Testifying Tuesday

160 thoughts on “Testifying Tuesday”

1. Oil and gas futures inching higher with equity futures uptick this morning. I’m not sure what the bears are retreating over as retail earnings look very mixed and AIG’s loss may be $60B. Maybe its just time for a dead cat bounce.

2. BDI -74 2010

3. Trader on CNBC looking for a quiet day. I’d agree with that. Says we need some statements from the President of clarity tonight. Agree with that too.

4. Credit Market Open — stocks looking perkier than credit this morning. Stock futures green, credit red. We will see who “wins” this tug of war. But, with Bernanke speaking today and the overhang of the POTUS speaking tonight, don’t expect much buying… so… slow drift lower? Don’t know. Mrkt hates uncertainty and I hate creeping socialism.

   CaseShiller Home Index in… headlines sound bad (down 18.55%!!!), but the mrkt expected down 18.3%. Frankly, the faster we drive home prices to find a bottom, the better off we will all be. Hope for the day — Pls, let home prices fall fast and bottom, before we get Judges with Cramdown Power. I want to buy a house again someday, and I don’t want to pay for deadbeats getting their principal “adjusted” by a judge. Throws contract law on it’s head and makes it a lot harder for the 90% of us who pay our bills on time (oh. what else is new).

   IG 224 +5bps from yesterday… back to “oh-sh*t” levels

   HY 72.125 about flat… still at “we’re all gonna die” levels.

5. Technical Trader tells me to shut up with all the “gloomy cr#p”… he’s excitied about today. Here’s what he thinks —

   fyi…Finally! Switch game plans. Go Long on the morning pullback, usually early, for a rally up through lunch and into the afternoon and last hour. Look for a few points with average odds of 60/40. Be sure to tighten stops after any rally in the morning and especially after 10:45 and 11:50. Tighten again at lunch at 1:05. And in the afternoon at 2:05 pushing long positions into the last hour.

   Hope he’s right!

6. Speaking with a HF mngr friend yesterday… he asked if i was on board with the last buzz… short gold/long oil. Seems it’s making the rounds of the hedgie world right now.

   Just fyi.

7. Tell that guy you aren’t gloomy, that you don’t get emotional about stocks. Tell him the recent history has been to fade the equity gains when the credit market is not playing nicely as well.

   I have a friend in commercial real estate. Buys buildings, land etc for his own account. He says foreclosures have gotten very strange with the banks unwilling to play by the normal rules because there is an unseen bidder in the room, the government in the form of the “bad bank”. Banks don’t yet know what the rules will be but they know they don’t want to do anything that would jeopardize them taking advantage of his tax dollars as he bids against them.

8. Thanks for number 6, I think they are grasping a bit there after the runs the two commodities have had. It must be simply a technical trade on gold. Someone pointed out the other day that adjusted for inflation the old high on gold would be north of $2,000.

   By the way, am probably going to play FSLR pre earnings, pre Obama’s speech tonight. They should have positive remarks for their outlook for 2009 and the President is going to layout his plan for “getting off foreign oil tonight” I’d bet with a few more details than his recent, shorter speeches.

9. When is the Average Joe gonna realize that putting a Gorrilla with a Gatling Gun in the room with a bunch of business men is gonna put a hault to just EVERYTHING.

10. From my piece on WLL’s quarter:

    Minor upside to the expected numbers but guidance may not thrill. The operations update is filled with quite a bit of promise however.

    “may not thrill” = down 10%. Will be listening to their call in about an hour. They had some really nice wells in the pr with some in new, unproven areas where they acquired acreage on the cheap.

11. BOP Re 9. Exactly. The government competing against you in a competitive bid situation is just not going to work. He said 7 other guys were in the room and they all left with 1000 yard stares on their faces as the bank simply refused to deal.

12. I’m normally in HK for earnings. May take a piece out of habit. Not sure what they can say to surprise the Street so it will/would be a small piece. Don’t see them missing numbers as they have essentially pre-announced the volumes so as long as the analysts have gotten the Woodford and Fayetteville 4Q margins right they should do ok on the bottom line. From an operations standpoint I don’t know what they will have to say beyond another 2 or 3 Haynesville wells. Maybe, just maybe another Eagle Ford completion but my sense is that project is very low priority right now.

13. FSLR putting on one of its slow creep moves higher, if the market stays positive these have a way of extending all day long, especially after the drubbing it has taken with the market over the last 10 days. There’s probably a TA name for that kind of move.

14. what hsppened to WIWO list.
    Is PQ worth dipping into. What does NG price need to be to reduce the writedown. Of course every dime up is less wrtiedown but in general where do we need to be to get out of writedown cellar

15. Consumer Confidence falls to record low of 25, vs 35 exp’d

16. IG credit index widening… now 227

    Bernanke on the tape with some pretty horrendous statements… says “US seeing severe contraction; risks to the downside”

17. I haven’t updated the WIOWIO list in awhile as things started moving pretty fast and the reasons there apply more to stock ownership than to options. Will have a look at an update.

    Re PQ. You won’t have more writedowns until next year and I can’t tell you what price it would take since the SEC is changing the rules. Write downs aren’t the problem here, those are non-cash and no one cares about them the week after they occur as they don’t change the amount of reserves one whit. They are simply the result of a dated accounting mechanism. The real problem is low oil and gas prices which constrain capital budgets and cause investors to lose interest. $5 and $50 would do a world of good for a number of names including PQ.

18. Some more Ben comments —

    Fed Chairman Bernanke says “if actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability–and only if that is the case, in my view–there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery. If financial conditions improve, the economy will be increasingly supported by fiscal and monetary stimulus, the salutary effects of the steep decline in energy prices since last summer, and the better alignment of business inventories and final sales, as well as the increased availability of credit

19. BOP – thanks. That’s ugly re consumer confidence.

    Re #16. That’s why I couldn’t believe the headlines this morning saying people are looking to Ben for confidence today and if you look in that link they go on to so it won’t be hard for him to find all kinds of rays of sunshine.

20. ZTRADE:

    $10KP

    (1) FSLR March $140 call for $8 with the stock at about $126.50. This got executed on the low side of the mid right before consumer confidence came out at the record low 25 with 35 expected. They report after the close tonight with a conference call 30 minutes after the close. The stock has been trying to creep up into earnings this morning and those moves have a way of building if the broader market will cooperate and not tank on the confidence results.

21. Ok, someone tell me the theta on that call in 20 is going to kill me.

22. That ticker is QHBCH by the way.

23. EPM came out yesterday for Dec. 08. NG prod DN YOY 5.3%. More importantly, Retail figures show YOY Res up 7% HDD up 3% (electric heating?) Comm up 3% INdustrial DN 11%.
    Last month ( Nov) Indust was Dn about 5% and NG Ind was dn about the same.
    if these numbers filter down to NG Industrial it would be about 2 BCFPD drop YOY

24. Md – so you are saying the electric power monthly showed December electricity generation attributable to natural gas fell 5.3% from year ago levels. And all of it was due to industrial? I’m not sure how you are getting to the 2 Bcfgpd down number.

25. BOP – wonder what the technical trader thinks now. Probably like poking a bull to ask him though.

26. Ben speaking now; market holding breath.

27. NG prod was dn 5.3%.

    Industrial electric retail sales was DN 11%.
    If electric consumption to Ind is DN by 11% YOY then it’s possible that NG to Industrial also fell YOY by 11& from LY 611 BCFPM by 62 BCF or 2 BCFPD. Not empirical evidence but we’ll kno whne NG monthly is released.

28. z — Technical Trader and I are not speaking to eachother today. He only looks at things one day at at time. I have to look further. He is happy with his “green” day.

    IG 222 … only +3bps for the day, still in the “red,” but backing away from the edge

29. I hear ya.

    WLL call in 10 minutes. BOP, did you read that release, the Bakken part? They are seeing some big results infill drilling and in the TFS. Good news for the play if what they are seeing translates. Saw TFS far to the south as well. Could be good for your KOG.

30. MD – ok thanks, I get you now.

31. BOP – I’ll take the green day, FSLR starting one of those runs after a pretty good 10 day beat down.

32. Z – with regard to the Obama speech tonight, is there any chance of a Natural Gas mention ? Just toying with the idea of taking some far out calls on the old favourites HK and CHK.

33. NT – yes, I think he mentions it with regard to moving cars and hopefully trucks. The point of NG for transportation has been pressed hard on him since he’s come into office. I think we hear more about Wind, then Solar, but also gas in the speech. You may have a small move off that for gas but I think very small. Maybe better in the gassy names of CHK, or HK (although you have earnings there in the morning) or SWN (earnings later this week). You also may get a little play out of CLNE (fleets of ng vehicles and CUM (natural gas powered engines).

    WLL call starting now.

34. Z – any thoughts on poor bedraggled BEXP?

35. Dman – just needs higher oil prices to rally it. No M&A to support it and they are subeconomic below $50 or $55. So it just creeps lower as people walk away from the stock market.

    Listening to WLL, stock moving a little bit higher off the morning lows and I’m content to watch it for now. Drilling results really could not have been better but again, oil prices stink for these guys, and for guys like CLR.

36. z – LOL… I’ll take “green” any day I can get it! Personally, I think they should take the mike away from Roubini for a while… We need the break.

37. Re 36. Agreed. Small steps. One day at a time.

38. WLL CC

    Note to management, I can read, do not read the press release. Ugh.

39. A bit surprised to see the SEA not going along better today. Still reading about continued signs of pickup in shipping.

40. Z – Thanks, Anyway, if I go in it will be lightly.

    Westport Innovations, ticker WPRT is involved in a venture with Cummins for nat gas engines.

41. Credit Market still not buying in… but, bonds have the extra-added complication of trying to figure out the credit-spread ramifications of cramdowns.

    What it does for the mortgage market, essentially, is move the focus from being a true “mortgage” (backed by the value of the asset) and instead just becomes a type of “personal loan analysis.” Can this person pay the bank back? If you look at your credit card rates… and then at your home mortgage rates, you get an idea of the difference in the “cost of default risk.” Of course, even a mortgage with cramdown options would not be as expensive as a personal credit card (as there is still the house as an asset, in the equation)… but, the point is, mortage rates in general WILL go up on that sort of modification of contract law.

42. MNT – right and those Westport guys, I always forget to mention them. I met with management of CLNE at the H.S. expo last fall. Good story, sounds like a 2010 move, not 2009 but it will be volatile.

43. WLL call good so far, nothing really incremental to the post today so far but they are still pre Q&A. I’ll let ya know but I don’t see a reason to run and buy it today. Just putting it in my favorable opinion box along with CRK.

44. Bernanke saying “we can’t run trillion dollar deficits indefinitely.”

45. Saw a story earlier that said he said we would have a hard time avoiding a depression. He didn’t say that that I heard but I’m listening to the WLL call at the same time.

46. Prechter Advises ‘Closing Shorts’ on U.S. Stocks (Update1)
    2009-02-24 14:00:50.823 GMT

    By Sarah Jones
    Feb. 24 (Bloomberg) — Elliott Wave International Inc.’s Robert Prechter, who advised shorting U.S. stocks three months before the bear market began, said investors should now end those bets following the recent market sell-off.
    Prechter, chief executive of the market forecasting firm, warned in this month’s ‘Elliott Wave Theorist’ that a rebound in stocks could be “sharp and scary” for anyone who is so-called short. In a short sale, investors borrow stock and agree to sell them at a later date on hopes of capturing profit by replacing the shares after prices fall.
    “This is an environment of escalating financial chaos,”
    wrote Prechter, who first shot to fame in the 1980s after cautioning investors that stocks would crash two weeks before Black Monday. “Our main job is to keep the money we have. If we exit now, we will do that.”
    JPMorgan Chase & Co.’s U.S. equity strategist Thomas Lee today issued a “trading buy” recommendation on the Standard & Poor’s 500 Index as the measure yesterday tumbled to a 12-year low at 743.33 points. Lee set a “short-term” target of 800.
    The S&P 500 has sunk 52 percent since its October 2007 record high as financial firms worldwide notched up $1.1 trillion in credit-related losses and the world’s largest economies fell into the first simultaneous recessions since World War II.
    In July 2007, Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
    “The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”

47. IG 223 +4bps from yesterday’s close. Would sure like to see this head back down toward 200. Not gonna happen today, it seems.

48. IG 224 +5bps.

49. Market in a holding pattern, up now but that’s not saying much after the slide we’ve seen.

50. Just got this from my congressman

    “President Obama will speak to Congress and the nation this evening to share his vision for addressing the critical challenges our country faces at home and abroad.

    Rebuilding our economy is no doubt foremost on the minds of all Americans. We must not forget the other critical issues before us, including the wars in Iraq and Afghanistan, health care reform, access to a quality education for our children, and energy solutions for the 21st century.”

    Glad to see energy included as a major topic.

51. Apparently, stocks are keying in on Bernanke’s comments re: sees recovery in 2010. Bonds know we have a few rows to hoe before we get there.

    Hope vs Cash Flow.

    In the end, tho, Hope will stimulate Cash Flow. Historically, stocks lead bonds out of the downturn. But, that assumes the GGG gets out of the room too.

52. BOP – its interesting to peruse the MarketWatch site this morning, optimism abounds today. Seems to correspond with the early look at futures. Last week it was all doom and gloom.

    http://www.marketwatch.com/

    See the following:
    The recession is by no means over, but its worst might well be.

    We are where we are, but the long-range prognosis will look better

53. Bernanke sees lower inflation over the next few years. I’m going to remember that and make sure he does.

54. z — wouldn’t that play into the short gold / long oil scenario, then?

55. BOP – I guess so, yep. Not good for the gold bugs at least. I just remember Ben being oh so worried about inflation for so long and using that as a reason not be more accommodative early.

56. z — and i remember going off on numerous rants about Bernanke’s misplaced focus on INflation… when DEflation was the real issue, staring us in the face. I was amazed how long it took for him to “get it.” He’s a smart guy… that was a real head-scratcher for me.

    The Dallas and St Louis Fed governors weren’t helping there. But, Ben should have seen the light much much earlier. It would have saved us all a World of Hurt.

    Oh well. Water under the bridge now.

57. Ben’s inability to understand that deflation was the real problem was what unleashed the power of the Credit Bears. The Bears were free to roam the streets, pushing on the market, and causing runs on banks… one at a time. Very very co-ordinated effort by the Bears. Bernanke just added fuel to their fire by misplaced his monetary policy.

    But, there will be books written in the future about this. So, i’ll stop boring everyone now.

58. Hey, I’m not bored. Sometimes I wonder if I remember things the way I think I do. You just confirmed it. I think his focus on inflation may have been prompted by the high energy prices at the time and a knowledge that he has no tools to fight deflation.

59. z — woulda, shoulda, coulda… but, if Ben had dropped interest rates dramatically, from the beginning (the mirror opposite of how Volker dealt with inflation in the early 80s), then much of this would have been avoided. But, Ben’s misunderstanding of what “real” inflation is, allowed the Credit Bears to move ahead with their game plan to scare financial markets through manipulation of the CDS market. And create a systematic run on the banks.

    Don’t get me wrong… there were a lot of sleasy financial institutions that needed to go boom. But, not Lehman… that was the straw that broke the finacial market’s back.

    It could have been prevented… if I could see it, beleive me, it just wasn’t that tough to see.

60. On the Somali watch I did not see any mention about the latest hijacking.
    Yes a lump of coal cargo from Dryships. Potential of 75000 tons. That would be $3.0M of cargo. These guys will hijack anything.

    Off topic – Where is GE headed. It looks cheap

61. WLL call ended about 10 minutes ago. Good call if a bit longish and overly read-y of the text in the press release. I think they move with oil prices which is no great impactful statement but I’m not going to go run and grab them as an oil price proxy.

    One thing did bug me and its an easy fix for them but it will hurt their 2009 growth if they do it. The press release was less than clear on how much of capex ($470mm comes from cash flow and how much is overspend coming from the revolver). They cleared that up late in the Q&A calling it about $100 mm over cash flow. They then went on to say they can lay down more rigs and quickly shave $100 mm from their budget. It gets a bit circular at that point as the reason you are laying down rigs is low oil prices for longer than you expect. They aren’t fully hedged, only about 40% so if you really pull the rigs down effectively to 0 operated and less non operated than the current level you may see the 12% growth evaporate for the year. Not saying its a bad thing necessarily to not grow oil at these prices this year but it represents a potential head wind for the stock. So no purchase by me right now.

62. Coal cargo hijacked? No kidding. Had not seen. Mogadishu just isn’t the vacation spot it once was. I suspect that lawless nation will fester for awhile. Can’t really see what will turn it. Ok, maybe this will do it:

    http://news.bbc.co.uk/2/hi/africa/7793723.stm

63. My dad bought a slug of GE the day the markets reopened in September 2001. It was the American thing to do. I think it was about $30 then. I’ve advised him to hold it and take the dividend but not to buy more every year since. I guess I’m a bone head. I really can’t stand these black box finance types.

64. Buffett has options @ 22.50
    What does BOP say

65. md — in the broad sense, I’m with z on the whole “black box finance” types… which is why (until recently) i have never ever looked at the banks. Too many internal dials to twist, too many possible outcomes.

    But, i DO think the market is OVERestimating the potential negative impact of GE’s GECC division. That division got conservative on it’s leveraged lending a long time before others saw the writing on the wall. Beyond that, GE is a “hard asset” and “medical devices” and “traditional energy” play. When industrial production turns around, so will GE’s core business.

    GE will be around. If they are not, nothing else we are investing in these days will be left standing either.

    Don’t know if the dividend is “safe”… as that requires a view to the near-term future. Too many variables to call there (would be a heck of a lot easier if the GGG got out of the way). But, even if GE is downgraded by the rating agencies, it is still the one-eyed man, in the land of the blind.

    If you want cash flow, buy GE bonds. If you want stock upside, it might be easier to analyze a less “black box” stock… but, I do think GE will be higher than $8.50 in 2 years. If it’s not, no one will care anyway…. it will be “pass the beans and stoke up the campfire, Maybel, we’re eatin’ good tonight!”

66. To go with your beans and campfire, look at the move in SWHC today, going to be a safe cave I guess.

67. z — sadly, a number of conversations i’ve had recently, with very smart, educated, otherwise “normal” people have included the statement: “well, we bought a gun, some gold, a bunch of bottled water, and lots of canned food.”

    I’m just not there quite yet… but, it’s surprising how many people are.

68. There has got to be a TA term for the type of action I see in FSLR from time to time. Move up intraday with the market, hold about 80% of those gains and move to higher highs when the market goes back to its intra day highs. I see it in other names all the time, a simplicity of the herd type move but its more pronounced in this name than most. Actually, from having covered small cap tech back in the early 90s it does remind me of those kinds of moves.

69. add-on to #67…. my favorite friends are the ones who also say : “loaded up the wine cellar, too…” I’m taking special note of where their particular caves are.

70. Ah, the smell of cordite in the air and tannins in the glass…makes for a fine cave.

    FSLR after the close with call shortly thereafter, the shares are basically recovering Friday’s losses here. These guys offer up very short press releases but should have positive color on the call. Saw a broker note earlier indicating at least one analyst expects the same, positive tone which could propel the shares higher.

71. md — caught this Fortune comment on GE today…

    GE bulls vs. bears

    Is General Electric stock a value or a bad bet? Two top analysts face off.
    By Scott Cendrowski, reporter

    February 24, 2009: 12:25 PM ET
    NEW YORK (Fortune) — When Warren Buffett invested $3 billion in General Electric last fall, some thought the move would calm the blue chip’s jittery creditors and investors. It hasn’t.

    Shares are down more than 50% since then, and worries about a downgrade of GE’s AAA debt have forced CEO Jeff Immelt to assure investors – half of which are individuals and employees – that he won’t cut the 31-cent quarterly dividend, which gives the stock a 10% yield.

    As GE trades in and out of single digits for the first time since 1995, is the stock a value or should you shun it? Two top analysts share their views.

    Steve Tusa, JPMorgan analyst
    The bearish view: We think those are the final steps towards the company’s realization that it’s too big and complex to manage the way they have been. The logical move is to undergo a dramatic restructuring.

    The biggest issue is GE Capital. GE is planning for potential losses of $5 billion in consumer loans, but this is only about 7% of total assets.There’s another 93% of asset base that GE is not writing down as aggressively – for example, GE’s $300 billion of commercial assets, which include real estate, aircraft financing and energy financing, among other areas.

    You haven’t yet seen the bankruptcy cycle in corporate America. Everything’s been focused on the consumer. But GE is a bigger player in that business than they are with the U.S. consumer. That’s why GE Capital’s earnings base has held up so well until now. Street estimates do not reflect how bad the commercial credit cycle is going to get by the end of 2009.

    GE does have solid assets and people. But analysts’ forward earnings estimates have been reduced every year since 2001. The initial 2009 estimate in January 2008 was $2.75 earnings per share and the current consensus is now around $1.20.

    Strategically, Jeff and the board have made some smart moves, but before this year they weren’t proactive enough in getting away from financial services. That’s now the biggest hole in the business. We’re cautious about GE (GE, Fortune 500) stock – earnings don’t support upside, and it could go lower.

    Scott Davis, Morgan Stanley analyst
    The bullish view: Contrary to popular belief, we think a dividend cut at GE would be well received by the market. No one’s buying the stock for a 10% yield.

    The stock recently rallied 15% the day a GE press release said it was going to revisit its dividend policy next quarter, which is code for, “We’re going to cut the dividend.”

    You buy GE for growth. Retail investors have two choices: own stock that has 10% yield and never grows. Or own one that cuts it to a more realistic level and grows in the next few years.

    I think it will lose the AAA rating, and that won’t be a big blow: GE doesn’t get credit for it right now anyway. AAA is more of a vanity rating than a practical rating. Its last bond offering was priced a couple weeks ago around a single A+.

    In the last down cycle GE’s industrial businesses declined only modestly. We forecast profits to drop by 22% in this recession. By comparison, the average industrial company’s will fall by 50%. The reason it holds up strongly is that its key businesses – like power generation, medical devices and aircraft engines – are less cyclical and generate a lot of cash.

    As we see it, the stock has a 20% downside and a 100% upside. That keeps us bullish.

72. Bernanke actually did well in front of the Senate Banking Committee today. He said that “major US banks have signigicant franchise value…” and that “that franchise value would be lost if the govt owned them”

    He also said “the time may come when it’s correct to close them down, but we are not there yet.”

    The market liked these comments. It’s about less govt-interferance and more about self-healing. Ben speaks to the House Financial Services Committe tomorrow.

73. Credit Market not fighting the rally now —

    IG 219 unch’d for the day

    HY 72.75 +0.50

74. md — did those comments help at all?

75. Now I know I am nuts…I need a recommendation(s) on consulting companies that conduct MET assessments
    (See those windmills on the z cap!)

76. You mean like these guys?

    http://www.weatherflow.com/home/

77. Time for a rant. I simply can’t buy the statement that the market know what is going on. Probably the only person who actually knows the financial state of BAC, for instance, is the CFO. Yet somebody started calling them a Zombie bank and ever since then the “market” assumes that it is true. They may or not be in a death spiral, but for sure we the collective market don’t know the outcome. I strongly suspect that BAC with the huge deposit base, is unlikely to become a Zombie bank. They really do have a license to generate one heck of a lot of cash flow.

    End of rant.

78. 76- Thanks z, do not know if these guys are more than just number crunchers. I gotta build towers and then crunch.

79. elduque — you, GO, guy! One thing to add to the BAC rant… people “assume” the Countrywide acqtn was “bad.” What they are missing, is that BAC got a HECK of a loan-servicing portfolio with that acqtn. Most of those loans will continue to pay… and that is one HECK of a CASH flow stream at a time when “cash is emperor.”

80. Reef – You’re not giving up on punching holes in lieu of breaking wind?

81. BAC — to clarify, they are getting paid to “service” the loans… they don’t actually own them. So, if those loans go bad, doesn’t hurt as much as one would think.

82. z — just sent you a fixed income report on NM. Jefferies upgrading bonds to a “buy.” Yielding over 15%. On the news that the company has resolved it’s debt financing issues.

    If the bonds are a “buy”… might be worth looking at the stock here. You follow this one?

83. Re NM, yep, they don’t have a ton of debt or at least my stat sheet shows them as almost debt free. What’s up with the report?

84. Ben said the recession may end in 2009, stocks climb story:

    http://news.yahoo.com/s/ap/20090224/ap_on_bi_st_ma_re/wall_street

85. From The BEST market strategist… what he said pre-mrkt open…

    The credit bears got the ball rolling with pressure on U.S. CDS’s earlier this month, and stocks are now short-term oversold. In the past, stocks have often fallen some more after reaching that oversold condition and then bounced. While stocks may bounce, that bounce should not be confused with the end of the credit crisis.

    To which I add — http://www.isthisthebottom.com

86. Z, I was out most of the morning so do not know if you got your theta on FLSR option.

    Stk at 134, QHBCH theta -0.259.

    Looks like a good pick so far.

87. But, if you can buy what you like on “scary-down” days, you can make $$ on these bounces. Just don’t fall in love with your position.

    JMHO.

88. WildZ: Pretty risky for the $10KP

    Adding (10) HK March $20 Calls (HKCD) for $0.65 with the stock set to announce before the close. The stock has been beaten up along with the other gassy names, I don’t expect a positive surprise on the numbers as they’ve already spilled the beans on production. Its possible they have further positive well news on the call but I don’t expect anything earth shaking, maybe 2 to 3 good rate Haynesville wells. The continued management of the low price environment, the ability/willingness to stay within cash flow is really what I’m looking for leaving them as one of the increasingly few gassy and growthy mid cap E&Ps out there.

89. re NG useage, I saw tail end of interview with Boone Pickens last eve-he was in some sort of working group meeting, not sure if related to all the other break out groups, but he said they are very serious about pushing NG useage into the transport sphere, trucks, etc. Of course, he might have a small agenda issue.

90. Afternoon comrades,

    re: 46 (close short positions) – is there an easy resource to find high short % against float??

    re: 67 Don’t forget the ammo

91. ok… this is a huge (positive) move…

    HY 73.25 up 1 whole point. major move in the high yield index.

92. Thanks choices, I pay a lot less attention to the greeks than many options guys. I understand them but I try to understand the moves better. I will say that delta would have predicted a better move than the 26% gain I’ve seen on this position today, and delta itself has not changed much since the open.

93. The Credit Bears are retreating a little… they will be back. But, they made a LOT of money this last week or so and need to go back to their caves and count it.

    That might take them a few days.

94. Roger than on the ammo, lot a steel shot around these parts.

    You can see the float and the short interest here:

    http://shortsqueeze.com/

95. Hear ya BOP, they’ll be back, next lousy set of data

96. BOP, RE 82. The only NM bond I see at my retail discount broker is cusip 639365AB1 12/15/14 9.5%. It is callable, and is offered at 52, giving a YTW of 26%. Either the offer is wrong, or bond holders are very nervous? BTW, the Chesapeake offering from last week is now 93 bid, 94.5 ask. I’v seen some trades go by at 93.5

97. You might also look for good deals on the DSX bonds.

98. Bob — that is the bond, all right. Bondholders are nervous. But, with the refi just announced, those bonds should move up.

    Not surprised the CHK bonds are offered lower… there were just so many of them placed. And then there was an add-on, after that. But, like i said, pick your company, pick your yield, buy-and-hold.

    Not knowing enough about NM… but hearing good things about mngmt and their risk profile, it seems to me those bonds are cheap. what do you think?

99. Z-Apparently no DSX bonds available at either of my brokers

100. I was sent something earlier on NM saying it was recently offered at 59.5, that may be a good offer, it was an upgrade piece on the bond.

101. Bob — my bad… i was looking at the “benchmark” yield on those bonds when I quoted 15.5%. The institutional write-up i see this morning marks the bonds at 59.5 for a yield to worst of 22.25%. I like your broker’s offer much better!

102. Re NM -Just came out with their latest quarterly last week. There is a web presentation.

     re 90 -GMXR seems to me to have a lot of shorts relative to amt. outstanding.

103. just to follow up… the NM bond upgrade to “buy” was from Jefferies. They have (historically) been pretty good in the space.

104. BOP- Definitely going to watch the NM stock and bonds and investigate their debt a little more. Any in depth analysis out of the Jeffries call? Do you see any bids on the NM?. I only see them offered at 52 with no bids

105. BOP – I know the equity guys there, pretty smart, don’t know the HY guys. Often the HY guys will call the equity analyst for the outlook on the business.

     Re GMXR. Yep, big short interest there and at GDP and some other gassy small cap names for awhile now, think its a bet against gas. The interesting thing is that these guys are low/no debt, hedged, high growth and staying within cash flow. So they will be among a rare crowd by mid year as everyone else trims capex to just maintain current production while shepherding their debt/total cap ratio to not get bigger.

106. Bob — those bonds don’t trade frequently (they might at Jefferies, but I don’t get quotes directly off their bond desk). The last good offer I see was 1/27, 57.5 bid – 59.5 offered.

     Your 52 is a good price….

107. If you’re up 33% on a one day trade and you have earnings at the bell, what is the smart thing to do?

108. BOP- You move the market. The 25 offered at 52 a few minutes ago are gone!

109. Crude tripping on the $40 level. Nothing to support it but a market feel good, looks like we waffle until close to OPEC (mid March) in the $35 to $45 range.

110. z — 107 — SELL, SELL, SELL

111. re 107, make that 43%

     Bob, check your email.

112. Bob — gotta pick a few sectors/companies/bonds to watch… then, when something gets cheap cheap cheap, you just gotta lift the offer. Bonds trade very technically (ie, a small bid or offer can move the mrkt a LOT).

     Sometimes you really DO see a $20 bill on the sidewalk… but, you gots to be the first to pick it up.

113. z — it sure could go higher… but, with the volatility in this mrkt, no need to be a hero. “Live to play another day”…. you WILL get another chance!!

114. No doubt, BOP, no doubt. I’ve been going over all my old notes and reading the last several transcripts. Going to hold it through the release (famous last words I know).

115. z — not saying it won’t go higher… and you know, i’m rootin’ for ya!

116. Head Trader feeling pretty good about himself. Wishing he had actually put money to work… (he’s all-talk, sometimes). But, he did say at yesterday’s (awful) close that he thought anything you bought at close, would be up, 3 days later. However, he ALSO said that, anything you bought at close yesterday, that was up a lot today, he would sell.

     So, there you have Head Traders’ thoughts.

117. Thanks BOP. The guy’s been right a lot of late.

118. Please tell me that i posted that yesterday… didn’t I?

119. re: Head Trader’s comments… yes. I did. #76 and 78. It doesn’t count, if you don’t post it ahead of time.

120. 119 very true, lol.

     Missed a RIG trade this morning, DO looks to be performing well too but then you look at the OIH and its just a mystery why that continues to do so much better than all things energy which are actually going to have a better year than service.

121. XLF up 11%. Wow. Feels like a giant dead bank bounce.

122. z — say only GOOD things about the banks… unless we get them up and walking around again, the rest of us ain’t going anywhere!

123. Beer thirty, but no rest for the wicked. FSLR CC in 30 minutes, HK in the morning along with NBR.

124. BOP- Thanks for Jeffries insight re NM

125. Bob — my pleasure! Use it as a learning-tool for bonds. Ask any questions you might have.

126. FSLR :

     $1.61 vs $1.30 estimate
     $434 mm revenues vs $410 mm estimate

     Conference call at 4:30 EST

127. FSLR — looking good, z.

128. Z – Since it’s the end of the day, can you comment on results from an exploreco I’m interested in.

     PR for some horizontal well results got released today and the stock got pummeled. The initial rate was up to 4 mmcf/day on a 4 stage frac with sustained rates between 100 and 800 mcf. They said the frac fluid flow-back was incomplete during the sustained rate testing so they were producing some frac fluid as well. I’m assuming the reaction is due to the sustained rates?

     This is in the Utica play with interests from Talisman and Forest.

129. Re FSLR: COGS was up a couple of % sequentially, operating margins were flat. Not bad in this environment. Early nutshell is strong top line growth analysts will like, will need to make sure it doesn’t cannibalize the 1Q or 2009 outlook any. Won’t be able to tell that until they start talking.

130. Some late comments by Technical Trader —

     As you know, we bought SSO yesterday. We bought more of them on the close last night, and this morning. We will hold them into March 10, 16, and/or 18…. if this works. We will dump them in a heatbeat if this does not work.

     some hot news from the pits: “Monday’s McClellan Oscillator had the fourth worst reading EVER since our data bank started back in 1960, 49 years ago, negative -367.50. This places it in the top ten worst readings ever, all of which came at major bottoms. This suggests we may be at, or days away from a bottom that lasts a few weeks.”

     [NB “lasts a few weeks”… so, not the ultimate bottom, yet]

131. Is that a Canadian pink sheet?

132. V – I see who it is and I don’t know them. Not a lot of data out, no real press release, just comments I assume taken from the operator (FST?). I don’t know what all those guys have going on but its a good bet that results like that are not what they wanted. I can have a better look a little later if you like.

133. I like Concho, will take a look tonight, about to get on FSLR call.

134. FSLR:

     CC: just got the stats sum.

     Very nice production level, very good cost per MW decline.

135. FLSR achieved $0.98 cost per watt. That’s a record, first time anyone has busted a $1 per watt which has been the holy grail for the industry for the last 20 years.

136. FSLR management says near term market never more difficult and then outlines all of the financial market difficulties. Snatching defeat from the jaws of victory.

137. FSLR: maintaining revenue guidance for 2009, ready for the next speaker, this guy is sending the stock on a roller coaster ride.

138. Nigerians getting into the Pirate Game. Can’t hold a candle to the Somalis, tho. You’d think all that MEND experience would help…

     Russian Tanker Escapes Attack by Pirates off Nigerian Coast
     2009-02-24 21:26:44.168 GMT

     By Lucian Kim
     Feb. 24 (Bloomberg) — A Russian tanker escaped an attack by pirates off the coast of Nigeria, less than a month after a Ukrainian cargo ship was released by Somali buccaneers.
     Five armed men aboard a fishing boat chased and opened fire on the Khatanga with automatic weapons, the Murmansk Shipping Co.
     said on its Web site today. The tanker was located 20 miles (36
     kilometers) from shore when the boat approached it.
     The crew, which had taken cover in the engine room, was safe and the ship escaped after an hour-long chase, according to the company Web site. The Khatanga was transporting oil between two Nigerian ports, according to Russian state broadcaster Vesti-24.
     A Ukrainian freighter was held for four months before its crew was released upon payment of a $3.2 million ransom earlier this month. On Feb. 13, a Russian warship patrolling the Indian Ocean seized three pirate ships off the coast of Somalia.

139. QEC on the TSX.

140. http://www.questerre.com/en/investorcenter/press-releases/2009/utica-wells-test-up-to-4-mmcfd-sustained-rates-up-to-800-mcfd/

141. FST was the operator for those wells yeah, didn’t see the question above.

142. API

     Crude UP 341K
     Gasoline DOWN 898K
     Distillate UP 1.8M

143. Thanks Sane.

144. BOP and co. thks for the colour

145. I found the NCX deal very compelling in that vultures are out there ready to scoop at their right price. Good for those who bought in below $6 . Lousy for those who bought at above $6. Who’s next in line.

146. If you don’t mind I wouldn’t mind if you could take a look at them. They have Bakken and BC shale property that’s working for them and no debt and cash in hand from equity sale at much higher prices.

147. zman ,, real estate & banks … definitely true; they don’t know what they can sell or at what levels.

148. BOP; who exactly are your credit bears ? serious question.

149. PackMan — serious answer: mainly Global Macro Hedge Funds.

     What they do is not exactly legal… you are not supposed to collude to buy or sell a security. But, these guys all talk to each other… directly, or indirecty. Frankly, they know what to watch for in the mrkt, so it’s not necessarily a direct, verbal communication.

     I have a strategist who used to work in that world. He knows what to look for and how to read the movements in the CDS market as an indication of what the Global Macro Bears are doing.

     CDS are powerful, leveraged, derivative “weapons of mass destruction” (as Warren Buffet calls them) in the hands of someone with a lot of money and ill-intent.

     This all sounded like “conspiracy theory” from moonbeams and whack-jobs… until I saw first-hand, how carefully-applied market pressure in the CDS mrkt can spook the overall market and start the snowball rolling that ends up in a run on a bank (ref: BearStearns and Lehman). CDS are typically used by only the largest institutions… mainly insurance companies (for good) and hedge funds and trading desks (for good… and not so good). So, when institutional players and smaller money managers see unusual movements in a company’s CDS, they start to think “somebody big knows something I don’t…”

     The more nervous a market is, the easier for a leveraged player to cause a disturbance and get the market cattle to stampede.

150. Thx.

     I happen to be a believer that the CDS market needs to be heavily regulated; made transparent and/or closed.

     What I don’t understand is that if these hedge funds are disrupting the markets in such fashion (and I believe that to be the case); why is nobody naming names and shining the spotlight in that direction. Sunshine is the best disinfectant.

     Which is why I think the Feds need to focus more on CDS, mark to market, uptick rules, leveraged ETFs and rumor mongering.

     Way back in Sept the SEC claimed to be preparing to introduce new market rules with respect to naked shorting and other matters; and then all that talk disappeared.

     I do not get it. If you did not have these folks causing or exacerbating the situation and compressing time, it would be easier to deal with / fix / repair.

151. PackMan — it is clear that you get it.

     The SEC either a) doesn’t. Or b) is not willing to deal with it.

     Frankly, I don’t know which one would be worse… a, or b.

152. or c) thinks its some other agency’s issue.

153. For the record, natural gas was not mentioned in the POTUS’ speech tonight. Solar 3x, Wind 2x, even Clean Coal got a nod. But not gas. He did ask congress to send him carbon cap legislation.

154. Regulation and oversight has definitely not kept up with financial innovation.

     However, it has always been thus.

     The best way to get out of all this (and lessen the impact of the Credit Bears and their ilk) is to stabilize the banks, bring back investor confidence, and apply some reasonable regulations for the 21st century.

     I don’t like the CDS market… but, I do see that there is some use for it. Most bonds are just not very liquid, when you need liquidity the most. CDS is supposed to help mitigate that. Frankly, the CDS mrkt is an outgrowth of the illiquidity of the high yield market in 1998 and 2000-2003. It started as credit insurance… but the tail ended up wagging the dog.

155. z — clean coal? Impressive… the POTUS went out on a limb there. The true Greenies don’t believe there is such a thing as “clean coal.” Good to hear.

156. U.S. furtures are down tho. They were up, before the speech, I think.

157. CDS and stuff like CMBX and ABX indexes became tools for speculation and were used to force mark to market pressures on holders of paper.

     This has exacerbated the financial crisis severely; we would not IMO be having this meltdown w/out the unchecked speculation and lack of transparency in these derivatives.

     Companies went down b/c artificial indexes were used to create fear and panic.

     Now, there may have been SOME validity to these markets, but clearly when you have these vultures gang up on a company or sector in coordinated (and possibly illegal) fashion, this is a system run amok.

     I didn’t hear Ben say one word about this.

158. PackMan — You just hit Truth on the head.

     I ask myself, over and over, why no one in “authority” is either talking, doing, or working on this.

     My hope? That they know. That they are quietly working on this behind closed doors. That some Common Sense will be applied to reigning in what is going on.

     This was a wildfire, for sure. But the CDS and indices you describe were used to pour jet fuel on the wildfire and turn it into a massive forest fire. Taking down good banks with the bad.

     But, watching all the “mortgage lending” commercials on TV from 2005 – 2007, I hoped someone was watching over their shoulder… ‘cuz it sure didn’t make any common sense to me.

     Turns out, no one was watching.

     Hope just aint what it used to be.

159. BOP, sunlight is the best disinfectant.

     Perhaps someone can write a Seeking Alpha article about this …

160. Z – in case I missed it, has there been any impairment news on WLL or the other little guys? (aside from PQ, which you wrote up a week or so ago)

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