Takeout Tuesday


As outlined in the Monday post I took the opportunity of yesterday's strength in the energy markets to raise cash from September call positions. I plan to do more of that today and tomorrow morning and todya's strong than expected retail sales along with again surging natural gas prices should provide just the ticket.

Sentiment Watch: Bulls continue to pounce on the shorts driving the S&P500 to new highs every other day or so. This makes me like cash more and more as we approach both September expiry and the stock market's notoroiously unfriendly trading heart of September and October. 

  • While the chorus of screaming bears is still their they are beginning to sound more and more like stuck clocks that will eventually be right but from a level so far above their initial prognostications of doom that the dip may well end at a level higher than said starting point.
  • Still, this is no time to be complacent and I'm more comfortable with higher, not lower levels of cash.
  • I still think oil service's move has been overdone and that a correction in the broad markets will reflected as more than a 1 multiple in the OIH.
  • As to E&P, I am reading more Street pieces calling for cautious buying of the group with higher gas prices next year driving multiple expansion. I generally agree although I give the word "cautious" greater emphasis than my still-on-the-Street cohorts do, probably because my short term concerns are grounded in the realm of options. I do see higher share prices for the E&Ps (as a whole) next year as I generally see higher commodity average prices next year and the two go hand in hand (again, in a general sense).
  • However, I think there are still some coming shocks to the broad market which will take especially the higher multiple names on a gut wrenching ride. In other words, I plan to be more patient, waiting on bigger dips to buy into calls for the next 6 to 8 weeks. In that time, I'll be favoring growthy gas (HK and SWN, RRC, KWK) and low multiple oil (WLL) .

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update - TSO thoughts.
  4. Stuff We Care About Today - MLP Update, another takeout
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $14,100
    • 77% Cash
    • The Current Holdings tab is updated.
  • Yesterday's Trades: Raising Cash.

    • WLL – Out second half of September $50 calls for $5.80, up 440%. I will reposition into Octobers later this week or next week. Still cheapest Bakken name I can find.
    • SWN – Sold the September $36 Call position (TKQIY) for $5.60, up 273%. Just lightening up on September positions.
    • NFX – Out of my 10 NFX $40 September Calls (NFXIH) for $4.10, up 103%. I continue to hold a small October position here and will likely add to that this week or next.

Commodity Watch

Crude oil eased $0.43 to close at $68.86 yesterday on fears of a stronger dollar (the dollar went up initially, then sold off). This morning crude is trading back up into the mid $69s despite a stronger dollar.

  • Early Read On Oil Inventories:
    • Crude: DOWN 2.5 millon barrels
    • Gasoline: UP 0.6 millon barrelsDistillates: UP 1.55 millon barrels


  • MEND Watch: Theyyyyy'rrreeee Baaaaacccckkk! MEND promises to end its ceasefire today. The group says that when they strike  attacks “will be carried out with utmost zeal." Pop quiz: How do you know when a terrorist group has outside funding? When they turn all their weapons one month and show up the next month with shiny new ones.  

Natural gas blasted $0.34 higher to close at $3.30 yesterday. This morning gas is trading up another 6+% as the short covering continues.


  • Imports Watch: Down 0.4 Bcfgdp from last week and flat with last year.

    • Canada: 8.0 Bcfgpd, down 0.4 from last week and 0.3 from last year.  We should being to see this fall back off to summer lows as gas gets turned away by the pipeline companies.
    • LNG: 1.3 Bcfgpd, up 0.3 from last year, flat with last week.

Crack Spread Update

Key Takeaways:

1) West Coast Margins have been strong and improving. Especially for gasoline but diesel margins have held in there as well.

2) Last week I hinted that I am warming to West Coast Indie refiner TSO. Why?

  • As you can see from the crack spreads graphs above, west coast margins are running high to the rest of the U.S.:
  • Why?
    • Because W. Coast refining capacity is now in the mid 70% range vs mid to upper 80% (depending on the week) for the nation as a whole.
    • This has led to reduced W. Coast gasoline inventories, which are now running about 10% low to the five year average vs higher than average total U.S. gasoline inventories.
  • TSO assets are well positioned either on the west coast, in captive markets like Alaska and Hawaii and in the mid-continent where they have been designed to run on Bakken crudes.
  • Meanwhile, the cost cutting efforts continue and the EPS slide has slowed considerably.


Stuff We Care About Today

MLP Update

  1. The Master Limited Parnterships Investor Conference is September 16 and 17, in Greenwich, CT
  2. Here is the link to the agenda.
  3. Most of the companies are midstream or transportation or storage types and as such of little interest to me since that's just not my area. However, four companies that are in my realm (E&P) are also speaking:

    1. Wednesday - September 16 (all times EST)

      1. BBEP - 11:15 am - I have very little interest in these guys and will actually be listening to the Boardwalk Pipeline presentation that's on at the same time to see if they update the timetable for pipeline repairs to capacity coming out of the Fayetteville Shale
      2. LINE - 11:45 am  - I own some line and it has been my favorite yield play for some time now.
      3. LGCY - 2:15 pm
    2. Thursday - September 17

      1. VNR - 8 am
      2. EVEP - 9 am

Looking at the following table, you'll note that 3 of the companies canned their dividends since my last update on the MLPs in April. These 3 companies fell the most early in the year and have all outperformed since then, rising over 50% apiece. My safer, 100% hedged for the next 3 years, LINE is up 47% since then but I also continue to get paid to wait there. I've also added another MLP in the name VNR to the list. Interesting story and will be doing more work there soon (note that they speak on Thursday).

Parallel Gets Taken Out:

  • $483 mm ($3.15 for the stock and the rest for the seniors and revolver
  • Reserves: 33.2 MM BOE
  • Acquisition works out to $14.52 per BOE. Fun fact: my last back of the envelope NAVs have been using a $15 per barrel in the ground oil price. 
  • Obviously some loose lips here given the move in the stock. This is likely to cause a run on other single digit names, from NOG to KOG in the Bakken, GST for deep Bossier, to WRES out west.  PQ also likely to get a look.


Odds & Ends

Analyst Watch:

  • Ladenburg picked up several pipeline transport co's with Buys including Boardwalk. Otherwise pretty quiet.


214 Responses to “Takeout Tuesday”

  1. 1
    BirdsofpreyRcool Says:

    It ain’t all just smoke and mirrors and feel-good sentiment. It’s showing up in numbers too. Nothing huge, but eco-numbers beating expectations. You can argue (successfully) that expectations are too low, but they were too high going into the recession too.

    Advance Retail Sales for Aug 2.7% vs 1.9% expd

    Retail Sales less Autos (Aug) 1.1% vs 0.4% expd

    Empire Manufacturing (Sept) 18.88 vs 15.0 expd

  2. 2
    BirdsofpreyRcool Says:

    The Credit Rally Continues…..

    High Yield Index climbs higher… as as this does, more and more M&A will result. If you can borrow money and think the mrkt is undervaluing your favorite asset, then leveraged takeouts like Apollo’s purchase of PLLL will follow. Deny it at your own risk. But M&A will propelll valuations higher.

    Also, some one(s) dumping the Investment Grade Index this morning… that means they are SHORTING risk / selling protection (bullish for stocks). Huge move from last week in this Index.

    IG 105 1/2 -1 1/2bps

    HY 93 1/2 +5/8pts

  3. 3
    zman Says:

    Good $/BOE in the ground price for PLLL. We should see more consolidation in E&P this fall, more small caps being taken out, most likely around redetermination times. I don’t think there will be a sudden flood but an increase over the last year’s quiet.

  4. 4
    baylor3217 Says:

    well my CHK hedge is looking pretty good. lol.

    Better to have insurance though. I’ll try to jump out of it this morning before it spits the bit.

  5. 5
    zman Says:

    CHK in a midstream deal in the Marcellus, but that’s not the rally reason. Feels like something is up, foreign partner interest cropping up in the rumor mill again or the like.

  6. 6
    baylor3217 Says:

    CHK up .60 early in pre-market. what a run! the the MOASCR that we were expaecting.

  7. 7
    zman Says:

    NG rally is going to give me an opportunity to come out of those once dead KWK $12.50s at a gain I think. I will continue to hold the now nearly worthless Oct $15s.

  8. 8
    zman Says:

    Baylor – very surprised GMXR and GDP short rallies have been so relatively muted. For GMXR, I mean, only 30% since the start of the month seems big but the June highs were closer to $18. Same relatively muted action for GDP.

  9. 9
    zman Says:

    I should add that short covering rallies in natural gas are beyond the realm of what you normally think of as “highly volatile”. If it rolls during the day, you could easily see a 5 to 10% gain end in a 10 to 15% loss. Very slippery. There is little to no tropical impetus for the move and nothing on the domestic weather front that spells big demand. Just the fear of broad curtailments and not enough contracts to go around when covering happens.

  10. 10
    elijahwc Says:

    HK files S-3 for a mixed shelf. Now they need to additionally convert to an open end mutual fund to more accurately reflect their serial issuer status.

  11. 11
    zman Says:

    Eli – Saw that, not a big deal in my book as everyone keeps an active shelf and they had played with the share count before and had a deal and therefore needed to reload it. Or maybe they just want to buy something. ;->

  12. 12
    BirdsofpreyRcool Says:

    TechTrader is saying 55/45 short today.

    But HeadTrader is saying he would wait, then continue to buy any pull backs. He suggests watching IBM at 120 today, as the whole mrkt went ballistic when GE went thru 15 yesterday. He thinks today will be a repeat of that.

  13. 13
    elijahwc Says:

    Z also of interest this am is that the rumor last week of a big int’l derivatives loss is apparently true.

    PetroChina: Chimbusco has huge losses from oil derivatives trading, report says – DJ (117.17 )

    DJ reports China Marine Bunker (PetroChina), a joint-venture between PetroChina (PTR) and China Ocean Shipping (Group), or Cosco, has unrealized losses of billions of yuan from its oil derivatives positions, Caijing magazine reported late Monday. The contracts were entered into by the Singapore unit of Chimbusco, as the joint venture is known, the report said, citing a source close to Cosco.

  14. 14
    zman Says:

    Thanks BOP.

  15. 15
    zman Says:

    Re 13 – Ok, true but of consequence to the markets, since PTR is funded under and over the table by the Chinese govt I think they can handle it.

  16. 16
    baylor3217 Says:

    may have exited my HK 24 C’s too early. Have to check the price action this morning, but got out around .25 for a 60% loss.

    Missed out on a profit on these had I been in front of my desk last week. GRRRRRRR!

  17. 17
    zman Says:

    KWK looks to be targeting the $13.18 level from the June run.

    KOG over $2.20 … nice

    EOG calls waking up

    HAL puts taking a hit, may add a few more if the market really spikes here, may add Octobers as well.

  18. 18
    Nicky Says:

    Morning all. Resistance at 1053,1062.

    BOP – in reference to #1. Where on the street are we seeing signs of a recovery? We are losing not creating jobs, the housing market continues to worsen, the consumer continues to save. This is a fed induced stock market rally that relates to nothing in the real world. Because this is the case when it tops this time the fall that we are going to see is going to be far worse than anything that has gone before. The retail investor is now getting back into the market and imo we are very close to a top.

    As far as the wave count we should see a top within the next 20 spx points – that may be it or we could do one more down and then up.

  19. 19
    baylor3217 Says:

    Markets can stay irrational longer than one can stay solvent. That’s been my mantra here lately.

  20. 20
    BirdsofpreyRcool Says:

    I read something the other day that struck me as insightful. It’s the stuff we don’t know, the stuff we aren’t paying attention to, the bubbles that get blown to the cheers of investors jumping in, that end up biting us in our portfolio. The stuff we do know, that doesn’t hurt us as much.

    We know about employment. We know about commercial real estate. We know about margin protection via cost-cutting. We already know this.

    What we don’t know, is what our own govt is going to do. But, if it becomes increasingly clear that some of the expensive, wealth-redistrib policies may fail, this mrkt will go higher.

    However, if I was a perfect crystal ball, I would be sitting on my own island, anjoying a marguarita for breakfast!

  21. 21
    jiveyjr Says:

    many coal stocks breaking out…noticed PCX yesterday…many more this morning

  22. 22
    zman Says:

    Yep, coal prices moving with gas prices. Coal companies, unlike natural gas producers, have done a very good job of cutting capacity. Too much coal, shut down a mine. Too much natural gas, drill a bunch of high production horizontals. Hmmm.

  23. 23
    zman Says:

    ROSE recovered its downgrade hit from yesterday already so no additional buy in from me at this time.

  24. 24
    BirdsofpreyRcool Says:

    Also, one cannot ignore the massive massive massive improvement in the credit markets. Now that debt is available (at least, to the larger borrowers and private equity shops) M&A will happen. There is so much money, being poured down the throat of the credit market. That money will have to find a home quickly. You can’t outperform your peers, by putting your cash to work in money markets. You have to put it to work out the yield curve, if your mandate is to invest in corporate bonds. You have to take this into account, in any assessment of where we are in the mrkt cycle.

  25. 25
    zman Says:

    On coal, met coal may soon be a problem, China steel mills have been going full tilt, sounds like that won’t last much longer. Names that have run like WLT which is an interesting story will take a hit if the Chinese slow down production.

  26. 26
    Nicky Says:

    re # 24 – so now we have a ‘consumer-less’ recovery? That is going to be interesting.

  27. 27
    BirdsofpreyRcool Says:

    I know you can’t have a consumer-less recover when the consumer constitutes almost 70% of GDP. So, the consumer will have to follow, at some point, totally agree.

  28. 28
    bill Says:

    13 and 15

    i read something that china wasnt going to honor the commitment

  29. 29
    bill Says:

    something on the order of shared pain

  30. 30
    Nicky Says:

    Nothing is being done for the consumer however. The housing bailout that was supposed to help 3 million has currently helped less than 300,000. There is no borrowing available to the consumer, instead the cost of borrowing ie credit cards continues to rise.

    All we have seen to date is a bank bailout.

    The recovery is an illusion imo.

  31. 31
    zman Says:

    Commercial Real Estate Watch: Local mall was razed, left large piece of property in center of town empty. A year ago, TGT pulled out as the anchor for a new development with condos, parks, restaurants, etc. Yesterday, they signed back onto the deal.

  32. 32
    BirdsofpreyRcool Says:

    The housing “bailout” was just another wealth-transfer program. The fact that is hasn’t worked well is actually a positive for the rest of the free market. Means those houses will turn over to someone who can afford to own them, not squat in them, on taxpayer money.

    Besides, the ones it did help, just defaulted again, 90 days later. So, pretty happy it didn’t “help” more people.

  33. 33
    Nicky Says:

    Yes I don’t disagree with 32 BOP as I totally believe in allowing the markets to work on their own. Unfortunately as it is almost impossible to get a mortgage there is very little chance of an imminent housing turnaround. On top of that it will take decades to work off the excess inventory.

  34. 34
    BirdsofpreyRcool Says:

    Credit Market giving a little back with weak stocks —

    IG 107

    HY 93

  35. 35
    BirdsofpreyRcool Says:

    Totally agree. The excess inventory will be the largest overhang. Like any “excess capacity” it will produce deflation until that excess can be absorbed.

    However, with money flowing into the corporate bond mrkt, it should get incrementally easier and easier to get a mortgage, as money wants to be put to work. It will happen. It always does.

  36. 36
    Nicky Says:

    Lending/borrowing is going to be the key (plus jobs of course) – there is talk in Europe about forcing the banks to lend.

  37. 37
    BirdsofpreyRcool Says:

    Interesting local tidbit — when Ford shut down their enormous Wixom Factory (you would have to see this plant to believe the size), 10s of thousands of people in the area lost jobs. It’s an old plant, so most people thought they would end up bulldozing it.

    Surprise! It’s got a good location, access to infrastructure, it’s in a very nice neighborhood… They are going to subdivide the plant up and already have 3 manufacturing companies signed up to move in. Yes. Can you believe it? Manufacturing Jobs coming back to Detroit. The kind of jobs we need. And the housing in the area is very affordable.

  38. 38
    VTZ Says:

    Too bad the people working at those manufacturing jobs cost >20 times as much as manufacturing jobs in China so they’ll be completely uncompetitive, especially with a strong USD.

  39. 39
    zman Says:

    VTZ – did you see that story about the U.N. now calling for abandonment of the dollar as the world’s currency yesterday?

  40. 40
    Nicky Says:

    BOP I have a friend who’s parents have a house in Detroit. Two years ago was worth $150k. Now he says they couldn’t even get $10k for it. Seemed unbelievable to me. From what you say it may just be the time to go and snap up real estate in Detroit.

  41. 41
    zman Says:

    Is Ben still talking?

  42. 42
    BirdsofpreyRcool Says:

    Nicky — I saw brick houses in Detroit listed in the weekend paper for as low as $5k. Banks just want to clear them off their books. If the new mayor can do some of the market-based things he wants to, Detroit should enjoy a comeback at some point. But the City of Detroit has a lot of unique problems, tho… will take more than a year or two to work out. For one, how do you get people to move back there?

    Check out the real estate online, tho. Yes. Prices are unreal low.

  43. 43
    RMD Says:

    MLP conf. I am interested in EROC having lost $$ before in it; my impression is they reinstate distribution at some reduced level after they have used cash flow to pay down debt to their targets. Alternative is to take it pvt, but the hodge-podge of up and midstream assets is maybe too tough to manage.
    Yes, I know, last sentence would spell “why bother” to some, but sometimes persistence pays.

  44. 44
    zman Says:

    BOP – tell Lynn to get the exchange to list calls on his stock, I want to take some LEAPs.

  45. 45
    BirdsofpreyRcool Says:

    (#42 was poorly written… one eye on mrkts, one ear on the phone, 10 fingers on the keyboard… something had to give)

  46. 46
    BirdsofpreyRcool Says:

    z — i’ll run it past him. Is that something he initiates? I don’t know how that works…

  47. 47
    zman Says:

    RMD – what struck me in looking over the names is that since April, the 3 that killed their distributions had easily outperformed the rest. I have bubonic feelings toward BBEP and they were up 100+%. Of course, that’s from the low point and they got trashed more than most but still, a bit ironic.

  48. 48
    baylor3217 Says:

    31- I have a short position in SPG (simon property group) that sems way over extended. May add to it this week

  49. 49
    choices Says:

    BOP, Nicky, Mortgages are available here in NW if buyer has downpmt, ability to pay, etc-no more liar loans, obviously. Jobs, as mentioned, must increase to bring back consumer, home buying-not part time, not half wage, but real jobs-I fear, that as V mentioned, we have priced our way out of competition. In the past, we had niches such as high tech but India, Taiwan, etc have passed the US in competitiveness. Not sure what the niche or niches are but govt should get out of way, or provide incentives, not dis-incentives-it is difficult for the demos to understand this if the deficits keep growing-the first pavlovian response is higher taxes.

  50. 50
    BirdsofpreyRcool Says:

    “bubonic feelings”… wow. And only a day after “Kung Pow Chicken.”


    Agreed on the total BBEP avoidance, tho. To be kind… Mngmt there not worth dating.

  51. 51
    zman Says:

    BOP – I don’t know the answer to that. It may be Amex or OPRA that sets that up. I’d be happy to look into and get back to you. The leverage you could get on some Jan 11 $5 calls would be, well, my cup of coffee.

    Speaking of coffee, have to highly recommend

    “The Coffee Trader” by David Liss. Historical fiction set in not quite the earliest days of Exchange in Amsterdam. Lots of machinations about commodities, puts, calls, etc….

  52. 52
    Nicky Says:

    BOP – in answer to how do you get people to move back there? I don’t know being a layman and I don’t know the problems only the pictures I see on tv. But it would seem like an opportunity for a new start if real estate is pretty much worthless. Surely they could raze whole neighborhoods to the ground and start again. New roads, parks, schools etc. If housing becomes super affordable and there are jobs there then people will take the opportunity. Would be ironic if one of the worst hit places was actually able to reinvent itself. Of course the next problem is the huge amount of money it would take to rebuild it which no doubt makes me sound like I am in La La land!

  53. 53
    BirdsofpreyRcool Says:

    At one point, no one could imagine buying houses in Harlem… or warehouses on The Strand in Galveston, either.

  54. 54
    zman Says:

    Ben on CNBC now at Brookings doing Q&A

  55. 55
    kyleandy Says:

    baylor = re 48- u have company in that short position. painful!!! it is always strong in afternoon.

  56. 56
    VTZ Says:

    RE 39 – Yeah that actually happened towards the end of last week. There were some officials taking that stance.

    USD cannot find support or momentum anywhere.

  57. 57
    Nicky Says:

    Choices – one of the things that struck me when I moved to the US was how many houses americans owned. By that I mean I was continually coming across americans that did not just own one or two houses but four or five and this was considered quite the normal. In the UK unless you are a ‘developer’ then it would be unheard of to own more than two properties. On top of that in the UK, being a tiny island comparatively (same size as Florida)there is a massive shortage of buildable land which keeps constant upward pressure on houses. Therefore, when we see real estate prices drop, as they do frequently and cyclically, then rebound very robustly due to the inherent shortage of land and houses.
    What worries me about the current housing crisis in the US is that americans no longer want/or can afford to own four or five houses which takes me back to the inventory I mentioned earlier and how the heck is it going to be mopped up. On top of that there is absolutely no shortage of land in the USA – being a young country – and neither is there likely to be for a couple of centuries. For those reasons I think that there is likely to be downward pressure on prices for longer than any of us can envision. Yes once it bottoms out we may see minor bounces but I think overall prices will bump along the bottom for some considerable time. Just imo.

  58. 58
    bill Says:

    Bahken has been hot and companies like dnr has been relatively ignored

    Does anyone have an opinion on oily DNR

  59. 59
    bill Says:

    rmd 43– im in eroc as well..i think they hol onto the money until debt gets to 600 m

  60. 60
    VTZ Says:

    Nicky – 4 or 5 properties is unheard of anywhere except the US. In Canada most people have 1 and lucky/well-established people have a lake/cabin/vacation property. Right now there are lots of people here buying winter houses in California, Arizona and Florida.

  61. 61
    Nicky Says:

    Broader market – pullback early was a iv. Could still be in iv which would call for further downside, or we are already in v up.

  62. 62
    zman Says:

    Market just hanging on Ben’s answers about the plan going forward.

  63. 63
    Nicky Says:

    VTZ – what I am seeing in Florida (and I am on a barrier island) is that the cheap end of the market is being snapped up by bargain hunters (bearing in mind property has fallen over 50%) but that the higher end of the market is absolutely dead – that said at the top end many have refused/don’t yet need to drop their prices.

    My view is that in the next leg down the top end will be forced to reduce their prices and eventually the whole market is going to fall into line.

  64. 64
    VTZ Says:

    Cheap, free, and excess money forever is the plan!

  65. 65
    rseidman Says:

    Z: Are you familiar with AXAS?
    Quick move today

  66. 66
    BirdsofpreyRcool Says:

    Ben says the U.S. recession has “very likely” ended.

  67. 67
    Nicky Says:

    Bernanke apparently says the recession is technically over.

  68. 68
    zman Says:

    Re DNR, solid, non flashy management, good CO2 assets which are likely to become more valuable over time. Not sure why it has underperformed, could be the relatively high LOE but that seems unlikely given where oil is. Probably worth a closer look.

    BOP and Nicky – Well OK then, lol.

    Rseid – No, I don’t know them.

  69. 69
    Nicky Says:

    Heck I hope we can finally get a much needed rally going on that good news!

  70. 70
    zman Says:

    NG fought off an attempt to go negative and is back up near the HOD, up 18 cents.

    GMXR short cover gaining momentum. Tempting.

    GDP not so much but it has to only be a matter of time.

    KOG up another 9% at $2.34.

  71. 71
    BirdsofpreyRcool Says:

    Some headlines are just worth repeating….

  72. 72
    Garyinhou Says:

    see jeffries raised nfx targets to $51

  73. 73
    zman Says:

    NFX, rising into insider sales. The sales are small and not likely a concern, stock has been moving very well and I may take my October calls out of play as well as they are too small to matter much, have had a nice gain and I can reposition when the group corrects.

  74. 74
    bill Says:

    bho seems more relaxed in front of his union buddies today after yesterday stern lecture to wall street

  75. 75
    rseidman Says:

    15-Sep-09 11:17 ET

    Halliburton awarded a contract by Shell (RDS.A) to deliver fluid services on
    one deepwater rig and one tension leg platform in the Gulf of Mexico (25.98

  76. 76
    zman Says:

    Gary – yes, that was yesterday, a bit late from the Pearl River Basin news of last week.

    Market feeling choppy. Got through Ben’s talk ok and despite one Fed governor’s worry about deflation. The President speaking to the UAW may be tougher.

  77. 77
    baylor3217 Says:

    55- keandy – I still fail to believe its rise is for real. I own spg short at 64.5.

    It’s at 6 month highs but can’t get myself to believe the carnage is over. However hedge fund and mutual find allocations can’t be overcome setes as everyone scrambles to beat the s&p

  78. 78
    zman Says:

    Gary check your email.

  79. 79
    baylor3217 Says:

    Need to talk through my nervousness on some recent gainers.

    KOG up 80% with 2000 shares in hand. Scaled out of 1/3 of Original position at 1.95.

    Kwk – up 25% in a week on recent ng shrt cvring rally. I’ve always learned to worrk when making too much money. Thankfully these trades are offsetting my conservative put strategy which seem to go to zero as soon as I buy them 🙂

  80. 80
    baylor3217 Says:

    Oops. Sorry Bout the emoticon thingy

  81. 81
    zman Says:

    Thanks ELI, got that file.

  82. 82
    choices Says:

    I just saw a number which was astounding to me-roughly 10 million jobs must be created to get us back to the level of employment of Dec 07 when the recession began-I do not see this happening anytime soon,

  83. 83
    BirdsofpreyRcool Says:

    choices — personally, i don’t think we will get back to that level of employment. Less call for dog-walkers, personal trainers, and pedicurists these days. Don’t think some of that stuff ever comes back.

  84. 84
    zman Says:

    NG at new HOD, up 28 cents or 9% at 3.60. Gassy stocks once again slow to respond/believe it. Can’t say I blame them but they are waking up. Finger on trigger on a couple of gassy September call positions to exit.

  85. 85
    baylor3217 Says:

    83 – millions of people can be employed by the govt re-writing newspaper articles from the past and revising wikipedia to the govts liking ala 1984.

  86. 86
    zman Says:

    KWK just pennies away from breaking the June high now.

  87. 87
    BirdsofpreyRcool Says:

    SD en fuego….

  88. 88
    zman Says:

    BOP – yep, up 8%, their short interest if I recall was 16%, gmxr up 8%, their SI is close to 25%, GDP is near 25% too and they have not moved yet. Tempting.

    EOG about to test $79. My quituple down there starting to work. A lot will depend on API tonight, EIA tomorrow. Last I saw, estimates were still calling for a pretty big draw on crude but with product builds again.

  89. 89
    apbd Says:

    What’s the matter with you people? Don’t you believe in green jobs?

  90. 90
    zman Says:

    APBD – Sure. As long as they didn’t used to be people working at refineries or drilling wells.

  91. 91
    zman Says:

    KWK at new 2009 high.

    NG – the 12 month strip is largely not following this move today. Oct up 26 cents, Nov up 12 cents, everything else up 3 to 4 cents. If I ran an unhedged E&P company, especially a lightly hedged one in the winter months this year, I’d have to be looking at thanking my lucky stars and adding some protection here. As the contango flattens however, there is less incentive to jam gas into storage and sell it later. The incentive is still there, but lessened.

  92. 92
    kyleandy Says:

    sold some GDP 25 sept puts .70 just now. stk at 25.05

  93. 93
    baylor3217 Says:

    91 – zman – new high becomes support?

  94. 94
    RMD Says:

    Bill #59: mgt suggested they don’t like having NO distribution while they pay down debt towards target; my inference was they pay something along the way as a token, though maybe not immediately. The minimum arrearage does add up quickly, creating an unstable state where the logical alternative is to take it private.

  95. 95
    zman Says:

    Baylor, I was thinking more along the lines of old high was resistance.

  96. 96
    BirdsofpreyRcool Says:

    Just got this… I’ll post, as it supports my position (makes me feel a bit like Bill Gross) 😉


  97. 97
    kyleandy Says:

    bop – bamn, i thot u were bill gross using alias

  98. 98
    Jerome Blank Says:

    Hi Zman…did you have a chance to look at NGAS, moving today

  99. 99
    BirdsofpreyRcool Says:

    aaaaaaaaaaahhhhhhhhhhhhh…. yes. I still could be. Maybe it’s just one of my famous DOUBLE HEAD FAKES! lol

    Nah. BG is too in bed with the current administration. I wouldn’t respect myself in the morning.

  100. 100
    zman Says:

    Jerome – No, I don’t follow them. But that’s one more little name running hard that makes me concerned about the nature of the money flowing into the group right now.

    When I see LNG (the company) running that hard (and it has started to run) it’s like the seventh seal being broken for me.

  101. 101
    zman Says:

    I left some cheddar on the table at WLL especially. And I could care less. It’s expiration week and anything can happen. I will add it back lower or higher but later.

  102. 102
    baylor3217 Says:

    Thoughts on adding sept Hal puts?

  103. 103
    zman Says:

    I have not done it yet. Mulling that or October puts. I’m not going to fight the tape and I am not going to do it in front of API tonight and probably not until I see EIA tomorrow.

  104. 104
    baylor3217 Says:

    95 – zman – I typically wait for a close above the old high before it starts becoming support but I’m always challenging my trading rules to try to get better

  105. 105
    VTZ Says:

    TORONTO (Reuters) – Suncor Energy Inc is planning deep cuts to its natural gas business, including asset sales, as it pares down its extensive operations following the company’s C$22.7 billion ($21 billion) takeover of Petro-Canada, an executive said on Tuesday.

    Suncor, which became Canada’s largest energy company after the deal, has not been pleased with the returns in either its gas business or Petro-Canada’s, Vice-President John Rogers told an investor conference in Toronto.

    “We are going through a significant reduction in terms of the number of properties and the amount of production that’s coming out of the natural gas division,” Rogers said.

    Word of the cuts comes a week after Suncor said it was scrapping plans for a C$1 billion heavy oil processing unit at its Montreal refinery, a project Petro-Canada had devised long before the deal.

    Suncor also said early this month it will cut about 1,000 jobs, or 8 percent of its workforce.

    The company has a target price in mind for gas assets and will identify specific properties to jettison in the coming months. It will put the properties on the block “when the time is right”, Rogers said.

    Gas markets have been depressed as the recession and mild weather cut into demand for the fuel, prompting record volumes to be injected into storage facilities. Some producers have shut off production in hopes that reduced supply will lift prices.

    Rogers said Suncor will likely spend less of its budget on gas than both companies combined had done in the past.

    The aim is to structure the gas business as Suncor did before the takeover — as a natural hedge to the gas used to produce oil sands-derived crude, he said.

    The company will consider joint ventures with producers that have expertise in shale gas, however, Rogers said.

    Meanwhile, Suncor has no need to acquire more refineries following the merger, he said. It runs plants in Quebec, Ontario, Alberta and Colorado.

    “We think we are in a good position in our downstream and we are not searching for any more refineries,” he said. “We have enough within our portfolio today.”

    Shares in Suncor were up 38 Canadian cents, or 1 percent, at C$37.73 on the Toronto Stock Exchange late on Tuesday morning.

    ($1=$1.08 Canadian)

  106. 106
    BirdsofpreyRcool Says:

    Energy trading color from a NY Money Center Bank —

    Energy: Group modestly underperforms as crude weakness suppresses any underlying bid for services and integrateds. E&Ps act very well tho not sure if for right reasons as appears they’re riding the natgas strength (again, commodity gains likely not based on fundamentals…rather UNG share issuance arb). On our pad, seeing number of swaps engaged within E&Ps and between pipes and integrateds (generalist HFs involved there), better buyers coals and integrateds. Utilities: Group modestly underperforms (more or less unched on day) as riskier assets catch a bit of a bid. Seeing better selling in integrateds here into weakness by generalist HFs. REITs: Very, very active in group today as REITs perform more or less in line. Caught an early sell program from generalist vanilla guy and caught number of buy tickets from dedicated guys. Flows rather non-directional but seems safe to say those who focus on this group still comfortable at these levels.

  107. 107
    zman Says:

    Baylor – and please recognize that there are far wiser chartists here than me including Nicky, Tater, Jerome … not to leave anyone else out but they all swamp my knowledge. I got my start in the business reading Oneil books (like a telephone book full of charts) for a PM but that was many moons ago.

  108. 108
    zman Says:

    Baylor – Also know that I’m pointing it out because I’m looking to exit my Sept calls in KWK, not add. I’m holding Oct higher strikes as well but not adding to them yet.

  109. 109
    baylor3217 Says:

    Question about put protection strategy against an equity position. Pete. Anarian is always harping on this on Fast Money.

    What he doesn’t describe is % of equity position and things like avg time value. I’m wanting to employ something like this on my ChK equity position.

    Is this something any of you guys typically employ? It sems it could get pretty expensive as moe often than not they expire worthless.

  110. 110
    zman Says:

    EOG in quadruple top territory, May, June, August all peaked right about here.

    Jerome, any thoughts on that chart, Tater you as well??

  111. 111
    BirdsofpreyRcool Says:

    baylor — IMHO, if you buy puts on a major position you are worried about and they expire worthless… that is a good thing. You have to approach it like buying fire insurance on your house. It costs you, but you’re really happy if you don’t have to use it.

    If you live in fire country… or worried that you might live in fire country, a little insurance helps you sleep at night.

  112. 112
    baylor3217 Says:

    Zman – I hear ya and appreciate getting folks perspecti ve on things. On my KWK position, it’s just run so much in the week I’ve held it the conservatve in me wants to take profits. I don’t have good feel for how muh this NG rally can go.

    Starting to feel a bit piggy

  113. 113
    VTZ Says:

    baylor – Example of what you’re talking about: I sold HK 25s calls against my HK 24s on Friday morning hoping that HK goes up but not above 25 and if they do and get to say 25.50 I’m covered by my 24 calls that also increased in value.

  114. 114
    baylor3217 Says:

    111- BOP – I hear ya. Question is how much and typically 30 or 60 dAys out (or more)?

    Do traders typically keep putting this position on month after month?

  115. 115
    zman Says:

    SP nearing morning HOD, feels like more “jam the shorts” action.

    Baylor – I look at valuation more than I do the charts. Low valuation, if undeserved, is why such names can often run farther than you think they can (case in point WLL which continues to shoot for $60 and alas, is still cheap despite a monster rally).

    But as I’m in options, not stock in KWK and it has had such a run, taking profits is what I normally do. When you decide to come out on days like today is probably more a call on the market than the stock itself, especially this week of the month. Right now, I’m milking it with an eye on the S&P and a mental stop in place.

  116. 116
    zman Says:

    V – I too do basis reduction work but not in the 10KP II.

  117. 117
    zman Says:

    Baylor – I don’t know that there is a typical trade for them. Many people roll the trade from month to month, others hedge across known news dates like earnings. On size, 1 contract = 100 shares. On timeline, again, going to vary from trader to trader.

  118. 118
    jiveyjr Says:

    REXX on fire too…whoever they are

  119. 119
    zman Says:

    EOG making a nice run. Would like to see 1) more volume and 2) a close above the old high of $79.65 from the August peak.

  120. 120
    BirdsofpreyRcool Says:

    HeadTrader saying that Buffett is “buying stocks as we speak” and that he said he thinks he is “getting a lot for his money.” FWIW.

  121. 121
    zman Says:

    REXX = Marcellus wannabe

  122. 122
    Jerome Blank Says:

    Re: #110, EOG is currently on a P&F buy signal, breaking out of resistance, longer term, the price objective on the current buy signal calculates to $97. EOG goes on a short term sell signal on a print of $74, finds major support again at the P&F long term bullish trendline at $70

  123. 123
    zman Says:

    Reef = Are you hearing rumors again on XCO?

  124. 124
    zman Says:

    S&P bumping up against Nicky’s first resistance level.

  125. 125
    zman Says:

    Crude back over $70

  126. 126
    Nicky Says:

    Z I think this should run to 1060 – pattern looks like it needs more upside.

  127. 127
    Nicky Says:

    We could see a blow off here. Gold to 1030, silver to 18, euro to 148…..

  128. 128
    1520sbroad Says:

    Baylor – #111, 114, 117 – definitely depends on the position (sacred cow?), the trader, are they up or way up and have some insurance money to burn?

  129. 129
    zman Says:

    Thanks Jerome, BOP, Nicky.

    I am Zman’s complete lack of emotion. But, I gotta say, pretty good day, week, and now month. Generally, it’s not supposed to happen this quickly and as such, generally, I take chips off the table into this kind of rally.

  130. 130
    Nicky Says:

    Buffet has to say that – he has derivatives – in a collapse it could wipe out a lifetimes work for him.

  131. 131
    Nicky Says:

    I am out of my longs. I may be early but I am nervous as hell up here.

  132. 132
    VTZ Says:

    Nicky – If you’re saying a blow off is a possibility I’m going to call it likely because I think gold is going to make a new all-time high before it pulls back. That probably means dollar puts in low and S&P also puts in a high on the strength of the weak dollar.

  133. 133
    Jerome Blank Says:

    Light Crude is currently in an interesting technical position from a point a figure perspective. Crude is actually now on a short term sell signal, but has been holding its long term bullish P&F trendline at $68. Important level. If $68 fails to hold, price objective calculates to $62 as next level of support. From where we are now,crude goes back on a buy signal at $74

  134. 134
    zman Says:

    NG rally cut in half again, throwing a little water on the E&P fire here with just under an hour until the NYMEX close.

  135. 135
    Nicky Says:

    VTZ – very likely I agree. Maybe Buffet gives us our blow off. The retail investor is likely to pile in behind him and that will likely be the top.

    Jerome – agree re crude. I have 68 as support too. This looks like a C wave to me and likely to be reversed.

  136. 136
    VTZ Says:

    Z – This is what we need to deal with. It’s like MEND except Greenpeace doesn’t claim to be terrorists. This is happening right now at the mine and they are streaming video because they are proud of it.



  137. 137
    VTZ Says:


    That’s the better video… they are blocking the shovel with pickups.

  138. 138
    Denise Says:

    This ones for you! I am in your camp-all
    cash (not even a KOGGER anymore-sorry BOP and West it was a fun club)


    from the contraininvestor.com
    “That is what this leg of S&P rally is going to do. Bernanke comments today “Recession over” will be the ultimate sucker to pull in the most pessimist of guys into the market and ultimately to crash. Exactly like the women in the video, who I can bet will never return into that pond. So will it be for many of the bulls who jump in now believing Ben. “

  139. 139
    zman Says:

    Re 137. Two things strike me about that.

    First, they drove there in cars. Burning gasoline. Which comes from oil.

    Second, tree huggers make good traction.

  140. 140
    VTZ Says:

    I guess they are chained to the shovels too now.

  141. 141
    zman Says:

    EOG just ticked above its 2009 high at 79.65.

    I originally took (5) Sept 80 calls there at 2.85 some time ago (bad timing on my part). I recent took (20) of the same calls at $0.25. I’m going to take the whole lot off the table soon with them trading at $0.90.

  142. 142
    zman Says:

    V – Well, they are pumping up the price of oil, lol. Thanks for the video, great sport to have on in the background.

  143. 143
    isleworth Says:

    Treasury has new tax rules out designed to ease commercial Real Estate crisis……see Bloomberg news. Beware those of you short SPG etc…. IYR is up almost 3%

  144. 144
    baylor3217 Says:

    Yes beware the ides of SPG. Tought trading when the rules change every day.

  145. 145
    BirdsofpreyRcool Says:

    HeadTrader put out the call to buy IYR this morning. But, this is an energy board… so I didn’t post.

    He is all over this mrkt… like white on rice!

  146. 146
    baylor3217 Says:

    Closed out my modest KWK position up 30% for a roughly $600 gain.

  147. 147
    BirdsofpreyRcool Says:

    go, baylor! nice trading.

  148. 148
    Nicky Says:

    Thanks for that Dman. There is a Bradley turn date today….Bullish sentiment is in the stratosphere etc etc. But considering we are only seeing a few ‘green shoots’ this market is in danger of imploding I think.

  149. 149
    BirdsofpreyRcool Says:

    Head of S&P’s parent (McGraw-Hill) says that structured finance market is coming back.

    I just report the headlines. I don’t make them up.

  150. 150
    zman Says:

    re 149. No, no, keep the headlines coming, I promise not to treat you like a line judge.

  151. 151
    BirdsofpreyRcool Says:

    good…. no tennis ball sandwiches, eh? thx

  152. 152
    Nicky Says:

    Financials not going with this rally today and GS actually red.

  153. 153
    Nicky Says:

    Sorry to be the continual voice of doom but here is a sanity check:


    apologies if it has already been posted.

  154. 154
    zman Says:

    Nicky – yep, its been up a couple of times since 2 days ago. The thing I didn’t point out was that that story and those pictures (well not those exact ones but ones just like them) were floated about 3 months ago. So it is definitely not new news from the since that there is a giant floating, empty bunch of ships bigger than the Spanish Armada off Asia. It should not even be news that they are still there although the author claims it is a secret revealed.

    NG failing into the close of NYMEX.

  155. 155
    BirdsofpreyRcool Says:

    Nicky — you are not the voice of doom. Any intelligent discussion requires both the yin and yang to round out the world. Keep up the good work!

  156. 156
    bill Says:

    89,90, lol

  157. 157
    bill Says:

    94 rmd

    i need to re listen to q2 call to get better understanding ogf their situation.

    I thought they had pretty good hedges in place with hi debt load

  158. 158
    zman Says:

    Nat gas saved by the bell, closing up 3 cents.

    XTO pretty much alone in the big cap E&Ps not making a new high. Lack of hedges next year seems to be troubling them. That and their high priced buyins to the Bakken and Haynesville last year.

  159. 159
    bill Says:

    99 rofl

    good stuff here

  160. 160
    zman Says:

    Refiners completely unloved/forgotten in this rally. I think the underperformance year to date is deserved. I also think that it has been all babies and bathwater and some of the kids aren’t as ugly as the others.

  161. 161
    Nicky Says:

    BOP if I took note of the talking heads like Bernanke, Geithner, Obama etc I would likely be feeling very bullish. It is only the charts and more specifically the EW count that is keeping me in check to be honest. Plus this market is now priced in like we have an economy firing on all cylinders and we never witnessed a meltdown let alone the biggest financial disaster in a generation. Even trying to put a bullish spin on the charts which of course is possible then this is not a healthy market as healthy markets do not go up in a straight line for months on end.

  162. 162
    baylor3217 Says:

    speaking of financials, knowing this is an energy site, i won’t post this type of discussion if it is generally unaccepted, thoughts on WFC significantly outpacing the XLF today?

  163. 163
    baylor3217 Says:

    Amateur question, when folks like Adamie, Taranova and the Fast money crew talking about the positions they put on, any thoughts on the size of those positions?

  164. 164
    Nicky Says:

    Broader market – iii of v done, currently in a small 3 wave pullback for iv, need v of v up…. I can also count v of v as done fwiw

  165. 165
    Denise Says:

    When anyone has some free time

    -the interactive timeline on this Reuters “Time of Crisis” is amazing


  166. 166
    zman Says:

    Baylor – Pinhead size. As in, in many cases I think you could put their positions on the head of a pin.

  167. 167
    BirdsofpreyRcool Says:

    baylor — if we stray too far from energy, z brings out the Wet Noodle and starts hitting us. It’s not a pretty sight. So we generally try to avoid it.

    Exception would be if it was market-moving stuff. Like watching GS was during the Dark Days, for example. Or HeadTrader’s suggestion that we watch IBM as a bellwether today. That kind of stuff.

  168. 168
    elijahwc Says:

    MHR – 20% gap up in trading. Apparently upgraded to Market Outperform at Rodman.

    I didn’t even know they covered them. Gary Evans second life apparently now in session.

  169. 169
    AAA Says:

    Baylor, re 109. I’d recommend that you get a good options text, like Natenberg’s Option Volatility and Pricing. Just buying puts on your long stock is expensive over time because of the time decay (theta). You need to either trade around the position (gamma scalping) or offset the cost of the puts with short calls (typically called a collar if done one for one). Unless there is some unusual reason to hedge the long stock, you are probably better off just setting a price floor and exiting if it goes down. Hedging sounds good but in practice it is a good way to turn paper profits into real losses.

  170. 170
    zman Says:

    Eli – one more sign of trouble. Moves in the little names are of the “too far, too fast” variety.

    Wet Noodle? Me? Naaah. Plus I’m going to be almost entirely cash soon so I might want a good stock idea.

  171. 171
    BirdsofpreyRcool Says:

    wel… if THAT’s the case… and you promise no Wet Noodle… let the games begin!

    Actually, does it make any sense to set aside one day a week where non-energy stuff can be brought up? Friday’s are usually good for lively, non-energy discussions… just a thought…

  172. 172
    zman Says:

    Oil Inventories Expectations Watch:

    Crude: expected DOWN 2.5 mm barrels. You typically get a big draw this time of year due to a tapering of imports and late refinery runs before maintenance season. Last year we were DOWN 5.9 mm and the 5 yr average is 4.8 mm. So API’s should be interesting tonight.

    I am still planning to take more chips off the table and add back smaller October positions later so if I miss a pop in oil on this week, well, I miss a pop in oil this week.

  173. 173
    zman Says:

    There is a place for that every day, over here: http://www.drudge.com/

    Just kidding, if you want to go off topic that’s great from 1 to 2 am. 😎

  174. 174
    zman Says:

    KOG at $2.41.

  175. 175
    BirdsofpreyRcool Says:

    HA! Knew you were kidding about the closeting the Noodle. Just checking.

  176. 176
    Popeye Says:

    I rue my KOG greedy order that never filled.

  177. 177
    zman Says:


    EOG – Added (10) October $85 Calls (EOGJQ) for $1.35 with the stock at $79.90.

    The September calls will be sold shortly.

  178. 178
    baylor3217 Says:

    Wow! Kog to 2.44 Feelin….piggy

  179. 179
    zman Says:


    EOG – Sold (25 – all) September $80 Calls (EOGIP) for $0.90, up 15% to my average cost.

  180. 180
    choices Says:

    #173-well said, Z-thanks. This the site where we try to exchange ideas to the end of trying to make some money.

    No offense meant, BOP.

  181. 181
    BirdsofpreyRcool Says:

    choices — I meant discuss stock ideas that weren’t necessarily energy related. Not politics and celebrity behaviour. But, point taken. And no offense taken.

  182. 182
    choices Says:

    Popeye-#176-same thought here. I bailed on KOG waaaaaay too early @1.70 and have been trying to get back in since then.

  183. 183
    baylor3217 Says:

    I’m pondering a stop market on KOG. Not sure of the price action on NG cam stick or just short covering / UNg arbitrage

  184. 184
    zman Says:

    The way I look at KOG is longer term. Good set of acreage in the Bakken. Oil more important by a good bit than NG for their future. On a barrels in the ground potential basis I can get an NAV from low $2s to low $4s. Mission accomplished on the low end. If they get positive results from their first TFS test at year end or thereabouts I can see the low end of my range walking up, even with, say, 10% dilution.

  185. 185
    zman Says:

    Market on a tear. Shorts taking it in the Kass.

    Apologies but I just had to get that out of my system. Plus, he’s right about the market, he’s just early.

  186. 186
    zman Says:

    BEXP inching towards $10. Just holding the common for now. Will add calls sometime in the next 3 weeks in front of more well news.

  187. 187
    Nicky Says:

    Dow retraces 50% off March lows at 9705

  188. 188
    BirdsofpreyRcool Says:

    KOG — sold the swing trading shares I bought at 2 last Friday. Sometimes, you just have to take profits when you get them. Still have my core position, tho.

  189. 189
    Dman Says:

    z – what’s your view of GDP from a long term perspective?

  190. 190
    elijahwc Says:

    KOG note

    “It takes courage to be a pig here, and I am a pig” Barton Biggs on CNBC just now.

  191. 191
    BirdsofpreyRcool Says:

    thanks, elijahwc… still long and strong the KOG. Just couldn’t resist the $2 present on Friday. So, bought those shares with a PLAN in mind.

    Plan the trade, trade the plan.

  192. 192
    elijahwc Says:

    Sorry, just couldn’t resist after reading the comments on KOG earlier and then hearing Biggs utter those words on his market view. Agree, “DISCIPLINE trumps CONVICTION” Todd Harrison

  193. 193
    zman Says:

    Dman – Will add that to the post for tomorrow.

  194. 194
    BirdsofpreyRcool Says:

    Note from a NY CDX/CDS trader —

    “Last time that HY was close to this spread level, the S&P was at 1300. What is the credit market telling us now?”

  195. 195
    zman Says:


    Someone please post the API results when you see them. Thanks.

  196. 196
    nifkin Says:

    – Crude Oil: Built 0.6 MMBbls on the week vs Reuters expectation for 2.7 MMBbl draw

    – Gasoline: Built 1.3 MMBbls on the week vs Reuters expectation for 0.8 MMBbl build

    – Distillates: Built 5.2 MMBbls on the week vs Reuters expectation for 1.5 MMBbl build

  197. 197
    nifkin Says:

    Crude build despite a 4.3 MMBbl decrease in crude imports

  198. 198
    zman Says:

    Thanks Nifkin. Ugly #s on the surface, does not make a heck of a lot of sense in light of the imports but capacity could have backed off quickly, happens some time around now, can’t tell which week it will be from year to year. Let me know if you see the % number.

  199. 199
    PackMan Says:

    Baylor – 48 … yes, SPG way over extended. Way.

  200. 200
    PackMan Says:

    Baylor – 77. Its not real in that its the entire sector moving. To me, most of the trading is driven by ETFs like IYR.

    Simon has enormous debt; the fundamentals are in question; property values are way down; and they are massively diluting the company to pay down some debt.

    What we are seeing is typical of the rolling short squeezes and HFT trading we see in other sectors like financials, homebuilders, some tech, crap stocks and so on.

  201. 201
    PackMan Says:

    BOP – 96 …. the problem I have, and manyothers have with all this, is that nobody can explain why it is … why is credit so strong ? Makes no sense other than liquidity driven.

    Certainly makes no sense from a valuation or risk perspective.

    His newsletter offers no explanation; it just observes what is happening without attempting to understand or justify it.

    I guess it works for now which is what matters.

  202. 202
    PackMan Says:

    Treasury Eases Tax Rules for Commercial Real Estate :

    Just read this … does nothing for REITs or for IYR. Appears intended to allow CMBS servicers to modify loans without triggering some esoteric taxable event in the bond pool. Since servicers are reluctant to modify loans in most cases (not their mandate) maybe this helps a few more loans get extended, restructured.

    REITs are generally not CMBS borrowers. Private owners and individuals are.

    And this doesn’t seem to help the Borrower, who would be facing phantom forgiveness of debt income in restructurings that involve discounting the loan balance. I don’t understand why Treasury would only help bond investors here and not borrowers, it is the latter who needs the help.

    I don’t see this as a reason to pump IYR, but I guess traders will trade off of any headline in this market.

  203. 203
    PackMan Says:

    162 — WFC — Buffett said he has been buying more of either WFC or AXP but did not disclose which one.

    How’s that for talking your book ?

    Two for one !

  204. 204
    BirdsofpreyRcool Says:

    PackMan — excellent, thoughtful answers. Especially like your cogitations on the real estate accouting vs REITS. But you’re right, traders only care about headlines.

    As far as what is driving credit? Of course it’s liquidity. That is why so many of us were pulling our collective hairs out over Bernanke’s reluctance to deal with the credit crunch by turning on the QE spigot. Ben had his panties in a bunch over inflation… which was mainly high energy prices at the time, as real estate was already a step or two over the edge of the cliff. That was the wrong type of “inflation” for the Fed to be concerned about… meanwhile, Rome burned. By the time the fires were licking at the supporting walls of the U.S. banking system, Ben finally realized he had been trying to throw water on the campfire, while the forest behind him burned.

    OK. Waxing a little poetically. But, to this day, I don’t know why the Fed waited so long to aggressively drop interest rates. So much could have been avoided. We would still have had a massive downturn and unwinding of a unthinkably overleveraged U.S. consumer (not business) cycle. But, we would not have had the Lehman disaster. History will prove this to be a correct statement.

    Anyway, back to my original line of thinking. Liquidity can do glorious things. Like the chicken and the egg. Liquidity can cause a lot of little good things to hatch. In turn, business can (and will) invest, then hire, then expand, then hire some more… and voila’, you have the makings of the next business cycle.

    This downturn did not start with the typical business cycle over-expansion, bloated inventories, and a worn-out global economy. It started with a credit implosion (from too much of the wrong type of borrowings packaged into the wrong type of securities rated wrongly, priced wrongly, and distributed wrongly). What the stock market doesn’t appreciate is that the Credit Market crashed almost 6 months before the stock market did! So, it makes sense that the Credit Market will preceed the stock market back to whatever “New Normal” we will be able to achieve, in the current environment.

    No doubt about it, we are still on the path of healing. I’ll believe that, until the Credit Market tells me not too. And stocks will follow.

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    zman Says:

    China getting whacked again.

    Oil off 50 cents on the API, probably opens lower than that but we’re still pretty range bound and the dollar is touching fresh lows tonight so that’s some support.

  206. 206
    BirdsofpreyRcool Says:

    z — i see china rallying… up 1.54% on a 20-min delay… did it turn down, in the last 20 mins?

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    zman Says:

    BOP – I was just watching the marketwatch headlines here:


  208. 208
    zman Says:

    Hong Kong up yes,

    But Shenzhen down 1.3%, Shanghai down 1.6%

  209. 209
    BirdsofpreyRcool Says:

    Somewhat funny article on the UNG… unless you own it.

    Natural Gas ‘Widow Maker’ Seduces Unwary Investors:

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    zman Says:

    Eli – again, that heatmap on finviz.com is pretty darn cool. Thanks.

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    zman Says:

    Oil slipping into green territory overnight.

    The current holdings tab is updated.

  212. 212
    Gtinvest Says:

    Eli- I don’t know how you found finviz.com but it is great, very helpful and saves alot of time.
    thanks again

  213. 213
    zman Says:

    GT – when you put the heat map on that site on 3d and then cruise down to the lower left to the E&Ps, it just blows the mind.

  214. 214
    Gtinvest Says:

    z Youre right did not know about 3d pretty good , sure tell you about relative performance quickly. By the way you mentioned joe bistardi the other day. He is looking for the coldest winter in last 5 years. I will have a summary form pro site when he releases his winter outlook next month.

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