24
Jan

Wrap – Week Ended 01/22/10

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Last Week Equals Two Words: No Fun. Note the red circles in the table below. 4 to 5% losses for the broad market and the energy sector, including oil and products were run of the mill last week.  Natural gas was constrained to an essentially flat week despite a second week of larger than expected withdrawals from storage which left storage essentially in line with year ago levels and rapidly approaching the five year average. While this coming week's storage number will be below trend and average for this time of year due to the recent thaw, look for a return to bigger draws the following week and into February. Odds are improving that the storage season troughs below the five year average, potentially substantially so, offering support to gas prices as we exit winter and hit the first should season. See the Friday post for additional graphs and gas price commentary. 

Holdings Watch:

  • $10KP II: $18,300
  • 44% Cash
  • No closed trades last week.

 

 

5 Responses to “Wrap – Week Ended 01/22/10”

  1. 1
    RMD Says:

    Been skiing, fresh oowder so not paying att’n. Yes, it was Fayetteville, around Conway and Heber Springs. He also mentioned “them” contimplating building a refinery–conotes seriousness. Back on Tues night.

  2. 2
    Jerome Blank Says:

    Interesting nat gas/oil relative strength chart…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  3. 3
    zman Says:

    Crude up 5 cents, NG up 2 cents dollar off a tad. S&PFut up 5.5 in early trading, probably on the increased Ben confirmation chances. Busy week for data ahead as well and the State of the Union.

  4. 4
    BirdsofpreyRcool Says:

    BedTime Market Strategist

    The Transition From Policy to Politics.
    What a mess. The 4% lopped off the equity market this week was not caused by earnings or economic reports, but instead, our fearless leaders in Washington. For the past 16 months, we have been bullish on the equity market because of our expectation that the recovery would emerge, much as it is doing. Although we believe Bernanke will be confirmed, if the Chairman is not confirmed, we will become unequivocally bearish on the U.S. equity markets.

    It appears as though the Democratic caucus has been held together by bubble gum. As a result of Scott Brown’s victory last week, legislators are doing whatever it takes to save their own political hides. The House does not have the votes to pass the Senate’s health care reform bill, so health care reform is over. The surprise victory has shifted the reconfirmation process for the Fed Chairman. Many Republican Senators have been (wrongly) critical of Bernanke all along. As expected, they will continue to be “no” votes. Senate Democrats, however, have begun wavering and flip-flopping in hopes of saving themselves, as if voting against Bernanke is going to make a difference. This is how Congress reacts to one Senatorial election, and yet these legislators want to audit and exact more influence over the Federal Reserve.

    As a citizen, you have to appreciate these Senators who claim they are undecided on this issue with only days left until the vote. We have endured the longest recession in almost three generations. It should not be hard to decide whether or not you think the Fed Chairman should be confirmed. Evidently, they want to see where the polls are. It is like saying that at the end 1944, you are unsure whether or not Patton was a good General. There is no doubt he was a good General, but some people tended to disagree with his methods. For the Fed Chairman, the situation is similar. The Republican no votes center around his actions on TARP, the AIG bailout and the BofA acquisition of Merrill Lynch, instead of where we are in the recovery process. When in unchartered territory, you need a Captain who is willing to take the risk of doing what he thinks is correct, rather than saying “I don’t have a map, so I can’t do anything” (Bernanke & Co. learned this from the Lehman episode). The Senators need to decide whether they want Col. Nathan Jessup or Lt. Daniel Kaffee on that wall when they go to sleep at night.

    Regime Change?
    Due to the President’s new regulatory initiatives announced last week, in which the President sided with Paul Volcker over Treasury Secretary Geithner, concerns are rising about Geithner being marginalized. If true, amidst the Bernanke concerns, this is a serious potential headwind. If the President were to truly shift the economic leadership team (Bernanke & Geithner) at this point in time, it is the equivalent of releasing your ace starting pitcher and reliever in the first round of the playoffs. From our perspective, these men have crafted and executed the correct policy response ever since Lehman’s failure. The mistakes and mishaps these gentleman committed leading into Lehman’s collapse were an expensive tuition paid for knowledge and experience gained that is irreplaceable. While the economy remains weak, it and the markets are still in a better position than most expected a year ago.

    Critics of our viewpoint will assert that one or two people do not make a difference, and that these jobs have been done by others in the past and will be done by others in the future. Saying one person does not make a difference is like saying Berkshire Hathaway will be equally successful when a successor eventually fills Buffett’s shoes. Maybe it will, maybe it won’t, but you can be sure that shareholders are still glad he is there today. Speaking of Buffett, if you heard his or Mort Zuckerman’s views on Bernanke, they provide insight as to how highly the Billionaire class thinks of the Fed Chairman. They probably will not be rushing to make investments if there is regime change in the economic team. There will be a day and a time when Paul Volcker’s tough love/strong medicine approach will be necessary, imperative and vital to the long term health of this economy. That being said, we are in the nascent stages of recovery, even if we see a 5% print on Q4 GDP, it would be reckless to take that to the bank with Unemployment still at 10%.

  5. 5
    bill Says:

    tph on pxp “these guys are good at deals”

    PXP impact – Target price up $8/share to $51/share. PXP’s onshore business is driven by the Haynesville and can deliver 10% annual production growth. We expect Lucius plus Blueberry Hill, Davy Jones, and Friesian will be incremental growth through 2014 (we dare not include California’s T-Ridge, but…never say never). On the exploration front PXP owns a 50% wi in Phobos prospect, is currently participating in the Davy Jones discovery, and will likely drill 2 additional deep shelf wells (Blackbeard East, Davy Jones #2, and/or John Paul Jones). On the financing side, PXP has the capital available to finance the Lucius development. Don’t be surprised if management swaps assets and working interests in existing discoveries for other exploration prospects…these guys are good at deals.

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