13
Apr

Monday Morning And All Is Quiet Before The Storm

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Earning season begins next week for the energy group with (HAL) leading off for the big names on April 20th. In the meantime, we get another day of calm before the storm today as people come back from holiday. Later this week I do expect to see more bank line redeterminations, operations updates, and more warnings from service and from the Majors as the group has been unusuaully quiet. Late last Thursday, (CVX) said it would miss analysts estimates by a wide margin due to weak refining margins and sharply lower oil and gas price realizations.

The Week Ahead:

  • Monday, 4/13: No U.S Eco data scheduled
  • Tuesday, 4/14: PPI (forecast -0.4%), Core PPI (forecast +0.2%), retail sales (forecast +0.3%), retail sales ex-autos (forecast -0.3%)
  • Wednesday, 4/15: TAX DAY, EIA Oil Inventories (10:30 am EST); CPI (forecast 0%), Core CPI (forecast +0.1%), Empire State Index, Industrial Production (forecast down 0.8% and can move natural gas prices)
  • Thursday, 4/16: EIA Natural Gas Inventories (10:30 am EST); initial jobless claims (last of -654K), housing starts (550,000 March forecast vs 583,000 Feb.)
  • Friday, 4/17:  Consumer Sentiment (59 forecast vs 57.3 last month)
  • Saturaday, 4/18:  April Equity Option Expiration

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today
  4. Odds & Ends

Holdings Watch: The wiki holdings tab is updated.


Commodity Watch:

Crude oil closed flat on the week at $52.24 last week and is up 1% on the year. The May contract continues to look like a rounding bottom and as such, with a fair wind from the broad markets, I think $60 is in the near term forecast before we see a significant pullback. OPEC compliance seems to have leveled out as has support for further cuts in May with key members including Saudi Arabia saying $50 "will do for now". The 12 month strip is trading at $59.31 with the April 2010 contract trading at $64.66. This morning oil is trading down by $0.50 to $1 as it eyes a weak open for equities and comments from the IEA ton Friday that global demand for crude would fall an additional 1 mm bopd in 2009 from its previous forecast. A downward revision to IEA's demand number was widely anticipated although the 1 mm bopd figure would have been higher than most had assumed. EIA will release their latest STEO tomorrow.

Errata Watch: Last Thursday's table incorrectly showed the wrong data for the Actual column. We try not to mistakes but they do occur time to time. Thanks to MD for pointing this out. The corrected table is shown below. Please know that the percentage figures and commentary were not impacted by this column.

  • Nigeria Watch: An oil fire terminal has forced the closure of the tran-Nigerian pipeline over the weekend and armed gunmen clashed again with army soldiers in the Nigerian delta near one of Shell's flow stations. No word yet on lost production due to the pipeline closure but unrest here continues to heat up.
  • OPEC Watch: Iran says a Cartel production cut is still possible at the May meeting if demand continues to fall. In general, their seems to be little support for such a cut from the credible voices of the group at this time.

Natural gas fell 5% last week to end at $3.61, its lowest weekly close in this cycle. This morning gas is trading off slightly with crude despite cooler than normal weather posted for last week.

  • Weather Watch: Heating degree days came in at 124 last week vs a forecast of 112. This should keep this Thursday's storage close to current levels. This week degree days evaporate which is normal for this time of year. Gas bulls are praying for an early start to the season's heat at this juncture.
  • Rig Count Watch: Rigs drilling for natural gas fell 18 to 790 last week. Last year at this time 1,451 rigs were turning to the right in search of natural gas.

Stuff We Care About Today:

OIH Watch: Numbers continue to fall. Whether or not earnings season will be full of misses or earnings surprises is a moot point. Analyst estimates have been falling by as much as 10% per week for the past 3 to 4 weeks with the mainline service names like HAL and BHI and shallow water drillers exceeding the drop in the deepwater estimates of RIG, DO, NE etc. The stocks are not cheap on forward numbers and with the oil and gas rig counts continuing to fall the outlook for the rest of the year will be key. Many companies opted to provide little to no full year guidance and so comments on the calls will probably be vague and shrouded in conservatism. Given the turn lower in international drilling in recent weeks and the continued activity destruction in the North American Market I doubt many of the service names will be jumping up and down about a turn in the offing.

Odds & Ends

Analyst Watch: Morgan Keegan ups (BRY) to Outperform, Raymond James ups targets and ratings on a number of Canadian energy names including (TLM), CIBC ups price target on (AGU) from $60 to $65.

 

93 Responses to “Monday Morning And All Is Quiet Before The Storm”

  1. 1
    zman Says:

    Baron’s had a piece out over the week on MLPs, focus seems to have been pipeline and not upstream MLPs but the basic argument that money is coming back into the group after the collapse of Lehmans support there applies to all of them. I continue to hold LINE for the long term. If we start to see improvement in natural gas prices it will likely not move up as far or as fast some of its peers given its 100% hedge position however it, unlike many of its peers, is in the position of being able to maintain and even grow its distribution going forward.

  2. 2
    bill Says:

    lng

    one more thing to consider

    http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n=91044

    all ep companies will miss in q1 imho

  3. 3
    zman Says:

    Bill – Re misses, I don’t think it will be as wide spread as you suggest. Hedges are heavily weighted to first half 09. Production in 1Q is likely to be strong for SWN and HK and analysts began marking their price decks to market last week so numbers should be in line there for CFPS. Some names will have more difficulty making numbers that are either unhedged or are seeing shortfalls on volumes. GDP could be a little short there and CLR may have some weak pricing that’s not full factored in. But for the most part, I don’t expect a raft of misses on cash flow in 1Q as numbers have come down where needed pretty swiftly.

  4. 4
    zman Says:

    Oil off $3, looks to be eying the market more than the IEA statement.

    BOP is out of pocket this week.

  5. 5
    bill Says:

    gmxr getting hammered

  6. 6
    zman Says:

    Re GMXR, no news, easy to move the single digit stocks around big %s.

  7. 7
    elduque Says:

    Z what do you think about GMXR. I am thinking that it might be worth taking a shot at it 6.30 and change

  8. 8
    mnt Says:

    Hi Z, just looking at the Horizons BETAPRO NATURAL GAS fund trading at a new 52 week low @ 1.67 .As has been mentioned on the board before, at these prices they are like options with no expiry.

  9. 9
    zman Says:

    Eld – I’ve got some Aprils there now, will likely add Mays. Had hoped they’d have the redetermination which has been weighing on the stock out the door by now but they may be holding it for the conference call. They should have the operations update out with earnings in May (2, maybe 3 horizontal Haynesville wells). The redet will determine how much room they have on the revolver at year end…given low prices the answer there is not much but still enough to get them through Q110 when reserve growth will boost the borrowing capacity.

  10. 10
    zman Says:

    MNT – thanks, don’t know that one. My system not showing a good symbol for it, what are you using?

  11. 11
    elduque Says:

    No BDI today as it is Easter Monday in Europe.

  12. 12
    zman Says:

    More re MNT – long term gas goes higher. Current low prices are not sustainable, hence the rig count, demand will recover with the economy at a time when production is falling off. LNG won’t completely fill that gap as Canada continues to fall. The pendulum always swings too far with gas especially and we are there or near there now.

  13. 13
    zman Says:

    Rumor going about since late last week that HK is any day now for an operations update. I see a lot of these, comment on very few but the timing makes a lot of sense and I have heard they are very proud of their recent Eagle Ford shale wells and will likely be going to as many as 3 rigs there. They downplayed this play earlier this year so that would be a change for them.

  14. 14
    mnt Says:

    Sorry, forgot to mention that it tades in Toronto HNU. Agree re the fundamentals and I just feel it would be wise to have some exposure to the actual commodity and avoid company specific risk.

  15. 15
    zman Says:

    MNT – I agree, its a good thought and you don’t have the company or the timing risk of options. May have to take some with the SEP IRA funding.

  16. 16
    zman Says:

    Barclays note says milder than normal summer, quieter than 2008 hurricane season. Both will help to weigh on gas prices this week at least. They also point to big LNG availability and then say we could see 5 Bcfgpd LNG imports by year end. They’ve been drinking the Chenierre coolaid methinks. Same was said about 2008 as new projects came on then too but were absorbed by foreign markets where prices were higher than in the U.S.

  17. 17
    mnt Says:

    They also have the NYMEX Natural Gas Bear Plus trading as HND. I know hindsight is a terrible thing but this would have worked as a perfect hedging tool. It was trading around 7 in July 08 and now trades for around 67.

  18. 18
    zman Says:

    Hmmm, wonder how I could buy HNU in the states. My Thomson screen switches the symbol to FHN (dunno?) which is obviously no right. Schwab says symbol not found.

  19. 19
    choices Says:

    Re: LNG Not sure if these Merrill analysts know anything more but this is forwarded FWIW

    http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=283887&version=1&template_id=48&parent_id=28

  20. 20
    choices Says:

    More comments on LNG:

    http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=284091&version=1&template_id=48&parent_id=28

  21. 21
    zman Says:

    Thanks Choices.

  22. 22
    RMD Says:

    Off subject except that GS is a leading indicator of the market sometimes: if GS does not NEED the TARP $, why would they not repay it from available cash rather than selling stock to raise the $? Or is 1.1X book a “high enough” price to sell stock these days?

  23. 23
    zman Says:

    RMD – good question. Sell stock to public to repay TARP so management can get paid more than $500K per year. Sound about right? Stock has been up big, guess they are selling high.

  24. 24
    zman Says:

    IOC continues to move higher without me. Not sure what the next big catalyst there is. On their estimated reserves it looks pretty fairly valued, could still move from $30 to $40 with ease and a stable oil price environment.

  25. 25
    zman Says:

    I’ll have more WIOWIO comments and some quick models out (HK), (CRK), (SWN), and more later this week and next as we approach earnings.

  26. 26
    choices Says:

    Z-do you have any view on NOV-scheduled to release earnings 23 April.

    Thanks.

  27. 27
    zman Says:

    Imports Watch:

    LNG was flat at 1.1 Bcfgpd last week, flat with last year.

    Canada was 6.7 Bcfgpd last week, down 1.4 Bcfgpd from last year. Exxon has not given a timeline for resumption of volumes of between 0.4 and 0.5 Bcfgpd from Sable Island which suffered a fire at a compressor station on April 7.

  28. 28
    zman Says:

    Choices – I don’t, not really no. I would be disinclined to think their outlook would be overtly favorable at this time. I will see what I can scare up from the Street. Wyoming or Jat or someone else who watches them more closely feel free to fill in.

  29. 29
    Bob Says:

    RE: 14, 15, 17, 18: FYI: The HNU (Nat Gas Bull) will have a 1:4 reverse split after the market closes April 14. The HND (Nat Gas Bear) will have a 5:1 split

  30. 30
    zman Says:

    ATW just got away from me. Will not chase into earnings. Will be watching that one closely during the call. Need to get 2009 firmed up for the shallow end of their fleet. Need word on their Southern Cross unit. Big future for that name going forward on earnings season. I may take the common in the SEP as well.

  31. 31
    zman Says:

    Thanks BOB, it seems I can’t trade it. I’ve found in the past it is good to check out how the ETF trades relative to the commodity due to management style/methodology. Don’t know HNU and I guess I won’t since it does not come up on my system. UNG does an ok job of tracking gas while USO does a relatively poor job of tracking oil. Do need a better proxy for natural gas without company and timing risk.

  32. 32
    Dman Says:

    Z – SD earnings call on May 8. Any events that you know of prior to that?

  33. 33
    zman Says:

    ZTRADE:

    Added more HK April $22.50 Calls for $0.25 with the stock off 1.5% (30 cents) in a weak market. Continuing to hold May $25s here as well and am looking for an upbeat operations update in the near future. Management has hinted they would do one prior to the earning call and time is running a bit short there. Risky for these April strikes as they may or may not do it this week and expiration is Saturday. The safer though less leveraged play is the Mays.

  34. 34
    zman Says:

    Dman – just a debt redetermination. Expect it to be unchanged. Down more than $10 mm would probably kill this little bit of optimism the stock has shown to pull out of the base.

    Re 33. That was 15 more calls added to the 20 from late Friday in the 10KP.

  35. 35
    Dman Says:

    Z – ATW shallow water: is this mostly NG or oil?

  36. 36
    zman Says:

    Dman – the only other thing on SD might be one of two planned asset sales but I’d bet neither are done until at least earnings if not mid year.

  37. 37
    zman Says:

    Dman – I think those are working oily targets but it could be either / both.

  38. 38
    zman Says:

    re 37 – they have two rigs coming off contract that don’t have new gigs. The southern cross is a mid water range floater which has been unemployed since 4Q. Then they have 2 more rigs coming into service that will garner very high rates in 2011 and 2012 (ultra deep capable) and will meaningfully change their revenue and earnings profile. Recall, they have less than a dozen rigs and they are increasing their deepwater exposure.

  39. 39
    zman Says:

    HK and EOG going green. I’ll probably hold those remaining EOG calls from last Wednesday a little longer.

  40. 40
    zman Says:

    FYI, we have IPAA next week which may serve to get more operations updates out the door prior to earnings, especially those who didn’t say anything really new around Howard Weil earlier this month. Hate to beat a drum but its a typical quiet Monday.

  41. 41
    zman Says:

    SD at $8.57, don’t think my Aprils will get there but ya never know, pretty comfy with the May 10 calls though. Today is almost a 5 month high for SD and it falls into the whole, “yes I’m over leverage but I’m going to make it and my reserves are valued way too cheap” genre.

  42. 42
    zman Says:

    EOG is up today because every big Street firm (ok, almost all of them) have it as one of their top 3 E&P ideas, generally along with APA and DVN.

  43. 43
    zman Says:

    CRK also falls into that camp of a coming operations update. Sort of think it will be next week or the one after so keeping in mind for a Friday buy of May calls there.

  44. 44
    zman Says:

    ATW receives contract for the Richmond semi sub (shallow water shelf driller). This was one of the ones I was mentioning above that was set to expire (April 2009). Its a short stint (40 days) so the rig will now be out of work in May if nothing changes. Rate was not particularly attractive at $52K per day vs its expiring contract which was at $85,000 per day but that’s not really surprising given the softness in the shallow water segment.

  45. 45
    choices Says:

    This article may be of interest to some:

    http://webreprints.djreprints.com/2150810784950.pdf

  46. 46
    zman Says:

    Oil back to being off only a buck. It just has that feel that further bad news has to be really bad or it is already largely discounted in the price. CLR seeing a little more profit taking. That one will be interesting to play more often around the inventory numbers.

  47. 47
    zman Says:

    NG up 2 cents. Stuck on a phone call. Group pretty evenly red/green now. Happily EOG and HK greener than most.

  48. 48
    zman Says:

    HK back atop $22. Another 75 cents and we have a nice technical breakout. Volume at 3.5 mm is strong for this time of day, especially after a holiday with little to no news to drive energy.

  49. 49
    Wyoming Says:

    Biggest Loser?

    http://screencast.com/t/DcodcrZ1

    The Data:

    http://www.eia.doe.gov/ipm/supply.html

  50. 50
    tater Says:

    Thought I heard Carter Worth on CNBC (radio) say something about HAL being a buy right now. I’m not one for disputing other chartist, it’s not really a science in my opinion and therefore in the eye of the beholder, but I absolutely do not see a bullish chart for that name. Not to say that means it’s going down. Just saying that I don’t find a single thing that would lead to a bullish conclusion. Maybe he thinks the 20 is going to cross above the 50 EMA. “About to” is different from “has” crossed over. Oh well, I knew there was a reason that I turned off all “news” sources, doesn’t help my trading.

  51. 51
    Wyoming Says:

    No “U” in team, aint no “We” either:

    http://www.epmag.com/WebOnly2009/item35276.php

    BP; proving the case for Independents in North America …. again;

    http://www.epmag.com/WebOnly2009/item35275.php

    ANCAP, proving 2D seismic technology ….. again;

    http://blogs.epmag.com/tayvis/2009/04/07/want-to-drill-in-uruguay/

    Quick article on increasing finding costs …. Again;

    http://www.epmag.com/WebOnly2009/item35273.php

    Lunch break over, back to work.

  52. 52
    Wyoming Says:

    Didn’t Carter talk up Campbell Soup the other month on CNBS, right before it tanked?

  53. 53
    tater Says:

    Wyoming, you ever been to one of the African countries for work?

  54. 54
    BirdsofpreyRcool Says:

    Good afternoon all… just checking in. Sort of out of it this week, but monitoring. Have a few things to say tho…

    First off — Bravo U.S. Navy Seals! Great gift to the American People (and International trade in general) on Easter with news that Captain Phillips was rescued.

    Second — Financials are the #1 focus this week. GS reports tomorrow morning, JPM on Thurs, and GE (and GECC) on Friday. It’s time to stop jeering and time to start cheering for our financial sector. I know people hate the financials… but, we all need them to be strong. I think the exec compensation issue has been heard (it sure needed to be!) loud and clear. So, I personally hope the financials do GREAT from here. We ALL benefit.

    Credit market is holding it’s breath, ahead of GS earnings tomorrow morning. Both investment grade and high yield indices are about unch’d from Thursday’s close. Tell that to the financial equities, tho. Seems money continues to come off the bench and onto the playing field there.

    This whole thing started in the financial sector… it needs to end there. Not saying the mrkt is straight up from here… I think there is a tremendous shift taking place in priorities and lifestyles (and baby boomer’s wealth decisions) that will keep a lid on this. And the Govt still has BIG PLANS for using our private sector income. Markets will be volatile until we can put a bottom under home prices and employment. Don’t think we see the 2007 highs again for a very very long time.

    “Sell in May and go away” just might work again this year. But will continue to watch credit markets for signs of what to do. For now, all eyes on Goldman Sachs tomorrow.

  55. 55
    zman Says:

    Merrill out saying the U.S. gas rig to fall further but if you look at their official rig count estimates they are ABOVE the current level of rigs. They then go to say that service names may not fall much further as multiple expansion is typical of this phase of the cycle. I just have to say that I don’t agree, that further pain is around the corner, especially if you buy their increased LNG volumes angle.

  56. 56
    BirdsofpreyRcool Says:

    Citigroup Leads U.S. Bank Stocks Higher Before Earnings Reports
    2009-04-13 17:19:34.579 GMT

    By Jamie McGee
    April 13 (Bloomberg) — Citigroup Inc. led U.S. bank shares higher as record first-quarter profits from Wells Fargo & Co.
    boosted expectations bank earnings will surpass analysts’
    estimates in the next two weeks.
    Citigroup, the New York-based lender that’s received three U.S. government rescue packages, rose as much as 15 percent, while Bank of America Corp., the largest U.S. bank, gained 8 percent. Goldman Sachs Group Inc. added 3 percent.
    Wells Fargo, the second-biggest U.S. home lender, last week reported about $3 billion in first-quarter net income, up from
    $2 billion a year earlier. Profit of about 55 cents a share was more than double the average estimate of analysts in a Bloomberg survey. The San Francisco-based bank plans to formally release earnings next week.
    “You are seeing carry-through from Thursday’s announcement about Wells Fargo, about strong earnings,” said Stanley Nabi, vice chairman of Silvercrest Asset Management Group, which oversees $8 billion in New York. “Now that the banking sector is healthier, or is more stable, the cycle will move up.”
    Citigroup, Goldman Sachs and JPMorgan Chase & Co., all based in New York, are scheduled to release earnings this week.
    Bank of America, based in Charlotte, North Carolina, and New York’s Morgan Stanley will report next week, along with Wells Fargo. Citigroup and Morgan Stanley are expected to report a loss on a per-share basis, and the four others will probably post a profit, according to analysts’ estimates compiled by Bloomberg.

    Citigroup, JPMorgan

    Citigroup rose 41 cents to $3.45 at 1:05 p.m. in composite trading on the New York Stock Exchange, while JPMorgan advanced 80 cents to $32.83. Goldman Sachs rose $3.72, or 3 percent, to $128.05.
    Bank of America climbed above $10 per share for the first time in three months as expectations the government may nationalize the company eased and estimates on home loan profits rose.
    “Fears of nationalization got pretty far to the extreme, though it is still a valid concern,” said Blake Howells, an analyst at Becker Capital Management, which oversees $1.6 billion in Portland, Oregon.

  57. 57
    BirdsofpreyRcool Says:

    Random Thoughts From Ed Yardeni this morning —

    I) STRATEGY: Since March 6, when the S&P 500 fell to the devilish intra-day bear market low of 666, I’ve been starting to count our blessings. I am still expecting a test of the January 6 high of 934.70, which would be a 40.3% advance from the March 6 low. After a brief and possibly nasty correction, the S&P 500 could rally to 1000 before the end of May. Let’s review and update the good news that should continue to drive stocks higher:

    (1) The relaxing of the mark-to-market rule started on Thursday, March 19, when key Congressional leaders threatened to behead the head of FASB. On Monday, March 23, FASB posted FAS 157-e, which amended FAS 157, for discussion. On April 2, the amended rule was approved by the accounting board. On April 9, Wells Fargo preannounced better-than-expected and record high Q1 results. The S&P 500 Bank Stock Index jumped 24.7% that day. Coincidence? I think not. The suspension of MTM must have contributed to WFC’s results by, at the very least, ending toxic asset write-offs. So did a temporary freeze on foreclosures.

    (2) On March 18, the FOMC expanded its plan, first announced last year on November 25, to buy Agency debt and securities. The total amount was upped from $600bn to $1.45tn to be purchased by the end of this year. In addition, $300bn of Treasury bonds would be purchased over the next six months. The result has been a sharp drop in mortgage rates and a sharp increase in mortgage refinancing. Wells Fargo reported that their mortgage lending business boomed during Q1. Coincidence? I think not.

    (3) Also on Thursday, April 9, Federal Reserve Bank of Kansas City President Thomas Hoenig said that the government stress tests of US banks’ ability to withstand a deeper recession are likely to indicate that most don’t need more taxpayer money. “I would point out, first, that although the United States has several thousand banks, only 19 have more than $100 billion of assets, and that after supervisory authorities evaluate their condition, it is likely that few would require further government intervention,” he said in the text of a speech in Tulsa, Oklahoma (linked below). Bank stocks sold off sharply on February 10 after Treasury Secretary Geithner announced that 19 of the biggest ones would be stress tested. The fear was that this would set them up to be nationalized. Wells Fargo’s results suggest that the banks will do whatever it takes (e.g., low-ball loan loss provisions) to pass the tests. Obviously, the change in the MTM rule will also help them get passing grades when the test results are announced later this month.

    (4) The S&P 500 Financials Index of 80 banks, insurers and investment firms, rose 16% on Thursday to its highest level in three months. It is up 75% since its March 6 low. This performance strongly suggests that Financials have bottomed. If so, then so has the overall stock market.

    (5) There is actually some good news to report on the corporate finance and investment banking front. In early April, HSBC raised $18.5bn in capital through a share issue, with the bank’s current investors taking up 96.6% of the new shares that were offered. HSBC is one of the few global banks that hasn’t sought government aid during the financial crisis. At about the same time, Ford reduced its debt by 28% as investors agreed to exchange $9.9bn in debt for cash and stock. Pulte will buy Centex suggesting that the homebuilding industry may improve through consolidation. Goldman Sachs may announce plans to raise $10bn through a share sale this week.

    (6) Short sellers are getting squeezed on all sides, according to the 4/7 WSJ. The SEC is moving against short selling and it is getting harder to borrow stock to short. The SEC may also soon reinstitute the uptick rule.

    (7) With the exception of employment, several key economic indicators for February and March haven’t been as bad as feared, suggesting the recession is bottoming. Last Thursday, stocks rallied after initial jobless claims decreased more than economists estimated and the trade deficit unexpectedly shrank 28%, the most since 1996. The trade deficit should be a positive contributor to Q1 real GDP.

    (8) China is shovel ready! China’s $585bn stimulus program may be starting to work already. During March: car sales hit a monthly record; industrial production climbed 8.3% y/y; crude oil imports rose to a one-year high; iron ore imports rose to a record high; M2 jumped 25.5%, the most since Bloomberg began compiling data in 1998. The Shanghai Composite is up 34.2% ytd.

    The market is looking better internally. Several industries that are very cyclical, particularly in the Retail, Industrials, and IT sectors, are showing especially good technical performances:

    (9) As of Thursday’s close, 16 of the 131 S&P 500 industries Joe and I monitor have risen above their 200-day moving averages: Agricultural Products, Automobile Manufacturers, Automotive Retail, Computer & Electronics Retail, Computer Storage & Peripherals, Department Stores, Diversified Support Services, Footwear, General Merchandise Stores, Gold, Home Improvement Retail, Homefurnishing Retail, Internet Retail, IT Consulting & Other Services, Specialty Chemicals, and Specialty Stores.

    (10) The S&P 500 sectors and industries that may shortly rise above their still falling 200-dmas are: Apparel Retail, Communications Equipment, Computer Hardware, Drug Retail, Homebuilding, Industrial Gases, Information Technology sector, Integrated Telecommunication Services, Internet Software & Services, Investment Banking & Brokerage, Restaurants, Semiconductors, Telecommunication Services sector, Trading Companies & Distributors, and Wireless Telecommunication Services.

    So what could go wrong? Plenty. But we know that already, and such scenarios were probably priced into the market at 666 on March 6. So far, President Barack Obama’s call to buy stocks on March 3 is ahead by 23%.
    * S&P 500 Performance (weekly): What propelled the S&P 500 1.7% gain last week and its fifth straight weekly rise? More good news on earnings from the Financials sector. The S&P 500 is now up 26.6% from its March 6 low, but just 6/10 sectors and 94/131 industries rose last week. Nine of 10 sectors are up so far in April and now 3/10 are up for the year: Tech (+12.4% ytd), Materials (+5.1), and Consumer Discretionary (+2.3). Just three sectors are down at a double-digit percentage pace ytd now: Financials (-15.1), Industrials (-13.2), and Utilities (-10.4).
    * S&P 500/400/600 Performance (weekly): How did the three S&P indexes do last week? All three indexes rose for a fifth straight week for the first time since May 2007 and are in their best five-week rally ever. LargeCap still down 5.2% so far in 2009 and trailing MidCap (-0.3%), but both are ahead of SmallCap’s 7.7% decline. 22 of 30 sectors rose last week and now 9/30 sectors are up so far in 2009, up from 8/30 in the prior week and 0/30 four weeks ago. The best performing all-cap sectors ytd: Tech (up an average of 9.3% ytd), Consumer Discretionary (+7.7), Materials (+0.4), Energy (-1.2), and Consumer Staples (-3.9). Telecom (-17.1) is now the worst performer ytd followed by Financials (-16.0), Utilities (-11.3), Industrials (-9.6), and Health Care (-7.9).

  58. 58
    tater Says:

    Now that the all clear has been sounded, I figure it’s time to go back to my HOG short.

  59. 59
    BirdsofpreyRcool Says:

    Anadarko Chief Says U.S. Green Policy Will Kill Economy: FT Link
    2009-04-13 18:35:40.610 GMT

    http://traxfer.ft.com/cms/s/0/399dbc30-2848-11de-8dbf-00144feabdc0.html?o=%2Frss%2Fcompanies

  60. 60
    BirdsofpreyRcool Says:

    hmmmm…. I don’t want to get blamed for sounding an “All Clear.” But, it’s nice to step back from the fear that every private bank will be nationalized.

    Who said we are outta the woods? But, again, it’s a nice break from thinking about using shotgun shells as currency.

  61. 61
    PackMan Says:

    I dunno BOP; financials seem more like a well orchestrated short squeeze to me more than anything else. Not gonna root for them either; the greedy bastards imploded the economy and ruined their shareholders; and rape their customers.

    Why should we “root” for them ? Not rooting for them to fail either; but at this point there is no rooting interest in this as far as I am concerned; let them get whatever comeuppance they deserve; still a boatload of crap they need to come clean about also, and that includes GS.

  62. 62
    PackMan Says:

    But I do agree w/ your #59.

    Remember the days where CNBC would have all day nationalization discussions ? What fun … “nationalization” hundreds of times a day. Now 0 ?

  63. 63
    Hoss Says:

    Z

    RE #27

    April 12, 2009

    OFFSHORE GAS PRODUCTION UPDATE

    (Halifax, NS) Gas production from the Sable Offshore Energy Project (SOEP) was shut-in at approximately 2:10 a.m. ADT, on April 7, 2009 as a result of operational incidents.
    Since that time, ExxonMobil, the operator of SOEP, has been repairing equipment in order to resume production.

    The CNSOPB has reviewed the offshore incidents and approved ExxonMobil’s repair and pre-start test programs.

    ExxonMobil has now completed these programs and has resumed production activities effective April 12, 2009.

    http://www.cnsopb.ns.ca/news_apr_12_09.php

  64. 64
    tater Says:

    “Wearing black alligator-skin cowboy boots below his dark suit and a startlingly white smile above it, Mr Hackett says…”

    Does everything have to devolve into an Entertainment Tonight level of journalism? Hackett is one the brightest minds this country has to offer (not to mention a person of real live leadership skills, not the Playschool kind). Maybe we should pay attention to his words and not just his pretty face.

    BOP – not you, the piece you showed seems to be pretty bullish.

  65. 65
    elduque Says:

    BOP Thank you for all the info.

  66. 66
    BirdsofpreyRcool Says:

    Packman — guess I have lived with this longer than most. A few ramdon thoughts….

    The credit market froze up almost two years year ago… while stocks still rallied. 1) Two years is a long time. 2) Not every banker is a scum-dog-rat-fart. 3) Practically every business needs access to banks, now and again. 4) Bankers are only ONE link in the chain that brought the US economy to its knees. 5) Some of our current govt officials made more $$ “consulting” last year than bankers… but, who’s yelling for Larry Summer’s head? 6) I’ve seen how asset pricing can be manipulated at mutual funds (much less banks), so, as with everything, comes down to the integrity of mngmt and internal controls/philosophy. 7) Rooting for the banks is rooting for our private financial system. If our private financial system fails, our govt will own our economy. I am not in that camp. Although, if you believe a recent Rassmussen poll, only 53% of Americans prefer capitalism to socialism. I will stop there.

  67. 67
    Wyoming Says:

    Tater,

    North Africa, Tunisia. I know a lot of the realities that happen in the West Coast, comparing it to other places I have been. Just glancing real quick, apologies if I missed a joke, keep laughing if I goofed up some more.

  68. 68
    tater Says:

    Wyoming,
    No jokes, just saying hi and wondering if you have any fun stories about how biz gets done in places where bullets fly.

  69. 69
    BirdsofpreyRcool Says:

    tater – #63… Amen. I watched the “press conference” when they announced the Captain Phillips news. Those reporters were more interested in digging into dirty laundry than reporting facts. I found that to be a very weird bit of info in the APC article too… but thought the link was worth posting.

  70. 70
    BirdsofpreyRcool Says:

    By the way, Head Trader is hung over today and Tech Trader has been suspiciously quiet for a long time.

  71. 71
    tater Says:

    BOP – Always appreciate reading your posts, especially lately since I haven’t been able to follow every day. Nice to have somebody to cut to the quick, so much junk to wade through out there.

  72. 72
    zman Says:

    Gotta step away for a bit. Glad to see yall talking. Thanks for the Sable update above all rest.

    Mulling a TXCO common buy. Getting more interesting, probably goes away looking at their assets and their balance sheet.

    Tater, thanks for the HAL comment, like that its flat with most energy much more green.

  73. 73
    BirdsofpreyRcool Says:

    tater — you are too kind. thank you. Hope your “busy” is good-busy… not the other kind!

    Yes. Lots of BS. Lots of talking heads. The banks/financials/credit market started this… it has to end there first. Until that occurs, there is no foundation to any market… much less a mrkt trying to rally.

    We have a lot more hoops and hurdles to pass through. But, not having to worry about banks or credit or investment-grade and high-yield indices will feel like a great relief, at some point. That is what I am rooting for.

  74. 74
    Dman Says:

    But BOP, I only just started accumulating shotgun shells & now you’re saying all they’re good for is making holes in things?!! 🙂

    Speaking of which, congrats to the USN and to Obama for authorizing it. (The first good word I’ve had for Mr O in quite a while).

    The French Navy did something similar a few days ago but they lost one of their hostages. Even so they made the right call.

    Z – I forgot to mention but Matt Simmons said recently that Iraq is now seeing serious declined due to woeful oilfield neglect for several decades. Since Iraq was considered one of the few “dark horses” for possible production upside, this seems to me to be important info.

    http://www.theoildrum.com/node/5255

    Iraq comment starts around 21.20 on the video

  75. 75
    zman Says:

    73 – no doubt, congrats in order.

  76. 76
    BirdsofpreyRcool Says:

    SECTOR COMMENTS
    Industrials/ Materials/ Energy

    Machinery – truck oems / suppliers are the weakest in the space ie NAV giving back some of last week’s gains while ETN (which has truck exposure) and PH are both very weak on respective competitor downgrades.. construction equip names are relative outperformers in the space, no great reason; rental equip smallcap RRR surging on a pos Barron’s mention.. all eyes on ITW and PH earnings on Thurs..
    Multis – SPW cut its full year outlook premarket, specifically citing short cycle flow biz; this is adding to pressure in stocks like FLS, DOV, TYC and ITT who are all levered to this segment.. TXT dn 14% while ROK is off ~4%, there was plenty of speculation in the press last week in both of these names and it looks like the excitement is deflating a bit.. GE +7%, looks to be rallying in unison w/ the upside move in Financials; the co will report this Fri..
    Transports – the TRAN is underperforming, as its recent high-beta nature suggests it should on days like today.. rails earnings will kickoff tomorrow w/ CSX, which is heavily underperforming its Class I peers; UNP is even trading flattish on the day.. we also await an earnings release from JBHT, which should hit either today or tomorrow..
    Aerospace – BA declines nearly 8% after announcing production cuts, some on the St expecting the co to take it even further and announce narrowbody cuts as well in the near future.. suppliers levered to the co are off big re PCP, SPR..
    Materials – the space is mixed, seeing strength in the metals (copper up 3%, gold reverses back to the $900/oz level) on benign eco data / commentary out of China, also reports that China is mulling new stimulus measures.. AA an outlier, taking a breather as the stock had a big run-up last week after earnings.. the rest of the materials space (ie chems, ferts, paper/forest, packagers) is trading dn w/ the tape..
    Energy – The macro trade, into financials out of everything else, weighs heavily on energy as it appears sector is source of funds for the trade. It appears mostly passive money being used in energy as flows are a bit light. Seeing services being hit the hardest on this move likely ahead of what investors believe could be very weak earnings. Drillers and refiners also getting sold. Tickets we do see are vanillas using weakness to add to positions. Utilities: Significant two-way flow in a number of regulateds and IPPs. Sector being hit pretty hard w market. Again, feels like most sectors being used as major source of funds for financials buying. 3:2 better buyers…hedge funds and vanillas participating.

  77. 77
    zman Says:

    BOP – re last paragraph in 75 I have to say looking at the stock action in the energy groups of late … not so far. I’ve got more than a dozen names at annual highs. Not sure how that makes them a source of funds. MLPs kicking higher as well which is where I’d look for weakness if people were coming out of the sector. If they are talking about the Majors I think they are red today over lingering impact of the CVX warning…won’t be long lived if history is a guide for that and may not impact COP or XOM when COP warns which I suspect they will.

  78. 78
    bill Says:

    ng now at .99 in wyoming

    http://intelligencepress.com/features/intcx/gas/intcx_gas_point.emb?pointcode=ICERMTNWW

  79. 79
    bill Says:

    in the 1 + range in other areas

    west looks weak

    http://intelligencepress.com/features/intcx/gas/intcx_gas_point.emb?pointcode=ICERMTNWW

  80. 80
    BirdsofpreyRcool Says:

    z — thanks for the colour from your side of the table. Just passing along comments from a major NYC financial trading desk. They get to sell flows that I don’t. Doesnm’t mean they always get the deets right.

  81. 81
    BirdsofpreyRcool Says:

    Just FYI, “adjusted” earnings estimates for GS tomorrow average to $1.643 as reported on Bloomberg. The GS report and conf call will probably set the tone of the market for the day.

  82. 82
    zman Says:

    Bill – Yep, more Rexx pipeline delays, not a whole bunch of demand. No wonder BBG is so hedged.

  83. 83
    zman Says:

    BOP – too right in 81.

    Ok, I’m not getting an alarm bell today when comments hit the site so I’m a little slower in responding.

    Beerthirty!

  84. 84
    Hoss Says:

    Z

    Speaking of BBG Hedges

    Do you have time for a quick explanation of a “basis only swap” i.e

    CAL 2011
    • Natural gas swaps: 10.5 Bcf at $7.87/Mcf
    • Natural gas basis only swaps: 6.6 Bcf at ($1.89/Mcf)

    you can address it later if you gotta go

  85. 85
    BirdsofpreyRcool Says:

    wow. GS just reported. Blow out earnings + will raise $5B in equity to repay TARP.

    As expected, trading revenues exceeded asset write-downs. Adjusted earnings for 1Q09 of $3.39. wow.

  86. 86
    BirdsofpreyRcool Says:

    Goldman Sachs to Raise $5 Billion in Stock Sale, Posts Profit
    2009-04-13 20:20:13.181 GMT

    By Christine Harper
    April 13 (Bloomberg) — Goldman Sachs Group Inc., the sixth-biggest U.S. bank by assets, reported first-quarter profit that exceeded analysts’ estimates and said it plans to raise $5 billion in a share sale.
    The New York-based bank earned $1.81 billion, or $3.39 a share, in the first quarter as a surge in trading revenue outweighed asset writedowns. The results beat the $1.64 a share estimate of 16 analysts surveyed by Bloomberg.
    Chief Executive Officer Lloyd Blankfein is raising money to shore up finances and repay the U.S. Treasury $10 billion it received in October after the bankruptcy of Lehman Brothers Holdings Inc. Goldman Sachs, the most-profitable Wall Street firm before converting to a bank last year, is seeking to rebound after posting its first quarterly loss since the company went public in 1999.
    “A return of taxpayer funds would manifest the bank’s strength and set it apart from the pack,” Isabel Schauerte, an analyst at Boston-based financial research and consulting firm Celent, said before the announcement.
    First-quarter revenue was $9.43 billion. Fixed-income trading revenue was a record $6.56 billion, 34 percent higher than its previous record. Equity trading revenue was $2.0 billion.

    Bid-Ask Spread

    Goldman Sachs benefited as the gap between what banks pay to buy fixed-income securities and the price at which they sell, the so-called bid-ask spread, almost doubled to 19 basis points in six months, according to data compiled by Bloomberg.
    The company’s book value rose to $98.82 a share at the end of March from $98.68 in November, and its return on equity, a gauge of how effectively the firm invests earnings, was 14.3 percent in the first quarter.
    Goldman Sachs raised $5.75 billion by selling shares at
    $123 apiece in September in an offering that started after the company announced that Warren Buffett’s Berkshire Hathaway Inc.
    bought $5 billion in preferred stock.
    A month later, Goldman Sachs was among nine financial institutions that shared $125 billion in the first payments from the Treasury’s $700 billion Troubled Asset Relief Program.
    “A stock sale would be a good thing for the government; it would be a good thing for Goldman Sachs or any other bank which was able to do it, especially if they were also able to repay the TARP,” Roy Smith, a finance professor at New York University’s Stern School of Business and a former partner at Goldman Sachs. “They would be free of the high cost of the dividend paid in after-tax dollars and the other restrictions, which everybody realizes they would like to get out of.”

    TARP Return

    If Goldman Sachs returns the TARP money, it may pressure other banks to follow suit or to risk appearing dependent on the government, Brad Hintz, an analyst at Sanford C. Bernstein Co.
    in New York, said before today’s announcement.
    “The right thing for government officials to do will be to delay the GS repayment until a significant group of banks are able to repay simultaneously under some organized plan,” Hintz said.
    Blankfein, 54, said last week at a conference in Washington sponsored by the Council of Institutional Investors that the funds that Wall Street firms received wasn’t intended to be “permanent capital.”
    “The minute that an institution is allowed to return the money and is capable of returning the money, while still carrying out its obligations and its role in the capital markets effectively, then it should do it that minute,” Blankfein said.
    Goldman Sachs has gained 55 percent this year to close today at $130.15 in New York Stock Exchange composite trading.
    The price is more than double the stock’s closing low of $52 on Nov. 20.

  87. 87
    zman Says:

    Basis swap has to do with location risk relative to a benchmark like NYMEX. So if your gas trades for a certain discount to NYMEX you might lock that in if you think the basis or differential is going to widen. For example, in the Fayetteville, if you had seen rising production last year in the region bumping up against pipeline capacity you might have hedged the basis before the regional glut of gas occurred which would expand basis until more capacity was placed onstream or production declined. In the Rockies, there has been too much supply for quite some time and until that gas gets to market it will have a wide differential to market or NYMEX prices. Basis expands and contract based on the regional factors but also based on the overall gas market. During the recent fall in prices we have seen some really big differentials to NYMEX, well above normal levels in many places. Hedging that basis to NYMEX and then hedging NYMEX gets your gas from wellhead to market at the price you want.

  88. 88
    Hoss Says:

    Z

    Thanks

    Just found EIA’s link to “Derivatives and Risk Management in the Petroleum, Natural Gas, and Electricity Industries” and will do some additional reading.

  89. 89
    BirdsofpreyRcool Says:

    big credit market rally (as measured by the indices) in last hour of trading… held onto the gains, post-GS earnings. “Whisper number” on GS earnings was as high as $5/share. So, stock trading off a/h. Conf call at 7am tomorrow morning. Still think it will set the tone of tomorrow’s trading. So, watch.

    IG 173 tightened 9 bps today… huge positive move

  90. 90
    md Says:

    MNT
    read the Horzions prospectus on HNU.
    The 9th day of the month it rolls over to the next months contract. I’ve been watching it myself. While it is a permanent option if spot price remains at this level over next few months it would seem that the HNU will decline due to contango.

  91. 91
    md Says:

    MNT
    It would be instructive to read as both short and long term timing on your part will effect your outcome.

    http://www.jovfunds.com/origo/betapro_updated/updated/HBP%20Investing%20in%20Commodity%20v1.pdf

  92. 92
    zman Says:

    SD on the tape with a shelf filing for CEO Tom Ward. Not sure if that’s a re-registration (updating of the S3) in which case it’s no cause for pause, or a new deal in which case I gotta ask why the CEO is getting ready to punt over half his holdings.

  93. 93
    PackMan Says:

    BOP I agree w/ #66. Except to note that Summers should be similarly trashed for his greedy pig no-show job that is so symptomatic of many other pols getting free 7-gure money from hedge funds, banks and I-banks. (like Daschle, Gore, Quayle, others).

    Maybe Summers should return all that money as well, just like AIG execs.

    What I object to is this gaming / manipulation that is going on.

    And that includes GS earnings tonight with their pumped up stock price and earnings that magically made a very large (10 figure) December loss magically disappear to magically create “blow out” earnings.

    Looks more like Treasury gave GS money and PPT go-ahead to buy S&P futures in March to goose the markets and create massive profits for GS to report and their employees to pocket.

    Now why would I be upset about that ?

    I have no position in GS by the way.

    I want a level playing field.

    GS 73-130 in a month; BAC up 40% in 2 days; C up 25% today; that ain’t it.

    Maybe Obama will come on TV tomorrow and say all is well, economy got fixed over the weekend.

    Excuse my rant. :>)

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