Job Less Friday

199 thoughts on “Job Less Friday”

1. The only “surprise” in the Jobs number is that anyone really thought it would be positive. I didn’t think it would be horrible… but, wasn’t looking for positive either. That said, hours worked ticked up a tad, as did hourly earnings. So, ship sloooooooooowly headed in the right direction. Slowly.

   Pick your targets. Pick your price. Wait in the weeds for the right moment…. then POUNCE. It’s good to be a hunter these days. When we are worried about Greece defaulting (it won’t) and their entire economy could fit into Michigan’s (does it get any smaller than that?), does that really merit a Global Meltdown of stocks? I’ll let you be the judge of that one.

   Meanwhile, let the sell-off continue! I’ve got a patch of weeds I am going to go sit in now.

2. BOP – thanks, agreed, put your comment 140 in the top of the post because I thought that guy put the whole greece thing in good perspective.

   Just going on record as sticking with my thoughts from yesterday:

   “My sense is that we close higher than here today, that we don’t see a selling crescendo into the close. If we get +25 on payrolls tomorrow we see a sharp rally back to at least 1,100 as the market is discounting worse news. If we see down 25 we gap lower at the open but still rally into the close based on the fact that the market has already discounted such a number, and maybe a little worse.”

   Ok I got all of that wrong so far but the last sentence, I still agree with. I think the lack of a negative reaction in the futures so far, in fact they have rebounded since the numbers hit, speaks to the fact that people are less concerned on the sovereign debt angle and that the jobs number should have been a negative estimate in the first place, just like last month when they were looking for +15K and didn’t get it.

3. Crude up 50 cents, gold ticking positive, dollar index falling back to 80. The 80.03 level was a % retracement from the correction in the dollar last year.

4. Analyst Watch:

   CRR – BMO upped it to Outperform, target 77

   BEXP – Credit Suisse initiates at Outperform with a $17 target. Funny that they speak at the Credit Suisse Energy Summit just after the opening bell.

5. z — well put. Agreed.

   Actually, seeing some selling on the CDS desk now (CDS is the prefered leveraged, institutional vehicle used to push the overall market around… that is the WMD that the Bears are using against Greece, for example… and very successfully used against BS and LEH). Selling CDS (“insurance”) = selling risk = like short covering. (Buying CDS is like buying credit market insurance = worried that something is going to burn down.)

6. Kass is net long today for the first time in months.

7. As of last night, TechTrader’s tea leaves suggested, with 60/40 odds, that the SHORT trade is the one that works best today. Doesn’t mean we close down… just that it has a higher probability of working as a day-trade, at some point today.

   HeadTrader isn’t saying anything right now… involved in some desk stuff. Let’s hope he’s not caught on tape doing it…

   http://www.theaustralian.com.au/news/broker-caught-assessing-kerrs-assets/story-e6frg6n6-1225826045130

8. NG up 15 cents … big, cold storm going to hit the Mid Atlantic, New England.

9. BOP – Question – what is normal leverage (margin)on a CDS and is there any financial requirement on the part of the counterparty or is it completely arranged on a judgemental basis between consenting adults?

10. DFW airport to build CNG fueling station.

11. More MHR

    Magnum Hunter added to Best Ideas list at Canaccord (2.15)

    Canaccord adds MHR to their Best Ideas list saying the board has approved an
    initial capital budget of $25 mln for 2010. It will be funded by internally
    generated cash flow and the company’s borrowing base ($70 million). MHR began the transformation in May 2009 with an acquisition and consolidation strategy,
    but with two very savvy acquisitions, the firm expects 2010 to be a year
    dominated by organic growth. Firm notes MHR is in two of the hottest shale
    trends in the US — the Eagle Ford and the Marcellus — and the company’s
    leases are nicely positioned towards the liquid-heavy portions of both of
    these plays.

12. RE:6 — Kass — “Kass net long for the first time in months” so is that bullish or bearish — lol

13. elijah — #9 great question! A CDS contract is a private party insurance agreement. If the company or country I hold debt in, gets economically weaker and their bonds trade down, I have “insurance” (a hedge) that will offset the principal (not the coupon) risk of that bond. Just like your homeowner’s insurance, this is a contract written between two private parties. As a buyer, you want to know that the insurance company is strong enough to pay off, if your house burns down. The insurance company wants to know that you can make payments on your policy. The “riskier” you are… or the better/worse neighborhood your house resides in, the higher or lower your policy payment. But, for a fraction of the value of your house, you own 100% insurance.

    That is roughly how CDS work too. You only have to put up a fraction of the total value. How much, depends on what you are insuring and how good you are for making the margin payments, should the value of the CDS contract change, and how “liquid” the contract you are buying (or selling) is. Like playing in the futures market… you can control a lot of value, buy initially putting up very little… but, you better be good for the margin call, if/when it comes.

    If you are a “good credit risk” and hold the underlying bond, you would (initially, at least) have to put up almost 0… depends on who you are, of course, and if you are using borrowed $$ to buy the bond. But, for just a plain-vanilla assumption, 5% of the face would be an expensive CDS to buy.

14. BJS-Bullish because he is a short
    hedge fund and rare for him to be long.
    He has a pretty good track record calling turning pts.
    His main thesis is not much change in credit spreads and like BOP the size of Greece

    He is usually early -covered most shorts yesterday and has been buying financials and consumer staples (sorry no energy mentioned also some gld)

15. Thanks re 13 and 14

16. BOP – Well done. Then yesterday was a giant margin call for the macro’s who positioned poorly. Nice to know that the AIG model (big precieved counterparty credit / no reserving) is alive and well.

17. Think of CDS as fire insurance or life insurance. You are betting that you will have a fire or will die. Your insurance company is betting that you won’t. Of course, the financial ability of the insurance company is key for you getting paid on your claim.

18. elijah — done correctly, CDS are a very useful addition to the overall ability to “risk manage” in the investment world. But, like futures trading, you have to know your counterparty and have tight risk-controls.

19. The major difference between CDS and insurance, is that you can buy insurance on your neighbor’s house, or a house in Greece, if you want to. You don’t actually have to own the asset you are insuring.

20. BEXP presentation in 3 minutes.

21. RE 19: thats true, it also is an area of potential problems.

22. BEXP Notes:

    288,000 net acres in the Williston

    They think they have derisked half of the acreage,

    That gives them 700 potential locations

    Completed well cost is $6.25 mm for 600,000 boe for F&D of $13/boe

    24 wells this year, with a 4 rig program

    They see 4Q10 oil production up >100% vs 4Q09 levels.

    Seeing a lot of attributes on their Montana that they see in their Rough Rider area (where they have been drilling the 2,000 – to 3,000+ boepd IP wells of late. East Montana test will be drilled in the first half of this year. They have 83,000 acres there, this is also where EOG is drilling a well now, should know about it next week on their 4Q call.

23. BEXP Notes 2:

    2010 capex:
    $170 mm to drill the 24 wells, funded with cash on balance sheet, and cash flow.

    Don’t see drawing down their revolver which currently has $0 balance.

    They hope prices are high enough at mid year to allow them to up their budget for 2010 but want it to be from internally generated capital.

    Position: (nothing new here but to get your bearings)
    100,000 acres east of the Nesson (Ross)
    104,000 acres west of the Neeson (Rough Riders)
    83,000 acres in eastern Montana (Ghost Rider)

    …

24. TRGL & ATGP = Two dogs that I’m thinking of bring home from the pound. Any guess which has the most potential with a two year horizon?

25. BEXP Notes 3:

    Current well design:
    9,500′ lateral, with 28 to 32 frac stages, for $6.3 mm. The last 4 IPs:
    3,540,
    2,513,
    3,394, and
    3,807 boepd.
    Trend is definitely in the right direction.
    …

26. BEXP moving to Q&A:

    Montana EOG well will not be in EOG’s comments next week, spud too recently.

    Market not cooperating …

    Eli – very different companies you know, TRGL probably has the bigger speculative upside, ATPG with the growing cash flow angle.

27. Re 10, Aubrey probably threatened to drill holes in their runway if that didn’t happen.

28. RE 24: It depends — There is definitely more upside with TRGL if they can get their Paris basin going. If the Paris basis is a real deal, and they can get the money or partnership to drill (BOTH BIG IFS), then TRGL is a mulitiple bagger.

29. BEXP calls tough to buy on the mid without really paying up, spreads blown wide today.

30. VNR below 20 again, added some here.

31. ZTRADE:

    BEXP – Added another 20 of the Feb $15 calls for $0.35 with the stock at about $14. See comments today for additional color.

32. ELI: for what its worth department, and it ain’t worth much, I did buy a few more shares of TRGL today.

33. john11 — VNR = tasty 10%+ yield. Any reason it cliff dove today? (other than going ex-52.5c dividend)

34. BOP – because it has been enticing me to buy it since I started paying attention at $17 and I missed that run.

    As to the drop, all of the yield energy vehicles are taking it on the chin, yesterday and today, whereas they had been holding out better than regular E&P. See LINE, EVEP, LGCY, all down 5 to 7% today.

35. Thx Z & BJS: I concur on both thesis and would also note that the convexity (foot on the floor speed) of TRGL is greater.

36. z — you are right, as usual. They are all down a lot. Lemme know if you’re thinking of adding one to your Long Term Holdings today, ok?

37. At the risk of being the board’s curmugion, I was intrigued enough with the inverse energy P&F charts (DDG, DUG, REC) to buy some this morning. I’m hedging my shrinking long positions.

38. ELI: if that Paris basis is what the optimists think it is, you can get some really crazy numbers for TRGL. At least a 5 bagger, many even more. But these are BIG Ifs. And take it from a TRGL shareholder, the first thing you should do after buying TRGL is to buy a big bottle of TUMS — LOL

39. Re VNR didn’t see anything, it was ex-div on wednesday (as was LINE) and been straight down, have pretty much seen this every quarter, although I think it has been exaggerated this qtr. by general mkt weakness.

40. Eli – I defer to BSJ on the TRGL – I’ve just looked at their press releases and presentations a few times and I have to admit I’m intrigued but I wouldn’t say I have anything constructive to offer on say management of that one. Could be all hype. The bowl shape of the Paris does remind one of the bowl shape of the Bakken for what that’s worth and it is certainly large.

    BOP – I might move some SEP money around and do my add for last year next week, will let you know. Everyone I talk to off site and read who is a TA type is yelling 1030 S&P at me which is the 10% pullback level. If that’s the case I’d bet we know next week.

    RMD – we like your views and will accept your curmugionenity as the price for listening to them. I still can’t find anyone who will talk to me seriously about deeper oil pools in the Fayetteville by the way and I’ve gone into some strange places in CHK midstream as well as in landman circles to try and track it down.

41. I’m going to go bag me some large cap service today.

42. Jat – yeah, another 20+ NG rig add and I will too, lol. If the shale guys get their F&D to $1 (all in) and their LOE to $0.10 (no kidding, this is what HK saying their core Haynesville LOE is) then we can all live on $2 natural gas.

43. Cross-Asset Class Strategist #2 — doesn’t add a whole lot, except to point out that the Credit Bears are back at their nasty tricks. Over the last 2 yrs, I have not seen the equity mrkt stand up to the Credit Bears very successfully. The equity mrkts have let the Bears do their dirty work in the CDS mrkt and watch from the sidelines. Whimps.

    So, until we see the Bears eat their fill, it may well be that they dominate the landscape for a while.

44. forgot to add the link —

    http://www.capmarkets.com/ViewFile.asp?ID1=338673&ID2=353451989&ssid=2&directory=11608&bm=0&filename=Adding_Another_Metric_2-5-10.pdf

45. BOP – Thanks, I really appreciate the CDS and other fixed market stuff color.

46. # 42: $2.00 gas will turn those inverses into core investments.

47. Well — just like the horrible Fall of 2008, it is the Credit Bears who are running the show right now. Of course, they need Stupid Economic Policy Decisions and/or weak fundamentals to help frame their game and sell their story… but, they set the tone.

    This could be over fairly soon. But, it will be because the Bears have left the Field, not because Vanilla Equity Buyers will put up any strong defense, me thinks.

    Intestest game to watch… once you identify the players.

48. $2.00 gas huh? I want to get in on one of those hat eating contests.

49. #47 — make that “Interesting game to watch…”

50. I was buying yield in Aug of 08. Worst mistake I have made in my life (well not really), but it was very expensive. If credit spreads continue to widen, then they will continue to be vulnerable to the downside. In fact this market, has a lot of similarities to then.

51. $2 gas. Don’t get me wrong, I don’t see it happening.

    MMR trying to poke up again, I would imagine you get your typical Friday buying for a potential Monday announcement. If it moves up significantly look for a draw on EXXID later in the day.

52. #50 The tactics are similar, but the targets are different. Last time around, it was the banks in the cross-hairs. This time, it’s sovereign entities. As we have said over and over, the U.S. Taxpayer is the last independent asset this country has to monetize… if the money raised by the monetization continues, and/or is not “invested” wisely, but “consumed”… we are setting ourselves up for much higher interest rates, much sooner than we would have to.

    That said, it will be a lot tougher to “crush” a sovereign credit (or, at least any one that counts) than it was to create a atmosphere of TOTAL FEAR that was leading to a run on all the banks. That won’t happen here. So, this time is different.

53. BEXP $15 calls trading better now.

54. elduque — also, if you held onto the yield you bought in Aug’08, i’ll bet you will be fine. Plus, you got coupon income from those investments. The ability to “hold on” and understanding your time horizon is key to maintaining some semblance of “calm” in a tumultous world.

    If you sold at the time, however, I don’t blame you. The problem with Fall of 2008 is that, yes, we DID come “that close” to a global meltdown of the banking system. That is why is pains me to see the Monday Morning Quarterbacking by the likes of congress and Cuomo (who is going after Ken Lewis personally). It is political driving while looking in the rear-view mirror of the WORST sort. I hope Andrew Cuomo chokes on his morning coffee.

55. BOP – never the less, drops on yield stocks like we have just seen, makes me think of forced selling by somebody who has been using them for the carry trade. Dollar keeps rising then there will be more pain.

56. Z: Do you follow GTI? They make the electrodes that go into electric arc furnaces. I know you like met coal. GTI is an interesting stock to follow because of direct tie in with steel production even though GTI deals with the Nucors of this world and not the coking steel producers.

57. elduque — great points, yes.

    We are back to the Max Pain concept… the mrkt will attempt to inflict the most damage, where investors have gotten the most complacent, or “greedy,” or “pom-poms” (or whatever it was that BSJ was talking about). I still think this is a mrkt where you make money by looking at specific trade ideas. Knowing what you own, why you own it, what the catalysts are, and what your own time horizon is. Then you just pick your entry price and bag your prey, when it wanders too close to your patch of weeds. (Yes, it’s true… i never get tired of using that mental picture. After all, what is “investing” but shopping around, looking for bargains — or Slow-Moving Deer [as we used to say on the trading desk] all day.)

58. Thoughts on HAL 29 march calls

59. BSJ – can’t say that I do, closest I get is trading X every great once in awhile.

    BOP = “hunter gatherer”.

60. Am continuing to hold the higher strike HALs at the moment. I certainly think HAL improves when the market stops going down every day as the quarter and more importantly, the outlook was good.

61. Just saw this, anyone have any color or targets?
    11:13 ET 2/05/10 KOG Kodiak Oil & Gas initiated overweight at Johnson Rice (timing uncertain) ($2.30 -$0.02)

62. Z: not really as an investment idea, more as a “tell” on the condition of the one part of the steel industry. Mini mills can not operate with graphite electrodes, and the more production the more electrodes usage.

    I have owned this stock in the past as a “royality” on the mini mills. But I was only mentioning it to you as a leading indicator for steel.

63. Thanks BSJ – that’s pretty interesting, I take it they disclose their sales volumes?

    John – Looks to me like it hit the wires about 45 minutes ago, should have been on their morning call notes, will check with someone and see if I can nab a copy.

64. KOG has no debt and is pretty much 100% oil. So it’s one you can have some fun with (and who doesn’t like to play with their food, every once in a while?). You buy at $2.25, sell at $2.55, rinse and repeat.

65. Where’s Andy these days? He met with the CEO of KOG a little while back and had some great comments…. was hoping he would share.

66. RE:63 — yes they do. They even list the prices of their prices on their web site. For an analysts, Parr over at Keybanc does nice work on them.

    RE: VNR — for some reason the entire MLP sector is very weak today not just VNR.

67. IM Exchange from HeadTrader with another PM… says it all. The usual indicators (TED and friends) all saying this is nothing like Sept 2008.
    ————————————-

    << 10:39:37: i am a buyer on weakness related to the consumer right now

    << 10:39:42: seems ridiculous

    << 10:40:25: this greece / europe thing is a reason for bears to push…i dont think it causes another crisis

    << 10:40:32: i think it creates opportuity

    << 10:44:44: this will be a snapback when someone steps up and says F U…we got their back

    << 10:45:33: look at all the indicators from last crisis

    << 10:45:40: libor/ois

    << 10:45:45: credit spreads

    << 10:45:51: frozen credit mkt

    << 10:45:57: VIX

    << 10:46:00: run on banks

    << 10:46:04: all NOT happening

68. KOG vs. CPE…What’s somewhat interesting is that CPE that has less a than stellar balance sheet is at $2.77 and won’t go down, KOG that has a great balance sheet breaks intraday support, go figure?…

69. As a reminder… the cash TED Spread was around 100 bps in August 2008… about 1 yr after the Credit Market started to wake up to the horrors. It hit it’s wide in the 2nd week in Oct 2008, around 495 bps (something like an 11-sigma event… ie, for all practical purposes, an impossible level). TED calmed back to +200 bps in Dec 2008, was at 100 in March 2009 (when stocks hit their low).

    Lately, the TED Spread has been around 20 bps… dropping down to a low of 15.7 bps the other day. It’s widened a bit, to 16.4 bps now.

    This is the PUREST measure of true Global Panic. I’ll leave you to your own conclusions.

70. Z…. crude just cratered.. any particular factors in play here ?tks

71. USO support at 33.65, 9.25.09 low

72. Person over at http://www.optionaddict.net has an interesting take on the copper market leading the stock market.

73. The only thing that matters is the USD.

    When that tops the market and commodities will reverse. My guess is if it does not pause before the 81.50 to 82 range, that will be the top.

74. Tradeboxes gone wild is the only explanation we need… simple.

    Greece debt -> euro down -> usd up -> market & commodities down

75. In reality the sovereign debt the traders in the us should be worried about is their own.

76. Especially seeing as they gorged themselves on a boatload of paper that pays next to nothing.

77. BOP-I’m curious as to what the spread is on comparable US Treasury debt.

    I saw this on another site.

    Thanks.

    quote from another site:

    “According to CMA DataVision, in early morning trading Greece’s five-year sovereign credit-default swap spreads were at 4.46 percentage points up from a record close of 4.27 on Thursday. Portugal’s spreads were quoted at 2.39 percentage points after closing at 2.29 during Thursday’s trading session. Spain’s sovereign CDS spreads were quoted at 1.82 percentage points, widening by 0.12 percentage points.”

78. #37 I don’t know, what does it take to get any credit around here?? I thought *I* was being the boards’ curmudgeon. Wasn’t I banging on about copper crashing and China and Chanos and the sky generally falling!?

    Although actually, I gotta say BSJ was way earlier than me, with the pom-poms etc. (Should mention however: pom-poms can get you a long way: just ask George Bush … wasn’t he a college cheerleader).

    And am I allowed to ask *when* Mr Kass put out the shorts he just brought in? Um… maybe July or something? He’s been wrong consistently for the best part of a year and *now* he’s going long? OK, we could bounce and some metals stocks are trying to do so (FCX,SLW). But then what?

79. Had to step out, Benbobby so apologies for the delay in responding. I agree with VTZ’s comments, as the dollar took off, again, crude broke recent support at $72 and had to take a look at $70. So far $70.70 but the President is on the TV again, so who knows where the equity market closes and that will likely drive the close of crude some two hours from now.

80. I listened to the CEO of Cullen Frost Bank this am and he said it’s not that they don’t want to lend to small business. It’s that small business is terrified to borrow. Because of a lack of demand for their products but also because they are worried about potential regulation coming down the pike (taxes). Cullen CEO said the costs of taking the $30 Billion for small business were more than double what the administration said it would be for them and then there is what happened to the banks that took TARP.

81. Dman – I think he went long in March (at the bottom), rode that to maybe September/October, then said it was time to short and has been wrong on that call since.

82. choices — short answer, US 5yr Govt CDS spread is 57.4bps.

83. #74 But V, doesn’t that mean the trade boxes get some credit for the run up as well? And how much more do they still have to regurgitate?

    As for the Greece thing: nobody thinks Greece can sink the world, but there is a clear progression of sovereign debt issues from small countries to medium to medium-large (Spain). Where is this arrow pointed? Directly at the centers of the financial universe: London & New York.

    Since both are basically insolvent, how are they going to bail out Greece, Spain etc? Simple, they print money. But they can only justify more mega-bailouts if there is an atmosphere of crisis. So the markets have to get in a twist before the big “on” button can be pressed on the money printing machine. That’s why there will be volatile swings between inflation and deflation. The enormous debt overhangs will periodically loom large, only to be washed away with the liquidity firehose.

84. CNBC saying someone bought $10 mm of the UUP etf calls, that’s a size trade.

85. You are the man DMAN! My sentiments exactly on all of RE 78. Kass has been wrong, but is playing that old trick, make alot of predictions, but forget the ones that don’t turn out. Heck, he was shorting BEN and TROW last July. Hope you had stops on those Dougie.

    I think you and I are the two curmudgeons here. It can be a lonely business, but someone has to do it. — lol

86. BSJ – I thought you liked E&P seasonally long in here. Here being February.

87. choices — longer answer… even though 0.57% doesn’t sound like much, it is up from the lows of 0.20% last October. However, it is no where near the recent wides of 1.0% in Feb 2009.

    HOWEVER, there are a lot of GAMES that can be played in CDS land. Games that we — mere mortals — can not participate in. So, squirrely things can happen that have no bigger, lasting signficance. UNLESS they start to set off some sort of GLOBAL PANIC… like the Credit Crisis we had in Fall 2008. This is no where near that sort of animal.

    Also, the Global Macro Guys were buying USTs and CDS against that position last week. Both the USTs and the CDS have made money. Lots and lots of money. Over just a few days. So, think we will see some of the Global Macro Guys start to unwind that trade today. No one wants to be the last one at that party. So, once they made their pot, the smart guys leave the room.

88. RE 83: The only difference being that the USD should be getting trashed fundamentally. Greece hasn’t even had an issue yet and shouldn’t be influencing the euro this much… the Euro went from 1.52 to 1.36 based on a GDP that is less than 5% of the euro area…

89. Ecomonic indicator stocks — check out either MLM or VMC. Both are aggregate stocks. Any general pick up in economic activity usually filters through to these two stocks. However both in downtrends. Aggregates companies do not need homebuilding activity to pick up to do well. They depend more on infrastructure and commerical building for most of their sales.

90. #7 All’s well that ends well. A London website “Here is the City News” started a global campaign to “Save Dave” (the trader caught oggling Miranda Kerr on live TV).

    http://news.hereisthecity.com/news/business_news/9902.cntns

    The campaign quickly went global:

    http://news.hereisthecity.com/news/business_news/9904.cntns

    and it looks like it worked:

    http://news.hereisthecity.com/news/business_news/9913.cntns

    🙂

91. Dman – The debt to GDP of the so called “PIIGS” that BOP refers to is basically the same as the US… spin away.

92. RE: 86 — Actually I do. According to the stuff I have read, Feb to the first of May energy names should have and upside biase. Of course that does not mean it will play out this time.

    I thought there was too much bullish in early Jan, but that is all gone. I have been writting about making up a list of energy names one wants to buy on weakness. For better or worst I have taken my advice and have been buying energy stuff on this weakness.

93. If Obama didn’t just sign a 1.9 trillion increase to the debt ceiling… in addition to the emergency one they just did then the US would be in default.

94. Damn — #90 Thanks for the update! It was pretty innocent… but, the trader in question, slowly turning around to face the camera … well, I almost spewed coffee this morning, I was laughing so hard.

95. #94 — oops. 🙂

    (LOL again… at myself… sorry!)

96. VTZ — in all fairness… the same percentage of a very small pie and a very very big pie is not a good argument.

    That said, we had better stop the spending… and, like, NOW. Also, making up a deficit through taxation is just taking money from what is productive and spending it on what is not productive. So, they had better cut the non-productive stuff first, before trying to cut themselves a bigger piece of the pie. THAT is what keeps me up at night. Stupid Govt Policy. Lots of stuff to generate years of nightmares, these days.

97. #91 That is my point: the real problem lies at the center. But the little guys at the periphery can’t get away with “extend and pretend” because (I’m guessing) nobody will lend them anything in their own not-exactly-global currencies. The US gets away with it for longer … because … I don’t know …old habits die hard? But the dollar rises when the debt (US debt) overhang looms large (i.e. there is a fear that some of that debt=money will simply vanish). It will take more money printing to stop that, but the public is getting a bit riled up about bailouts. So politicians can only “go to the next level” of mega-bailouts if the general level of fear ramps up. To get that you need to see a big correction in markets.

98. RE 96: Respectfully BOP, that’s BS.

    I would like you to explain to me using math how the US can pay off their much large pie with increases to their larger economy any faster than a smaller pie.

    If anything the US is goign to have the hardest time paying it off because they have the most housing debt bombs in their system.

    Not to mention… health care, etc.

99. AREX impressive, staying green all day.

100. Rig Count Watch:

     Oil up 1 to 445 vs 283 a year ago

     NG up 17 to 878 vs 1104 a year ago

     of the increase 12 were horizontals, now 659 vs 518 a year ago.

     The only market that cared about the above today was natural gas which just lost a dime.

101. Z: I want to congrat you on your write up on WRES. That is a very interesting idea.

102. Well, if Greece is such a small problem then just get the US to bail them out… no big deal. Then the equity markets here can go up and we can talk about the above average growth in the US economy that nobody is seeing except for the bankers again.

103. RMD – saw that and it is impressive, there a number of names that haven’t yet capitulated but the list is getting shorter.

     S&P seems overdone and although I’m not a rahrah bull I’m told I resemble one from time to time. Looks like the S&P just needs to go ahead and hit the 1030 level to make all the TA guys happy.

104. …And the exceptional job situation… did you hear unemployment went down a whole bunch?! WOW! We can probably grow our way out of 10 consecutuve 1 trillion+ deficits that is goign to double our existing debt.

105. BOP – I’m so fed up with political correctness, I think the “Save Dave” campaign is a (rare) good omen. The pics were on mainstream newspaper websites all over the world, but those same newspapers then wanted to play “gotcha” when “Dave” looked at the same material they were promoting. They quickly realized the wind wasn’t blowing that way & so “Dave was Saved”.

106. re 101. I’ve waited a long time to see if it will work.

107. This all just goes to show that the USD and the 10Y and 30Y UST are the biggest bubbles of all.

108. RE:106 for what its worth, I bought some WRES today as a spec. Your best case (from org report) is actually what turned out to be the current env. I think it really is an interesting idea. Now if the Mr Market likes it is another tale.

109. BSJ – yep, Mr market may just not care but by the time they get their reserve report out we should be in a calmer, more contemplative mood.

110. Bastardi – thinking February will be a top 10 cold FEB for the entire United States, saying it could be top 5 in the last 50 years.

111. VTZ — yes. The USD and USTs are the last bubble we have to blow (after our IRAs/savings in the TechWreck of 2000, then housing and credit in 2008) before we all have to learn Chinese as our first language.

     I really HOPE we don’t blow it. But raising the debt ceiling by $6,300 per head in the U.S. yesterday was NOT a step in the right direction.

112. How many people thought a couple weeks ago that we soon might be talking if SWN can hold its support at 36. It always amazes me how much lower and faster stocks can drop.

113. Dman — #105 fwiw, i think political correctness SUCKS. surprised?

114. EXXID down 11%.

115. BOP – But surely the US can simply offer to return 20 years worth of plastic crapola to China in return for cancelling the debt?

     That’s an SNL segment for ya!

116. Absolute buyers strike and pretty early in the day with this drop. Going to be an interesting close.

117. RE: WRES — Z — I view WRES as a special situation and I am a SUCKER for special situations — lol

118. #113 Not exactly surprised, no.

119. Re 111: We’ve already blown it. It’s just a matter of time.

120. I think this is a day, after yesterday, to turn the computer off-I need to keep my finger off the buy button.

121. EXXI really went off the cliff there more a moment. 16.50? Wow.

122. Everything I have bought in the last few days has turned to #$%@

123. It’s a “baby and bathwater” day. No thinking going into the selling, volumes are higher today but not into panic levels.

124. Too many people looking for a low which means that it continues down-understand heavy selling in the ES futures pit, boyz and locals.

125. Dman — “tone” doesn’t come through the internet very well… just wanted to let you know, i’m with ya, man, on the whole PC thing.

126. RE: 125 — maybe I will go and have a cigarette –lol

127. The reaction today is based on the Spain GDP number and Portugal raising their deficit.

128. I actually think it is a great day to do some shopping. There is way less risk for an informed long term buyer of assets on days like today than when the market is up 100 points. Less pressure too.

129. Z – #116 It’s back to a day trading environment. GMXR, SLW are good vehicles, but damn hard to catch.

     Due to the ugly copper chart, I got hedged (short calls) on all stock except KOG and have just one set of calls (mutant EXXI/EXXID). But that hedging only gets you so far when things are falling 7% per day. As for the EXXI, I don’t mind ending up with the stock.

     Trying to figure how the weekend risk trade will go in the final hours. Traders scared of disasters over the weekend or worried about missing a bounce?

130. EXXID and MMR, just for starts went on P&F sell signals, looks like the $bpnya was giving us good information…good to have the weekend to sort thru everything for the best TA set-ups…

131. BOP #125 – I understood your #113, no problems with tone. It was *my* tone in #118 that was off. Shoulda added a smiley to it 🙂

132. I’m not feeling like much of a value add at the moment, just doing a little reading. When they decide to do a snapback rally it will be epic, either from here at 1045 or from 1030. Oil hit 69.50 earlier and seems not all that hard to rally. If you saw Shork on CNBC this morning calling oil a bubble I’d be happy to tell you why he was wrong.

133. For those looking at EXXI for an entry price… I think DJ is at TD now. They will be doing a final suite of logging runs of the well. This will take a few days, as it is a very deep well (almost 5.5 miles) and they are going to run some special logging tools to try to get some physical data from specific sections. Something the core couldn’t do for them. Anyway, good chance we hear an update near the end of next week.

134. z-not sure if you saw it but KOG just started at overweight at Johnson Rice.

135. Adding to #133… keep your fingers crossed they don’t get a tool stuck in the hole, or burn up another set of tools at the 425 degree downhole temps. This is fraught with execution risk, just to keep everything in perspective.

     Dman — #131… thanks. Didn’t mean to go all “thin-skinned” on ya.

136. HK at $21……..time to wade in…….

137. BOP – sounds about right.

     See what I mean about oil easy to lift, over $71 from $70 in about 5 minutes. I have to believe you can’t lift the dollar another 5% next week which seems to be the going rate of increase.

     Choices – thanks, I did, someone pointed it out above, I have not yet seen the inside of that piece.

138. Due to the rapid drop in the names, I’ll have fresh valuation tables out Monday.

     BOP – I was going to add the stuck tool thing myself and then I deleted the sentence. Drill pipe as a heat shield?

139. If there were ever a good candidate in the current cycle for a merger Monday it’s next Monday. Wooops, there I go with the rahrah, lol ;-0 😉

140. NG up 5 cents. Can’t keep a good CH4 molecule down.

141. #138 — As i understand it (and Reef or Wyoming can run circles around me here) they can drill-pipe, heat-protect some tools, but not all. So, will be able to get some info on the new sections for sure. But really want to run some specialty stuff this time, that can’t be shielded by drill pipe. There is a tool that someone was describing to me that can actually penetrate the sidewall and into the formation, to measure pressure and take a sample of what is filling up the pore space. As I understand it, the hole is too narrow to run a sidewall core, but this tool (Repeat Formatin Testing Tool) can get easily stuck in the hole. When you have spent, what, $90mm? to drill that hole, you don’t wanna get anything stuck in it.

142. #122 — choices may have called the bottom…???? shhhhhhhhhhhhhhhhhhhhhhh………….

143. I didn’t see shork on cnbc but heard him the other day on Bloomberg radio. I tried to email in a question to ask him when he thought ng would go to $0 again. I couldn’t get back home to my computer fast enough to get the email written though.

144. BOP: Thanks for sharing your cross strategist as much as you do. Always seems like a calm point of view during stormy times.

145. what does greece have to do with shale gas? or portugal?

146. 143 LOL 🙂

147. Schiller said they would be running an RFT. And Wyoming said the RFT was antiquated, but I forgot the name of the tool he said replaced it. Maybe at 29000 feet you go with the old tool, dunno. But he said RFT again during his presentation earlier this week. As to sidewalls, Jim Bob said no to that a couple of weeks back on one of the calls. Because he didn’t want to muck up the hole.

148. re 142. See 132. I’m like Rodney Dangerfield in here, I tell yas.

149. LNG Watch:

     Russian gas giant Gazprom confirmed today that it has pushed back first gas from the giant Shtokman field by three years.

     LNG is now seen coming from the development in 2017.

150. Gazprom cited the slump in exports to the U.S. and the shale plays in the U.S. as a reason to push the project back.

151. What a beating we are getting !

152. Comments on today’s employment numbers:

     http://finance.yahoo.com/news/What-a-97-Percent-usnews-2235233201.html?x=0&.v=1

153. Z – # 2 … lol !

     you had a 50/50 shot anyway …

     :>)

154. I am bringing out my rally cap for the last hour (warning: it doesn’t often work).

155. … and I was just about to say the day’s not yet done when you put in 154.

156. This is all fearmongering into the weekend about Europe. Maybe we catch a break and rally into the close.

     Or we get some rally next week if the world doesn’t come to an end.

     Our energy names have gotten a complete whupping. Everything I bought is lower.

157. Days not done; but unless there is news or a good rumor; I would not hope for too much.

     Holding 1050 would be a start. If we get to 1060 we should be doing the happy dance IMO.

158. And I know you think I am Mr. Bear; but I am actually happier above 1050 – ideally 1080-1100, and long a lot of our favorite names here.

159. exxid??? any reason other than the market for the drop? Thinking of adding more.

160. FWIW: It “appears” that gold liquidation stopped a hour or two ago-maybe the dollar bounce lacks “credibility.” April gold down to 1044 earlier today, now @1064.

161. Eld – nothing that I know of. The names with recent big runs are getting hit worse than the group but honestly there is a not a lot of rationale thought going into the moves as there is simply very little in the way of bid support in this market.

     Pack – I’m long as well and while the move has been exceedingly hard on the $10KP II I am not concerned about the holdings in the ZLT. I am more than pleased I swapped GMXR for EXXI before either of their moves and I am consider adds for HK and a few others prior to earnings.

162. RE 160: run on stops… same as yesterday.

163. Wow NFX, group starting to de-redden, probably just noise but the S&P has gone flat on the day of a sudden.

164. Today is not a beer-thirty it is a bourbon thirty.

165. Was thinking petron thirty

166. Yeah, those of us who aren’t as awesome trading options need to stick with bourbon for the cost basis.

167. Jat – This petron is the leftover fruits of past awesomeness.

168. nice spike !

169. z how much do you think the new weather call is NG already. Are you ahead of the pack re future draws relative to last year?

     Also do you think earnings are going to help or be sold like the techs.

     How is that for some easy questions?

170. Re S&P. Everybody keeps talking 1030 because that’s 10% off the high and it’s all the bottom of the October selldown. Seems kind of thin to me. Now, I’m not a chartist but I have to wonder if we got test 1,030 whether or not someone won’t be able to push it to 1,029.99 to which then all the 1030 guys should point to the 200 day SMA which is at about 1,018. Between here and there, there is nothing but air, unless this support zone of 1,050 to 1,030 holds. Just thinking out loud that they should go ahead and say we need to test the 200 day since the 1,030 support looks so short in duration, just a few days long at that level. Now maybe we’ve done enough by dipping into the zone and then by closing green today (if that happens which it could). Anyway, just rambling out loud.

171. Uh Oh BEXP gets its nose above water.. $.005 ….Held mine and followed Z into the Feb 15s……

172. ElD – not next week, but the next several weeks after that should produce size withdrawals that take us back into the YoY deficit we dipped into 2 weeks ago before the end of January got hot.

     Re earnings – good question. PXD number very solid but is it fair to judge the reaction in light of the market? I think not. I also don’t think the numbers are nearly as important as the market, then oil, then gas. In front of all but the market becomes directionality on production growth and where the stock is relative to its normal range for P/CF or TEV/EBITDA for the debtier names. Many o my names pulled in their horns all year for 2009 drilling with maintenance budgets and their balance sheets in mind, names like PXD and PQ come to mind. EOG did the same but on gas and their U.S. gas volumes should slip a bit through 1Q as a result. While the oil side runs. This is what I think will be on the minds of potential buyers and analysts as we enter the season in earnings. How does your 4Q09 to 4Q10 outlook look and what does that do to your balance sheet? If you can increase oil over gas in that time frame all the better. And if you the balance sheet to pick off still cheap assets, like EOG or a SWN then all the better. So not the numbers (although you miss and you’ll get shelled for it…but if you beat that’s not going to be enough, on the E&P side to drive your share price higher, not with commodity prices trending sideways to somewhat lower). Love those kind of questions and I would go on but I’ll let you redirect.

173. Milepost – that trade isn’t for the feint of heart.

174. Beerthirty. I wonder if they will call that a key reversal day.

175. 1066; not a bad close. Happy Dance commences; rally cap worked !

176. I’ve been trading the stocks; not the options.

177. Proposed major Canadian oil pipeline to the Gulf Coast could include a

     stop in the Northern Plains to take on American crude,

     but cautioned that the market will determine the feasibility and location of a terminal.
     Meeting with Montana Gov. Brian Schweitzer on Friday, TransCanada Vice President Robert Jones said the company’s Keystone XL pipeline would not exclusively deliver fuel from Canada’s massive oil sands reserves.

     Jones said the 1,980 mile pipeline could also carry conventional oil from Saskatchewan, North Dakota and Montana.

     But the executive declined to endorse Schweitzer’s bid for a loading terminal around the small town of Baker, where the pipeline will pass near eastern Montana’s oil fields.

     Montana’s Public Service Commission chairman said this week that Keystone XL might not get state approval without such a facility.

178. BSJ – Are you looking at bxe, nxe, nal, bne, mel as your go to Cardium names in this downturn? Which do you prefer?

179. Just got back… yep. #122 choices “called” the low about 10 mins early. What happened? People figure out that Greece/Portugal are mere pimples on the hindside of Europe? Or, were they “surprised” that the EU will do what they can to keep them from defaulting… something BedTime Strategist was pounding the table about last night.

     TomDavis — Thanks for letting me know. I agree. I find the Cross-Asset Guys to be the most helpful for the last 3 or so years. Before that, no one in equities had to really think about the “credit market.” So it’s nice to have people around (and there are not many of them) who know what both sides of the fence look like.

180. and z, the “formation testing” i was refering to at DJ is not a “side wall core.” I know they are not going to run that. This tool is something different. But, it takes physical samples… which is what we need, if we can’t run a production test any time soon.

181. Roubini saying stocks will be “flat” or almost unch’d this year. I agree. With bouts of volatility prevailing.

     2011, Rally Monkey gets back to town. This year, buy low, sell high. Repeat.

182. If great big steel tubes are your thing, check out the offshore wind structures (under construction):

     http://europe.theoildrum.com/node/6154#more

183. BOP … re: 47 – how can we “Identify the players” and know when they are on the field and when they have left the field ?

184. PackMan — #183… you need the help of people who watch what the Global Macro Guys are doing… and to what asset class and which derivative they are using to doing it. Can’t just watch the stock market. Can’t just watch the bond market. Can’t just watch currencies, or gold, or commodities, or CDS, or options, or money flows, or bond spreads, swaps, futures, or banks. You have to keep an eye on all of the above.

     We figured out that the Global Macro guys were going long treasuries and sovereign CDS. That told you they were going to force a “flight to quality.” To the USTs and USD (which would make oil go down too). We didn’t see them put on this trade ahead of time. But when we found out they did, it explained the stock market, oil price, credit market, and UST and dollar response. So then it was just a matter of seeing if they could really whip up a wildfire and keep in going (like they did to the banks in 2008). We don’t think they can… as marginal sovereigns are not as vital to the global economy as the banks are. So, then it was just a matter of watching how much they made on the trade… knowing that no one wanted to be in the back-half of the group to exit. When enough money was made on Friday, we figured they would start unwinding. They did.

     We will watch to see if they retry the trade on Monday. But if the EU comes out with any words of support over the weekend, then that particular trade is over for now. We will just have to watch for what they do next.

     The Global Macro Bears have shown they can scare the market… so, you may not agree with their stance, but you have to respect what they are able to do. But if the Big Picture is not supportive of their plans in the longer run, you know they will make the trade, press it, then unwind and regroup. They made mountains of money, almost killing the banking system (which was weak for all the reasons we know about, so made a worthy target)… The Bears are looking for ways to make a lot of money again, from whipping up fear.

     I know this sounds like crazy “conspiracy theory” talk, but it’s not. It’s just how interconnected markets work these days.

185. OK… #184 probably doesn’t help anyone. Let’s talk about something that does.

     If I was trapped on a desert island, trading stocks in 2010, and only allowed one broad market metric of FEAR… it would not be the VIX, or the Dow Transports, or gold, or the US$, or the Jobs Report. I would hang out with TED.

     Meet my little friend, TED. This is something we can all follow (and sound like we know what we are talking about at cocktail parties). The WSJ refered to TED this morning, in their article “Stock Rebound Is a Crisis Flashback,” when they wrote that: “There has been no sign of a panic. Short-dated Treasury bills were basically flat on the week, as were overnight bank lending rates. At past crisis points, T-bill rates have turned negative and bank-lending rates have soared.” They are refering to TED here.

     There are lots of ways to measure TED. Greenspan uses OIS spreads on overnight treasuries and LIBOR futures. Historically, money market traders looked at 3-month t-bill futures and Euro-dollar futures. These are traded throughout the day, so you can get a constant update. But, it’s the MACRO TREND that we need watch/worry about most. The trend that starts and builds and reaches a cresendo, before breaking over our heads in a messy way. So, you don’t need to track intra-day moves to have a macro insight into the Global FEAR Level. You just need the daily newspaper (at a minimum) or quotes online on US Treasury yields and LIBOR settings.

     TED is refering to the “TED Spread.” I know most of you recall talking about TED last year. But, time for a review. The TED (any way you want to measure it, futures, OIS, cash) is the difference between Euro-US$ bank lending rates (LIBOR) and the US Treasury of equal maturity. I watch 3-month LIBOR rates vs 3-month cash T-bill rates. So, LIBOR minus treasury yields = the TED Spread.

     I’ll post TED every morning… but you can (and should) monitor it yourself. Just pull out your newspaper or online quote for the daily 3-month LIBOR yield and subtract the yield on the 3-month US t-bill. That number — currently 15.9 bps, the way I measure it — is your own personal TED. 15 bps is about as low as it gets. It got to 15 last Sept, then blew out in Oct through Nov, and rallied (dropped) again in Dec – January to a low of 15.7 bps. We are probably headed back up to the 20s. But — just to keep it in perspective — at the height of the Crisis in 2008, TED reached almost 500 bps. Where you really start to worry that a global macro trend has lasting evil intentions, is when TED moves toward 50 bps.

     So, a cross-asset class metric (treasuries and bank lending rates outside of the US Fed system) for us little people. You get to know TED and follow his movements, you will have a friend to guide you through the darkest of times in the securities markets.

     Some please tell me if this helps and/or makes sense. Thank you.

186. RE: #185, very helpful thank you…

     TED spread…

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

187. Site work about to begin, may be offline for a few hours.

188. z: #172 makes sense to me; good summary.
     BOP: #185 good review of TED.

189. Broad picture updated charts and comments on…

     $bpener
     $bpnya
     $bpspx
     $wtic-Crude (three charts added with ATR P&F comparison, candle stick
     $NYA -NYSE composite
     McClellan

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

190. Thanks, BOP, for #185-very helpful.

     Also, thanks, Jerome, for the useful updates.

191. test, test, test

192. BOP 184 & 185 both very helpful. Would be good if you posted TED each morning, together with a comment when appropriate.

193. Agree with Occam. Monkeying with site, may be intermittent service for a bit but looks good so far.

194. Updated charts and comments on AEZ, BHI, CHK…

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

195. Updated charts and comments on EXXID, KOG, PXP…

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

     25 inches of snow here south of Philadelphia…

196. Good update on search functions, Z, you should repost that on Mon. when lots of folks are tuned in.
     JB: I look at those charts and all I see is bearish, unless they reverse and turn around very soon. Ugh. I’m grandson-sitting in Wyndmoor and spent part of today shoveling that 25 incres…reminded me of trudging 5 mi. through the snow to school in the good old days.

197. Addendum: I really do not like the P&F of CLR; probabky take an initial position on Mon.

198. RE: #196..RMD, nice to know we live close to each other, all things taken into account, a good number of the stocks that we are following in the group are still holding up really well and many are in very low risk easy to manage spots..I suggested in a number of the charts the stocks that were technically more difficult to manage and in this environment are probably better to avoid entering any new positions…I totally agree with you…the big macro indicators are telling us to go to cash or even short, that’s why I posted them…utmost care and precision with predetermined sizing and exit points… if things go sour…but there are contrary divergent bullish indicators out there also, (ie: TED Spread) so it’s not super clear…

     WRES, ROSE (added a 1/2 pt P&F chart) and MMR updated comments and charts…

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

199. Jerome — thanks for the update on all my Redheaded Stepchildren, KOG, EXXID, and PXP. From your comments, it appears they are still behaving.

     I’ll add our friend, TED, to the morning commentary.

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