that in 2010 (they've said this one before)

Operational Update:

  • Marcellus Shale:
    • > 60 wells planned for 2009
    • 1 well with 7.9 MMcfepd 24 hour IP which is pretty strong for this play
    • "In process of testing" another well at 10.7 MMcfepd
    • Late 2008 wells were averaging 7.3 MMcfepd
    • 1.4 mm net acres (900,000 acres in the "fairway")
    • Average well EUR: 3.5 Bcfe, cost to drill $3.5 mm
    • they think they have unrisked reserve potential of 22 Tcfe (8x YE08 reserves)
  • Barnett Shale:
    • 3 rigs running remainder of 2009, down from 6 in
    • March production was 125 MMcfepd and rising (or 30% of the 1Q average)
    • They think they drilled the highest rate to date in the play with a Tarrant County well with average production of 9.6 MMcfedpd for its first 30 days on stream.
    • Balance Sheet: 43% debt to equity

Hedge: 83% of 2009 volumes hedged north of $8.

Nutshell: Not knock the cover off the ball like the SWN quarter but very solid, will listen and being working up the company story a little better.

Conference Call: Today, 1 PM EST.

BHI Reports 1Q Numbers ; Offers Little Cheer

The 1Q09 Numbers

  • Revenues of $2.67 B vs $2.58 expected
  • EPS of $0.82 vs $0.76 expected. This number excludes:
    • 12 cents of expense for employee severance which is non-recurring or probably non-recurring and as such forgivable as they trim costs
    • $0.07 of expense for doubtful accounts. That may be cause for concern, will listen to call.

Management Quote

"Looking forward, the fundamentals that drive our outlook are essentially unchanged. We expect customer activity in North America to continue to decline, and see little chance of a recovery before the end of the year. Internationally, oil prices and the strength of the global economy remain the most critical factors for determining international spending and activity.

Conference Call:  Today, 8:30 EST

 

Reporting after the close or before the open tomorrow: (FSLR), (OII), (WLL), (PTEN), (XOM)

Odds & Ends

Analyst Watch: Pretty quiet so far this morning.

142 Responses to “Wednesday – Oil Inventory Preview + RRC Earnings + More Stuff”

  1. 1
    zman Says:

    BHI call in 15 minutes, will listen to that and then the replay on COG.

    First H1N1 death reported in Texas.

    Market seems to be in rally mode.

    Dollar off nearly a percent this morning which breaks the back of a rally spike started Monday.

    Crude up 81 cents to 50.74

    NG up 6 cents, we should get those February supply numbers out of the EIA today. Check out that big picture watch link, answers a lot of questions on NG supply later this year. We are down $10 bucks from a peak that was inarguable too high for gas but we are now well into oversold territory (I use the term descriptively if not from a purist’s perspective Tater). Anyway, the production writing is on the wall.

  2. 2
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures tracked firmer equity markets to trade
    back above $50 a barrel Wednesday, despite expectations that data due later
    will reveal U.S. crude stockpiles have continued to rise.
    Worries about the potential economic impact of swine flu and the implications
    for crude demand also helped curb gains.
    Trading volumes were thin as market participants opted to wait for a 1430 GMT
    inventory data release from the U.S. Energy Information Administration, which
    could underscore how weak demand for crude has caused U.S. crude stockpiles to
    balloon to near 19-year highs. Traders were left cautious by separate American
    Petroleum Institute data Tuesday revealing crude stocks rose nearly 5 million
    barrels last week.
    “Despite the steady stream of bearish news and information, oil markets have
    remained surprisingly resilient,” said David Hart, oil and gas analyst at
    Hanson Westhouse in London. “Should there also be a large build above
    expectations in U.S. government inventory data later today, this resiliency
    will be put further to the test.
    At 1135 GMT, the front-month June Brent contract on London’s ICE futures
    exchange was up 77 cents at $50.76 a barrel.
    The front-month June light, sweet, crude contract on the New York Mercantile
    Exchange was trading 92 cents higher at $50.84 a barrel.
    The ICE’s gasoil contract for May delivery was up $9.00 at $428.75 a metric
    ton, while Nymex gasoline for May delivery was up 226 points at 142.03 cents a
    gallon.
    According to a Dow Jones Newswires survey of 12 analysts, U.S. crude oil
    stocks are expected to have risen between 1 million barrels and 3.5 million
    barrels last week. The outlook for gasoline stocks is more varied, with a
    decline of 200,000 barrels seen on average. Distillates are seen 700,000
    barrels higher while refinery use is seen rising 0.1 percentage point to 83.5%
    of capacity.
    Despite the negative implications for crude oil supply and demand balances
    from repeated crude stock builds, there is no guarantee that prices could
    finish the day lower if more build emergedWednesday, analysts said.
    Prices have strayed little from $50 a barrel throughout most of April –
    despite U.S. crude oil stockpiles climbing to their highest levels since
    September 1990 – amid hopes that economic recovery will lead to an uptick in
    demand.
    “In the past few weeks, the market has made a repetitive pattern of buying
    into the higher-than-expected stock builds, hence we need to keep a bias for
    this to be repeated again, especially since [a] gasoline draw could be taken as
    a positive input,” says Olivier Jakob of Petromatrix.
    Market participants continue to monitor the spread of swine flu around the
    globe, spurred by worries that a widespread outbreak could extend the
    contraction in the global economy and, by extension, demand for crude. The U.S.
    confirmed the first death of a U.S. citizen from swine flu, CNBC reported
    Wednesday, a 23-month-old child in Texas.
    Ahead of the day’s oil data, financial markets are also waiting on U.S. first
    quarter gross domestic product data due at 1230 GMT, as well as the conclusion
    of the Federal Reserve’s two-day interest rate meeting at around 1615 GMT, for
    an update on the health of the U.S. economy. While some recent data releases
    have proved better than expected, views on the economy will continue to exert
    opposing forces on crude prices, some analysts said.
    “Right now the whole market is in two minds of where we sit with respect to
    economic recovery,” said Walter De Wet, head of commodity research at Standard
    Bank in London. “(But) there is nothing in the macro fundamentals or crude
    market fundamentals that should see crude sustainably well above $50 a barrel.
    Even if crude inventories decline, the market will want to see that being a
    trend not just a blip.”

    -By Nick Heath, Dow Jones Newswires
    Dow Jones Newswires
    04-29-09 0807ET

  3. 3
    zman Says:

    Q1 GDP down 6.1%, that’s worse than the expected down 5.1%.

  4. 4
    zman Says:

    BHI conference call.

    North America Rigs:
    Beginning of Q1 1,721 rigs to 1,039 rigs at end of Q1, now 955. They’re getting ready to tell you its not close to over.

  5. 5
    zman Says:

    Analyst Watch:

    Tudor Pikcering taking SWN price target from 47 to 56.

  6. 6
    BirdsofpreyRcool Says:

    For anyone looking to shift more of their savings into fixed income, it is a great time to be alive. Corporate bonds are cheap and have enough yield and spread to provide great returns for years to come. We have seen a lot of non-govt-backed issuance by smaller bank companies over the last few days. The success of those deals has kicked real corporate bond buyers (mutual funds, insurance companies) into action. We are seeing quite the rally in individual high yield names this morning. Across the board, names are 10-15 bps tighter.

    Although MJ was off on his 1Q GDP guess, his strategy piece this morning is spot on.

    http://www.capmarkets.com/ViewFile.asp?ID1=116127&ID2=317357545&ssid=1&directory=6571&bm=0&filename=04.29.09_Rally_to_Continue_Long_Term.pdf

  7. 7
    BirdsofpreyRcool Says:

    Maybe it’s b/c 1Q GDP was much worse than expected, meaning later quarter’s could benefit. But, seeing quite the rally in corporate bonds. Levels to keep in mind… want to get to +150bps on investment grades and $85 on high yield bonds to breath a sigh of relief. But, getting there… fast, this morning.

    IG 173.5

    HY 77

  8. 8
    elduque Says:

    BDI -18 1772

  9. 9
    zman Says:

    BOP – how are the recent CHK bonds trading?

  10. 10
    BirdsofpreyRcool Says:

    z – those lovely CHK 9.5% 5 yr, $1,425mm non-call bonds issued in Feb at $97.75? Let me check.

  11. 11
    zman Says:

    If you have the time I’ll send you a list, thinking about SD, XCO and a few others.

  12. 12
    BirdsofpreyRcool Says:

    CHK 9.5% due 15 are 100.5 / 101.5

    At the 101.5 offered price, that is still a 9.15% yield to maturity.

  13. 13
    zman Says:

    SWN target upped from $30 to $34 at FBR. I like Fadel Gheit, good analyst, he’s gone over the top conservative, not sure if he is the analyst on the case there anymore or not but that price target is very low, sounds like a doomsday case on NG driving it.

  14. 14
    BirdsofpreyRcool Says:

    CHK 9.5s — that quote is from JPMo… i see them offered cheaper at a boutique shop. Meaning, an individual investor should be able to snag those bonds at pretty close to the 101.5 offered

  15. 15
    isleworth Says:

    Z- At some point in the future, can you explain “decline rates” as they apply to nat gas in the shale plays?

  16. 16
    BirdsofpreyRcool Says:

    the high yield CDS index continues to rise…

    HY 77.07

  17. 17
    Bob Says:

    Re: 11, 12. I picked up some at 96 in late Feb. They continued falling to 88-89 March 8-9. Then recovered and have been steady in the 100-102 range since April 7. Would like to pick up more if we have another drop. Non-callable to maturity in 6 yrs

  18. 18
    zman Says:

    Isle – very briefly, your first few days are generally the best for the well. The Haynesville is thought to be a 80% or so decliner first year, so start at 10 MMcfepd first few days, end at 2 MMcfpd in month 12, then tale out for 20 or so years.

    Conventional sources are often less steep but have shorter reserve lives. You might see a shallow water conventional well have a 25 to 35% in the first year and be toast in 4 years.

    This means that a majority of gas production in the U.S. is from fairly recent wells. Stop drilling and we quickly fall off a cliff.

  19. 19
    zman Says:

    Bob – gotta love the non-call feature.

  20. 20
    BirdsofpreyRcool Says:

    Bob — I recall when you purchased those bonds… the way they were offered, we knew the price would probably fall further. But, you can’t always count on getting a good offer, as an individual investor. So, you just have to pick your credit (CHK) and pick your target yield (was it 10.5%?) and execute. That’s a lesson in high yield bonds “liquidity.” Bonds have a mere fraction of the liquidity of stocks.

    Anyway, that was a great buy at a good time and good execution on your part.

  21. 21
    zman Says:

    BHI call just ended, frankly must of dozed off during it as it sounded like the other oil service calls of late, “yes things stink now but they won’t always and we’ll come out of it leaner, meaner, with more market share”. I wonder how everyone in the business can come out ahead like that. Hmmm.

  22. 22
    zman Says:

    That Aubrey pay story still holding CHK back today. You can smell the lawsuits adding up. I will buy in when I see the first new wave of them hit the price.

  23. 23
    isleworth Says:

    Thanks Z……very helpful. That is quite a drop, and I get your point re total production falling off a cliff when drilling stops.

  24. 24
    zman Says:

    HK in breakout mode near 24.50. Been selling back my position, better safe than sorry. Will let the remain $24 and all of the $25 calls run a little longer.

  25. 25
    zman Says:

    SWN – Tristone takes target up $3 to $37, rating stays mkt perform. That’s not helping the shares.

  26. 26
    zman Says:

    BOP – how are XCO’s 7.25% seniors trading out of curiosity? I would imagine they are distressed.

  27. 27
    BirdsofpreyRcool Says:

    z — let me check…

  28. 28
    bill Says:

    Lets look ahead to CHK on Monday

    They are 80 % hedged vs swn 50 % hedged

    do they jump 10 % too?

  29. 29
    bill Says:

    Lets look ahead to CHK on Monday

    They are 80 % hedged vs swn 48 % hedged

    do they jump 10 % too?

  30. 30
    zman Says:

    Housekeeping Watch: Is anyone having difficulty refreshing the site today?

  31. 31
    zman Says:

    Bill – first blush answer is no. CHK won’t be taking up production numbers which was a big part of the reasoning behind the move in SWN. They may have some good well results though so it could still be a positive move for them and the stock is cheap. That Aubrey’s pay story is hanging over their heads right now as some investors are voting with their feet.

  32. 32
    zman Says:

    EOG ran away from me … again.

    CLR should have a good report on their call, not seen date yet, moving with the stability in oil.

    By the way, we should get a swing off anything lower than expected on the crude build last night. Imports should be lower which should help pull that number storage number down.

  33. 33
    BirdsofpreyRcool Says:

    XCO 7.25% due 1/11, callable now, $444.7mm o/s, rated Caa1/B-, CS was the only bank on the cover, so not widely quoted. Last run I have is from 4/24 where the bond was 84/86 (18.5%/17.0%) at a boutique shop.

    The problem with such low-rated bonds is that they have a lot of “equity-risk” embedded in the bond. If you believe that XCO is a survivor, you are better off buying the stock for higher risk-adjusted returns. Unless you think their asset base is just plain stellar (or you just want the coupon stream).

  34. 34
    zman Says:

    Re XCO – agreed, just wanted to check that price to see if it was busted enough, that’s really not for me, happier to go with the higher yield at a CHK or HK new bound.

  35. 35
    BirdsofpreyRcool Says:

    z — i know you understand that. just wanted to state the obvious.

    the best bonds to buy are the unloved, high-single-B rated, orphan company bonds with great cash flow, but not a lot of equity upside (like NFX, historically).

  36. 36
    zman Says:

    GMXR breaching $10.

    TXCO holding at 45 cents after its demand cash call press release the other day.

    In fact, a lot of the higher risk, more speculative names coming into play. Rising tide and all I know but also, I think a willingness to believe its an “when, not if” event for rising gas prices via falling production. One of the things I was ranting about a couple of weeks back was that the service analysts have been treating this down cycle in rigs like past ones. Rigs come off hard then bounce. I and others see little reason for a bounce now…instead slowly drift lower or flat line at best with 600 to 800 gas rigs in service for a long time.

  37. 37
    BirdsofpreyRcool Says:

    blinding statement of the obvious, but a “good bond company” is not always the same as a “good stock company.” So, find yourself buying bonds in companies where you might not necessarily buy their stock.

  38. 38
    Sambone Says:

    DOW JONES NEWSWIRES

    Williams Cos. (WMB) on Wednesday issued notices of default to Petroleos de
    Venezuela SA (PVZ.YY) as the pipeline operator no longer expects the
    state-controlled company to pay outstanding bills.
    As a result, Williams will record a first-quarter write-down of $241 million,
    pushing the company into the red for the first quarter. Results are due to be
    released Thursday.
    PdVSA has fallen behind on payments to firms operating its drilling platforms
    as it opens divisions dedicated to importing food and selling it at subsidized
    prices. The move comes as Venezuelan President Hugo Chavez uses money from the
    oil company to sharply raise various social spending. As a result, declining
    investment in oil extraction has led to a plunge in PdVSA’s production levels.
    Also hurting the company recently has been the plunge in crude oil prices from
    mid 2008’s record.
    Williams operates a pipeline business and provides services to PdVSA through
    long-term agreements. Williams said the non-payments, first disclosed in the
    company’s annual report filed two months ago, said it will stop recording
    revenue from its assets in the country.
    As a result, 2009 earnings are expected to be 4 cents less than they otherwise
    would have been. Williams, which is also a natural-gas producer, in February
    cut its earnings target range to between 60 cents and $1.10 per share on the
    commodity-price plunge.
    Williams said Wednesday potential action against PdVSA includes international
    arbitration.

    -By Katherine E. Wegert, Dow Jones Newswires
    Dow Jones Newswires
    04-29-09 0937ET

  39. 39
    BirdsofpreyRcool Says:

    FWIW, Tech Trader went LONG this morning… but is working it with a 861.2 stop on the spoos. He thinks 870 is the “magic number.”

  40. 40
    zman Says:

    Re 37, that’s what I was thinking for XCO but those bonds aren’t going to work for that for me.

    Re 38. Hugo not paying the bills to a lot of people. Saw they put off bids for 3 large development deals in the Orinoco heavy oil last night for 3 months.

  41. 41
    zman Says:

    COG Marcellus results impressing, stock up 9%.

  42. 42
    BirdsofpreyRcool Says:

    re: XCO bonds… 17% YTW isn’t bad for an asset-rich company. That’s an annualized return… assuming they don’t call the bonds early (and give you an even higher return). But a below-single-B rating is meant to imply that there would not be a full, par recovery in a reorg scenario. All things you know, I know… but worth repeating.

  43. 43
    zman Says:

    Thanks for looking out for me BOP, good points.

  44. 44
    zman Says:

    Sandridge feel good video:

    http://mfile.akamai.com/7076/wmv/ccbn.download.akamai.com/7076/SD/SDvideo20308.asx

  45. 45
    zman Says:

    Isle – take a look at Slide 4

    http://library.corporate-ir.net/library/19/196/196066/items/329798/E39CF4BA-B343-486B-B115-5D444804A84E_SD032509-BarclaysFINALPRINTBOOK.pdf

    Shows typical decline profile for Barnett, Fayetteville, Haynesville shales. You can also see the WTO (Warwick) here which is more conventional and note the shallower slop to the decline curve.

  46. 46
    zman Says:

    Somebody is not drinking the LNG coolaid. LNG, the stock backed off to $4.

  47. 47
    choices Says:

    BOP-I just looked at JNK again-yield over 14%, premium about 2%, they have a few bonds in top ten, however, which make me uneasy-CitiGroup, Ford, Windstream(I think RV mfg), GMAC-did not see any energy related in top ten-any opinions?

    Thanks.

  48. 48
    zman Says:

    EIA Inventory Report

    crude: up 4.1
    gasoline: down 3.7 (that’s big)
    distillate: up 1.8

    crude imports: flat and high at 9.8 mm bopd

    utilzation: 82.7% not as far off as API but off.

    gasoline demand: flat at 9.1

    cushing stocks: inched up

    oil at time of report: $50.95

  49. 49
    zman Says:

    Followup to 48:

    Gasoline production dipped substantially last week, so it was not demand that led to the unexpected decline in mogas stocks. As such, not thinking this is really a bullish report, and distillate inventories are just over the top large for this time of year.

  50. 50
    zman Says:

    Re 39: SP at 872+

  51. 51
    BirdsofpreyRcool Says:

    choices — I would buy Citi and GMAC bonds all day long. Not the stock, but the bonds. The govt has shown it’s hand. There will be no nationwide bank nationalization program and they will prop up those institutions by hurting the preferred and equity holders, not the debt holders. So, an example of where i wouldn’t touch the equity, but would be willing to buy the debt.

    Top 10 holdings in JNK in order are: HCA, CYH, INTEL, GMAC, C, WIN, AES, PCS, TXU, and DTV. Top 10 = 25% of portfolio. This portfolio is constructed to follow the “Barclays Capital High Yield Very Liquid Bond Index.” The largest single issues are not from the e&p guys. But there are a lot of e&p names, just further down the list.

    I would prefer not to buy this ETF at a premium. But, again, pick your comfort level with the yield, buy, and hold.

    That is what I am seeing in the bond market today. Vanilla accounts, buying individual names (vs the 1000-times more liquid CDS), willing to take the “liquidity risk” and hold through near-term volatility. These are buy-and-hold players who do not pull the trigger to sell at the first sneeze. They have been watching, gauging the market and doing their credit homework. And they are buying today.

    HY 77.875 a huge positive move today.

  52. 52
    BirdsofpreyRcool Says:

    btw, I don’t mean to be a cheerleader here. Personally, i have NO IDEA why this mrkt is rallying, right here, right now. But, credit is seeing a grass roots rally across all sectors, individual names AND CDS. That is unusual.

  53. 53
    zman Says:

    Cheer away BOP, I’m mostly long. Having trouble picking off calls on the mid this morning which may be telling about sentiment out there right now too (stingy sellers).

  54. 54
    BirdsofpreyRcool Says:

    “Sell in May and go away” has worked so well for so many years, recently. Is this year different? That is the question we ask ourselves every year, of course. Any thoughts, z

  55. 55
    zman Says:

    Nothing more than conjecture that some parts of the market will drift higher in a lower volume environment a little earlier in Summer than in the past years due to the fact that the economy will be closer to right itself

  56. 56
    zman Says:

    Still waiting for a down day to get long NFX, was actually thinking about puts on CLR for a quick trade as this looks a bit extend and oil is only up this much because the market is. Those inventory numbers were not bullish.

  57. 57
    Sambone Says:

    BOP – #54

    Sell in May and go away?
    Commentary: Markets teasing investors with more hardship on the way!
    By Todd Harrison
    Last update: 8:05 a.m. EDT April 29, 2009
    NEW YORK (MarketWatch) — Mark Twain once said history doesn’t always repeat but it sometimes rhymes. Investors around the world hope that doesn’t again prove true.
    ‘Indians scattered on dawn’s highway bleeding. Ghosts crowd the young child’s fragile eggshell mind.’
    — “Dawn’s Highway,” The Doors
    We asked last year whether we should sell in May and go away following the spirited sprint off the March lows. In the 12 months that followed, the S&P was sliced in half as a confluence of negatives combined to create the financial equivalent of a perfect storm.
    We humbly offered in January that 2009 could see two 20% bear-market rallies that litter the landscape with false hope and empty promises. As we digest the initial lift, the obvious question is whether we’ll see a meaningful decline before a second such move arrives later this year.
    The most constructive possible path at the end of March was a sideways digestion of the gains as a function of time rather than price. That worked off the overbought condition and created potentially bullish reverse head-and-shoulder patterns across the major indices. We must respect that scenario if it triggers with a trade above 875 on the S&P.
    Be that as it may, I believe the current rally will prove a massive stock tease. We monitored the cumulative imbalances as they built through the years and it would be myopic to assume we’ve swallowed the bitter pill in its entirety. While there are two sides to every trade, we must remember that social mood and risk appetites shape financial markets.
    I don’t know how conditions are where you live, but through my lens, times are tough and tension is elevated. While news is always worst at the bottom and best at the top, our finance-based global economy is dependent on employment, leverage and the velocity of money. One way or another, the bar bill of our collective excess must be paid by this generation or the next.
    The big picture is made of many smaller ones, and the destination we arrive at pales in comparison to the path we take to get there. As such, as we gaze across the global horizon, I wanted to touch on five dynamics that should remain on our radar as we find our way through this prickly fray.
    When pigs fly
    As if we didn’t have enough on our minds, the specter of a global pandemic adds another layer of uncertainty to an already complicated equation. The World Bank estimated last year that an influenza pandemic could cost $3 trillion, trigger a 5% drop in global GDP and lead to 70 million deaths.
    As we hope for the best, risk management requires that we respect potential contagion, particularly if the specter that the virus was manmade seeps into the mainstream mindset.
    The pop and drop
    One of the primary reasons I adopted a more constructive trading stance in March was that we were effectively backstopped against Armageddon. In other words, if General Electric (GE
    General Electric Co, BAC) and others simultaneously failed, paper losses would have been the least of our worries.
    While healthy skepticism of further upside remains, there is widespread acceptance that a breakout above S&P 875 would clear a path towards the 200-day moving average at S&P 970. As such, clearing that technical hurdle would clean out the shorts and potentially set the stage for a vicious head-fake.
    Pakistan
    One of our 10 themes for 2009 was the evolution of societal acrimony to social unrest and geopolitical conflict. The world stands at a critical crossroads, with orderly debt destruction and eventual globalization on one side, and isolationism, protectionism and the unfortunate truth that all world wars were born from economic hardship on the other. See link here.
    With the Taliban 60 short miles from the Pakistani capital of Islamabad, we would be wise to keep this nuclear state on our radar.
    He said, she said
    The back-and-forth between embattled Bank America CEO Ken Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson has massive implications for the psychology surrounding the government’s role and responsibility in the capital market structure.
    As Minyanville offered in August 2007: “The Federal Reserve attempted to buy time on the back of the tech bubble with fiscal and monetary stimuli that encouraged risk-taking, reward-chasing behavior. While debt is front and center, credit of a different breed — credibility — has emerged as the issue at hand. If and when investors begin to perceive that central banks are no longer larger than the markets, a crisis of confidence will ensue.” See link here.
    Stress test
    The “more adverse” scenario offered by the government is a 3.3% contraction, 8.9% unemployment and a 22% decline in home prices, followed by a rebound in GDP of 0.5%, 10.3% unemployment and 7% degradation in home prices the following year.
    That’s debatable at best. It’s clear that some banks will need to raise more capital, further diluting equity holders, and others won’t make it to the other side of this prolonged socioeconomic malaise.
    I, like most of you, stand to benefit from an economic expansion that buoys our spirits with the rising tide of good fortune. The popular opinion is rarely the profitable one, however, and my hope is that sharing these potential caveats provides utility as we collectively prepare for the future.
    Financial staying power, risk management over reward chasing and proactive financial intelligence remain three staples of any successful investment approach.
    Todd Harrison is the founder and CEO of Minyanville.com.

  58. 58
    PackMan Says:

    why is HAL up 4%. Is it a short here ?

  59. 59
    zman Says:

    Pack – its just up with oil service, people liked the BHI “beat” this morning.

  60. 60
    ram Says:

    Regardless of inventory numbers, could traders use oil as a hedge against a falling dollar? Is the import number quoted above from all foreign countries? It seems we were consuming 21mmBopd at the top and now near 16mmBopd (10 imp + 6 dom).

  61. 61
    BirdsofpreyRcool Says:

    Thinking some more about it… while the 1Q GDP number was much worse than expected, the Personal Consumption component was a lot more positive than expected (up 2.2% vs 0.9% expected). As we have moved past the banks (leaving that train wreck to the clean-up crew) and moved onto the Consumer Train Wreck, anything that continues to show that not every American Household is about to be homeless and has stopped buying, will be taken as “good news.”

    That said, Tech Trader took his 7+ points and is done for the day now. Not to say the mrkt does down (or up) from here. But, 7 points in one days is a pile of riches for Tech Trader.

  62. 62
    Popeye Says:

    BHI is up almost 9%.

  63. 63
    PackMan Says:

    I only see financials and some energy being up. Consumer not moving up on GDP BS.

  64. 64
    BirdsofpreyRcool Says:

    sam — thanks for posting. I like reading minyanville. Todd’s words are always wise ones.

  65. 65
    Sambone Says:

    BOP, That’s why I put it up.

  66. 66
    BirdsofpreyRcool Says:

    fwiw, have to think a lot of directly-linked consumer stuff is mired in swine flu worries. Not saying that is wrong, not saying that is right. Struggling to justify/explain/understand what I am seeing today.

    IG 169.5

    HY 77.875

    major positive moves in both high grade and high yield CDS indices.

  67. 67
    zman Says:

    Ram –

    Oil in general will go up with a falling dollar, could be a flight to some perceived safety.

    yes, its from all countries, running a bit towards the high end of the normal range.

    The numbers 21 and 16 are a bit apples and oranges.

    The 21 refers to product supplied (gasoline, distillate, other things) and is now running 18 to 19.

    The imports and production are about 15 (9 to 10 mm bopd imports + 5.2 mm bopd production). There are also product imports on top of this.

  68. 68
    BirdsofpreyRcool Says:

    IG 169

  69. 69
    choices Says:

    Thanks, BOP-I take your point on the premium for JNK.

  70. 70
    choices Says:

    USD/CAD is testing the 1.20 level, which has been support for months-if broken, I believe it would be a good sign for crude, natgas, and other resources-if it bounces, then prob back to no man’s land where we have been for weeks.

  71. 71
    zman Says:

    Choices – re dollar. On the dollar index, another 2 days like this one and its look out below for the dollar, no basic support for at least a 5% move lower.

  72. 72
    md Says:

    Have you looked at TIMminco. Would they supply the FSLR’s.

  73. 73
    zman Says:

    md – I have not. You mean a supplier of silicon. No, not for FSLR, they are thin film guys, not traditional photovoltaic.

  74. 74
    md Says:

    I was wondering if TIM is a turnaround situation. They have a CC on 5/12.

  75. 75
    zman Says:

    Solar grade silicon? Tough commodity row to hoe there. Could be a turnaround, don’t know the company, but that’s not the end I in general would want to be in. Again, don’t know them from adam.

  76. 76
    zman Says:

    Still no EIA gas update.

  77. 77
    AAA Says:

    Z,

    Do you know off the top of your head when FSLR reports?

  78. 78
    AAA Says:

    Z,

    Sorry, I just saw it is this afternoon.

  79. 79
    zman Says:

    AAA – sorry for the delayed, yes today, typically they announce and then have the conference call right after.

    Issues here:
    1) they probably won’t miss
    2) more important is what they say about their forward guidance, part of it is floating, some customers not taking orders so they have to have back ups step in, so far no problem doing this but don’t want to the % of revenue that falls into this category rise
    3) tone of comments very important. I was long last time when they beat and the stock rallied and then fell promptly $40 while they were talking, obviously the GOOG of the energy world, lot o’ hot money.

  80. 80
    zman Says:

    adding to 79, so I’m sitting it out which probably means it spikes, lol.

  81. 81
    zman Says:

    If I were going to play FSLR it would be with the June $160 calls for $13, nice delta on those and you have time if they muck up the call.

  82. 82
    zman Says:

    Barclays reiterates CHK and SWN at Overweight.

  83. 83
    Nicky Says:

    Good afternoon all.

    Unemployment continues to rise as do home foreclosures, credit card failure, and now to top it all swine flu oh and the markets ignore it all of course. This will end badly!

    In the meantime SPX 870 was important. If you are short 875.64 is the absolute line in the sand. If we bust through there which I think is highly likely then big resistance at 881 and of course 900.

  84. 84
    ram Says:

    We got the up move with the general market, but it seems SWN is digesting yesterdays gains. Not enough brokerage push?

  85. 85
    zman Says:

    Afternoon Nicky – have you taken a look at the dollar? Seems to be lending a lot of support to crude along with the equities.

  86. 86
    zman Says:

    Ram – yes, so far.

  87. 87
    ram Says:

    I’m with Nicky. I don’t understand where the increase in energy consumption is going to come from later this year (SWN). There is no catalyst out there that screams jobs are coming. If there was, large companies would not be shedding tens of thousands weekly.

  88. 88
    Nicky Says:

    Dollar at a fairly critical point Z. Sitting on a support line here which if it breaks is likely to take us down to at least 78.

  89. 89
    Nicky Says:

    Ram I think there is a very good chance they will push the indices higher than we all thought possible – to squeeze the last of the bears out. In fact just read Samborne’s post and think it is spot on.(#57).
    I posted last week a target area of between 965 and 1032 for SPX.

  90. 90
    zman Says:

    re 87 – why the SWN reference in that?

  91. 91
    md Says:

    Looking at EIA we consumers are driving almost as much as year ago. DN say 2.5% from LY preliminary figures. But trucks and industry are hurting big time in every other complex from diesel to Other Oils DN between 12-30%. So avg. consumption is DN 10%YOY from LY preliminary numbers.
    But VLO is still making .50 per qtr. so does it matter.

  92. 92
    ram Says:

    I thought it was the SWN ceo that stated yesterday he sees an increase in energy usage later this year.

  93. 93
    zman Says:

    He was saying he thought the economy would begin to recover later in the year. I’ll hunt down the quote.

  94. 94
    zman Says:

    md – good points, the stock prices have already discounted the weak demand environment when you look at historical PE multiples or from a replacement cost metric.

    Re SWN – on the gas side, just to be clear, there is the possibility of increasing demand from chemicals and the coal backout from the electricity equation angle but that’s not my major driver on prices here. The drop in U.S. production won’t be a trickle it will be a major leak by year end if rigs don’t rebound. Canada is falling and still no one mentions that despite the fact that it swamps LNG in terms of imports. So its supply that will be the stabilizing factor, demand returning will be gravy to prices.

  95. 95
    zman Says:

    Ram – I can’t find his comment in the transcript, not coming up in a word search. I wouldn’t make to much out of it…its just a CEO saying things will recover sooner or later and they are believe prices will trend up towards year end (as per the points in 94) which is why they have not yet hedged 2010 volumes.

  96. 96
    ram Says:

    Thanks Nicky.

  97. 97
    zman Says:

    Was my explanation on SWN and energy demand clear Ram?

  98. 98
    zman Says:

    BOP and all – PQ back above $3, that should be a low expectation quarterly report coming up, they are moving pretty slowly right now but have good asset value. I’m holding the common for the long run.

  99. 99
    ram Says:

    Yes.

  100. 100
    zman Says:

    Cool, thanks, just making sure.

  101. 101
    zman Says:

    NG gave up its gains and is down 3 cents at $3.41 as we approach the close of the regular NYMEX session. EIA still mum on the natural gas monthly schedule for release today.

  102. 102
    zman Says:

    … and LNG (the company) now below $4. If you are in the “Tsunami of LNG” camp, there is probably no better play than LNG (the company), as they have built a lot of state of the art regassification and storage infrastructure along the U.S. Gulf Coast which is now gathering much dust.

  103. 103
    ram Says:

    When are the Fed minutes released?

  104. 104
    zman Says:

    I took 1 of those aforementioned FSLR calls just to make me pay attention to the conference call and keep on the story and because I’m a glutton for solar punishment. Not going to ZTRADE it as I took it when I mentioned that’s what I was going to do. The June call should give me some added protection if do indeed muck up the call. I think the numbers will be respectable and the story remains strong. It will be interesting to see if they have further squeezed the cost per watt below last quarter’s record level.

  105. 105
    zman Says:

    Fed kept it at 0 to 0.25%, reaffirmed plans to buy treasuries.

  106. 106
    zman Says:

    Will listen to the OII call but don’t plan to play after the run it has had.

  107. 107
    zman Says:

    SP blowing through those key levels. Dow up 240.

    Text of the Fed statement:

    http://www.marketwatch.com/news/story/Text-FOMC-statement/story.aspx?guid={A1CA3C64-8C62-428E-9652-91DDDFE083FD}

  108. 108
    BirdsofpreyRcool Says:

    Fed also said that the economy has improved modestly, since March.

    Financials and credit are both having a very strong day. Best day for credit in recent memory. Financials and credit got us into this fine kettle of fish… so, they will have to lead us out. They seem up to that task… today, at least.

  109. 109
    BirdsofpreyRcool Says:

    For most of you, this won’t mean much… but I am now seeing the HY CDS index quoted up 2 1/4 points. A big move in the high yield index is 1/2 point. A full point is a 2-sigma day. I can’t recall the last time I saw a 2 1/4 point move up.

    HY 78.75

  110. 110
    zman Says:

    Thanks BOP – very much appreciate your bond color. This looks like a short killer event.

  111. 111
    BirdsofpreyRcool Says:

    The stock market may bounce around here, for the rest of the day… taking out stops on the upside and stops on the down. But, it feels like a sigh of relief has collectively passed through the credit market, starting this morning. Not sure there is any one, single catalyst. Think it is the collective action of a lot of little things. But, with a stronger credit market, that puts a stablizing support under a whacky stock market.

  112. 112
    zman Says:

    Later for the FSLR call, things to compare to when listening:

    http://zmansenergybrain.com/2009/02/25/wednesday-morning-4/

  113. 113
    BirdsofpreyRcool Says:

    z — I would agree with the short killer statement, except that I am seeing a broad rally in single names too, not just the credit indices. That indicates real longer-term buyers (like mutual funds, insurance companies, pension funds)… and not just hedge funds, playing paddle tennis with each other.

  114. 114
    zman Says:

    I hear ya BOP, just noticing some of the bigger short names in the energy space are up a lot more than the group in general.

  115. 115
    BirdsofpreyRcool Says:

    anybody ever look at Xtreme Coil Drilling (Toronto: XDC CN)? A savvy old sell-sider was just talking about it. Looks like it might have started life with VC-backing.

  116. 116
    zman Says:

    BOP – not me, good question for Reef or Jay.

  117. 117
    Garyinhou Says:

    Hey Z.. can you elaborate on the bigger energy short names please.. plus you gave me a handy dandy website or link to short info a few weeks ago.. Thanks

  118. 118
    zman Says:

    Gary –

    Bigger short names are in a chart at the bottom of the E&P tab. You can see GMXR for instance is the second highest short on the list and its up 16+% today

    That website is:
    http://shortsqueeze.com/

  119. 119
    reefguy Says:

    BOP- used for slim hole shallow drilling. It is hard for it to compete against paid for(many times) junky old iron and sundry equipment. Was nearly justifiable when casing was sky-high, now I cannot see the need except in special applications.

  120. 120
    md Says:

    EIA NG monthly posted

  121. 121
    zman Says:

    Thanks md

    Production increases slightly on a daily basis from Jan to Feb. Increase was due to higher Gulf of Mexico volumes which are still recovering from storms last season and from new deepwater associated gas production.

    Texas saw its 3rd month of rollover although the dip was slight.

    I’ll have the whole slide show out late tonight.

    Stepping out for 30 minutes, back before the close.

  122. 122
    BirdsofpreyRcool Says:

    reef — thanks. I heard those guys have “new” technology that allows for deeper and horizontal drilling. Does that make sense?

  123. 123
    BirdsofpreyRcool Says:

    Leaking out that Obama is going to announce a Chrysler bankruptcy tomorrow.

    Kind of a weird thing for a President to announce… but, it’s a weird world we live in.

    That headline seemed to kick the mrkt in the head a little.

  124. 124
    md Says:

    Did you see the cartoon today about the guy on the shop floor asking to speak to the manager and being taken to the white house.

    EIA Dec and Jan production numbers minor revision. Electric consumption s/b 40BCF higher based on Electric preliminary numbers

  125. 125
    tater Says:

    That guy would announce his last BM if would get his face on TV and I don’t care if you’re a conservative or liberal, there’s no denying it.

  126. 126
    BirdsofpreyRcool Says:

    KOG — hearing they completed their first well and are working on completing the 2nd. Hope we will hear about both on the conf call on May 7th as it sounds like there was a technical problem on the first well, which can be corrected. 2nd well will be a better test of production at that end of KOG’s acreage. It is believed it will IP at as much as 1,200 bopd.

    Hearing that wells near their 3rd/4th location (2 wells, drilled from the same pad) are IP-ing around 2k bopd. They think they will also achieve that rate there.

    Stock moving up on these scout reports… not any news about a partnership or sale of the company.

  127. 127
    Garyinhou Says:

    Three people briefed on the deal say Italian automaker Fiat Group SpA will sign paperwork by Thursday to become a partner with Chrysler LLC.

    The partnership is the last piece of a huge restructuring plan needed to keep Chrysler alive. The U.S. government has lent Chrysler $4 billion and gave it until Thursday to get concessions from unions, reduce debt and take on a partner or face liquidation.

    The United Auto Workers union is expected to ratify a cost-cutting contract Wednesday night, and major banks have agreed to reduce Chrysler’s debt.

    The people briefed on the deal say Chrysler could still go into a short bankruptcy if about four dozen smaller lenders don’t sign onto the banks’ agreement.

    The people did not want to be identified because the deal has not been made public.

  128. 128
    BirdsofpreyRcool Says:

    ROUNDUP: OBAMA CALLS ON CHRYSLER BONDHOLDERS TO SACRIFICE
    2009-04-29 19:42:47.890 GMT

    Eds: Adds Chrysler CEO letter
    Washington (dpa) – US President Barack Obama called on Chrysler LLC bondholders to make sacrifices in order to keep the nation’s third largest automakers from filing for bankruptcy.
    Obama, speaking at a town hall meeting in Arnold, Missouri, credited the autoworker unions for taking the necessary steps to help Chrysler avoid bankruptcy protection by accepting a new labour agreement.
    “One of the key questions now is: Are the bondholders, the lenders, the money people, are they willing to make sacrifices as well?” Obama said. “We don’t know yet.”
    Chrysler has until Thursday to present a plan to prove its long-term viability, or risk losing 4.5 billion dollars it has received in emergency government loans. Chrysler is also working on a merger with Italian carmaker Fiat.
    Chrysler is still waiting to hear from its smaller lenders about a proposal to accept 2 billion dollars in cash in return for wiping out
    6.9 billion dollars in debt. Larger creditors like JP Morgan and Citibank have tentatively agreed. A rejection by the small banks would push Chrysler into bankruptcy.
    Chrysler CEO Robert Nardelli, in a letter to employees obtained by the German Press Agency dpa, expressed optimism the company will survive without seeking bankruptcy, pointing to the deal with the union on labour agreements and the willingness of the large creditors to accept the debt offer.
    “Im encouraged by this progress and I want you to know I deeply appreciate the sacrifices made by so many constituents to help us reach the restructuring targets established by the government,” he said.
    Obama imposed Thursday’s deadline on Chrysler to present restructuring plans to lose continued government financing.
    The largest US automaker, General Motors, faces a similar deadline June 1.

    [large banks caved into pressure b/c of TARP money… let’s hope smaller holders can make a more rational decision here… ]

  129. 129
    RMD Says:

    I don’t know much about EAC but thier conf. call sounded confident. What is mgt’s reputation?

  130. 130
    zman Says:

    RMD – I’ve never heard anything bad there.

    FSLR reporting $1.99 vs estimates of $1.51.

  131. 131
    BirdsofpreyRcool Says:

    RMD — the Brumley’s have solild gold reputations. From my experience, very good, credible management. That said, old man Brumley has stepped away from the daily stuff and the son has taken over. But, the apple didn’t fall far from the tree there.

  132. 132
    Bob Says:

    Listening to replay of MEE cc today…CEO mentioned that they are looking at picking upsome distressed natural gas assets. Blankenship said he did not want to start any rumours, but has heard rumblings of some natural gas producers being in trouble. Wonder if he is referring to small players like TXCO or somebody a little larger.

  133. 133
    Wyoming Says:

    Heading home. I leave you with this. Actually”, will get to it after I read “The Forgotten Man”.

    http://www.getreallist.com/facts-and-myths-about-offshore-oil.html

    I will throw this from ML on the BHI earnings:

    http://screencast.com/t/kfd50NBkY

    Notice the comment about pressure pumping, guess BHI will look at BJS … again?

    You can expand the screenshot twice for a better view.

  134. 134
    Wyoming Says:

    Dont know what happened but his book is Profit from the Peak

  135. 135
    zman Says:

    FSLR moving nicely through $164, up about $13 post close. Here’s to management not throwing cold water on the stock again during the conference call.

  136. 136
    BirdsofpreyRcool Says:

    tater — #125… you crack me up.

  137. 137
    BirdsofpreyRcool Says:

    listening to the Chrylser and GM bondholder discussion on CNBC… it is amazing to me how even the “expert” talking heads have NO CLUE how a reorg/Chapter 11/bondholder negotiation/preference of payments works.

  138. 138
    BirdsofpreyRcool Says:

    END OF DAY OVERVIEW

    · Equities & credit continue a solid rally, though stocks finish off best levels; SP500 cash closes at 873.5, a new closing high, but below the key 875 technical level many would have liked to see in order to confirm a real break-out. Also, volumes aren’t as heavy as some would like to see w/the sp500 threatning to break up towards new levels. That said, bias remains to the upside and equities remain very resilient (ignoring bad GDP data this morning, more talk of swine flu spreading, worries about banks needing more capital, etc). The futures desk says to watch watch 860-862 for support…there was some heavy resistance in the 866-872 range on the SP futures, with stops most likely above 872 (high from April 20th).

    · The credit desk says the market feels solid; HY index +2pts, HG is 9bps tighter, cmbx up 5/8pt. GS issued $2bn of 5yr FDIC bonds at T+410 and has since rallied sharply to T+380.

    · Some of the themes of this rally: 1) encouraging eco headlines, inc. today’s GDP report; 2) risk assets def. being bought, not just in equities but also credit (IGs tightest since Sept); USD selling off and EUR/JPY rallying; secondary market prices act well but new issuance also strong (see all the bank non-wrapped debt issues, secondaries in builders, REITs, etc). The Treasury’s PIPP program drew 100+ applications for managers according to a release today; 3) comfort around the bank stress tests (Bloomberg said at least 6 banks may have a capital deficit, although appears like gov’t will push pref/common exchange offers vs. incremental TARP infusions); 4) earnings season coming in better-than-expected (according to a Bloomberg headline today, companies are beating forecasts by the largest amount since Sept).

    Intra-day headlines – a lot of big events today (GDP, refunding size, FOMC)

    · FOMC decision (hit 2:15pmET) – Treasuries sell-off after release of statement as Fed didn’t raise buyback size; 10yr yields break up above key 3%. The Fed noted that the pace of contraction appears to have slowed although they keep the same language on inflation. There was no change to the size of the MBS, agency debt, or Treasury buyback amounts. There was no change to the rate band and no dissenters (everyone voted in favor).

    · Treasury – the Treasury announced this morning that it would be selling $71B in its refunding next week (the number was pretty much inline w/median forecasts on Bloomberg and compare to $67B in the Feb funding); minutes of the refunding meeting downplay yesterday’s speculation that TSY may issue a 50yr bond. The Treasury sold $26B in 7yrs today (results hit @ 1pmET)

    · GDP takeaways – St enthused by inventory decline as well as strong consumption numbers – Today’s number was about 1-1/2% points worse than expectations. Weaker-than-expected inventories and stronger-than-expected net exports about offset, with most of the miss concentrated in final sales to domestic purchasers. Within that broad category, business fixed investment in both structures and software was worse than anticipated and government spending also underperformed expectations. The forward-looking implications from the miss are mixed to slightly positive for 2Q GDP: weaker inventory building in 1Q should provide some support to growth going forward, though this is partly offset by unexpected strength in net exports which could be hard to sustain.

    · Chrysler – Bloomberg reported late in trading on Wed that Chrysler will announce a pre-packaged bankruptcy on Thurs along w/a Fiat partnership; the Fiat partnership would be created inside bankruptcy according to Bloomberg.

    · Retail stocks got a lift in the afternoon after WMT CEO Castro-Wright made positive comments re consumer spending. Castro-Wright said US customers are spending more on discretionary items as payroll taxed come down/gasoline price fall and that the co is having a strong Easter (bodes well for Apr. SSS).

    · Paul Volcker said mid-day that the economy is “leveling off at a low level” and doesn’t need a second fiscal stimulus package (Bloomberg)

  139. 139
    zman Says:

    FSLR call going well, putting a lot risks to rest and outlining some good growth opportunities.

  140. 140
    RMD Says:

    Thanks for thoughts on EAC.

  141. 141
    zman Says:

    RMD – wish I had more to offer, will look over the names roster to see if I know anyone when I get off the FSLR call. That call is going uber well.

  142. 142
    zman Says:

    FSLR call concluded, stock at $173 to $174 for morning reference.

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