Free Wheelin’ Wednesday – Oil Inventory Preview + Haynesville Comments

Posted on by zman

Word of an auto bailout deal has the market pumped. Energy, which outperformed in a down market day yesterday looks poised to repeat that performance again today. I've included a revised look at the potential impact of the Haynesville players positions in the post today as well as thoughts on oil for the oil invetory report and a better look at HK's Haynesville wells and some math on what it might mean for them. Have a good day.

In Today's Post:

  1. Holdings Watch - added a little more HK on news
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today - HK well wrap, A Revised Haynesville Player Graph
  5. Odds & Ends

Holdings Watch

  • HK - $10KP Trade - added (1) HK $17.50 December Call (HKLW) for $0.70 to the current 3 in the portfolio.
  • HK - Regular account - added HK $15 December calls (HKLC) for $2.

Commodity Watch:

Crude oil fell $1.64 to close at $42.07 retreating with the equity markets. Lack of further bullish speculation out of OPEC contributed to the slide as did a small bounce in the dollar. Noise, nothing more. While the chorus of bearish voices continue to decry oil north of $10 per barrel a number of prominent market participants are starting to talk about a 2H09 economic recovery driving oil back into the $60 and $70 with longer term targets of $150 to $200 being espoused as large development projects, both conventional and of the oil sands nature seem to drop off the map on a weekly basis. This morning oil is trading up $2 ish but it is also just noise until the weekly EIA report comes out. See the breakout in the next section as I think we could see another downside surprise (bigger than expected draw down on distillate inventories). 

  •  EIA Watch: Dropping Demand Target Again. Ok, this is yesterday's news but its good to keep track of these guys' thoughts. 2008 global demand now seen down 50,000 bopd and 2009 down another 450,000 bopd.
  • China SPR Watch: China is said to be filling their third government stockpile of crude as prices slide.

Natural gas fought off early losses brought about by over supply fears due to the sudden deluge of Haynesville Shale well news climbing a penny to close at $5.58 on the day. This morning gas is trading slightly with oil.

  • Weather Watch: Gas weighted HDDs are forecast to climb to 194 this week, up from last week's 192.
  • LNG Watch: BG commented that a 50% increase in LNG liquefaction capacity over the next 3 years will lead to oversupply but that the market will then re-tighten.
  • Fertilizer Watch: AGU is reporting it is cutting back on nitrogen production (which consumes gas) as fertilizer storage in North America approaches full levels due to the financial crisis.

Oil Inventory Preview

ZComment: Reporters were so busy speculating about what OPEC will do next week and what the IEA will say about demand on Thursday (think lower) that they did a lousy job of posting the numbers for today's EIA big 3 numbers (oil, gasoline and crude). I saw a range of 1 to 1.3 mm barrel build for crude and the 900,000 barrel expected decline in distillates but saw little mention of and no numbers for gasoline expectations. Since analysts and traders were wildly off last week it probably doesn't matter than much. Here's what I think does.

  • Crude - Oil will trade in relation to distillate demand which should pick up in this week's report. Imports will again be the swing factor as I doubt the refining segment is going to break its neck producing product for next to nothing (see the refining tab). Not to be too counterintuitive but a big build in inventories here would probably be more positive for long term oil prices than not, coming just in front of the next OPEC meeting where the Cartel must put up or shut up. A big build would likely steel their resovle to come with the bull's (and mine for that mattter) much hoped for 3 mm bopd cut on the 17th.
  • Gasoline - Time to see demand surpass year ago figures as per that Spending Pulse survey. If not this week then next for sure. Sell your Prius and buy a Suburban, they're cheap on red tag sales right now and the warranty will be honored, trust me.
  • Distillates - people were shocked last week when cold weather, as measured by heating oil population weighted heating degree days, eventually transalted into a draw on heating oil inventories. The fact that production of heating oil eaked lower in last week's report also contributed but the cold was the main culprit. Well, it was slightly colder last week with those HDD's jumping to 211 vs 209 in the prior year. Recall last week saw distillate inventories drop by 1.7 mm barrels. Again, these numbers aren't as linear as the more cold = more natural gas demand but they do correlate over time and it has been cold.

Stuff We Care About Today:

(HK)' Haynesville Wrap and Long Term Thoughts:

  • Putting today’s HK well news in perspective with their guidance:
    • 3Q production: 315 MMcfepd
    • 4Q guidance: 355 to 365 MMcfepd
  • Yesterday's three wells initially add 73 MMcfepd gross or about 48 MMcfepd net after royalties and half that figure after their first 3 months considering the usual declines.
  • Production at the end of the third quarter was higher than the 315 MMcfepd quarterly average but deducting normal declines while adding say 20 MMcfepd or so for these wells which came on late in the quarter may not ensure the 4Q target is reached but it doesn't hurt and it sets up a strong start to 2009. They’d already modeled a good ramp in and nothing like these wells was in the mix. So look for stronger than expected guidance for 2009 (it had been 25 to 35% and though I bet they leave it alone, it will become an easier beat with this kind of performance)

Current plans call for a 12 rig program in 2009 for Haynesville Shale horizontal wells. What that means:

  • Production Growth: They assume the wells will be drilled in 65 days but lets just make it simple and say those 12 rigs drill and complete 1 well each per quarter for 48 years on the year. Just for kicks, the back of the envelope production add on those wells were they to come on stream at an average IP of 15 MM/d, evenly spaced over the year with a decline rate of 81% (seems like a good decline rate for the basin according to the lead players here) , with an average working interest of 75% and an average royalty of 75% would be mean an add of 200 MMcfepd net to HK over the four quarters from the end of 1Q09 to 1Q10.
  • Reserve Additions: From a reserves standpoint, those same wells adding an average of 6.5 Bcfe of reserves per well, again assuming they over 3/4 of each one, would yield reserves of 175 Bcfe, net of royalties for the 2009 reserves report (net of the aforementioned production of course) which compares pretty favorably to year end 2007 reserves of  1.1 Tcfe.  

Eagle Ford Shale: This is upside the Street is not giving the stock credit for. Could see another press release on 2 more wells here prior to year end.

Hedges are strong. Latest is 70% of expected 2009 hedged at $7.97,

These notes will be added to the HK notes section on the ZEB Reports tab.

The Revised Haynesville Player Graph. The following graph depicts the potential reserve exposure of the acreage positions based on some simple assumptions relative to each company's last reserve report. In the case of HK, the exposure is extreme at over 7.5x current booked reserves. This would take a decade of drilling to be sure and assumes that the play is unbiquitous under half of their acreage which it won't be but as averages go its a good starting point. I've haven't gerry mandered the numbers to reflect what seem to be some player's sweet spot potential but kept it pretty simple as valuations are pretty depressed as present and I don't think the extra tweaking is worth the time. In other words, with the stocks this low, we are playing with large blocks in the playset. If the stocks start to come close to challenging traditional valuation metrics we can start tweaking things. For HK, CHK, GDP, and GMXR I have a strong suspicion my math is very far on the conservative side of the back of the envelop.

Taking a look at the same names on a Enterprise Value (market cap + debt) / EBITDA (earnings before interest, taxes, depreciation and amortization) you can see how cheap the names have gotten. Despite the hefty potential exposure the Haynesville shale alone has for them relative to their latest proved reserve reports.

 

 

Odds & Ends

Analyst Watch: Cowen cut ratings on a couple of the smaller solars but otherwise the analyst community is very quiet today.

 

105 thoughts on “Free Wheelin’ Wednesday – Oil Inventory Preview + Haynesville Comments”

  1. Good article on EP’s $500mm high yield bond issuance. Includes general comments on the debt market.

    http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=EP%3AUS&sid=aTTkF8abdV5o

    EP issued 5yr, non-call bonds at a discount to yield 15.25%. Ba3/BB-

    EP has $968mm of bonds maturing in 2009, so they took this window of opportunity to roll some of that debt over. Given that EP is large, and fairly highly-rated (for a junk bond issuer), they were able to place this debt, albeit at a cost of 15.25%. That is a large chunk of cash flow dedicated to debt that will not be used in capex. The real test of the high yield market will be the ability of smaller, lower-rated companies to rollover their 2009 debt maturities.

    IG 269 +1bps

    HY 73 3/4 -1/8 point

  2. z – thank you for the summary charts of the Haynesville players.

    Using the criteria of YoY growth in EBITDA and looking at your metrics, two companies stand out to me: XTO for a large cap, and GMXR for a small cap.

    How would you rank/high-grade the list?

  4. Re 2

    I don’t know XTO well but I’m not a big fan of Simpson. Just on the metrics they look ok but I don’t know their hedges and they are debted up like CHK. I prefer CHK for upside potential. Mids I like HK and smalls I like GDP and GMXR.

  5. Z,

    I am doing a small study on tired old resource plays and found some interesting data on the EIA website regarding New Mexico NG production. Seems to me the San Juan was the grandaddy of them all before the Barnett came along. Looks like the field is in terminal decline despite contributions from the Lewis Shale. I have been having trouble finding information on production out of the Antrim. Since there is either 1 or 0 rigs in Michigan running I do not think there is much going on… Do you have any sources on Antrim production or Michigan in general? I have attached the link for the NM data.

    Thanks

    Bill

  6. That last was from Sportlock posted on yesterday’s post.

    On the SJB, true its in declines, COP is the big player there having bought the primary operator Burlington Resources. Downspacing can stretch that play along time and their are non-traditional zones to tap as well, more compression, workovers, new looks at CBM etc…they will stretch a long time. SJT is the principal royalty trust and its low cost and well run in general. Rockies gas stinks in terms of price right now and I don’t that the REX line changes that all that much but it should help narrow differentials.

    On the Antrim, I have not done much and activity does seem even lighter now. From what I remember, those were eaker wells, very low production per well so you drill a massive amount of them as they don’t cost much. Think the guys there were solely doing verts, will look around.

  7. Big rebound in coal starting…sort of interesting…look like people are saying wow, Obama can’t just kill them, even if he wants to. Despite the recession, electricity generation is only off 1% ytd and that’s more attributable to tepid August weather than activity levels although the recent weekly data has been more troubling showing generation is off 4 to 5% yoy.

  8. CNBC reporting Platt’s EIA Inventory estimates, very different from what I had last night including a big build in gasoline and a 2.7 mm barrel build in crude. That makes me feel a little better going into the numbers.

    Getting a third day of follow through on CHK,

    HK getting day 2 smaller rally, still thinking about adding more common here as I think that is more than a double within a year if gas prices are $6 to $7.

    EOG trying to recover from its down week last week, making good progress.

    SWN popping which is nice after last week’s swoon over natural gas prices…cautiously optimistic the Street won’t get the gas number too wrong again tomorrow.

  9. Any thoughts why, with the exception of BP, none of the majors have looked to add reserves, by buying some of the small and relatively large energy companies.

  11. El-D. Preservation of capital would be number #1 thought. #2 would be that they have held up well while the prey (the E&Ps) have gotten weaker…so why not wait and pick up a basket for what just one of the names would have cost you last summer.

  12. Reef – the XCO is the one I feel bad about missing. When the Haynesville news hits on GDP I don’t plan on being in that same watching the boat leave position.

  14. Bill,
    The largest Antrim producer/driller is ATL [by acqusistion]. The problem is the Antrim #’s are masked by their Marcellus and shallow Appalachinan gas well production.

    The IR folks at ATN are extremely helpful and can provide yow with detailed Antrim #’s [both production and drilling]

  16. BRY is a total sleeper play, pummeled for that low $ kern county crude.

    Reef – are you seeing private transactions with reserves attached in the Barnett? What does acreage pricing look like now. Heard good acreage in the Haynesville is below $5,000 acre but not confirmed that. Know it to be below $7,000. My question relates to CHK’s 1/2 size trickle of shares and what they will get for them. You know Aubrey is not completely stopping is buying spree.

  17. HK through $17, that’s a little more like it but the response is still pretty pathetic considering what the wells and their prior ones say about production and reserve growth.

  21. Jefco cuts GDP to hold from buy. Somebody who gets there stuff send that one over if you please. I think that’s Subash Chandra who’s a smart guy. Would like to see his reasoning. Probably high p/cf multiple but I think you can overlook that for now.

  27. ZTRADE: Sold 2 of the 3 CHK Dec. $10 calls CHKLV for $5.50, up 157% after the EIA numbers came in a little ugly. So far the group is not really retreating and I could have done better with the sale but its had a good quick run and I have more options here.

  29. z- did you get to listen/hear about the GMXR presentation yesterday?

    BOP – any other high yield stuff in the pipeline that you have heard of? thanks for the note on the EP sale yesterday.

  30. Very large increase in refining, 15 mm bopd consumed with utilization spiking to 87.4%. Pretty odd and unexpected by the Street and me. Why the refiners go hog wild to make product now with margins negative on gasoline and weak on distillate is beyond reasoning.

  32. Crys – yep, that’s what mastercard is showing, did not show up in the EIA numbers as they show we were still down 3.5%

  33. 1520 – not yet, ran out of time, plan to listen this afternoon.

    Say that HK spoke as well yesterday and will see if I can find that one as well.

  35. 1520 – continue to see a lot of issuance under the FDIC (and other govt)-backed program. GE Capital, KeyCrop, Bank of NY Mellon, John Deere Capital, Macquarie (Australia).

    The non-FDIC bonds in the pipeline include: MSFT, BA, ASH, CL, and AHG (to fund its acqtn by Blackstone).

    Those are all solidly investement grade. The one to watch: ION Geophysical (IO). If they can place $175mm of senior unsecured 5-yr debt (rated B1/BB-), marketed by Jefferies, it will be worth noting… for a number of reasons. My guess is that the notes will be issued at a discount to yield 17-18% and come with equity warrants attached. But, that’s just a guess.

  37. Big spike in gasoline and distillate production is pretty counter intuitive at these margins. Products negative and dragging natural gas with them. Oil about to go their too.

  38. Thanks Sane. Confirms the refiners got busy on the products side. Pretty bearish. You’d think these guys would be bending over backwards to do maintenance. Maybe they don’t have the desire to spend cash on that right now. Hmmmm. So they instead produce more and contribute to the problem.

  40. Good sign of the changing times:

    The energy groups (majors, E&P, oil service) all shrugging off the numbers. We’ve fallen enough dammit seems to be the new end of year attitude. Bout time.

  41. In fact, HK just hit Tater’s first level of resistance at $17.50.

    Hurricane forecast for next year out. 7 next year with 14 tropical storms. That’s either normal or a little light depending on who you ask. I’d say light.

  45. HGT – don’t have one. Not an expert by any means in the trusts. I’ve owned SJT from time to time and it is a fairly predictable one. I like several of the MLPs right now but don’t any of them either.

  47. GIM – might be tough to get out of that one whole. Likely will go down .88 ex-div and stay there for a while. Also got to be some tax treatment of that type of payout that might be quirky.

  48. Hearing of some offers with “drilling commitments” for 18 month leases in the area for $2K/ac for HS. There is no teeth in the drilling commitment, ie, if they don’t drill the lease simply expires of its own terms. I haven’t bitten and won’t be taking a draft since so many have gone unpaid on some manufactured technicality.

  49. Z and Crysball,

    Thanks. I will give Atlas a call and report back what I find in case the anyone is interested.

    Bill

  50. Jay – I’ve heard from a lot of people including lease holders when I was down there that the leases aren’t worth a thing until the money hits your account.

    Thanks Crys for fielding that Antrim question. Big help.

    HK back to $18 so I guess we’re busting first resistance of course its better not to talk about it until the close.

    Oil back to green, same natural gas. Market liking the auto deal sort of.

    CHK putting on a very nice third follow on day now, up another 13%. Waaahhoooo.

  51. CHK – Not getting a good read on that one. Could go either way. Couple of areas to look at for decision points.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    Also, the HK chart that I did late in the day yesterday showed a huge gap. Went back last night to look it over again and the chart showed a huge candle, not a huge gap. Bad chart info intra-day. Sorry. I actually had the bad info chart still open in a different browser window, so I am positive I was working with bad data. Again sorry if that goofed anybody up. I think the analysis was valid anyway though, price got above 16.30 so nobody should have been affected.

  52. Doing a little reading, here if any one wants to bounce stuff (other than bricks) off of me. My kind of green day. Oil up $2…go figure. Products green as well.

  53. Thanks Tater. The daily chart on many of the E&P names is certainly looking very breakout from a base started mid October.

  54. z- CHK transcript, page 12 down on West Texas shale. Page 19 and 20 up on Permian “new projects”. Question relates to e-mail I sent you the other day. Is Aubrey serving up a curve ball?

  55. CHK rally looks to be fueled by short-covering. All those guys who bought into the “CHK going BK” last week have to get out at some point.

  56. Reef. Sounds like it, right? Keeping that news in reserve.

    BOP – just don’t know how they could have bought off on that. Way to much volume last 3 days over average to be just short covering…gotta be some natural bottom fishers.

  58. XOM approaching a 2 month high. EOG will generally shadow that move.

    Reef – know anything re Eagle Ford. HK may be able to get another 2008 pr out the door on that one.

  59. z – no doubt, there are long buyers on CHK. Just think you are getting a turbo-boost from the shorts.

  60. Z,
    Crude Oil carriers [NAT, FRO etc.] are up…..yet OPEC (with purported Russian support) is going to cut daily production……..isn’t this counterintuitive?

  61. Crys – noted that. Think its the steep contango causing a “storage at sea” event. They get paid to sit at anchor. Nice work if you can get it and I hear the fishing can be excellent off those.

  65. I guess the thing that I cannot get my mind around is that any play in oil is a bet that the economy is recovering. It’s not just automobile driving holding up at year on year levels. Pink slips are being contemplated currently as 2009 budgets are argued over. I just can’t help but see this move into oil and gas as hot money. I know that money is being printed to make sure we have Skittels in every pocket and our hair done just right, but that doesn’t mean that carriers are shipping goods like it was 2007. I sense gamesmanship going on. But then again, I am living in a cave eating soup as we speak.

    I am seeing XOM head up into the 200 MA while the DJUSEN is heading up into 50 EMA. Both look like places where profits might be considered.

  67. Bird, let me know when you do an “it’s cold outside” trade. I wussed out on the last cold front. Good thing.
    Have to bring Beano. Then everybody’s welcome.

  68. CHK 12 yr debt trading at 13.7% … with about $500mm of various preferreds + $10+ billion of equity beneath it. that’s just sick.

  69. Tater – agreed, the all clear whistle has not been blown by any means on the economy but the stocks and perhaps oil itself are discounting depression, not recession. Balance sheets on the whole are stronger than they were going into 1998 when oil hit $10 and the fear has been over-hyped by those troglodytes who were forbidden at least temporarily from shorting financials and had to find another industry to tell lies about. Anyway, price takes care of price…on the downside as effectively as on the upside.

  70. tater – yeah… was thinking about the whole bean + confined places thing. 😉

  71. you guys should tune into the virtual energy forum going on today and tomorrow. Might be some sequestration technology for that bean gas issue.

  72. re CHK debt… on the other hand CHK’s 12 yr bonds are up 2 points today. That’s a huge (positive) move in junk bond land. Still, trading at 66 cents on the dollar, tho.

  74. HOG having a run here. Nice to know that everybody is still buying $20,000 bikes….aren’t they?

  76. Really the platforms are what’s best known for great fishing.

    I hear ya on XOM and profits Tater. In my case, I’ll take my lumps if they look to roll lower again. Liking it holding above $80 for now but it all hinges on the auto bill which is pretty nutty. Hate having my trades depend on congress.

  78. Again commodity stocks hold up well in the face of a flagging market. Nice to see.

    Just noticed Quarryman’s favorite VMC had a 40 to 75 run over the last 2 weeks over the Obama infrastructure move.

    I wonder how companies like that and Flour can have such big runs and yet X is just barely off the ground. Seems dichotomous.

  79. Just had a thought that the uptick in utilization at refineries and consequential increase in production may be a function of a pretty steep contango in the gasoline futures market. I think I remember a while back hearing that TSO was blowing down inventories of gasoline, maybe they are restocking now in anticipation of selling higher later, just a thought but it could lead to a surprise in margins vs earnings a couple of quarters down the road.

  80. Natural versus unnatural(!) buyers in CHK.

    Don’t know about the stock but there are natural bid-splitting buyers in the calls. Just offloaded some Jan 15’s and of course that was CHK’s cue to go grooving right on up. Just ‘cos it’s up 70% from the lows don’t mean it can’t go 90%, I guess.

    Pretty wild action in the commodities. Oh right, that’s just normal these days.

  81. Dman – I hear ya. Regarding the rally off the lows. Since CHK took away 95% of the impetus for the plunge, it makes since that it makes it back to at least Nov 26 levels (pre-shelf) and betters them in the near term. Now, I’m an optimist (you really have to be to trade energy calls these days) but that only seems fair. Especially with even the spineless analysts who think natural gas will trade at $9 long term but still think NAV stands for No Action Varranted going positive on the name.

  82. Oh yeah, I forgot about the pulled shelf thing. Does that mean I’m not paying attention? Could be the (intended) effect of 5 months of ugly energy bear market on the trading psyche. On one had, it did make me wonder (again) about Aubrey if he had to let the market tel him the shelf was a bad idea. OTOH, well at least he responded.

    During the last 5 months, you had to buy stocks down 26% and sell up 8% (usually the next day). Wonder if we are now in a period where you have to buy up 20% and hang on grimly?

  83. A warm November behind them, forecasters in Southern California are now preparing for cold storms to move into the region.

    One meteorologist examined the forecast models and said he knows they’re due for a winter storm sometime this year. “The type we may be dealing with will be ranked up there with the known years before 1950, which set record low daytime temperatures into the forecast region.” Kevin Martin of OWSweather.com said. “With this, may come low elevation snow.”

    He added that temperatures in Siberia, Russia will be -81 degrees this week. “With those types of temperatures the arctic air mass has to spill somewhere.”

    Meteorologists with the National Weather Service in Phoenix confirmed that there is a massive pool of cold air over Siberia.

    The NWS said that system will affect the Valley this weekend and into next week.

    Along with that, they added the potential for snowfall in Arizona’s high elevations, is likely.

    http://www.abc15.com/content/weather/stories/story/Cold-air-from-Siberia-set-to-blast-desert/k-SX8GLHqk2aWMI75y4Fsw.cspx

    That link is probably mangeled, sorry.

  84. Maybe scientists are going to refer back to the late 60’s and early 70’s when they foresaw the beginning of a new ice age at this time. The recent global warming thing was just a head fake.

  86. Thanks Popeye.

    Ram – they changed the name to climate change, lol.

    CHK moving towards HOD. Impressive to see a big cap E&P move up this fast. At least more impressive than it was to see it tank this fast.

  87. Afternoon all.

    What a whipsaw on oil today. Smacks of a wave 4 with a final plunge down in wave v needed. If we were to move above 47 then likely the bottom is in.

    Broader market. Expected upside has materialized into the minor cycle high due 12th December plus or minus a day.
    884 is key for spx – once we take it out to the downside I am expecting a move back to at least 857.

  88. Agreed crazy oil trading today. Didn’t really understand that post inventory spike. Then it evaporated in minutes. Today’s close just recovers yesterday’s loss. Hmmm…OPEC has to know 2 mm bopd won’t be enough to rally oil.

  90. We really needed to close above 45 for the bulls and of course we didn’t. That said I am not in the camp calling for 25. And the reaction to OPEC which of course has been bearish for the last six months may just throw us a curve ball this time. All these markets should turn together although I wouldn’t be surprised if oil bottomed out a bit ahead of the indices.

  93. Nicky – last CNBC said the senate would vote on Friday and that they don’t have the votes.

    BOP – Thanks but I’ll not be patting meself on the back for quite some time. Should have shorted AM’s lack of responsivity to changing market sentiment or at least realized that the market would brand them on the wrong side of sentiment, his fault or not.

  94. Reuters showing natural gas stocks down 83 Bcf last week for tomorrow’s number. That I can probably live with. I say one firm out at 112 yesterday and I just think they’re smoking something, maybe bean gas.

  98. El-D as to the near term options my layman’s technical eye say 19.50 to 20. I still hold December calls at 10 and 15 and then January 25s. Any of the Decembers are on the table as of tomorrow as they are getting pretty long in the tooth anyway and the stock’s had a good dead shelf bounce. I’ll likely punt them in descending order from Friday into early next week on expected further strength. I did punt some of the $10s earlier today in the ztrade above.

  100. z – yeah. i heard that the Fed was thinking about issuing their own debt. bet it would be FDIC-backed too. why not? everyone else is doing it!

    all i can say is, people had better keep their jobs and pay their taxes. Uncle Sam is gonna need a LOT of your future income to keep all the boats they want to keep floating. Problem is, there isn’t enough money to float some of the boats with Titanic-sized holes in their hulls. Better hope your Senator is good at picking floaters and sinkers… the tax payer is just about the last asset class this country has to monetize.

  101. Positve Credit News!!

    reason for the rally that started around 2:30 pm: Fannie and Freddie are considering waiving a requirement for new appraisals on refinanced loans.

    Since part of the problem with taking advantage of lower mortgage rates is that houses are appraising below the mortage value, this is HUGE POSITIVE news! It puts another slat in the floorboards below housing.

    Two things have to happen before we can even think about doing the economic Happy Dance: credit needs to thaw for qualified corporate borrowers and housing needs to stablize for qualified homeowners (those with income to service their mortgage debt).

    So, this could be considered a major crack in the iceberg enveloping the credit market.

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