Expiration Friday

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Market Sentiment Watch: Thanks DELL, learn how to guide the Street. Ugly opening on tap with little in the way of news and nothing in the way of economic data to change sentiment during the day today. See Mea Culpa Watch from yesterday's post. By what appears to be default, I'll be entering next week almost entirely in cash in the $10KPII and I don't plan on going heavily into that cash today (expiry trading is frequently just shy of gambling) but I will dip a small toe or two next week after we see how markets are feeling during the holiday light volumes before Thanksgiving. Moreover, I'm wrapping up a new version of the Orange Charts and will have them out on Monday...valuations have swung wildly within the E&P space in just the last 3 weeks so its a handy reference to have close at hand.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch

  • $10KP II:

    • $14,600
    • 74% Cash
    • The Current Holdings tab is updated.
    • I will update the $10KP tab on Monday.
  • Yesterday's Trades:

    • None

Commodity Watch

Crude oil fell $2.12 to close at $77.46 yesterday on another small oscillation in the dollar. Crude remains quite range bound. This morning crude is trading off a buck as fear over the equity market prompts dollar buying.

  • Offshore Drilling Watch: Comments from Shell:  "There is some hypocrisy in locking these resources away while relying on resources produced in other countries ... Instead, we should embrace policies that provide access to our own oil and gas resources,".

This was of course met with arguments from environmentalists who apparently believe Chinese, Iranian, etc drillers do a cleaner, safer job of tapping the Earth's resources as seen here:

"The potentially irreversible effects of oil pollution on marine ecosystems and their dependent economies do not justify the potential short-term economic gains that might accrue from offshore oil and gas development," said Jeffrey Short with the international marine conservation group Oceana.

Natural gas rose $0.09 to close at $4.34 yesterday after the EIA reported an in line storage number (see below). This morning gas is trading about 5 cents.

  • Weather Watch: Still warmer than normal but with snow expected in the midwest on Turkey Day, headed to the northeast, sentiment for natural gas should get a lift next week.

Natural Gas Storage Review

ZComment: I think next week is the last injection we will see this year. It will be smaller than yesterday's number and will put us right at just under the 3,850 Bcf target I've had for awhile now. Prices are likely to remain subdued until more Winter-like forecasts hit.


Stuff We Care About Today

Jones Energy Acquires Crusader

  • $289 mm bid by private company wins Crusader, vs SD's $230 mm failed bid.
  • $7 mm of that bid will go to pay the break up fee to SD.

Odds & Ends

Analyst Watch:

  • (STP) - raised to Hold at Soleil
  • (XCO) - initiated at Buy at Wunderlich with a $22 target

Interesting Reading Watch:

116 Responses to “Expiration Friday”

  1. 1
    PackMan Says:

    Interesting read:


  2. 2
    zman Says:

    BOP – I think I recall that HT and TT don’t play expirations, correct.

  3. 3
    BirdsofpreyRcool Says:

    z — you are correct. They agree with your assessment that calling price action on options expiry day is “just shy of gambling.” Throw away day. Read research, walk the dog, contribute longer-term insights to the board… it’s that sort of day.

  4. 4
    zman Says:

    Thanks BOP, am doing my Orange Chart update for the month to day as everyone has reported and the stocks have moved sharply in some cases it seemed a good time. Thinking it would be good to get an intern who can 10 key for this stuff.

  5. 5
    BirdsofpreyRcool Says:

    On the other hand… maybe a little “gambling talent” is what is called for. Interesting lead article on bloomberg this morning (as I recall, it’s how Bill Gross got his start in the biz too) —

    Harvard Poker Pro Says Texas Hold ‘Em Can Teach Traders to Fold 2009-11-20 05:00:00.0 GMT

    By Mason Levinson
    Nov. 20 (Bloomberg) — Brandon Adams, who teaches behavioral finance at Harvard University’s Department of Economics, says some of the best candidates for Wall Street trading jobs are the professional card players at FullTiltPoker.com and similar Web sites.
    “They’ve essentially been the survivors in the system, a very difficult system where 95 percent of people lose money,”
    the 30-year-old Adams, who plays at the site, said in a telephone interview. “Anyone smart enough and disciplined enough to survive that system is probably going to do very well in the trading world.”
    An increasing number of hedge funds and brokerages are scrutinizing professional poker to find talent and analytical tools, according to financial recruiters including Options Group, a New York-based executive-search company. Susquehanna International Group LLP, the Bala Cynwyd, Pennsylvania-based options and equity trading company, uses poker to teach strategic thinking.
    “Someone who has made a successful living as a poker player for a few years would more likely be a good trader than someone who hasn’t,” said Aaron Brown, a 53-year-old former poker pro who is now a risk manager at AQR Capital Management LLC in Greenwich, Connecticut, which oversees $23 billion.
    “They know to push when they have the edge and they know how not to bust, and that’s a tough combination to find.”

    Skill Sets

    Skills that define successful traders — rational approach toward risk, speedy decision-making under pressure, discipline and a well-trained memory — are the same ones that separate elite poker players from ones known as “dead money,” financial recruiters say.
    After the World Series of Poker started in Las Vegas four months ago, Options Group recruiter Simon Satanovsky said he received a hedge-fund request for online poker players with no financial experience. He wouldn’t identify the client.
    “Before, we were asking about GPA or the Math/Physics Olympiad,” Satanovsky, a former Russian national bridge champion, said in a telephone interview. “Now, we’re asking questions about poker successes.”
    Satanovsky said Wall Street firms and recruiters have been paying increasing attention to poker players as job candidates since 2003, when amateur Chris Moneymaker beat hundreds of professionals to win the World Series of Poker’s No-Limit Texas Hold ‘Em main event.

    The Right Game

    Adams, who has taught at Harvard in Cambridge, Massachusetts, each spring since 2003, said disciplined poker players can be spotted on sites such as Full Tilt and PokerStars.com waiting for particular games, not tempted by those outside their area of expertise or financial comfort level.
    Their self-control and confidence would be useful in trading where large profits are possible, the probability of going broke high and the competition formidable, he said. Adams cited as an example a trader who notices a slight imperfection in the way options are being priced, then works to come up with the proper bet per trade.
    “In poker, people are used to not sitting back and waiting for the fat pitch,” Adams said. “They’re used to skirting the edge of ruin and they learn the tools of how to do that.”
    Susquehanna has been using poker to teach its new traders since it was founded in 1987, said Pat McCauley, who heads the privately held firm’s trader-development program.

    College Friends

    The company’s founders played the game as college friends at the State University of New York-Binghamton. Susquehanna has held in-house poker tournaments to recruit traders and monitor decision-making skills.
    The trainees learn to use information they see in the marketplace to infer what motivates others, helping them make better prices. It’s the same way poker pro Phil Ivey, considered among the game’s greats, makes bets based on what he sees among his opponents, McCauley said.
    “What professional poker players are really good at is taking this information that’s relatively subjective, quantifying it and making it objective, and that’s what trading is about,” McCauley said.
    The ability to write complex poker algorithms, which either run poker Web sites or try to beat them, will get hedge funds interested, said Todd Fahey, a recruiter who specializes in quantitative finance at New York-based Exemplar Partners.
    “There have been a few guys that I’ve placed in the industry that come from the poker software side of the house,”
    Fahey said in a telephone interview. “Two Sigma, D.E. Shaw and any of your larger computationally-based hedge funds are going to want to see people like this.”
    Two Sigma Investments LLC and D.E. Shaw Group, both based in New York, declined to comment.

    Begleiter’s Try

    The worlds of poker and finance often intersect. Steven Begleiter, who headed corporate strategy at Bear Stearns Cos.
    before its 2008 collapse, earned $1.6 million earlier this month with a sixth-place finish in the main event. Greenlight Capital LLC founder David Einhorn was 18th in 2006. The annual “Wall Street Poker Night,” benefiting Math for America, was started by billionaire James Simons, the founder of hedge-fund firm Renaissance Technologies Corp. This April, the $5,000 buy-in tournament drew 100 entrants — 90 percent from hedge funds or other Wall Street jobs — raising $1.3 million.
    Even though poker players make good traders, they aren’t necessarily good with their own investments, said Adams, adding that he is almost “famously unsuccessful” as an investor.
    “Poker players are lazy and they’re gossipers,” he said.
    “If you look at the way they trade, they tend to latch onto other people’s ideas.”

    Texas Hold ‘Em

    One person who has chosen poker over finance is Joe Cada, who this month outlasted Begleiter and Ivey at the main event final table. Cada, who plays the game professionally, was first among 6,494 entrants and took home the $8.55 million top prize, giving half to financial backers Cliff Josephy and Eric Haber, poker pros with Wall Street backgrounds. The Texas Hold ‘Em contest had a $10,000 entry fee.
    “As a little kid, I used to watch the stock markets day in and day out,” Cada, 22, said in an interview. “My parents always thought I was going to get into banking or become a stockbroker because I was really good with math and logic, and I was obsessed with money.”
    Cada said he plans to remain a poker pro. AQR’s Brown, the author of “The Poker Face of Wall Street” and a life-long player, long ago gave up the game professionally after a couple years of trying.
    “I eventually decided finance was easier,” he said.

  6. 6
    zman Says:

    Analyst Watch:

    EOG – Barclays takes target up from $112 to $121. Given Barclays’ recent timidity towards the group and habit of marking to market their price targets one has to wonder if it simply wasn’t a transposition error, lol.

  7. 7
    bill Says:

    #1 that was so good im bookmarking it

  8. 8
    elijahwc Says:

    HW moving target on APC. from Briefing:
    APC Anadarko Petro assumed with a Market Outperform at Howard Weil; tgt raised to $75 (61.70 )

    Howard Weil assumes coverage of APC with a Market Outperform and raises their tgt to $75 from $73. While the firm believes the majority of the street views APC as solely an exploration story, the firm feels that while exploration is a key component to APC, it is only one of three strategic business units driving value. Those units can be broken down by capital expenditure structure, which, excluding midstream/infrastructure, consists of 50% maintenance capital, devoted to onshore and offshore production and development spending, 25% “mega-project” spending, which is earmarked to provide the next leg of offshore/international production, and 25% exploration. The exploration segment will ultimately provide the event-driven catalysts and next level of value for APC, but it is worth pointing out that it only accounts for 25% of expenditures. Therefore, the firm views APC as an investment opportunity representative of lower-risk development and higher-risk exploration projects, each with their own place in a balanced portfolio.

  9. 9
    zman Says:

    Adding to #6, actually Barclays appears to be genuinely hot for EOG. Going back to November 9, they raised their target from 81 to 112. So this is $30 or 50% in the last 10 days. Many other analysts are also in the high teens for targets.

  10. 10
    bill Says:

    jones energy filing re sd acquisition try


  11. 11
    milepost_43 Says:

    Sometime this week a “comment” was made on timing for KOG’s next PR on a drilling well. Forgot to print it out. Is there a way to do a “search” or can someone repost? Thanks.

  12. 12
    zman Says:

    Cannot search comments unless you recall the date is was made, will go grab it for you.

  13. 13
    zman Says:

    KOG comments from Wednesday:

    West ~ KOG, is moving fracing equipment on location for # 9.

    BOP ~ west — that sounds about right on schedule, if KOG thinks they can complete and test #9 by early December. Thanks for the update, west.

    Z ~ OP/West, thanks, any sense on whether they go ahead and PR #9 alone or do they wait for 10/11 to complete?

    BOP ~ z — if they stick to their original plans, KOG should report #9 results as soon as they have them. After that, I would expect only a quarterly operational update.

  14. 14
    BirdsofpreyRcool Says:

    milepost — KOG’s #9 was originally scheduled to be completed and tested by “early December.” It sounds (from west’s comments about a completion rig moving on site) that KOG is right on schedule. Maybe hear something 1st week in Dec?

  15. 15
    zman Says:


    You can search posts using the search box at upper left on the screen.

    To search for comments, you can go to the date of the search and open a find box at the bottom of your browser. I remembered it was either Tuesday or Wednesday, went to those, then entered KOG in the find box, turned out to be Wednesday. That’s the best way I have to search comments.

  16. 16
    zman Says:

    BOP – and to confirm some earlier color on that well, we don’t see a barn burner for #9, right?

  17. 17
    BirdsofpreyRcool Says:

    KOG made statements to investors during their last stock placement that #9 will be an “average” well for them.

    The FEAR was that is would be a dry hole. The HOPE was that there was a pressure pinchout as you approach the Pink Line of Death that caused more natural fracturing and would result in a “Parshall Field”-like well. It will be interesting to hear the geology on #9. But it sounds like it came in as neither a disappointment nor a gangbuster. That said, it would prove up that SE chunk on KOG’s acreage on the Rez. And that would be a good thing.

  18. 18
    zman Says:

    Pinning setting in already. WLL getting pinned to $60.

  19. 19
    zman Says:

    BOP – hear ya, thanks.

  20. 20
    BirdsofpreyRcool Says:

    EXXI — rumors are swirling…

  21. 21
    john11 Says:

    BOP..any color on those rumors?

  22. 22
    elijahwc Says:

    Volume certainly says so:

    EXXI @ 60% of ADV of 1.82m already.

  23. 23
    ram Says:

    It would be nice if there was an HK rumor swirling ….

  24. 24
    zman Says:

    Only rumor there, and it carries little weight, is that I’m going to add more HK common to my holdings, either today or Monday.

  25. 25
    jiveyjr Says:

    I never seem to have patience to wait on guys like Stoneburner to get what they want done and sell…missed huge opportunity here in Fort Worth with Brumley and EAC…just got juked out with the volatility of it rather than buy a slug and give it to my wife who would never look at it and would have cashed the ticket…

  26. 26
    zman Says:

    NG just barely green for second day. Wow.

  27. 27
    zman Says:

    Anyone see a Street comment on XCO?

    Head down in a pile of numbers.

  28. 28
    bloodystupidjohnson Says:

    CNBC rant — Steve Liesman — how in the hell did this guy ever get to be on the network, any network? He is a windbag that must think he is paid by the word. He mumbles, take some speech lessons. And he is a moron.

    A prefect CNBC hat trick.

  29. 29
    Popeye Says:

    I feel your pain BSJ.

  30. 30
    BirdsofpreyRcool Says:

    EXXI — here’s the thing… i don’t think that people actually KNOW what they think they know there. When i said that “rumors are swirling,” I didn’t mean it as some sort of “I know something you don’t… nah nah nah.” Just that people think they know something. And I don’t think they do.

  31. 31
    zman Says:

    Going to do some end of day, small, small nibbling in a couple of names.

  32. 32
    BirdsofpreyRcool Says:

    That said, I wouldn’t be surprised if EXXI comes out Monday and says something like they placed more shares than planned, during the debt exchange. But, in the case of a company with a lot of debt already, that is a good thing, not a bad one. Just speculating/noodling, on my part. But SOMEbody panicked this morning and sold EXXI shares at a nice entry price.

    Putting my $$ where my mouth is, I just added a little to my position. So, clearly talkin’ my book here.

  33. 33
    choices Says:

    EXXI-opened 1.93, spiked down to 1.5 according to charts(!?), and bounced back to 1.88 now, with heavy volume as was noted in earlier post-still off 6.5%. Whatever rumor caused the spike down was a negative.

    SD actually turned green.

  34. 34
    zman Says:

    ZLT Trades

    HK @ $20.88

    WLL @ $60.02

    These I don’t see holding for anything less than 6 months, most probably longer.

  35. 35
    bloodystupidjohnson Says:

    http://jeffmatthewsisnotmakingthisup.blogspot.com is a pretty good site. Matthews is a former anaylsts that has some interesting points of view. His note 11/10/09 on why Buffett bough BNI is that it is all about the inventories — that the inventories in all businesses are at rock bottom. If correct, this has implications for all commodities and production.

    Check out the note yourself.

  36. 36
    bloodystupidjohnson Says:

    Z, I see you have the curse of bloodystupidjohnson — whenever you buy a stock, that is a sign for it to go down — that is why I am a value investor — my cheap stocks always get cheaper — LOL.

  37. 37
    BirdsofpreyRcool Says:

    choices — re EXXI, I know they don’t have any conclusive info/updates on Davy Jones (although some people might think that is the reason for the sell off), but I do think there is some fire, behind that rumor smoke swirling around. Thing is, it could be good news, not bad. I just think someone panicked and — like all of this high-risk stocks — selling begat selling. I am taking the position that whoever sold, is on the wrong side of the trade.

    But, we should hear what caused all the fuss sometime early next week. And I honestly don’t know what the truth is. I just know that EXXI seems undervalued given their outlook for gloriously strong cash flow, on a go-forward basis. Even if DJ and BB are complete dusters, EXXI should be valued closer to $3+, after this debt recap and with their (oily) production coming back on in Nov-Feb.

  38. 38
    choices Says:

    Thanks, BOP. In this case, a sell down to 1.50 certainly would indicate panic. “Talking your book” is always useful-no need to apologize. It is information useful to many of us, at least to me, and in many cases your book is my book-heh.

  39. 39
    bloodystupidjohnson Says:

    BOP: there is a poster on the yahoo board of EXXI — xmanzball — that has been posting the drilling info. He said yesterday that “Davey Jones is now at 27115 feet, pressure increasing does not bode well”. Alot of people follow this guy and since PXP, MMR, and EXXI are weak, maybe he is on to something.

    But that is the rumor. Take it for what it’s worth.

  40. 40
    baylor3217 Says:

    Thoughts on CHK? Massive cliff it fell off here in the last 30 days.

  41. 41
    BirdsofpreyRcool Says:

    choices — kind thoughts. Thank you. Just trying to make a little money here…

    I’m also trying to get a current mrkt quote on the EXXI 10% notes. Just curious if the panic slopped over into the high yield mrkt. Asking CRT to an update. I’ll let you know what they say.

  42. 42
    BirdsofpreyRcool Says:

    bsj — thanks for the head’s up on the poster. I’ll see if i can confirm his TD info. But, if he is correct, you do not want to see an increase in pressure at this point. Deep gas productive wells normally encounter an underpressured zone overlying productive zones. Had heard coupla weeks ago that they were seeing underpressured indications. But, with wildcat drilling, things can change overnight. thanks again.

  43. 43
    BirdsofpreyRcool Says:

    EXXI 10s just traded at CRT in the 80.75 / 81 range. So, bit of a selloff in the bonds too (which had been offered around 82 recently, to insitutional buyers)

  44. 44
    bloodystupidjohnson Says:

    Z, TXCO, do you know if they have any other acreage in the Eagle Ford, or other areas that they are still planning to sell?

  45. 45
    zman Says:

    BSJ – I don’t know what their plans are, they are in some sub prime EFS acreage (gassy and apparently not in the slightest overpressured last I heard) on the far west side of the play. Could be just the wells I’ve seen were short laterals or weird completions but they don’t stack up to some of the SFY, HK, and PXD completions, not even the smaller ROSE wells. And given were they are, they’d likely be dry gas.

  46. 46
    zman Says:

    Reef – got any updates on Davy?

  47. 47
    bloodystupidjohnson Says:

    Z, I have always meant to ask you what is your take on GDP?

  48. 48
    zman Says:

    BSJ – Gil is a great guy. Series of starts and stops, stock will do very well in a high gas price environment. I’ve been somewhat unimpressed with their Haynesville activity, kind of feels like just another shale player with ok acreage. In the shale game, lower cost and repeatable success in completions and IPs is becoming more key.

  49. 49
    zman Says:

    Crude crawling up.

  50. 50
    zman Says:

    Changed mind, not going to take any options later today, would like to see next week’s open, lots of housing data Monday through Wednesday.

  51. 51
    zman Says:

    HK by no means alone in its crunking, FST has gotten whacked hard. May go back in there next week.

  52. 52
    bloodystupidjohnson Says:

    Even though it is up today, RRC has also be pole axed.

  53. 53
    zman Says:

    WLL – looks to have halted the slide at the 50 day, kind of like a few weeks back. We should get a PR with well updates including the Lewis and Clark test before Christmas.

  54. 54
    zman Says:

    BSJ – add to that UPL and SWN and BBG

  55. 55
    bloodystupidjohnson Says:

    Z, anything I say about stock and charts, you can dismiss as the ramblings of an idiot, however check out the 6 month chart on RRC. This is the fourth time back to the 46 area. The last three times it held there, will it do it again?

  56. 56
    tomdavis12 Says:

    Z: According to ODS-Petrodata Pemex is cutting back JU tenders ’10 vs ’09. Most aversely effected HAWK – NE.

  57. 57
    bloodystupidjohnson Says:

    And GMXR, GDP, CRK, CRZO, CXG, etc.. etc.. etc..

  58. 58
    zman Says:

    Thanks Tom – I don’t get Pemex of late. Speed up, then slow down from week to week.

  59. 59
    zman Says:

    BSJ – given gas’ drop, some of those I get, others are harder to explain. Market not sorting the wheat from the chaff right now.

  60. 60
    BirdsofpreyRcool Says:

    Pemex = govt-run entity. End of story.

  61. 61
    bloodystupidjohnson Says:

    Re 59, Z, that is what you want!!!! When they throw the baby out with the bathwater, and you know what a baby looks like, that is always a great time to be buying babies.

  62. 62
    zman Says:

    BOP – ah, but they used to make claims/targets and then miss them, then opts to throw more money at the issue, say Cantarell, then Chicontepec. Now, there is a battle between members of congress to either fight to stay an exporter or succumb to net import status. So it seems Pemex is either turbo for developing new sources or not week to week. I give them five years before they are importing more than they export (different weights so they already import some now). Guess who is the U.S.’ 2nd largest source of imported crude.

  63. 63
    BirdsofpreyRcool Says:

    let’s see… Canada#1, Mexico#2, Venezuela#3, Nigeria#4… if i recall correctly…

  64. 64
    zman Says:

    BSJ – Re 60. It is one of my sole reasons for existing. And no, there is not a contradiction within that sentence. Happy to do more homework over the weekend after runs like this.

  65. 65
    zman Says:

    BOP = winner, winner, chicken dinner. Yet another reason to dislike the domestic refining base. VLO is going to be paying up for the low quality crude they have adapted themselves to process. Meanwhile, increasing middle eastern sources of finished products will continue to squash the exports market and will probably land more gasoline tailored to U.S. regions on U.S. shores. And that’s before you consider the burden of cap and trade.

  66. 66
    BirdsofpreyRcool Says:

    Equities, Commodities Drop on Trichet, Dell; Dollar, Yen Rise 2009-11-20 17:04:53.687 GMT

    By Elizabeth Stanton
    Nov. 20 (Bloomberg) — Stocks and commodities fell after European Central Bank President Jean-Claude Trichet said policy makers will withdraw emergency cash gradually and Dell Inc.’s earnings trailed analysts’ estimates. The yen and dollar rose.
    The Standard & Poor’s 500 Index slipped 0.5 percent to
    1,089.37 at 11:58 a.m. in New York as Dell tumbled the most this year to lead declines in technology shares. Europe’s Dow Jones Stoxx 600 Index and the MSCI Asia-Pacific Index dropped for the fourth straight day, the longest streaks in four months. Crude oil declined as the Dollar Index gained as much as 0.8 percent.
    “We live in a world where on a day-to-day basis all risk assets move in the same direction, and it’s the opposite direction from the dollar,” said John Kattar, who oversees $1.6 billion as chief investment officer at Eastern Investment Advisors in Boston. “There is a lot of good news built into stock prices, and stocks are more or less fairly valued given the fundamentals.”
    U.S. equities fell for a third straight day, with the S&P 500 poised for its first weekly decline since October. The Dow Jones Industrial Average lost 44.06 points, or 0.4 percent, to 10,288.28. Declines were limited today as J.M. Smucker Co. led gains in consumer staples companies after the maker of jams and Jif peanut butter reported better-than-estimated earnings.

    Rebound Stalls

    The S&P 500 rose as much as 64 percent from a 12-year low in March, closing at a 13-month high of 1,110.32 on Nov. 17. The deepest U.S. economic contraction in seven decades ended in the third quarter, when government incentives spurred consumers to spend more on homes and cars. Corporate profits, which have shrunk from year-earlier levels for a record nine straight quarters, are projected to rise in the current period, according to analyst estimates compiled by Bloomberg.
    Dell, the third-largest maker of personal computers, slid as much as 9.7 percent after reporting a 54 percent drop in profit.
    “In an economy that’s growing slowly, we’re finding some companies that are continuing to execute well and some that are faltering,” said Alan Gayle, senior investment strategist at Ridgeworth Capital Management in Richmond, Virginia. “The market wants to see companies that can deliver on their business model, and it’s pretty clear Dell’s business model isn’t as effective as it has been in years past.” Ridgeworth manages $60 billion.
    D.R. Horton Inc. tumbled 12 percent for the steepest loss in the S&P 500. The second-largest U.S. homebuilder by revenue reported a fourth-quarter loss of 73 cents per share, three times wider than the average estimate of analysts surveyed by Bloomberg. All 12 shares in an index of homebuilders retreated, with Pulte Homes Inc., Lennar Corp. and KB Home each slumping at least 4 percent.

    Smucker Rallies

    J. M. Smucker added 4.9 percent. Second-quarter earnings excluding some items were $1.22 a share, 18 percent higher than the average analyst estimate, as sales of Folgers coffee helped boost revenue by 52 percent.
    Per-share earnings topped the average analyst estimate at 80 percent of S&P 500 companies that have released third-quarter results, the biggest share for a full quarter in Bloomberg data going back to 1993. Still, combined profits are down 14 percent from the year-earlier period.
    Dillard’s Inc. added 9.1 percent to $15.58 after the department-store chain was raised to “buy” from “hold” and its share price estimate increased to $28 from $13.50 at Deutsche Bank AG, which said the company is positioned better than almost all investors estimate to increase earnings based on merchandising and cost control initiatives.

    Trichet’s Liquidity Concern

    European stocks slipped as Trichet said the ECB will remove liquidity in order to ensure the bank doesn’t fuel inflation.
    “Not all our liquidity measures will be needed to the same extent as in the past,” Trichet said at a conference in Frankfurt today. “Any non-standard measure whose continuation would pose a threat to the achievement of price stability must be undone promptly and unequivocally.”
    Trichet has already signaled the ECB is unlikely to renew its offer of 12-month loans to banks after the third installment in December. Council member Guy Quaden indicated this week that the bank may offer fewer three-month and six-month loans next year. At the same time, policy makers have stressed the exit from emergency lending measures doesn’t necessarily imply they will raise interest rates soon.
    “Stocks all over the world and all risk asset classes are being driven by this liquidity factor,” which also is reflected in U.S. dollar weakness, Eastern Investment Advisors’ Kattar said.

    Dollar Gains

    The Dollar Index, which gauges the dollar against a basket of six major currencies, rose 0.3 percent. It has climbed three out of the last four days after touching a 15-month low on Nov.
    16. The U.S. currency gained against 15 of the world’s 16 major currencies. It was unchanged against the yen, which also rose against its 15 most-traded currencies.
    Europe’s Dow Jones Stoxx 600 Index lost 0.8 percent, led by real-estate and financial shares. Asian shares declined after Sony Corp. said it will take longer to reach its profitability targets. Sony slid 2.4 percent in Tokyo.
    Additional strength in the dollar “is the primary near- term risk to equities,” Myles Zyblock, a strategist at RBC Capital Markets in Toronto, wrote in a report today.
    Energy companies in the S&P 500 fell 1.2 percent as a group, the biggest decline among the benchmark’s 10 industry groups, as the dollar’s rebound spurred drop in the price of crude oil.
    Materials companies fell 1 percent as other dollar- denominated commodities including gold, silver, aluminum and nickel also retreated. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. lost at least 1.4 percent.
    Treasury three-month bill rates turned negative yesterday for the first time since December as investors were willing to pay for the safety of the shortest-dated U.S. government assets.

  67. 67
    BirdsofpreyRcool Says:

    bsj #39… poster is correct. DJ currently at 27,115.

  68. 68
    TEXWS6 Says:

    TXCO has alot of S. Texas acreage, will be a EFS player…

  69. 69
    zman Says:

    Rig Count Watch:

    Oil up 14 to 375 from 419 a year ago.

    N. Gas down 2 to 726 from 1,511 a year ago. Second week counts have drifted slightly lower after the recent run.

  70. 70
    bill Says:

    what happened on the opening with exxi?

    It looks like someone had a market sell order for 100,000 ++ shares, rebounded seconds later

  71. 71
    zman Says:

    BOP said rumor, fear above re EXXI

  72. 72
    1520sbroad Says:

    Z – i have been going back thru conference calls that i missed and looking at post Q3 analyst writeups. One comment by Papa on the EOG call struck me – he mentioned that they had worked thru most of the inventory of wells that they had drilled and were waiting to complete. I assume this was related to the falling rig count over the majority of 2009 and late 2008. Did you hear other folks mention this on cc’s? I know SWN talked about it to some degree as it related to the Boardwalk takeaway issues. My guess is they still have some inventory to complete and hook into sales. Does this hangover from the falling rig count ever show up in the numbers or does it get glossed over by big new wells?

  73. 73
    bill Says:

    cabot is getting sued

    Forty-five residents of a northeastern Pennsylvania town in the heart of the Marcellus Shale on Thursday sued Cabot Oil & Gas Corp. and a service operator, claiming that their water wells became contaminated when the producer used hydraulic fracturing (hydrofracing) in the course of drilling and stimulating natural gas wells. The plaintiffs claim the hydrofracing “fluid and/or drilling mud includes hazardous chemicals that are carcinogenic and toxic.”

  74. 74
    DrLink Says:

    I know this is an oil/gas blog but what happens to the dollar has been impacting our oil/gas investments on a daily basis, so I thought this interview is relevant.
    Jim Rickards on Gold – CNBC Interview


    This is an interview on CNBC explaining why gold has been and will continue to be strong in the years ahead. The analyst is Jim Rickards, senior managing director of market intelligence at Omnis.

    His main point is that China and the USA are shorting their own currencies. Thus, gold will move from a commodity rising on those fundamentals to a chief competitor to the major currencies of the world as a store of wealth….

  75. 75
    bill Says:

    a rumor that lasted 30 seconds, lol

    maybe the shares issued with the bonds were dumped

  76. 76
    1520sbroad Says:

    BOP – you still following URKA and the fertilizer names at all?

  77. 77
    zman Says:

    1520 – Yep, I pointed that out when he said it as something I thought to be fairly important. The overhang of wells being slowly completed has been a contributing factor in the slower than expected fall off in production. I did not hear much from others talking about it but you can see it happening at various E&Ps that are suddenly upping their rig counts (they are running out of inventory to simply complete).

  78. 78
    1520sbroad Says:

    #77 – got it. i just hope it gets cold soon.

    your youngest intern taken any steps yet? Mine skipped walking and went straight to running to keep up with the other two.

  79. 79
    isleworth Says:

    Sunoco: Hearing it’s been added to Buy list at Morgan Stanley

  80. 80
    BirdsofpreyRcool Says:

    1520s — good memory! Have taken my eye off the fert-ball for now. You?

  81. 81
    zman Says:

    1520 – turned 11 mos on Tuesday, 12 steps longest walk so far, pretty good with a soccer ball, pretty sure he’s right footed.

  82. 82
    BirdsofpreyRcool Says:

    bill — i think there is something to the EXXI rumor stuff. Don’t think it is about either of the deep shelf wells… but, supposedly we will hear on Monday. I have no idea what “it” is. Just that it probably isn’t bad news.

    I’m guessing (and it it just a guess) that they placed more than the 13.8mm shares that were issued with the secureds. But we shall see.

  83. 83
    zman Says:

    Thanks for that link DRlink

  84. 84
    BirdsofpreyRcool Says:

    EXXI et al. — if people find it annoying (and I would understand why they would) to post stuff about unsubstantiated rumors (especially ones where I have no idea what it’s about), pls tell me. It probably doesn’t help much… but it IS interesting, sometimes.

  85. 85
    1520sbroad Says:

    #80 – i follow the fertilizers as closely as i do energy. i followed URKA for a while and then looked at it again when we went back and forth on it a few months back. I wish i had bought some then – it has doubled since then.

    Some unusual dynamics in fertilizer right now – late harvest in north america, the whole CF/Terra/Agrium love triangle still trying to get something done. Crop prices up, should be an interesting winter and spring.

  86. 86
    1520sbroad Says:

    #81 – good to hear. World Cup 2028?

  87. 87
    BirdsofpreyRcool Says:

    1520s — i owned TRA for about 3 weeks in Jan/Feb… looking at URKA (London exchange) I wish I had bought it too! You were very helpful with info on that one. As I said, guess I just dropped the fert-ball. Thanks for bringing it up. Please continue to post your thoughts there. ok? thx!

  88. 88
    zman Says:

    Roger that, probably in goal.

    About half way through the Orange Charts, adding some new stuff and breaking into small, mid, large cap, (from just large vs everything else) may add a couple of names worth watching like XEC, BEXP and UPL.

  89. 89
    1520sbroad Says:

    87- will do. I could never get comfortable enough with URKA to allocate any money to a position.

    SQM is one of my favorites at the moment. Chilean company – fertilizers, lithium, iodine, a tiny bit of gold, well run, fiscally conservative, fiscally conservative gov’t – what’s that?? (check the Chilean peso vs. USD this year). Stock has been boring this year but as demand for fertilizers picks up it could get interesting.

  90. 90
    zman Says:

    WLT recovered a $2 deficit from earlier to break to green, momo alive and well.

  91. 91
    zman Says:

    BSJ – your curse isn’t all that terrible, lol.

  92. 92
    BirdsofpreyRcool Says:

    JPMo note —



    Recently, investors have been moving into “hibernation” mode

    2009 has been a bountiful year for many institutional investors, and thus we believe many are moving into “hibernation” mode, shifting to lower Beta, expecting little upside into year-end. With an increasing share of hedge funds re-attaining their “high water” marks and a fairly large 33% of mutual funds beating their benchmarks, it is not too surprising that it appears trading in some stocks is becoming more difficult and activity levels seem to be falling.

    While investors usually don’t want to “short a dull market,” it seems that few are prepared for a “bull rise” into YE. Thus, in our view, investors are likely to be surprised to the extent that pro-cyclical data points emerge over the coming weeks. Specifically, we look for incoming data regarding payrolls, housing, and even M&A.

    • We are raising our 2010E EPS estimate to $80 from $76 previously and our YE09 Target to 1160 from 1100. The increase in our EPS estimate reflects our belief that the recent higher base of earnings is sustainable and the $80 EPS level is consistent with a 3.5% ’10E GDP growth rate.

    • Potential catalysts into YE include a positive surprise in the improvement of payroll losses, and our analysis suggests positive payrolls by January are still likely. Improvement in payrolls is key to restoring business and household confidence and also improving small business and consumer credit availability.

    • Directionally, we also believe home prices are declining at a slower pace and, as our ABS team notes, prices are likely to see a bottom in early 2010. Investors focus primarily on Case-Shiller, which reports with a two-month lag. First American Corelogic, which leads Shiller by two months, suggests the Shiller report for September and November, to be reported in late November and late December, should again show seasonal improvements (see “The SMid (Cap) Perspective: Building a position in Homebuilders” dated 11/13/09). Stabilization in home prices would preserve household net worth (and thus, balance sheets) but also improve bank capital positions and likely boost overall lending in housing.

    • M&A is certainly on pace to exceed activity seen in 2008, where only 1,106 deals were announced between November and December. Prior to 2008, deals averaged 1,800 in November/December; thus, increased activity with anticipated premiums would bode well for stocks.

    Still Positive Potential Catalysts into YE

    Payrolls likely to surprise in coming weeks

    As we noted a few weeks ago, we believe the surge in output per worker (GDP/worker and, more recently, productivity) sends a strong signal that firms could soon expand payrolls, as early as January 2010 (see “US Equity Strategy FLASH: Surge in GDP per worker suggests positive payrolls by early 2010” dated 10/29/09). In fact, we believe the November payrolls report (reported in early December) should show meaningful improvement in labor markets. Supporting this view have been the: (i) expansion in hiring reported in the JOLTS survey (September ’09 private openings were 2.232mm vs. 2.128mm in August); (ii) jobless claims nearing the 500k threshold (recently at 502k) our Economists see as the pivot to positive jobs; and (iii) improved temporary hiring (33k in October, has typically led to positive payrolls within four months). Payroll improvement is key to restoring business and household confidence and also improving small business and consumer credit availability.

    Further support that home prices are bottoming

    Recently, the LoanPerformance home price Index (provided by First American CoreLogic) shows that October home prices increased for the sixth consecutive month and reflected a YoY decline of 5.6%. LoanPerformance data leads Case-Shiller data by two months (in late November, Shiller’s data will report HPA for 9/09). In other words, we believe Case-Shiller will report positive trends in home prices for each of the next two months – likely causing more investors to see a bottom in home prices by early 2010. Moreover, the volume of existing and new home sales has also been encouraging lately and is helping to reduce the excess inventory of existing homes, which is needed to bring equilibrium to supply and demand. Stabilization in home prices should preserve household net worth (and thus, balance sheets) but also improve bank capital positions and likely boost overall lending in housing.

    M&A activity likely to remain strong into YE

    We expect M&A volumes to be significantly higher than in the final months of 2008. Last year, there were only 1,106 deals in the US announced between 11/08 and 12/08 (MA <>) according to Bloomberg, 38% below the average seen in 2005-2007. In our view, the final months of 2009 are likely to be more similar to 2005-2007 levels given: (i) sluggish 2010 GDP outlook of 2%, suggesting acquisitions are needed to support organic growth; (ii) record-low financing costs; (iii) easy access to capital; and (iv)

    likely exhaustion of internal cost structure initiatives, thus margin expansion may need to come from mergers. An anticipated higher level of 2009 M&A over 2008 levels is likely to boost equity valuations into YE, in our view.

    They have identified 25 stocks that could benefit from this “pro-Cyclical” move into YE: (i) in Sectors with potential upside into YE; (ii) JPM Analyst EPS forecast is 10% above Street; (iii) market cap >$4b; and (iv) Rated Neutral or Overweight by JPM Analysts. The 25 stocks are: X, AA, CCI, KMP, DAL, F, MGA, COG, SWN, HTZ, VMC, PXD, LVS, XTO, HK, MWV, CREE, WYNN, IP, MT, PCAR, LINTA, JCP, WMB, and CHK. https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-347212-0

  93. 93
    PackMan Says:

    hk moving …

  94. 94
    choices Says:

    HK seems to be finding some support between 20.45 (low today) and 20.68 (low sep 3)- fwiw

  95. 95
    bill Says:


    keep posting everything

    I find it informative

  96. 96
    bill Says:

    or producers — and anyone else who prefers that gas prices are higher rather than lower — the good times won’t arrive until 2013. But then prices could shoot up as high as $10/MMBtu on demand strength coupled with constraints in the rig and oilfield services sector, while global markets draw liquefied natural gas (LNG) away from U.S. shores, according to analysts at Wood Mackenzie

  97. 97
    choices Says:

    slow Friday comment: interesting action on WLL at 60 level-sellers trying to push it below 60 and it keeps popping up over the pin # of 60-been ongoing all afternoon.

  98. 98
    BirdsofpreyRcool Says:

    bill — on Monday, we will see how good my source is on EXXI. “Something” will be announced. Maybe they are buying more acreage? Don’t think it’s anything monumental…. but, sure spooked 100k shares into selling this morning.

  99. 99
    zman Says:

    Choices – its all just games, you never see a spread that tight in the common. At this rate I’ll own some common on Monday because of a penny.

  100. 100
    BirdsofpreyRcool Says:

    HT comment… 1093.48 was last Friday’s close…. so about flat on week. But sure does feel negative.

    well put, HT

  101. 101
    zman Says:

    Re 100, hear ya, very narrow market. S&P perf a lot less representative of what’s been going on in here.

  102. 102
    zman Says:


  103. 103
    rkbos Says:

    Z – not sure if my info is correct but i show HK dec 21 calls looking about 10x the open int, and fighting back toward the close….comments ?

  104. 104
    elijahwc Says:

    MAX PAIN DAY IN WLL, oh well, onward and upward into the universe and beyond! Have a great weekend.

  105. 105
    ram Says:

    Brutal day.

  106. 106
    choices Says:

    #98-EXXI did come back reasonably well from the panic spike down-$1.99, down 2 cents from the 1.50 spike level-so maybe, we shall see Monday. Good week end everyone!

  107. 107
    choices Says:

    #106-garbled=closed at 1.99 (-2 cents), moving up from the 1.50 spike level.

  108. 108
    BirdsofpreyRcool Says:

    ram, dear… love ya to death… but, gotta say something here…

    brutal? A year ago was brutal. Market action this week was a small rain shower on what is otherwise a walk in the park compared to last year.

    I have some HK options that expired at zilch. Do I think HK is worth more than $21? Yes. But, that’s what happens sometimes with options. They have that pesky “time value” thing.

    Anyway, I hope you have a good weekend. One thing a good trader does is not to fret over the past. Learn and move on. (I’m preaching to myself here, so don’t take it personally.)


  109. 109
    BirdsofpreyRcool Says:

    By the way… I found out what is going on with EXXI. Will post the barebones details this weekend, but we will be able to fill in all the blanks on Monday.

  110. 110
    PackMan Says:

    Interesting week; I like choices term “brutal” for the week. It did have that feel; just feel worn out. The low volume in particular made it feel even more so … I guess that’s what we can expect for next 6 weeks.

    Not like in 2008 of course, that was something else; a different more virulent brutal… down 700 up 400 same day; just nuts.

    This week was just a tough one to trade I thought; but that’s fine. Got some good buys on HK and SD I hope.

    Today being options expiration was a busy one for me, monitoring expiring options and rolling out some in certain instances (like HK 22 puts that I did not want to take more stock assigned, so I rolled down).

    Glad the week is over; have a good weekend everyone.

  111. 111
    bill Says:


    i can hardly wait

  112. 112
    Jay Says:

    This is a good weekend read:

    How SEC accounting changes will alter reserves booking.


  113. 113
    zman Says:

    Thanks Jay, will read that this afternoon

  114. 114
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