Monday Morning

100 thoughts on “Monday Morning”

1. TechTrader taking the day off.

   HeadTrader says mrkt feels “wishy-washy” to him today.

   Not a lot of comments, coming off the trading desk this morning.

   Credit market holding in there…

   IG 97 bps

   HY 94 3/4 pts…. bit of a rally here. But not a lot of trading, yet.

2. Yep, wishy washy looking opening BOP. GMXR rallying off the opening lows, a bit surprising.

   Thanks to SunTrust for the WLL upgrade, new 2009 high there.

3. BEXP rallying off lows too. The deal is underwritten… so, does that mean it was a bought-deal? If so, looks like the purchase price was around 9.80?

4. BOP – I actually meant BEXP and typed GMXR. Wow rotten feeling. Signing off for an hour. I noticed earlier the underwriters for both are the same…Jefco and Credit Suisse…they have a good weekend, lol. BEXP has a broader selling syndicate with some good names in it, probably explains the lack of a huge dip on the announcement so far.

5. z — go take a nap. The mrkt will still be here, when you feel better.

6. useg hit 7.30 today

7. eroc insider deal got thrown a curve ball as a higher bid came in

8. bill — any chance USEG pulls a BEXP and issues stock here? do they need the $$?

9. I dont think so as they have no debt and cash on their Bal. Sheet.

   I do see them investing in more wells. They invested some $’s with PQ as well as Bexp.

   Maybe they should target an eagle Ford well or haynesville

10. It seems like every stock i buy a secondary is done

    pxp
    hk
    atpg
    bexp

    but i cant blame these guys, get it while the getting is good

11. so USEG is fully-funded for their working interest payments? dont’ get me wrong, it was a great buy, on your part!

12. bill — that’s b/c you like the growthy kids! Not a bad strategy.

13. Win some lose some. I own some of the GMXR Nov 17.50, which are now a underwater, however, I almost followed you’all into BEXP Fri, but missed my price. So easy come, easy go.

14. bsj — thing is… i haven’t bought the BEXP’s, yet. Didn’t hit my price on Friday, so didn’t chase. But, wondering if it’s worth adding here. Some of these stocks take longer than others, to get over the 2ndary body blow. 14mm shares on a 83mm share base is a chunk to absorb. But the stock is holding in here, so worth keeping an eye on.

15. BOP: I just bought some BEXP Nov 10’s a few minutes ago (kiss of death). The big thing they have going for it is nice oil wells, and they are using this money to drill more oil wells.

16. bsj — agree on the BEXP. That is why I am circling the Nov10s… thinking about it. You’ve had some nice calls here… “kiss of death,” hardly.

17. BOP: another thing on BEXP, since it is a small cap, it is kind of hard of a fund to buy in bulk without pushing the price throught the roof. It is possible that this secondary will give a fund or funds the chance to buy without moving the price.

18. bsj — that seems to be the case, so far. Also, nice stable of underwriters on the BEXP deal. Pretty classy shops. That helps support the price and the after-placement trading, of course.

19. From X-Asset Class Strategist this morning —

    On June 12, we published our Second Half of 2009 Outlook piece in which we stated that the economic recovery was likely to gain momentum as the year progressed. One of the base reasons we thought the recovery would gain momentum was….The US Consumer. On June 12th we stated that the “US consumer is not dead, but we are also convinced that the majority of US consumers believe that they should be saving at least 5% or more of their income. We are also equally convinced that the vast majority of US consumers will fail to accomplish this goal and will end up at the mall by the end of the year.”
    Based on recent economic, newspaper, and company reports this appears to be coming true.
    In early-to-mid August we also began publishing the opinion that retailers are likely to increase their hiring and advertising to take advantage of the Christmas Holiday Season. This also seems to be playing out and we believe investors should continue to add exposure to the advertising sector…..
    Another market misconception is the belief that the banks will not lend money. Bankers, like used car salesmen, only get paid if they generate revenue. They do not get paid to say “NO”….and bankers actually get upset when their credit committee says “NO” to a deal. Believe it or not, bankers are actually pounding the streets looking to find demand…the terms they can get through their credit committees might be restrictive and the rates high…but they are looking to lend.
    Once the banks clear the market for credit they will be forced to loosed credit terms and pricing to generate additional revenues….this is a positive….and the re-establishment of this process can be sped up with the reestablishment of the ABS securitization market. WE BELIEVE THAT THIS PROCESS IS ALREADY BEGINNING TO WORK!
    The clearest sign of this is process was the bank’s expansion of their car financing businesses….”cash-for-clunkers” would not have been a success if the banks were unwilling to finance the purchases….Cash for Clunkers was a success – partially – because banks wanted to lend and earn revenues.
    The recent increase in durable goods retailers advertising “NEW” low rate financing options is a sign that banks (financial system) are looking to find these additional revenues. Combine this with recent increases in retail sales, recovering advertising demand, and low channel inventory rates, we expect the recovery to gain momentum.
    The probability that the US economy goes into a double-dip is decreasing and the probability of a sustained recovery continues to increase. One fly in the ointment is the rising cost of energy even before an appreciable pickup in demand occurs…..this is something that must be watched.
    MJ

20. I’ve finally figures out how the E&P secondary thing works.

    When they drill a well, we might imagine a geyser of oil or a blast of gas. But actually, they get a blast that is a mixture of hydrocarbons and primordial stock certificates that were printed up by dinosaurs in anticipation of the coming oil age.

    When that happens, the roughnecks call the CFO, who comes around and has to clean all the oil off the certificates. Then he crafts a press release to say they will be sold to the public.

    A simple but little understood process.

21. Dman: funny but very true!

22. SWN acting nicely…I think Z said he wanted positioning ahead of Tues., is that right and what is happening on that day?

23. I am struggling with a new computer that works a while and powers down a while…I can see Z’s sick so re# 22 it don’t matter

24. Many of you might have seen Dennis Gartman on TV this morning. As a note of triva, we graduated together from the same class in the same high school. I was not great pals with him, but knew him well enought to say hello, and chit chat with him.

    This could be either good, or it could be either bad.

25. Just received this from a NYSE trader friend. “Hdy news 23 percent buyout.
    Sent from my iPhone” Any comments/info?

26. exxi up 20%, MMR up 5%…Davy Jones??

27. jivey — i see that SWN’s earnings aren’t until Oct 30th… so, wonder what z was looking for?

    reef — WOW on you HDY call.

    bsj — where did y’all go to school?

28. BOP- look at EXXI,MMR

29. BOP: Cuyahoga Falls High School class of ’68. Cuyahoga Falls is in northeast Ohio. It is a suburb of Akron.

30. bsj — it’s always interesting to know where someone is from, what they did. And I had no idea Dennis was over 50-ish. Must be good water in Cuyahoga Falls. Thanks!

31. Morning all. We are either in ivb or v up. Time running out on the upside. I expect a top no later than 21/22 Oct and then a 3 – 5 week correction. Upside targets for spx are still above 1100 possibly 1109, 1113, 1121.

32. Is this 9 up days for oil? Read it somewhere but could hardly believe it.

33. BOP: I don’t know Gartmans age, but since we graduated in the same class he is probably my age – 59.

34. Nicky — looking at the closing prices, it looks like this would be the 8th day up, if the near contract closes above 78.53.

35. Thanks BOP. Not sure how long they are going to spin the high oil prices must need things are looking better!

36. Nicky — weak US$, strong oil prices, maybe?

37. 26

    exxi,pxp,mmr

    just got off the mmr earnings call.

    The comments suggest they are on the verge of a major discovery.

    Said they dont want to over-hype but all the comments sounded to a laymen like me they are on to something big with results to be announced shortly (within 30 days)

    JimBOB “old wildcat geyser” rambles on and on and on is either senile or a genius or both

    Go listen to the replay..if they hit something MMR will quickly climb above 10 in this market

38. Oh to be 59 again!
    apbd

39. MMR said about 9:20 AM (see daily chart for immediate stock move) that Davy Jones well hit and hence confirmed top of Eocene at 25,200 ft. (Wilcox) which was at 33,000 ft in Blackbeard. This implies the co.s theory of continuous sands from onshore to deep water offshore is working. 1 hr and 46 min into call Jim Bob guessed wells production potential at 250mm/d…but I’m not raising or lowering expectations.

40. 39, lol good recap

    i actually nodded off while he was rambling

41. I am familar with the MMR story. I don’t usually like to buy gulf E&P stories, but I just took a flyer on the NOV 10’s. I will more than likely rue this trade, but what the heck, it is just a spec and Jim Bob has had alot of success in this area.

42. Look at the difference between GMXR and BEXP. One down 9.44% and another down 2.44%. I know it is not really an apple to apples comparison, with GMXR’s more sizable dilution, however I think it shows the power of finding oil over finding nat gas.

43. Latest from Matthew Simmons:

    Nothing earth shattering but the thesis remains unchanged.

    “ASPO’S Peak Oil Message: Successes And Impediments”

    http://www.simmonsco-intl.com/files/ASPO%202009%20Final.pdf

44. PIMCO is going to add stock funds — for the first time ever. Pretty bullish statement, by an all-fixed income shop. Don’t think they would be making that move, if they thought the stock mrkt was headed down, for any length of time over the foreseeable future.

45. BOP: or you could say it is a sign of a top. I mean, why did they not add stock funds when the market was much lower?

46. bsj — one reason i can think of… bonds were so juicy since the lows of Dec 6, 2008. That, and PIMCO was busy “advising” our govt on the various alphabet soup of financial programs/bailouts.

    Sure. It could signal a top. But, PIMCO is not known for being stupid-money. That said, no one is perfect. But Bill Gross has a whole lot more $$ than i do.

47. GDP has worked itself clear of recent congestion. Could be a stealth move happening.

48. bsj — also, there is the looming (and in many cases, already here) problem with underfunded pensions. Pension mngrs will be reaching for risk product, in order to try to fill some of that gap, over the next few years or so. Can’t fill the gap with just govt and corporate bonds… will have to reach for some more risk.

49. adding to 48 — not saying they SHOULD. Just saying they will.

50. RE 49: The govt is going to have to bail them out anyways so it really doesnt matter what they do.

51. maybe PIMCO is looking ahead, just waiting to get their hands on the PBGC Pension Pools… The point is, somebody has to manage them… whether it’s the govt or the private sector. Those monies will not be confined to buying short term treasuries.

52. VTZ: govt prints the money, which flows into asset markets, pushing up pension funds *if* the managers take on risk.

    Sure it would be simpler if govt just printed and handed it directly to pension funds (or just to the retired folk).

    But who wants simple when you can have crazy?

53. RMD – did they say how many feet of pay they encountered at Davy Jones? Are they at TD? I was trying to hang on through their report this am but didn’t make it (companies should give the Street at least 2 hours prior to the open to review numbers in my book). Any comments on Hurricane Deep and Flatrock rate? Plan to go back and read in awhile.

    HDY – I covered in the post. Sounds like they gave away a pretty good piece of their deal for not that much money.

    BEXP is now down 8 cents. That’s shocking. Should be down 5%+ all day. Testament to Rough Rider prospectivity and a selling syndicate including Weil that knows energy and is banging the gong. The last piece of the recovery from secondary puzzle is their oiliness and the oiliness of what they are going to spend the money on.

    NFX = wow.

    SWN = wow. I don’t recall saying there was a datapoint for Tuesday positioning. They report late this month and I planned to be long for that. Also I wanted to be in for today, because, and even though its a long shot, the stock is acting like it is in play.

    WLL = thanks again to Suntrust.

    LINE about to hit $25

    ROSE = someone forgot to tell them about the rally. If that dips again tomorrow I will look at their oh so illiquid calls again. I continue to hold common there.

    Just a drive by from me, not sticking around.

54. RE 52: They can only fuel the liquidity rally so far… many people have already said valuations are full or excessive so they’ll end up being forced to bail out the funds directly.

    They already functionally bailed out the autoworkers pensions, everything else is like dominos now.

55. ny is picking xom pocket

    105 m fine for messing around with ny ground water

56. Oil through $79 as we enter last half hour of trading:

    Early Read On Oil Inventories:

    * Crude: UP 2 mm barrels … but it could be quite a bit bigger
    * Gasoline: DOWN 1.5 mm barrels
    * Distillates: DOWN 1.6 mm barrels … it looks to me like this one will be bigger as well.

57. Bill

    Your ATPG appears to be completely forgiven.

    Your VQ continues to move higher.

    Hats off.

58. You would think a crude build would be bearish but all markets are now completely detatched from fundamentals so we see a 6 mm build and it will go to 85.

59. ty

    everything in ep seems to be working

60. Nicky – I would tend to think a 6 mm barrel build, and that’s not out of the realm of possibilities for this week would send crude back to 75 at least. Crude is a funny beast at times but it does keep an eye on the fundamentals. Right now people are more concerned with the demand for products. Distillates should pick up nicely this week but we could also see a surprise with a more middling number (close to flat) on gasoline. Demand there has been exceptionally strong (record in fact the last two weeks), that’s unlikely to continue for much longer.

    On crude itself, you had very low imports which should reverse by as much as 1 mm bopd in this week’s report. That gives you an added 7 mm barrels if it happens. On the refining side, utilization has finally come off for the fall maintenance turn. This was not fully reflected in last week’s refinery throughput numbers so you could be looking at lower demand there by another 2 to 300K bopd. So it sets up a big build. I could be off a week but I kind of don’t think so given where prices were and the amount of oil holding offshore (large, but unquantifiable) that is likely to have set sale for the Gulf terminals when oil broke strengthened. If it doesn’t happen in this week’s report, I’d be shocked if it didn’t happen to next week’s report.

61. Oil up over $1 as we approach the close of NYMEX, at 79.50+, technicians earlier on CNBC calling for $84.

62. Next weeks report looks like it may line up better with the charts. I cannot agree with it trading on fundamentals up here – we are awash with the stuff. The speculators are back and everyone knows it.

63. Nicky – I didn’t say it was trading entirely on fundamentals. But they hold sway in the short term when outlier type numbers present themselves vs expectations.

64. Other possibility is they ram it up to 84 – 84 as November goes off the board tomorrow.

65. ZTRADE:

    SLB – Added (10) SLB November $75 Calls (SLBKO) for $1.15 with the stock at $70.20 as per comments in the post. Earnings are Friday.

66. We cannot do the fundamental argument again. When it was at 140 everyone said it was down to fundamentals. Then when they sold it down to 32 everyone agreed it was the speculators who took it to 140. Either we have enough of the stuff or we don’t. Right now we have plenty of all of it so how can we justify a price up here? And when do you think the price will go high enough to tip the economy over the edge again.

67. Having enough of the stuff is not the pricing mechanism. Directionality of demand for end products is. If you look at crude in storage it has fallen markedly since Spring so we have less of it now than before when prices were lower. But that really wasn’t my point. My point was that in the very short term, price pays attention to what it perceives as bearish numbers. Like it did 3 weeks ago when crude was in the mid $60s after a couple of reports showing unexpected builds in crude sent oil lower. At that time, crude in U.S. storage was 116% of the 5 year average. 3 weeks later and we are 110% of the 5 year average. So I’d say it does pay some attention to the numbers.

68. Yes I can see what you are saying. However 110% of the 5 year average and we are at 80? And a move from mid 60’s to 80 in 3 weeks? I just don’t think you can justify the price up here. Sure its based on the move in the dollar and I am sure everyone is going to tell me that its the forward demand out of China etc. However, to me its just the speculators finding any reason they want to run it up. Heck Terranova himself they were doing just that a month ago on the back of Iran.

69. By the way don’t get me wrong the charts said this was coming but it still irritates the hell out of me as you can tell!

70. Nicky, don’t make me get on my emotionless trading stump.

71. BOP or West. My sense is that KOG will not announce a secondary with well results for 7,8. They should have 7/8 results by the conference call in November and then 9 sometime before year end or do you see them having 9 completed by the call as well? Thanks.

72. BEXP – Jerome can you take another look. This morning’s announcement allowed it to fill the gap from Friday’s well news. Its now down 4 cents. I own the common as well as the $10 and $12.50 strike Novembers.

73. z — re KOG, i don’t think we will get results from #9 until early december. But, the 7,8 results should come in around the end of October… or just around the next conf call, estimated for Nov 5th.

74. Thanks BOP, thought I had that correct. So I would assume they don’t announce a deal with the 3Q call as they will be proving up the southeast portion of their acreage with the #9. One thought is that they would be far enough on 9 by the time of the 3Q call to know if it is wet or not. Problematic at that point to do a secondary if you have material info in your back pocket that’s negative.

75. BSJ 41: some smart, gray haired folks say Jim Bob’s theory is correct and you just have to own some stock. I suspect GOM stocks will do some catchup to the onshore E&Ps.
    Z 53 Davy jones at 25,200 ft with a target of 28,000. Did not write down answers to other questions, sorry.

76. re KOG — the rumor mill is uncharacteristically quiet. This could be b/c there is nothing to say… or it could be that the company is being very “tight hole” right now. I think it’s the latter… and I can think of both good and bad reasons for Lynn to be so quiet. Time will tell.

    Also, I think the Stetson dry hole scared some people. But it shouldn’t. It didn’t change anything for KOG’s #9… just confirmed another data point defining the Pink Line of Death for the Middle Bakken productive zone.

77. By the way, an awful lot of really good wells in the Parshall Field are right up against the PLoD… there is even the possibility that some portion of KOG’s #9 falls on either side of that line. Anyway, other than their 1st well, #9 is the most important well, in delineating just how much of KOG’s FBIR acreage is productive for the Middle Bakken. So, it just seems uncharacteristic of Lynn to come out with a 2ndary, ahead of knowing what #9 is going to tell us.

78. RMD – thanks – I think I will put the headphones on and doze through the replay, was it really a 2 hour call?

79. Thanks Bop.

80. BOP – anyone besides AAPL of consequence with earnings out overnight.

81. Hey, Nicky, Re#64 – Don’t use my name in vein.

82. · Eco events for Tues Oct 20: US (PPI, Housing Starts, Building Permits, ABC Consumer Confidence); Eurozone (German PPI, UK M4 Money Supply); Other (Japan Leading Index, Convenience Store Sales, Coincident Index, Bank of Canada Interest Rate Decision).

    · Corp Calendar for Mon Oct 19: earnings due Mon night (GAP, BRO, ZION, IEX, WTNY, PKG, ATHR, VLTR, BSX, SWI, AAPL, TXN).

    · Tues Oct 20: earnings (Xstrata, DD, CMA, SHW, PH, UTX, ARB, PCP, BIIB, BLK, UNH, LMT, KO, STT, RF, UAUA, MTB, DGX, PNR, ITW, BTU, JEF, COH, STM, LXK, SVU, PFE, ISRG, EAT, STLD, SNDK, AMLN, TSFG, CNH, CYMI, STX, YHOO, NBR, TUP, SLM, CAT, WU, BK, CNI, CREE, GILD, CHRW, PLCM). GE has a health care analyst meeting.

83. Apologies in advance for the rant of the day.

    Was tested for swine flu over the weekend, came back negative. After an hour and a half wait. And then they tell me the test is 50% accurate. Sweet. So I’ve either got a cold, SARS, or Ebola for all they can tell.

    Then I read that the 40 mm doses of Swine Flu vaccine set to arrive by the end of October will actually be 28 to 30 mm. Now, if the government can’t project numbers more accurately than that 1 month out, why should I expect them to be in the solar system sized ball park on the 10 year federal deficit. Or anything else.

    My kid’s pediatrician does not yet know whether they will be allocated any doses. The state health department received does on October 15 but the majority of those will sit in storage 10 days while the logistics are worked out. Double sweet.

    End of rant.

84. MMR just short of 2 hr, mostly questions. JB still saying “there’s lots to be learned” when they drill another duster; imagine the excitement when they hit and “light up the pinball machine”. (I love the analogy.)

85. #72, Re: BEXP…not much change from P&F perspective,BEXP continues to hold up well…from here BEXP remains on a buy signal, but goes into o’s on a print of $9…the daily chart shows a nice ascending triangle forming with support at the daily 20 SMA, and with trendline support right above $9…BEXP breaks out from the consolidation at $11…

86. Thanks Jerome.

87. Z – any opinions on CLR lately? Where do they line up with all the other positive news coming out of the Bakken?

    #83 – any time the gov’t gets involved there is a lot of sitting in storage while working out logistics… fortunately the new healthcare plan will be able to and I quote “bend the cost curve” – mini tack on rant over.

88. Hey Jerome, I forgot to ask about SLB. On a chart like that, where do you see resistance. It has had a strong recent run but it underperformed its peers in the quarter. It normally trades at a premium valuation and I could see it going higher, towards $80 with either a beat this Friday or positive comments.

89. 1520 – I like them on reserve valuation…long term they have a lot to capitalize on with the biggest Williston acreage position. On a P/CF they are pricey on next year’s numbers. So I’ve been playing WLL instead.

    On the topic of your tax dollars not working very hard or smart or quickly, I saw early today someone is proposing tax deductions for pet expenses. Stop. Please stop. We could end up with another whole entitlement system for dogs and cats. Would you get a bigger deduction if your dog was blind or a tripod? Ugh.

90. Texas Instruments after the close too. I guess Caterpillar will be key in the morning.

91. This has got to be the dumbest thing I’ve seen yet:

    http://www.usatoday.com/life/lifestyle/pets/2009-10-01-dolittler-happy-act_N.htm

    And I have 3 dogs.

92. I will have to trade in Sophie for a St. Bernard if deductions are by the pound. Nah, couldn’t deal with the slobber.

93. #89 – got it – i’ve been continuing to evaluate a Bakken play or two for my oilier plays.

    Your second paragraph makes me sad.

94. Thanks Nicky. Frankly, I’m not certain AAPL is any kind of indicator on the economy. Income level and having the latest IPhone seem to be uncorrelated. They have to have the latest cool gismo and so they buy it. Maybe we should give these people tax credits because they would be contributing to Global Coolness.

95. Re: #88, the nearest resistance point I see is the current P&F buy signal price objective at $73, a good point for profit taking …other than that not much traffic above

96. Thanks again J

    BEXP ends down a whopping 3 pennies

    Bio for TEXWS6:
    -Over 10 years engineering (E&P) experience all over the states (California, 4 Corner’s New Mexico/Colorado, West Texas (specialty), Oklahoma, Louisiana).
    -BS Petroleum Engineering Texas Tech University
    -Completion Engineering focus, with operational/production/drilling experience

97. AAPL looking happy post earnings.

98. how are you feeling, z?

99. like kung pao cat…plan to be tip top by morning.

100. Oh, the plans of mice and men…. get some sleep tonight, for once!

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