Friday … And Rome Burned

75 thoughts on “Friday … And Rome Burned”

1. On the tropics front, a little disturbance in the southern Gulf and one out in the middle of the Atlantic but not much near term chance of development for either of them.

2. By Nick Heath
   Of DOW JONES NEWSWIRES
   LONDON (Dow Jones)–Crude oil futures fell more than $3 in European trade
   Friday as uncertainty surrounding the future of a U.S. financial bailout
   package prompted market participants to trade out of long positions and wait on
   developments.
   Oil prices had firmed Thursday on anticipation that a $700 billion rescue
   package was nearing completion, but opposition from Republican lawmakers late
   in the day scuppered hopes of an agreement, stirring fresh doubts over the
   proposal’s outcome.
   The impasse plied downward pressure on crude prices Friday, and while talks
   are set to resume Friday morning, expectations are now growing that the plan
   will need to be revised to secure all-party approval.
   “It appears the plan will be watered down and (we) therefore question whether
   it will be as effective as many might previously have thought,” said Michael
   Davies, head of research at Sucden in London. “At the same time there are also
   many that feel that the plan will do nothing at all to solve the problems.”
   At 1101 GMT, the front-month November Brent contract on London’s ICE futures
   exchange was down $2.54 at $102.06 a barrel.
   The front-month November light, sweet, crude contract on the New York
   Mercantile Exchange was trading $2.72 lower at $105.30 a barrel.
   The ICE’s gasoil contract for October delivery was down $3.50 at $964.50 a
   metric ton, while Nymex gasoline for October delivery was down 705 points at
   262.68 cents a gallon.
   While debate over the proposal is expected to dominate market activity Friday,
   from an oil market perspective, doubts hang over whether any successful passage
   of a proposal will contribute to shoring up physical demand for crude amid an
   otherwise bleak economic landscape.
   “The latest political debacle will not help consumer sentiment. Even if the
   plan is passed, we are not in the camp that believes that it will do anything
   to improve oil demand,” said Olivier Jakob, managing director of Swiss
   consultancy Petromatrix. “This plan is a rescue plan to prevent a collapse of
   the financial system and not a plan to boost the economy. The rescue plan’s
   impact on the economy will be a lengthy process and will not immediately put
   the U.S. driver back on the road.”
   And signs of economic weakening elsewhere suggest demand for crude outside the
   U.S. could also wither. The German Ifo business climate index released
   Wednesday declined for the fourth consecutive month in August, promoting
   renewed talk of recession across the eurozone.
   “The United Kingdom and Germany are already in the throes of a recession,
   while France and Italy, and therefore the eurozone as a whole, can at least
   still hope for stagnation. In Japan, however, such hopes are probably finally
   passé,” said Jochen Hitzfeld and Nikolaus Keis, analysts at UniCredit in
   Munich.
   “It is no wonder, therefore, that physical demand for crude oil from the
   industrialized world is already falling and will continue to decline in the
   coming quarters.”
   Market participants suggested Friday that amid weak market sentiment, demand
   concerns are likely to remain the market’s dominant focus, in spite of recent
   supply-side disruptions such as hurricane-linked production shut-ins in the
   Gulf of Mexico, and militant activity in the Niger Delta.
   With traders continuing to eye developments in other financial markets,
   analysts predicted price activity will remain volatile.
   “Financial market uncertainty is likely to continue blurring the usual links
   between commodity supply and demand and price, creating the conditions for
   further high levels of volatility right across the sector,” said analysts at
   Barclays Capital.
   Given recent financial market upheavals – such as the collapse of investment
   bank Lehman Brothers and the surprise sale of Merrill Lynch to Bank of America
   – emerging over weekends, oil market participants will be taking few risks
   Friday.
   “Ahead of the weekend I don’t think anybody will be trading any large
   positions, on concerns over bad news or any more fallouts over the weekend like
   those we’ve seen in the last couple of weeks,” said Andy Sommer, analyst at HSH
   Nordbank in Hamburg. “Nobody really wants to go into the weekend with a long
   position – they’re waiting to see what the guys in Washington do.”
   -By Nick Heath, Dow Jones Newswires
   Dow Jones Newswires
   09-26-08 0722ET

3. Northeast about to get first blast of cooler weather.

   http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=5

4. Cash-Rich Oil Firms Snap Up Assets

   By BEN CASSELMAN
   Of THE WALL STREET JOURNAL

   The turmoil on Wall Street is reshaping the U.S. oil industry, forcing debt-laden smaller producers to sell assets and creating opportunities for larger, cash-rich companies that until recently had been criticized by investors for spending too conservatively.

   The latest example: Occidental Petroleum Corp., one of the largest independent oil producers, Thursday snapped up the 50% interest it didn’t already own in oil and gas fields in Texas and the Rocky Mountains from smaller company Plains Exploration & Production Co. The $1.25 billion price tag was nearly 20% less than the $1.55 billion Occidental paid less than a year ago for the first half of the assets.

   The deal comes amid a rapid reversal of fortunes for many in the energy sector. In the first half of the year, energy prices skyrocketed and investors eagerly lent money to oil companies, one of the few industries still thriving in the struggling economy.

   Wall Street rewarded companies that spent aggressively on finding and drilling new wells, such as natural-gas producer Chesapeake Energy Corp., shares of which soared 77% this year, peaking July 2 with a closing price of $69.40.

   Companies that spent conservatively and built up cash saw their stock go up far less; Occidental shares rose 15% in the same period, closing at $88.42 on July 2.

   Oil prices, though still high by historical standards, have declined more than 25% from their July peak. Natural-gas prices have fallen even more sharply as rising production has led to fears of a looming glut. And many energy companies have seen their share prices plummet 40% or more from their highs in June or July.

   The shift has led to a scramble for cash just when the global financial crisis has made it hardest to come by.

   Chesapeake, the U.S.’s largest producer of natural gas by output, Monday said it would cut capital spending by $3 billion, or 17%, through 2010. To help fund its drilling program, the company said it will sell $13 billion of assets during that same period.

   But experts said the marketplace for oil-and-gas properties may have more sellers than buyers. Even some companies that want to buy are struggling to find the cash for purchases. Wednesday, Dominion Resources Inc. said it was scaling back a sale of drilling rights in Appalachia after its buyer, closely held Antero Resources Corp., had difficulty borrowing the money it would need to drill the wells.

   Antero will buy 114,259 acres for $347 million, down from its original plan to purchase rights to 205,000 acres for $552 million. The remaining acres will go back on the market where they will compete with assets being sold by Chesapeake, among others.

   “There are a lot of property packages on the market right now,” said David Heikkinen, an analyst with energy-focused investment bank Tudor Pickering Holt & Co.

   That means buyers can set more aggressive terms. Occidental President and Chief Financial Officer Steve Chazen said his company’s deal with Plains began with a phone call from Plains CEO James Flores. “We told them what the price we were willing to pay was, and [Mr. Flores] says, “Well how about more?” and we say, “No,'” Mr. Chazen recounted.

   Plains representatives couldn’t be reached for comment. But in a statement, Mr. Flores said the deal will allow the company to refocus its efforts on assets in the Haynesville Shale, an emerging natural-gas field in Louisiana and Texas where the company bought a 20% stake from Chesapeake earlier this year.

5. Regarding the OXY/PXP deal, I would again point out that while prices are lower now than they were when the first 50% of the reserves were purchased, the piece of the assets that were bought last time around had far greater production on it than what was bought yesterday. While the firms look at reserves in these deals (which were roughly 50/50) they also look at current cash flow and the package sold at the end of last year was producing quite a bit more CF than yesterday’s asset sale generates today.

6. Hope you like the smell of napalm in the morning. Otherwise, this will not be your sort of day.

7. Pretty historic times my friend. No more Merrill, Lehman, Wamu. I heard Goodrich, the tire company can’t get their hands on $360 million they had in a money market account. No bueno.

8. By Brian Baskin
   Of DOW JONES NEWSWIRES

   (This article was originally published Thursday)

   NEW YORK (Dow Jones)–Hurricanes Gustav and Ike are shaping up to be worse for
   the short-term outlook for the oilfield services sector than the devastating
   2005 storms, which included Katrina.
   Neither of the recent hurricanes cut quite the same swath of destruction as
   Katrina and Rita, which damaged nearly every platform and rig in the Gulf of
   Mexico before reaching land. But this year’s storms were close to a worst-case
   scenario for oilfield services firms – big enough to shut down work in the Gulf
   for weeks, but not causing the sort of damage that leads to lucrative repair
   contracts.
   The main impact, analysts and the companies themselves have warned, is from
   nearly a month’s worth of lost workdays offshore due to rig evacuations, and it
   will be felt mostly in the current quarter.
   Several analysts have lowered third-quarter estimates across the sector.
   Still, the hurricane’s effect on stocks has so far been lost amid a general
   slide in equities prompted by problems in the credit market, as well as
   additional losses for energy firms as oil prices hit a six-month low. Some
   investors have opted to ride out the earnings storm, in the assumption that
   business will return to normal by the end of the year.
   The effects of the storms will take up to 10 cents a share off some companies’
   bottom lines, said Kurt Hallead, an analyst with RBC Capital Markets.
   “You’re going to lose the revenue when you’re not out working on the rig, and
   you’re not cutting back costs,” Hallead said. “(Losses) may bleed over into the
   fourth quarter, depending on how much damage is done.”
   Hurricane Gustav passed through the Gulf of Mexico over Labor Day weekend,
   forcing a total evacuation of offshore facilities. Nearly all of those workers
   remained onshore as Hurricane Ike entered the region on Sept. 11. About
   two-thirds of oil and gas production was offline as of Tuesday, according to
   the federal agency overseeing offshore energy activity.
   The major well-servicing and technology companies will bear the brunt of the
   storms. Their personnel work on drilling rigs and platforms in the Gulf of
   Mexico, and most have sat idle – and unpaid by customers – onshore since the
   Gulf was evacuated ahead of Hurricane Gustav in late August. Baker Hughes Inc.
   (BHI) and Halliburton Co. (HAL) executives have both said the storms will
   likely affect quarterly results.
   “We’re going to have … five weeks or so of disruption in the Gulf of
   Mexico,” with Baker Hughes normally generating $20 million a week in revenue
   from the region, said H. Gene Shiels, the company’s assistant director of
   investor relations.
   While the short-term impact may end up greater than in 2005, the Gulf hasn’t
   seen the sort of long-term damage caused by Katrina and Rita, which prevented
   some offshore activity from restarting until well into 2006, Shiels said.
   On Sept. 13, Hurricane Ike scored close to a direct hit on the Houston area,
   where many service companies have both headquarters and manufacturing
   facilities. Some companies, such as Lufkin Industries Inc. (LUFK), were able to
   quickly restart facilities in the area, and did not see a need to change
   earnings guidance. Others were not so lucky; T-3 Energy Services Inc. (TTES)
   shut down eight Houston-area plants, responsible for 80% of the company’s
   revenue, and may have at least one facility down for two weeks.
   The storm, in fact, has been a boon for certain service companies.
   “For the transportation companies – boats or helicopters – hurricanes tend to
   be a positive … you end up moving more people in a shorter amount of time
   than you would in the normal course of business,” said Roger Read, an analyst
   with Natixis Bleichroeder. “For construction companies, it depends ultimately
   on the path of the storm.”
   The stock of Bristow Group Inc. (BRS), which operates helicopters that shuttle
   employees to and from offshore installations, is up 5% in the last month.
   Oceaneering Inc. (OII), which repairs offshore facilities, is also up 5%. But
   Baker Hughes, Halliburton and other general service company shares are down
   between 15% and 20%.
   Still, the damage to the companies’ shares is not likely to persist long-term.
   Investors tend to see hurricanes’ impact as fleeting; business lost in the
   quarter is made up later, as offshore work returns to normal.
   “It’s more of a nuisance and an inconvenience,” than a major, long-term
   earnings event, said Bob Auer, senior portfolio manager for the Auer Growth
   Fund.

   (Brian Baskin covers energy markets for Dow Jones Newswires.)

9. By Brian Baskin
   Of DOW JONES NEWSWIRES

   NEW YORK (Dow Jones)–Crude oil futures dropped Friday as an agreement on a
   federal bailout of financial firms fell through and a major bank failed,
   raising concerns about the immediate health of the U.S. economy.
   Light, sweet crude for November delivery traded $2.59, or 2.4%, lower at
   $105.43 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
   futures exchange traded $2.23 lower at $102.37 a barrel.
   Congressional leaders failed to reach an agreement overnight on a $700 billion
   bailout package for financial firms, after appearing close to a deal Thursday.
   Meanwhile, federal regulators seized Washington Mutual Inc. in the largest bank
   failure ever.
   Crude prices had risen on the prospect of a way out of the ongoing financial
   sector meltdown, which threatens to deepen the slowdown in the wider economy,
   hurting oil demand.
   Oil futures now trade close to Wednesday’s settlement, indicating that
   Thursday’s gains were largely on the assumption of a completed bailout deal.
   Traders said the vast majority of investors are unwilling to gamble on oil
   prices moving higher or lower without a clearer indication of how the financial
   sector’s problems will shake out. A successful federal rescue could jolt the
   oil market higher, while further bank failures could send oil prices plunging
   back below $100 a barrel.
   “Everyone is on the edge of their seat,” said Dean Hazelcorn, a trader with
   Coquest Inc. “Just knowing the markets could jerk really hard one way or the
   other makes people skittish.”
   With the economy front and center, oil prices are more likely to fall than
   rise, analysts said.
   New home starts and manufactured good purchases both slumped in August,
   federal agencies reported Thursday, in the latest sign that U.S. economic
   growth is slowing.
   “One gets the sense that economic growth is not only turning sharply lower in
   the U.S., but that it is spreading globally as well, with the alarmingly tight
   credit conditions providing little relief,” wrote Ed Meir with MF Global. “This
   is not necessarily a backdrop where commodities can thrive.”
   Front-month October reformulated gasoline blendstock, or RBOB, recently traded
   down 7.63 cents, or 2.8%, at $2.6210 a gallon. October heating oil traded 5.92
   cents, or 2%, lower at $2.9666 a gallon.

   -By Brian Baskin, Dow Jones Newswires
   Dow Jones Newswires
   09-26-08 0919ET

10. And now for something completely different:

    http://www.theway.org/Current/Mar07/Mar07Flash4.htm

11. That got me laughing!

    Thanks.

12. Heard over 50 billion outstanding on credit swaps in regards to WM. Hope the counter party can pay up.

13. Smith new CEO, John Yearwood, is a great leader and manager. No worries in that transition.

14. “McCain’s Brilliant Play: Bets Presidency on Blocking Bailout Deal”

    Interesting take by Henry Blodget and Aaron Task:

    http://finance.yahoo.com/tech-ticker/article/73110/McCain's-Brilliant-Play-Bets-Presidency-on-Blocking-Bailout-Deal;_ylt=AhG1Ii3ZQWGcoMntGZKrYR.7YWsA?tickers=

    (Is it *that* Henry Blodget????)

    Upshot: they think McCain might be onto something.

    Anyways, it’s taken me a while to figure out what I think about all this. But here goes: the question should not be “how to fill a $700B black hole”. It should be “how to invest $700B so the real economy doesn’t crater?” Of course there is a timeliness issue. But does it have to be all-or-nothing & all-at-once? If they screw it up, then what, another $700B from somewhere?

    How about, “OK we are going to spend $700B over time & the 1st 100 is on X and then we’ll work on the rest so it isn’t a gigantic screw-up”.

    I know I know, I’m just dreaming. At the moment, we have the worst of worlds: no-plan, no timetable, no nuttin’.

    Well, enough of my threadbare thoughts. Market hanging in not too badly. Energy not so much.

15. Thanks Wyo – If drilling activity comes off hard, bits and mud probably not where I’ll be.

16. Dman – Dow just marking time waiting on a deal. Credit markets are getting worse. Foreign markets worse than Dow.

17. DJ EIA: Drop In US July Oil Demand Twice Estimated Level

18. The WH acquisition gives them a greater service base, not just a bit and mud co anymore. Especially in North America. Anyway, not the parking lot for my $$ at this time either.

19. Sam – got a link to that story? Its not time for the EIA’s short term energy outlook and I don’t see it on their website. Thanks.

20. High Island area gas production suspended as Enterprise Products says it discovers 42″ pipeline severed. Looks like most production is going to get restored for the Gulf over the next 2 to 3 weeks but I’d guesstimate we could be about 1 Bcfgpd short for the next couple of months.

21. Z – Not yet, just headlines scrolling

22. Z,

    The probability of the general market tanking big is growing. Our financial system is freezing up. The Bailout plans are both unpopular with the public and IMO inadequate to this dangerous situation. What we need among other things is an immediate end to mark to market accounting. It needs to be suspended for a year or so to give us time to work out workable and generally supportable actions and solutions. But I see almost no hope of this happening.

    Again, the stock market except gold is very vulnerable to a major downturn.

    I continue to sell everything I can bring myself to sell (It’s very hard to sell those dancing partner beauties. But if the market tanks they will tank too.)

    I sincerely hope I am wrong.

    Everyone: be extremely careful at this time is my recommendation. If it starts to tumble the effects will ripple and keep it going.

23. #22, also watch your moneymarkets. Commercial paper is freezing.

24. The dance partner list is for when commodities have stabilized. They still have not so I’m not yet in names like GMXR. The CHK I hold for the very long term. Other option positions are small and few. Still holding the DUG calls.

25. Z,

    I realize you had not turned us loose on the dance partners yet but I already owned most of them and bought a few more because I thought they were dirt cheap and wanted to try to catch a falling knife (an ego thing) which was not very bright. So I have a few and maybe I’m not the only one.

    Many thanks for your good advice to wait for the right timing.

26. Mahout. Lots of cheap stuff around. Nobody cares at the moment. This too shall pass. No advice intended, just trying to be clear on what I’m doing (or not doing).

    Market rallying on Harry Reid speech.

27. Z,

    Wrong word “advice”. It should have been your good example. Sorry.

28. Hey, no apologies from you. I thought your read on the dollar in your comments last night were spot on.

29. anyone have any thoughts on selling covered calls on CHK….I’m looking at the Jan 2009 45’s at $2.75.

30. D – I write a little nearer term options on them from time to time. I generally try to do it after a green day and lately have let them expire worthless. Have done better on names like SD where the markets are thinner/premiums are fatter. My reasoning for not going further out is that at some point we will see some winter weather related pops in the group. My two cents.

31. thanks for your help!

32. Refiners: one step forward, one step back. Maybe 1.5 steps. This market needs a high colonic.

33. Just watched a highly partisan diatribe by Gasparino on CNBC. That was way over the top.

34. Hmmm, would you buy a used car from this guy?

    July 12th, 2007
    “This is far and away the strongest global economy I’ve seen in my business lifetime.”
    – Henry Paulson (US Treasury Secretary)

    April 20th, 2007
    “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.”
    – Henry Paulson (US Treasury Secretary)

    May 17th, 2007
    “Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,”
    – Ben Bernanke (Chairman of the Federal Reserve)

    August 1st, 2007
    “The market has focused on this. There’s a wake-up call, and there’s an adjustment to this repricing of risk, but I see the underlying economy as being very healthy,”
    – Henry Paulson (US Treasury Secretary)

    February 28th, 2008
    “I’m seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street.”
    – Henry Paulson (US Treasury Secretary)

    March 16th, 2008
    “We’ve got strong financial institutions . . . Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”
    – Henry Paulson (US Treasury Secretary)

    May 7th, 2008
    “The worst is likely to be behind us,”
    – Henry Paulson (US Treasury Secretary)

    May 16th, 2008
    “In my judgment, we are closer to the end of the market turmoil than the beginning,”
    “I have great, great confidence in our capital markets and financial instituations”
    – Henry Paulson (US Treasury Secretary)

    May 19th, 2008
    “Our policy in this administration is that laws shouldn’t bail out lenders, laws shouldn’t help out speculators,”
    – George Bush

    July 11th, 2008
    Indymac seized by federal regulators

    July 15th, 2008
    “I think the system is basicaly sound, I truly do.”
    –George Bush

    July 20th, 2008
    “it’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”
    – Henry Paulson (US Treasury Secretary)

    September 7th, 2008
    Fannie Mae and Freddie Mac taken over by federal regulators.

    September 7th, 2008
    “Nothing about our actions today in any way reflects a changed view of the housing correction or of the strength of other U.S. financial institutions.”
    – Henry Paulson (US Treasury Secretary)

    September 15th, 2008
    Lehman Brothers files for bankruptcy

    September 16th, 2008
    Government takes over AIG (American International Group)

    September 19th, 2008
    Government bans short selling

    September 19th, 2008
    “We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system’s stresses,”
    “We’re talking hundreds of billions. This needs to be big enough to make a real difference and get at the heart of the problem,”
    – Henry Paulson (US Treasury Secretary)

    September 20th, 2008
    Bush asks congress for $700 billion to avert catastrophic, economic meltdown.

    September 25th, 2008
    Washington Mutual seized by federal regulators

35. Thanks Sam! Your tax dollars hard at…oh, never mind.

36. Z, about your comment “Northeast about to get first blast of cooler weather.
    ”

    Possible effect on natural gas?

    Current stance on CHK/HK calls?

37. Any opinions on how energy e&p and oil react if deal gets done?

38. The cold should give a little boost to gas.

    As far as the calls go, those names and others are suffering from system risk, not individual company risk. I continue to hold but am not adding.

39. Sam – I wouldn’t buy a used car from the guy, no. But a used global economy, no problemo!!

    Fine print: your used economy still runs but may contain unknown number of metastasizing black-hole cancer thingies that will form a massive sort of vortex thingy at some point which will explain the giant sucking noise you would then hear, should that eventuate. Refunds only in post-apocalypse money delivered in wheelbarrows.

40. Gary – I think we will get a bounce as we did yesterday later in the day. What makes today different is a bit of a mystery but the group is definitely underperforming today. Holding DUG calls as long as possible but I think we get a deal by Monday and also a good chance of a rate cut before the open Monday. Some of this selling in E&P, where the % losses are large today, is I am sure end of quarter get it off the books selling.

41. Thanks Z.. contemplating clr common at $40, if get a bounce in few hours/days to 45 I will write oct 50’s on them… went 100% cash few days before ike… mixed results

42. Sambone #34,

    Great series of quotes, Sam.

    As to Paulson, it sure appears like that to a Wall Street man a solution to the crisis is to do what Wall Street would like. ‘Not really the best solution or maybe not even a solution at all, but sure would give a free pass to Wall Steet. It’s kinda like if the only tool you have is a hammer, everything starts to look like a nail.

    In China where they do not have these problems or these goofy and harmful financial instruments running wild, they think the lecturing Paulson is a bad joke.

    As to Bush: Terrible advisers.

    As to Ben: Obviously not nearly a high enough level of competance for the job.

    As to the SEC: An incredible level of harmful incompetance.

43. Mahout – So here we are. Wow

44. Makes sense to me! My advice to you is to start drinking heavily!

    12:30 (Dow Jones) Some analysis billed as “sound financial advice” is
    circulating in the Irish and British markets. An enterprising number cruncher
    has calculated that a purchase of £1,000 sterling of shares in mortgage
    lender Northern Rock, the same amount of lender HBOS and of now-bankrupt travel
    agency XL Leisure exactly one year ago would leave the purchaser about 25 quid
    (a “pony,” in local parlance.) “But if you bought £1,000 worth of Tennents
    Lager one year ago, drank it all, then took the empty cans to an aluminum
    recycling plant, you would get £214,” according to the circular. (RCC)

45. Alright guys, in an effort to brighten the tone here:
    When this bill passes, which stocks would you want to be in to maximize your returns from the pop? What’s your play?

46. Shell sees majority of Gomex oil production back up within 2 weeks. Now producing 39,000 bopd, normal produces 350,000 bopd (that’s out of 1.3 mm bopd). They didn’t give a read on natural gas.

47. Al – my tones not bad, just nothing happening on a Friday that is all about watching DC, not the oil or company news.

    I like what I’m in but the more volatile names like GMXR, GDP and SWN will move with natural gas which I expect to move up a bit soon.

    I like the refiners, especially TSO and FTO for fundamentals but I also think SUN could see a good fall run due to their positioning in the northeast and low heating oil stocks.

    I saw a piece on oil service saying things are worse than people thought in the Gomex but not the kind of worse that helps the names …more of a delay of game for them but no big repair contract at the end of the day so I’m staying away from there except for RIG which is just getting hammered today.

    I think shipping will rally once it looks like some kind of economy stabilization has taken hold. Continue to watch the shipper ETF SEA fall hard and daily (down another 5% today). When it turns that could really snap back and the idea that less ships will get built is a pretty big change from what the industry has seen over the last two years. Again, being patient.

    Among the Majors, I think XOM rocks with bailout passage. Numbers should be coming up there and at COP.

48. Z-Given today’s senario and it’s friday, would you consider adding to the CLR position?

49. K – yes, I am considering it. I don’t see how these guys get away with not doing a deal on Monday. If no deal by Monday morning I think the market takes a header and it won’t matter if you produce crude or make Iphones, you’re going to get crushed. They know that. No one wants to look like they are the one who held it up. My biggest decision is when to sell the DUG calls right now. The losses in the oil group are big and dislocated from the moves in oil and ng which are also big. Volumes are very very light.

50. As I get stopped out of ” longs”, I’m putting the $$ in 3 mos CD’s so I won’t be tempted to buy anything else. Too many idiots have harmed my beautiful country and helped shrink my net worth.
    apbd

51. XLE – interesting.

    APBD – I hear ya. Careful what CD you go with. Bank of the local mattress becoming increasingly popular choice.

52. I agree with being patient. Waiting on FRO again; really liked last weeks move from 44-54. Z, I wasn’t trying to single you out, just trying to refocus myself away from the frustration with the DC’ers. Besides, I always appreciate your dry humor. Thanks for your thoughts.

53. A – ok, I agree to step back from this here ledge because you added that last one. Hey, I know tempers are frayed. I’m just not as smart as those guys on the hill so I have little to say about what they are up to. I do long for the days (which I think will return soon) when stock risk is the focus, not systemic risk. I long to talk about wells and geology and growth rates and not counterparty risk. But I figure that right now, it’s time to read and focus. Apologies if I seem a bit quipish. And I’ll tell my wife you said I have a sense of humor as she seems to think it should be called something else….at least I’m not known for hitting parked cars.

54. Where do I find your comments on the solar cos?

    Mahalo

55. Z, lol love the last line in 53

56. El D – I have not said much on them of late. Will do shortly.

    Boss – And I was the bad guy for just asking the question as to how one goes about doing that. Then even more angry when I sent one of those youtube links to Middle Eastern driving videos.

57. #45- I have bt. wfr, ipi, sd and prgn during the last couple of days.

    I really think that today is the day to be buying. Sell it to them after the announcement.

58. On CNBC – pit trader saying oil down to delay in bailout. Sort of no duh there but the point is that they are not looking at new data we have not seen. Sam if you do see that story I’d like to see what they mean by that. I know they are talking the monthly data but are they talking percents or barrels?

59. Here’s what I got;

    10:14 DJ EIA: US July Revised Oil Use -5.8% Vs Yr Ago

    10:14 09/26 *DJ EIA: US July Revised Oil Use -1.198M B/D Vs Yr Ago

    10:16 09/26 *DJ EIA: Drop In US July Oil Demand Twice Estimated Level

    These were “Headlines”. Nothing else has come across.

60. z- #53 – couldn’t agree more. I dislike politics as it is.

    I have taken some solace in a couple of things: 1.volumes are extremely light. 2.Most of the stocks i follow are down but haven’t continued to go down thru the day, they opened down and have more or less stayed right there. 3. Oil and ng have risen into the close at the NYMEX a bit. 4. It would appear that the markets are giving the folks in DC some time to hopefully get this right the first time.

61. Just watched Marc Faber on CNBC…what a Debbie Downer!

62. Afternoon all.

    Marc Faber on CNBC calling for 500 SPX. I suggest someone listens to him as he has been spot on so far.

    Broader market seems to be buying the fact the deal will be done by Sunday night. 1187 is the absolute line in the sand for the SPX. I cannot stress strongly enough how key this level is. If support starts to fail then the SPX will be at 1060 in a heartbeat.

    So oil gets a touch excited into the close over the thought of the bailout – will be a short lived rally I would have thought. I mean even with the bailout we are looking at the US being in a recession for at least another year maybe longer so this fact will sink in sooner rather than later.

    Interestingly gold is finely poised and pretty much closed the week where it started. So its not telling me much!

63. Oops sorry Douglas – didn’t realize you hadn’t already commented on Faber.

64. Nicky – got levels for on oil?

65. Nicky…no apology necessary…I enjoy reading your thoughts and opinions.

66. By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures dropped Friday, with the market
    concerned that even a federal bailout of financial firms would not be enough to
    restore declining oil demand.
    Light, sweet crude for November delivery settled $1.13, or 1.1%, lower at
    $106.89 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange settled $1.06, or 1%, lower at $103.54 a barrel.
    Oil futures, like other commodity and currency markets, were in limbo Friday
    as traders waited for congressional leaders and President Bush to settle on a
    final bailout package for troubled financial firms. Investors see the $700
    billion plan as the best hope of avoiding a full economic meltdown, a fear
    punctuated as federal regulators seized Washington Mutual Inc. (WM).
    Traders nervously bid crude lower in the absence of a deal, though few were
    willing to take bets on a big price move in either direction.
    “The prospect that a deal gets done helped support the market,” said Andy
    Lebow, senior vice president for energy at brokerage MF Global Ltd. (MF) in New
    York. “It doesn’t mean the price is going to rally … the market is still
    grappling with near-term demand issues.”
    Oil prices had risen above $108 a barrel on Thursday as a deal appeared close,
    only to fall back when talks fell through overnight. House Majority Leader
    Steny Hoyer, D-Md., said Friday on CNBC that an agreement could be reached by 6
    p.m. Sunday.
    The plan is likely only to contain damage to the economy, rather than spark a
    rebound that would lift oil demand, said Addison Armstrong, with Tradition
    Energy in Stamford, Conn. U.S. oil demand has dropped for months and is off
    about 4% from a year ago, according to the U.S. Energy Information
    Administration, while European consumption is only beginning to decline.
    “(The bailout) is not big enough now … the market is going to take that as a
    disappointing sign,” Armstrong said. “It really calls into question where the
    growth will come from.”
    Armstrong sees oil prices quickly returning to the levels seen on Sept. 16,
    before the bailout talks began, when crude settled at $91.15 a barrel. Prices
    as low as $80 a barrel are possible, though at that point the Organization of
    Petroleum Exporting Countries would likely halt further declines by cutting
    exports, he said.
    The oil market has seen low trading volume this week, partly due to economic
    uncertainty but also as investors have had trouble gaining access to credit.
    The bailout should loosen up lending a bit, encouraging busier trading next
    week, Lebow said.
    Front-month October reformulated gasoline blendstock, or RBOB, settled 3.22
    cents, or 1.2%, lower at $2.6651 a gallon. October heating oil settled 3.09
    cents, or 1%, lower at $2.9949 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    09-26-08 1521ET

67. Something I sent out this week to someone who was ready to jump out of a window and was concerned about his accounts;

    Big Ron,

    OK, if the overall financial market freezes up, we will see another 1929. This could happen because of a lack of “Confidence”. That is what is and has run the credit/financial markets all these years. If we have a freeze up, you will not be able to withdraw money, your company will not be able to borrow to make payroll, etc.

    So what do we do? We have a situation unlike anyone alive has ever seen. That is why you see Congress actually talking (Wow, think of that?). The “Bailout” is to free up the financial markets, to restore confidence. Will they pass it? I think so. If the credit market freezes up, then there is no place to hide. Yes, you could sell everything and go to BDP (Bank deposit program) which is FDIC insured. If we have a freeze, the US dollar will freefall, so your now savings will lose value. So what do you do? Buy Gold if you think it will freeze, go to cash and hope, hope my friend that all will be well.

    Now if our firm fails, then you are protected by SPIC which is funded and has $. It is an insurance policy for brokerages. It doesn’t allow for loss on your portfolio though. Ok, that’s the bad news and worst case.

    What I believe is that Congress will pass something to restore confidence. Also you and I have reviewed the portfolios with a fine tooth comb. Should we sell? Yea, we could raise a lttle more cash at this point, but overall you have decent companies, making money, and don’t look like they are going out of business. I’m not selling. What I want you to think of is buying. Wow, what did I just say? Buying. Not today, but soon. This market has not reached a bottom yet, but it will soon. Here is a story that I want you to read twice;

    Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a
    private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

    Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in
    that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will
    unload your interest on him.

    Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

    But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If
    you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

    Ben’s Mr. Market allegory may seem out-of-date in today’s investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of
    investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising “Take two aspirins”?

    The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business
    judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben’s Mr. Market concept firmly in mind.
    Warren Buffett
    Warren Buffett just invested 5 Billion in Goldman Sacks. This guy has seen it all and learned from Ben Graham. If Warren Buffett is buying, we should also. If he thought that all was lost, he would not be buying. I believe in taking advantage of “Mr. Market” and I don’t believe that our world as we know it will disappear or that we will have a freeze up. Yes, you can raise a little more cash here, but be ready to buy soon! EOM

68. Sam, well said.

69. 285 point swing today.

70. Tini time

71. Earlier there were a couple of posts about Marc Faber’s appearance today on CNBC. Contrary to what was posted then, he did not predict that the S&P500 would drop to 500. He did quote someone else in his newsletter who made that prediction. He believes that the stock market will rise after a bailout deal gets done, but not take out the highs of earlier this year. Then the markets will fall as the world experiences a global recession. He thinks gold will do relatively well under any scenario, but believes that it is possible that the US will outlaw the trading of gold sometime in the future. After seeing the degree of intervention during past week, who could deny that this is within possibility. Here’s the link:

72. Sambone #67,

    So good, thanks.

73. Why would he quote someone else as saying SPX 500 if he didn’t concur or even print something in his newsletter that he didn’t agree with. After all he is very bearish.
    That said I apologize if I misquoted him – I was only half listening as ever to the dross on CNBC and it did seem quite in line with his view on the global economy.

74. Z – will do some oil levels and broader market levels over the weekend.

75. Re 73: I think Faber quoted the other, unnamed newsletter writer in this context: if you think I’m bearish, you should hear what this guy is saying.

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