Monday Morning And All Is Flat

Print Friendly, PDF & Email


Market Sentiment Watch: Futures pointing slightly lower this morning after a volatile set of sessions last week. We are still a week away from many of our most trafficked names 2Q reports but the pace does step up this week as the Majors weigh in (should be largely positive) and we start to see a number of E&P mid caps report. On the economic front, the week starts slowly with only the confidence numbers holding much sway. Later in the week we get jobless claims and the first reading of 2Q GDP, now set at 2.5%, down from recent early forecasts of 3.0% just weeks ago. 

HERO CEO Watch. A couple of good points.

  • The company has been working hard to keep its work force, focused on shallow water drilling, employed
  • In the next 30 days, they will be forced to start layoffs of their 2,200 employees due to tighter regulations that impact activity in the shallow water. Operators have declared force majeure on number of jack up rigs due to uncertainty around these regulations. 
  • They have a good safety record with no oil spills BUT if they layoff their current workforce there is no guarantee they will be able to hire them back AND this would mean both efficiency and safety will be reduced as they hire back less experienced workers. 

BP Spill Watch:

  • Work on the first (deepest) relief was was resumed on July 25th.
  • Cap remained in place over the weekend and pressure had risen to 6,904 psi by 7/25.
  • BP plans to begin the static kill procedure in the first week of August before intersecting with the relief well in the next two weeks.
  • CEO Hayward rumored (by the WSJ) to be among the unemployed by week's end. BP's board is  meeting today and the company has earnings later this week and you can bet they want to open a new chapter on their corporate life sooner rather than later. Bob Dudley rumored to be next CEO. 

The Week Ahead: Backend loaded week.

  • Monday 7/26: New home sales (F = 316K),
  • Tuesday 7/27: Consumer confidence (F = 52, last read 52.9),
  • Wednesday 7/28:  EIA Oil Inventory Report,  Durable goods orders (F = 0.8%), Beige Book, 
  • Thursday 7/29: EIA Natural Storage Report, Natural gas supply report due, jobless claims (F = 460K, last week 464 K.
  • Friday 7/30: 2Q GDP (F = 2.5%), Chicago PMI (F = 56.3%), Consumer Sentiment (F = 67.3)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today – Energy Earnings Q2-Week 2
  • Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $7,500 (2 BP call positions and 1 HAL position)
  • 70% Cash

ZIM (Zman Inefficient Markets portfolio)

  • $1,700 (2 LINE call positions, 1 ECA and 1 WFT call position)
  • 10% Cash

Commodity  Watch:

Crude oil ended last week up 4% at $78.98. The 12 month crude strip is now trading at $81.22  This morning crude is trading off 50 cents. 

Natural gas rose 1% last week to close at $4.58 but remains range bound with spikes and slumps attributable to tropical weather which is having much less of an impact, as of yet, than is a series of Lower 48 heat waves.  The 12 month strip is now trading at $4.95. This morning gas is trading off slightly.


  • Weather Watch:  Hot summer peaks pretty much on schedule.
    • Week before last: Cooling Degree Days of 93 which, yielded an injection of 51 Bcf, the lowest of the season to date.
    • Last Week: CDDs of 97, versus a prior forecast of 101. This should yield an even smaller injection this Thursday.
    • This Week's Forecast: Cooler, still well above normal.  CDDs of 89 are forecast, 14 above normal and last year.

  • Tropics Watch: All clear on the horizon. 


Stuff We Care About Today

Earnings Calendar


Other Stuff

  • APC scores off Ghana with the Owo Prospect
    • 174 net feet of pay in the deep water Tano Block off Ghana
    • two high quality oil zones
    • Continues a string of discoveries off west Africa for APC and Tullow. APC has an 18% in the well, larger interests in neighboring Twenboa and in Jubilee.
    • Good to have alternatives to the Gulf of Mexico deep water realm at this time. 
  • SSN - no word on the Goshen County deal yet.
  • FTI - 2Q call at 9 am EST.

Odds & Ends

Analyst Watch:

  • SLB - Jefferies cuts target $4 to $85, maintains Buy
  • SLB - FBR reiterates Outperform
  • PTEN - Jefferies ups to Buy
  • DO - Berstein ups to Market Perform

Interesting Reading Watch:

Housekeeping Watch. I am scheduled to be largely out of pocket Thursday through Tuesday for a battery recharge session with the interns somewhere in South Carolina. I will post Monday through Thursday but will have only intermittent access to the site thereafter.   

171 Responses to “Monday Morning And All Is Flat”

  1. 1
    crysball Says:

    DJ  is on the  wire  stating Fed. Gov .  estimates  23.% of Gulf  Nat Gas  was shut-in due to Bonnie.

  2. 2
    zman Says:

    Crys – yeah but only for a day or two, should have a negligible impact.

  3. 3
    zman Says:

    MSNBC reporting that a U.S. diplomat wrote to Scotlan 8 days before the Locherbie bomber was released informing them of the U.S. position on the matter. The diplomat told the Scots that the U.S. preferred to see the bomber releases on humanitarian reasons and not as a prisoner exchange. Interesting that the Senate is after BP for this and yet the U.S. is on record just before the release basically OK'ing the release.

  4. 4
    zman Says:

    SSN typical pre opening attempt to bump it to the next level. Not that I mind as I'm still an owner but the attempt to manipulate the name is rather obvious. Would much rather see them close this deal.

  5. 5
    BirdsofpreyRcool Says:

    XACS#1 weighs in this morning with a few comments and observations… thinks SPX is still cheap to credit markets

  6. 6
    zman Says:

    Thanks BOP


    I've got another request for information in with SSN, stock opening at $1.39.

  7. 7
    BirdsofpreyRcool Says:

    Equity buying by MFs, pensions, and endowments reaches bull market high while pessimism rises among individuals – institutions now have equities at 68% of their total assets, the highest level in 15 months (and compared to 63% in Apr).  The last time money managers and individuals were this far apart was in March 2009.  Bloomberg 

  8. 8
    zman Says:

    BP – opening up a buck on the Hayward for Dudley trade rumor. BP still saying no decision has been made but if they need an indication of what the market thinks of such a deal, they've got one. Personally, I'm not sure what he could have done to prevent one more drop of oil from flowing out of that well but I guess we all could have done without the gaffs.

  9. 9
    ratberto Says:

    BOP, thank you for #5; their perspective is very helpful and much appreciated.

  10. 10
    BirdsofpreyRcool Says:

    thank you for the feedback, ratberto.  Good to know what is helpful to post.  (As there is so much info out there)

  11. 11
    zman Says:

    Bill reporting on the wrap that NM reported but it was not on my calendar site so I missed it. Will listen to the replay.

  12. 12
    BirdsofpreyRcool Says:

    And in other news…
    The Rolling Stones will start their farewell world tour next year according to a report in The Sun; the performances will last until ’12; talks are ongoing now w/Live Nation (LYV); the 4 members of the band will have a combined age of 268 when the tour commences.  The Sun  http://www.thesun.co.uk/sol/homepage/showbiz/bizarre/3067095/Rolling-Stones-to-say-farewell-with-50th-anniversary-tour.html

  13. 13
    zman Says:

    Re 12  – Wow.

    LINE attempting to move on up, earnings later this week.

    Regarding today's House Keeping Watch, BOP and Nicky have graciously agreed to keep the site flowing in my partial absence so I will leave you in their competent and infinitely interesting hands. In the immortal words of Hudson in Aliens 2 said, "Put Her In Charge!"

  14. 14
    zman Says:

    SSN holding up 7%, no response from the company, best guess is press release is being word smithed now.

  15. 15
    choices Says:

    #5-thanks, BOP-I am a true convert to watching the credit mkts for signs in the equity mkts.

  16. 16
    BirdsofpreyRcool Says:

    CIGX doing it's Prairie Dog imitation this morning… sticking it's head up outta the hole (on some early volume).  No new "news" that I can see… someone remarked that there is a new report out from some private newsletter.  But it's stuff that has been said before.  Only other comment i heard was "chart looks great."  That's about it.

  17. 17
    zman Says:

    Analyst Watch:

    SLB – Credit Suisse cuts target $6 to $80. Stock off a second day. No interest by me at the present time. The stock is having a modest drag effect on the OIH.

  18. 18
    BirdsofpreyRcool Says:

    choices —  Thank you for that comment!  Once you start incorporating what the credit market is doing into your longer-term investing practises, it's like the difference between the view from the 2nd floor… and taking the elevator up to the top, where the view from the 100th floor shows a lot more.  (Still have to figure out how to make sense of the landscape, but gives you so many more data points.)

  19. 19
    zman Says:

    Editor turned off for you iphone types.

    WFT moving through $16. JB, when you get a chance could you have a look. I think with HAL doing well and SLB coming off a bit some other service names like WFT have a chance to get up and walk about the cabin.

  20. 20
    zman Says:

    BP now up 4% on the Hayward departure news. Dude, don’t let the door hit you in the butt on the way out.

  21. 21
    bill Says:

    i posted this in the wrong spot

    NMM reported this am–call going on

  22. 22
    bill Says:

    11 actually NMM a sister company not NM

  23. 23
    zman Says:

    Thanks much bill, that may be why I missed it.

    Analyst Watch – yet more knocks on SLB

    Told you the call was boring, non catalytic and more than usual cautious in nature.

    Raymond James cuts to Outperform
    Boosts BHI to Strong Buy.

  24. 24
    bill Says:

    SD at 6.04

    its aug 5 calls are 1.04 bid 1.10 ask

    i think the name could blip up to 6.50 on Tom Wards weds interview

    Beyond that, I dont think people really understand sd oil focus. Ward is on record the oil production will be 22,000 per day with ARD. That’s conservative as he is already at 22.5

  25. 25
    bill Says:

    24: Last outlook he had oil at 5.8 m for the year up from 5.2 Mmbls. 22,000 a day is an 8 m run rate

    The huge risk is level of debt which is massive and future NG prices as they are tottaly unhedged for 2011

  26. 26
    elijahwc Says:

    CIGX: FWIIW folks on Briefing out with a note attributing price action to takeover speculation

  27. 27
    cargocult Says:

    BOP-I’ve never quite understood this relationship between equity and credit market. Any easy place for me to get a handle on this information?

  28. 28
    zman Says:

    Bill – When I ran the numbers on the combined a couple of weeks back I thought it looked better than SD standalone but worse than ARD standalone given the still high leverage and while ARD has a lot of liquids, SD is larger and so you are left with an SD that is less gassy but still pretty gassy. So I think they really need to talk about refocsing the capex, maybe on the quarterly conference call, to attack their gas/oil profile.

  29. 29
    Jerome Blank Says:

    RE: #19, WFT…new P&F buy signal with the $16 print, but trading right up against P&F trendline resistance, looking at the daily, $16.50 appears to be is the resistance area to watch, if WFT can get above this level, it breaks P&F trendline resistance and gets above the daily 200 day SMA, significant resitance areas…new charts posted

  30. 30
    Nicky Says:

    Good morning all. Okay I have lots of thoughts but will deal with the short term first.

    I am looking for a 10 day cycle to top out between 28th and 30th July – the astro may point to late Thursday. At that point we may be at the 1126 level. I will add that we have resistance at 1113 – 1117.

    We then should see a pullback into the 2/3 August. Support will be in the 1088 – 1092 range.

    Unless that level fails to hold I would then be looking for the market to move considerably higher.

  31. 31
    BirdsofpreyRcool Says:

    cargo — #27… that is a good question. I don’t know of any where you might be able to pick that up. Heck, 99% of most PROFESSIONAL equity investors don’t get it (altho, more recognize that they need to now). Just read everything you can about the state of the fixed income market. The fact that Bill Gross himself is moving away from bonds and into stocks, is worth noting (as Bill is one of the best fixed income investors out there… and knows how to read the tea leaves. That said, even Mr. Gross had to take a couple of years off and go stand on his head [literally] a few years back.) Probably just the fact of recognizing that the fixed income / credit markets are the global dog (and equities just the dog’s tail) is a good start. When credit is cheap, things can happen. When it gets too cheap, it’s like overdosing on dessert… as some point, you’re going to throw up… feel ill for a spell… Then get better and act normal for a while (until the dessert table gets overloaded again). The Business Cycle and Credit Cycle are inextricably-linked. Equities just get to go along for the ride.

  32. 32
    zman Says:

    Thanks much JB – I’m used to disappointment with that name so when I failed to see it in their quarterly pr or hear it on the call, I went long a little for a quick trade. Will be watching your levels.

  33. 33
    zman Says:

    Nicky – when you say astro, you do mean astrology, right? I saw one Astro newletter, Crawford, was calling for a huge drop starting today.

  34. 34
    bill Says:

    will obama pay czar comment on BP hayward exit package??

    ..Same guy being paid by BP to handle BP claims

  35. 35
    BirdsofpreyRcool Says:

    cargo — and watch the TED Spread. Don’t need to every day… but check in once a month or so… or during times of volatility. TED is still the best FEAR indicator I know. But, TED too tight is an indication that the dessert table is loading up again… it can take a while, but too low a TED Spread (indicating too much credit available) always ends in the market puking… then nursing a hangover. The only question is the length of the purge and recovery period.

    This is why I am a raving loonie about Washington so-called “policy.” What our govt is doing is keeping the economy from getting better on it’s own. It keeps trying to stuff more dessert down the throat of the mrkt. That is NOT helping us get through the recovery period. Au contraire…

  36. 36
    zman Says:

    Bill – good question. Last I heard, the pay czar was going to be on the job 6 weeks before he paid out a dime. BP was paying from the beginning but then the government took over and things became more “efficient”.

  37. 37
    skimo Says:

    z-still haven’t received SSN refund at Schwab, have you?

  38. 38
    zman Says:

    BOP – Put the HERO bit in at the beginning of the post partly for you. The CEO was on CNBC this morning early, impressively calm for what he is enduring. The comment about safety goes right to “the law of unintended consequences”

  39. 39
    bill Says:

    28 agreed

    Looks to me they are only producing enough NG volumes to cover their hedges as anything over that doesnt add to ebitda.

    The stock took a hit on the lower production forecast last qtr but why produce if it doesnt add to EBITDA

    SD trying to get message out, but no one is listening

  40. 40
    zman Says:

    re 37. No.

  41. 41
    Popeye Says:

    No refund at ST.

  42. 42
    BirdsofpreyRcool Says:

    z — I appreciated the HERO comment… and all that it implicated. Thank you.

  43. 43
    Jerome Blank Says:

    RE: #37, skimo, received SSN refund this morning at TOS

  44. 44
    zman Says:

    re 39. Yeah, no one listening yet at the big sellside shops. I think guys like TPH are on the case but no one is listening to them as it is summer. I’m watching the dust settle but not removing it from my market watch. What time is the interview on CNBC on Wed?

  45. 45
    skimo Says:

    JB-voted- looks like you have risen from obscurity to #35 on their hit parade. Nice work!

  46. 46
    zman Says:

    If you are new or simply have not checked out JB’s charts, there is always a link to them at upper right on this site.


    On his site there is a link at right called chart book where you can scroll to the name you are interested in. At the bottom of his site there is a place to vote for him if you like what you see.

  47. 47
    elijahwc Says:

    SSN; MSSmith Barney credited last Friday. MLFPS not yet. Bet it all credits before tommorrow.

  48. 48
    Nicky Says:

    Hi Z – yes astrology. Yes you are right Arch Crawford is super bearish. It is true to say that the astro right now points to massive volatility for the next month – it is in fact the worst astrological configuration of the last 200 years. Mars, Saturn,Jupiter,Uranus and Pluto all fall into negative aspects with one another. This could point to a natural disaster.
    Short term the one of significance is the opposition of Saturn versus Uranus but it may take a few days to show up. To counteract some of the bearishness this would normally bring, the Sun has moved into Leo which is bullish and this does not turn a touch negative until 7/29.
    Now I bet you wish you hadn’t asked!

  49. 49
    bill Says:

    sign of the times


  50. 50
    bill Says:

    JB Could you look at SD

    Thank you

  51. 51
    zman Says:

    My two words for voting today were

    “outfoxed nation”

    How appropriate.

    JB, could you comment on the Mcclellan Oscillator when you get a chance?

  52. 52
    Jerome Blank Says:

    RE: #45, #46, skimo and Zman, thank you much for the votes and kind comments…

  53. 53
    john11 Says:

    Dr John Faessel blog post on CIGX.

  54. 54
    cargocult Says:

    BOP-I think I understand. When the dog sees desert he starts to wag his tail. After eating too much sweets the dog lays down for a nap and his tail curls up under his you know what. He sleeps it off and wags for more.

  55. 55
    bill Says:

    50 meant to say comment.

    Do gaps always get filled?

  56. 56
    BirdsofpreyRcool Says:

    cargo — yes. Nicely put!

  57. 57
    zman Says:

    SLB sitting further back in the penalty box, if this keeps up, I will get interested in a few more days. It wasn’t a bad call regarding the future, just more cautious than expected.

  58. 58
    cargocult Says:

    BOP-So what’s the dog up to now?

  59. 59
    BirdsofpreyRcool Says:

    cargo — but there is not always sweets on the table, either. So, it’s a dynamic system… involving the availability and amount of credit (sweets) and the appetite and traing of the dog (companies). However, after over eating, you HAVE to let the dog sleep it off. You can NOT make the dog better by continuing to feed it, once it has too much. It just delays the “sleeping it off” healing process.

  60. 60
    BirdsofpreyRcool Says:

    The table is laid. But the dog is looking at his Master. One one hand, the Master is saying, “go ahead, it’s time to eat.” On the other hand, the Master is saying “you were a bad dog before and if you do that again, I am going to beat the living crap outta you and throw your sorry flea-bitten butt into jail. AND I am going to raise the price of your dog bed and restrict your access to the yard.”

    So, the table is laid. But the dog is a tad confused as the Master is sending out way too many conflicting signals. That means the dog just sits there, looking into it’s Master’s eyes… trying to see what he really wants the dog to do… and what the consequences will be.

  61. 61
    BirdsofpreyRcool Says:

    BUT, eventually the dog will eat. He has too. He is just hoping the signals will become a tad less confusing before approaching the table. But, even if the signals stay mixed, eventually the dog will just go for it anyway. It’s in a dog’s nature not to starve itself to death.

  62. 62
    zman Says:

    Re 48. Yeah, but I’m still fascinated.

  63. 63
    zman Says:

    BOP – If you could stretch that out and put some pictures with it you could sell it in the kids section at Barnes and Noble.

  64. 64
    zman Says:

    BP up 5%.

    BP $40 calls waking up but the $45s are outperforming.

  65. 65
    BirdsofpreyRcool Says:

    yeah… kids LOVE stories about DOG BARF. ha! 😉

  66. 66
    Jerome Blank Says:

    #50, SD, added a 30 min chart for a closer look at near term support at the trendline, longer term , from here SD holds its reversal back into X’s on the current sell signal until a print of $5.50, so it appears that any down side is farily limited, SD is in a good spot for a run higher, but what is going to get SD moving?

  67. 67
    BirdsofpreyRcool Says:

    john11 #53 — thank you for pointing that out. Doesn’t say anything “new.” Those are the numbers we have all been playing with for the last year. But, kinda cool to see them laid out in black and white and blog, tho, eh?

  68. 68
    zman Says:

    re 66

    “what is going to get SD moving?”

    1) Fall
    2) Their plan of getting oilier combined with time to actually get oilier.
    3) Stable or higher oil prices
    4) Stable gas prices
    5) The initiation of protective collars/swaps on their expected 2011 gas production.
    6) A real. believable commitment to de-lever the company.
    7) Continued progress on the CO2 deals into 2011.

  69. 69
    zman Says:

    Will be adding some WLL Calls in next two days with the knowledge that I will be around for earnings but miss the earnings call until late Thursday. Obviously not expecting any negative surprises and, market willing, a retest of the recent $90+ highs.

  70. 70
    Jerome Blank Says:

    #51, $NYMO, McClellan is now trading at overbought levels, and as of the moment the reading will probably be a bit higher today if the mkt closes higher, $NYMO is now indicating that the probability of a pullback is increasing…pullbacks from these levels have been fairly reliable, working on how deep the pullback might be using other indicators…

  71. 71
    tomdavis12 Says:

    BOP: Nothing that our wonderful gov’t has done puts a damper on the EXXI bonds? Any thoughts on the RIG 5.25 ’13 at a discount. I am a par or better buyer and ratings are not an issue.

  72. 72
    zman Says:

    JB – uh, huh, that’s what I thought your chart was showing. Hmmm.

  73. 73
    BirdsofpreyRcool Says:

    TomDavis — you are much better than I am at RIG. I don’t follow services all that much. But, if RIG cash flow can cover any foreseen scenario, then it’s just a “relative value” analysis on the bonds. Do they pay you more than a company with similar risk and leverage? If yes, buy them.

    I’ll shoot you over the next relative value bond list i get. Haven’t seen an update lately.

    Still LOVE the EXXI 10s. Oily production is good source of cash flow. And 2011 capital budget UNDERspends that cash flow. Wonderful stuff for bondholders.

  74. 74
    zman Says:

    Speaking of EXXI, starting to outperform again, noting strength in SGY and ATPG as well. Pressure mounting to end the moratorium early with lots of media stories now about jobs about to go away, shallow and deep. HERO quoted a payroll of $150,000 / day for those it will have to let go in the next 30 days.

  75. 75
    bill Says:

    66 thanks jb

    good question– what would get it moving

    -shorts covering
    -sd meeting a forecast on ebitda
    -higher ng and oil prices
    -getting the story out

  76. 76
    bill Says:

    lol z answered in 68 just saw it, we matched on a few

  77. 77
    tomdavis12 Says:

    Z: 62 If you want to know more about astrology you should consider getting your own natal horoscope done. You need to know your exact minute of birth and of course the date. I can give you a name of someone very gifted. If you approach from total skepticism, you might get surprised. Very helpful to parent two interns as well. 😉

  78. 78
    zman Says:

    LINE – hitting new highs at 30.26. Spoke with my accountant over the weekend and the dislike for MLP tax accounting was made abundantly clear. The one exception was the sub $1,000 per year distribution category in a tax free account. This is actually easier to deal with than the K1’s in a taxable account which can trigger all sorts of tax items with the various states in which they produce. I’m not a tax accountant but be cognizant of the fact that you will probably need one if you own one of these things to any great extent.

  79. 79
    zman Says:

    Tom – Wow, thanks. I am so not interested in doing that, lol. But thanks. I don’t understand it all and have no spare cranial room for it all (except for the occasional program on Discovery channel when I can’t sleep) but I respect Nicky’s work and I don’t have to understand it to believe that it is a piece of what makes her so accurate in calling the ball on this market.

  80. 80
    zman Says:

    BP says the board will rule on Hayward Monday. I’d say there is a 99.99% chance he gets more time to work on his sailing skills. Stock due a test of the recent high of $39.81 in next few days (essentially a $40 test).

    JB, got any thoughts?

  81. 81
    andy Says:

    tom davis if u get a quote on the EXXI bonds pls pass it on. thks

  82. 82
    tomdavis12 Says:

    Andy: I see the 10% 6/15/13 @ 100.25 with no mark-up

  83. 83
    BirdsofpreyRcool Says:

    tomdavis #77 — interesting. Have to say I don’t subscribe to that stuff. But “There are more things in heaven and earth, Horatio, …”

  84. 84
    zman Says:

    BP to stick Hayward in Russia (TNK-BP).

  85. 85
    BirdsofpreyRcool Says:

    Sorta revives the whole idea of “being sent to Siberia,” eh?

  86. 86
    zman Says:

    BOP – yeah but my sense is more Dacha than Gulag for him.

  87. 87
    elduque Says:

    re 85 – Now who would think you were old enough to remember J. Stalin?? Eh!!

  88. 88
    choices Says:

    cargo-re: credit spreads-here are a couple of short articles FWIW-note somewhat dated, end of May 2010. analogies certainly not as clear as BOP’s



  89. 89
    BirdsofpreyRcool Says:

    A little lunch-time reading… BedTime Market Strategist from last night


    As is readily apparent, an apples to apples comparison of the European bank stress test to the U.S. bank stress test (SCAP) just over a year ago is a challenging task. The banking systems, the economies, the politics structure and the threats all differ significantly. Recognizing this fact, we realize the best option is simply to identify the similarities and differences. The SCAP was announced during the heart of the post-Lehman financial crisis here in the U.S. Its purpose was to ensure that the U.S. Banking system was solvent for both investors and the American public. The concept was modeled after FDR’s bank holiday during the Depression, which succeeded in restoring the public’s confidence in the banks that were permitted to re-open. In short, this new seal of government approval provided the public with confidence that a re-opened bank would not be shuttered in the ensuing weeks. The SCAP served a nearly identical purpose with similar success and went a step further requiring more than half of the participating firms to raise additional capital for a SCAP buffer well beyond the regulatory standards. In fact, Treasury was sure to point out that “First, the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. Second, the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital.” Essentially, all banks received a passing grade on regulatory capital.

    One key parallel is that both tests measured firms with approximately 65% of the assets in the overall banking systems, which is a comprehensive enough group to create broad confidence in the system. Treasury reported the bottom line result of SCAP as “The two‐year loss estimates total close to $600 billion in the more adverse scenario for the 19 BHCs.” ECB reported the bottom line result of the European stress test to be “In total, aggregate impairment and trading losses under the adverse scenario including the additional sovereign shock would amount to 565.9 bn €.”

    The key differences in the two tests are the state of the relative economies and the perceived threats to the system. In the U.S., the threats were primarily housing losses and unemployment creating mortgage losses during a brutal recession. In Europe, the fear is largely caused by the lesser quality sovereign debt that banks hold in conjunction with the slow recovery. Under the SCAP’s base case scenario for 2009, GDP would shrink 2%, unemployment would rise to 8.4% and the S&P Case-Shiller 10 City housing price index would drop an additional 14%. Under the SCAP’s adverse scenario for 2009, GDP would shrink 3.3%, unemployment would rise to 8.9% and the S&P Case-Shiller 10 City housing price index would drop an additional 22%. In the final tally for 2009, unemployment overshot hitting the 2010 more adverse level of 10.3% in late 2009. On the other fronts, performance was much better than expectations. GDP rose .1% in 2009 and the Case Shiller only dropped 2.5%. With the exception of unemployment, 2010 is also tracking well ahead of the test criteria.

    Many know that we have not perceived the European sovereign debt crisis as an imminent threat in 2010 (especially for investors in U.S. markets), but we do acknowledge that it is a serious problem that needs to be addressed. As such, we do not think the test was as necessary as many others believe, but anything that provides information and transparency to investors is a good thing. Comparisons will be made as to whether the European test was more or less stringent than the SCAP. On a wide variety of metrics, SCAP was notably tougher, much of which is a result of the prevailing environment at the time of the test. On one key metric, however, the EU test was much harsher.

    Let’s start with the environment. The SCAP was applied during a time period that was close to the trough of the worst recession of 2 generations. That fact alone makes it tougher from a metrics standpoint. The world today being far better than the expectations of 18 months ago means that in the current environment, the criteria would be less harsh. Another key difference was that SCAP went further by creating a new capital criteria above the regulatory threshold called Tier 1 Common capital in addition to regulatory Tier 1 capital. The purpose of this was to respond to the market’s focus upon Tangible Common Equity. The European stress test did not use an equivalent of Tier 1 Common. The reason given was that 20 different member nations participated in the test. Among that group, they have a harmonized definition of Tier 1, they did not have a consistent measure of a stricter standard. Instead, they raised the regulatory minimum by 50% from 4% to 6% to parallel SCAP’s Tier 1. Remember, “virtually nobody” failed SCAP by this measure. As result, the failures of the EU test were real failures. Not only was the economic environment better, but they also failed by a lesser threshold.

    It was not all easy for the European banks. As a matter of fact, overall the test may have been significantly harder when you look at what was being tested for. The entire crisis emanated from fears about a sovereign debt crisis. The question is what constitutes a sovereign debt crisis, a “sovereign shock” or an outright “sovereign default.” Here is what ECB explained, “Within the adverse scenario, the exercise also envisages a “sovereign risk shock”, reflecting adverse conditions in financial markets.” They clearly state “Modelling sovereign risk based on market yields implies that sovereign defaults are excluded from the exercise.” We reiterate we were not expecting an imminent sovereign default, but we are not among the market participants who this test was meant to appease. The ECB would undoubtedly argue that EU’s announcement of its “Shock & Awe” sovereign backstop package in May would prevent a sovereign default and modeling for a sovereign shock is more appropriate. This is the part that makes the EU stress test harder. Since government securities are generally considered the standard “risk free” asset, any banking system modeling a default of their sovereign would be severely compromised. Even modeling for a sovereign shock as the EU has done is a stringent criteria. SCAP outlined the government securities of U.S. banks. “At the end of 2008, the 19 BHCs held $1.5 trillion of securities, more than one‐half of which were Treasury, agencies, or sovereign securities, or high‐grade municipal debt, and so are subject to no or limited credit risk.” Under SCAP, these securities benefitted U.S. banks (as they should) for having little risk. In the EU test, the European equivalents of treasuries were detractors (as they should). The point is that a major tailwind in one test was a major headwind in the other. The bottom line for investors is whether or not they believe a sovereign default is likely or not. That also begs the question, if the risk is at the sovereign level, does the government “stamp of approval” aspect of the test that was so influential psychologically in the U.S. market carry the same weight? The answer is probably not the same weight, but primarily because the primary fear here in the U.S. was nationalization. Investors will still likely get a reasonable amount of comfort that the ECB has signed off on the passing institutions. The market reaction was a quiet one. Five Year CDS spreads for most of the at-risk countries are approaching their best levels in 2 months, but are still wider on the year. For U.S. investors, the reaction is probably more likely one of relief that no new big negatives emerged.

    One final side note, another example of the negativity in the market place or at the least the need for conservatism was the benchmark scenarios treatment of the equity market exposure. Equity books tend to be a small portion of overall bank assets, but we thought is interesting. “Equity exposures in available for sale portfolios have been subject to a cumulative haircut over two years of 19% in the benchmark scenario, and 36% in the adverse scenario.” So even if recovery continues at the forecasted pace, they are accounting for an ugly equity market.

  90. 90
    BirdsofpreyRcool Says:

    choices — thanks for the credit assist!

  91. 91
    jat Says:

    OMG he’s getting sent to Siberia.

  92. 92
    ram Says:

    BOP – Have you entertained buying options on CIGX? I know at 2.15 it is an option, but if you thought to leverage more?

  93. 93
    choices Says:

    #84-not sure if that is an opportunity to “get his life back” altho I’m sure he will be living well in Moscow/London-TNK-BP has been a very troubled joint venture for the Brits with the Russians beating the hell out of the them in various forums in Russian and other courts.


  94. 94
    BirdsofpreyRcool Says:

    ram — as PAYD has so painfully taught me… things take so very (Very VERY) much longer than you think they will. And “timing” is everything in options. I can sleep at night, owning CIGX at 1.50, 1.80, 2.50… as i know they (or inVentive, that is) will launch some time soon (any day now? certainly before the end of this yr… ). But, i would chew my nails to bits, if i laid money down on options there. That said, I actually have bought call options on CIGX (when it was STSI, two and a half yrs ago). But, there was a set court date that time.

  95. 95
    elduque Says:

    ng futures going green

  96. 96
    bill Says:

    robry has this week (last week) at + 22

  97. 97
    ram Says:

    BOP – You’re right about timing. I tried to time more at 1.75 and now it’s around 2.20. I might just buy a fraction at this price.

  98. 98
    zman Says:

    Doing a little model work, so will shut up for a bit.

    As per housekeeping watch, anyone from or been to Charleston, looking for places to eat, things to do. Have the Yorktown and Ft. Sumpter on my list of things to do so far.

  99. 99
    ram Says:

    Poogan’s Porch and Magnolia’s for dinner.

  100. 100
    BirdsofpreyRcool Says:

    ram — CIGX is up today on rumors about a takeover (phtttfffft, i say to that one) and the blog that john11 pointed us to. It could go higher tomorrow, it could come back down to 1.95 tomorrow. I have no idea. But, at some point before the end of this year, I would expect to see a 3-handle (at the very least). But it is going to be a VERY volatile ride! So, pick your price, strap in, and don’t make yourself ill, watching the price bounce around every day.

  101. 101
    cargocult Says:

    Choices-thanks for the links.

  102. 102
    BirdsofpreyRcool Says:

    appologies, z, for the CIGX talk. You run a First Class energy research operation here.

  103. 103
    zman Says:

    Senate Dems to introduce new and improved Energy Bill

    1) reforms for offshore drilling including bumping the liability cap to $10B or beyond.
    2) $4.1 B in natural gas incentives
    3) something also on electric cars
    4) $5 B for home efficiency incentives

    The $ figures in the bill to be paid for by increased taxes on O&G companies.

    Democrats expect to start deliberating the bill by tomorrow and hope to pass by next week.

    Cap and trade is not supposedly in this bill.

  104. 104
    zman Says:

    BOP – no problem at all, there is interest in the name and far be it from me to be so monolithic and inflexible that I can’t see a few non energy tickers here and there from fake cigarettes to gold.

  105. 105
    BirdsofpreyRcool Says:

    hmmmm… in prison, cigarettes ARE gold. Wonder what that means. Pondering…


  106. 106
    bill Says:

    >reforms for offshore drilling including bumping the liability cap to $10B or beyond.>??????

    wow that would knock out little guys

    they must look at it as half of bp’s 20 b as reasonable

  107. 107
    bill Says:

    If aig wrote the policy would the us accuse them of gambling on an oil disaster?

  108. 108
    BirdsofpreyRcool Says:

    bill, frankly, i hope the democrats continue to bring this sort of stuff to the table. People need to know how their brains work and a little more granularity behind the heading of “hope and change.” Makes for a better informed voter (says the optimist in me…).

  109. 109
    zman Says:

    re 106 and 107. Yes. I try not to think about it because that’s just too irritating. MCF and SGY could transition onshore with pain. The others like ATPG and CPE, I dunno, would be hard to justify the risk of drilling just one well. Insurance rates would go through the roof.

    re 105. I’m not going to ask how you know that but with time comes much knowledge and if ElD is right in #87 than that would explain it.

    Ram – thanks for the tip.

    Robry at 22 Bcf. Wow, had not worked up my number yet but it won’t be that low.

  110. 110
    bill Says:

    The dems want to raise the price of gas at the pump and they want to tax oil companies back to the stone age and this gives them the means and the cover to do it


  111. 111
    zman Says:

    RRC out after the close, don’t see a reason to buy pre earnings as they have essentially preannounced the quarter as usual.

  112. 112
    isleworth Says:

    Z – Peninsula Grill for an awesome meal in Charlestown


  113. 113
    jy Says:

    re #99 I second “Magnolia’s” for dinner.

    You might consider walking/running/cycling over the new Cooper River bridge early in the morning-the views are excellent. Single A baseball w/the Charleston River Dogs. Ggreat ballpark by the Ashley River and they are in town this week, Wed – Sat.

  114. 114
    PackMan Says:

    BEXP, EXXI up nicely – why ?

    SD, HK can’t catch a break – why ?

  115. 115
    bill Says:


    oil and


  116. 116
    zman Says:

    re 112, 113, thanks much!

    BEXP was down on nothing with oil holding well.

    EXXI – pressure to lift moratorium early, not they they are directly impacted. Also, you’ve got some broken leases for jackups lately, could be contributing to some thinking about falling costs in the Gulf.

    OAS – still waiting on coverage, not sure but maybe they are waiting out the quarter. Could be quiet period invoked by the company pre that but have not yet seen anything.

    SD, HK = SSDD.

  117. 117
    zman Says:

    BP on the wire, Hayward to step down in October, to take position in Russia.

    White House within minutes saying that BP must meet obligations regardless of who is in charge of the company. No kidding, really? You guys are really on top of that if nothing else. Sheesh.

  118. 118
    zman Says:

    White House so childish with that comment it’s just mind bogglingly painful to watch.

  119. 119
    PackMan Says:

    115 & 116 thks

    116 LOL

  120. 120
    bill Says:

    117,118 I thought you were joking, unbelievable and they wonder why no one has confidence in them.

  121. 121
    zman Says:

    Analyst Watch:

    NFX – Barclays maintains Overweight, says oil plays paying off.

  122. 122
    elduque Says:


  123. 123
    zman Says:

    Same stuff, different day.

  124. 124
    BirdsofpreyRcool Says:

    (elduque — thanks for asking… i didn’t know either)

  125. 125
    BirdsofpreyRcool Says:

    wooo-hooo!!! just got an advance sample of a few CigRx tablets. They look like little, flat tic-tacs.

  126. 126
    cargocult Says:

    Hard to find anything out about TAT, but I think I heard about it here. Up almost 7% as we speak today.

  127. 127
    BirdsofpreyRcool Says:

    TAT made the institutional rounds last 2 weeks. Looks like they got someone(s) interested.

  128. 128
    zman Says:

    WHX thoughts – in tomorrow’s post. But it looks to me like the Street has again gotten overzealous with the quarterly estimate. I’m in it to get paid to wait but I will say that the estimate has walked up from $0.62 3 months ago to $0.70 now. I am at $0.61 and I think they could do somewhere between $0.65 to $0.70 based on how production does. I always try to be somewhat conservative on the purely math plays like this. Recall that 2 brokers downgraded this thing last quarter after it “missed” their numbers … numbers is just about could never have made.

  129. 129
    zman Says:

    Cargo – My initial piece on TAT is here:


    You can generally find those kind of pieces on the Reports tab here:


  130. 130
    zman Says:

    Nicky – nice call on the day, again. S&P hit your 1113 level and stopped dead in its tracks.

  131. 131
    cargocult Says:

    Thanks Z, I looked everywhere but here.

  132. 132
    Popeye Says:

    Dumped the rest of my SSN, it is free to run now. I hope everyone still holding gets a double from here.

  133. 133
    zman Says:

    BDCO on the tape with comments about it’s pipeline being significantly below capacity, president resigning, etc.

  134. 134
    zman Says:

    Popeye – hear ya on that, if they don’t get back to me in the morning and have no press release I will likely cut my half in half again tomorrow.

  135. 135
    zman Says:

    JB – where do you have resistance on HAL? You were right about it moving higher last week, feeling a bit extended now.

  136. 136
    tomdavis12 Says:

    Z: Are you guestimating about 3850 TCF as the peak or end of the injection season? What is your stab at year end crude and NG prices. ( You are allowed to wait for Papa and Aubrey before answering )

  137. 137
    zman Says:


    Peak storage: 3,600 to 3,800 Bcf

    Crude – somewhere around $90.
    NG – $5.50 to $6.00.

  138. 138
    tomdavis12 Says:

    Z: Just to show you I need more vacation time, I made a list of bearish comments re HK from cyberspace and sell siders. You do not need to respond to these, you have already made your case repeatedly. Overleveraged, over spending cash flow, bonds coming due in 2 years, weakening strip pricing, increased production not translated into increased cash flow, as hedges come off cash flow hurt, EFS more gassy than oily on their property, rising rig counts with rising service costs, history of serial issuance, no option premiums in the calls, cold winter and warm summer has not reduced supply significantly and 914 data this Thurs will not be bullish. These comments are not all well informed, I just wanted to remind myself what the concerns are.8)

  139. 139
    BirdsofpreyRcool Says:

    8) you need to put a space between the ” . ” and the 8 and )

  140. 140
    BirdsofpreyRcool Says:

    but now i know how to keep the smiley-face with glasses off my lists. Always happens when i’m marching along, listing… 1)… 2)… 3)… etc…. until i get to 8)

  141. 141
    zman Says:

    Getting ready to part ways with my HAL calls.

  142. 142
    tomdavis12 Says:

    BOP: Thanks. Since I remember the 60’s, these tech things don’t come easily.

  143. 143
    zman Says:


    HAL – Sold the (10) HAL August $30 Calls for $1.66, up 86%. Catalyst there has come and gone with earnings and I was just milking it at this point.

  144. 144
    Pati Says:

    From Schwab: CHK doing spinoff — Chesapeake Midstream Partners, LP. 21,250,000 units/ $19-$21, Expected date 7/28.

  145. 145
    zman Says:


    WLL – Added (2) WLL August $80 Calls for $7.10 with the stock at $85.70 and earnings due on Thursday. Expecting positive commentary from their traditional Bakken play and also from their nascent Three Forks Sanish play (Lewis and Clark) down in the southwest corner of North Dakota. Potential for a beat here seems slightly more positive than not. I continue to own the common in the ZLT.

  146. 146
    zman Says:

    FST running like an operations update is on the way. I’ll stick with my LINE calls as a way to play anything FST has positive to say about their Granite Wash activities. Yes, I know the play is not homogeneous but the Street often sees things that way for short bits of time.

  147. 147
    zman Says:

    WLL – as if on cue … hate it when they run right after a trade blast but its the market doing the driving.

  148. 148
    Jerome Blank Says:

    RE: #135 HAL, sorry for the delay…next major resistance from here remains at $32, support at $29.50

  149. 149
    zman Says:

    Thanks, man, but it felt like I was overstaying my welcome, especially given this market being overbought.

  150. 150
    zman Says:

    BP not at HOD as we approach the close but near it. Not sure how they please the market tomorrow with results unless they have a more deals to announce or a better than expected progress update on the well effort.

  151. 151
    zman Says:


  152. 152
    skimo Says:

    re CIGX-if someone has parsed them into the biopharm area, the rise could be due to the herd flocking that way today rather than takeover rumors. Hope I didn’t make any errors for the grammar police! 🙂

  153. 153
    BirdsofpreyRcool Says:

    (no grammar police here! was just trying to help TomDavis look coooooool)

    would NTY be considered “biopharm”? I would put CIGX’s product into that category. I have no idea why it’s up so much today. But, every day that passes, is just one day closer to launch. Whenever THAT is.

  154. 154
    Pati Says:

    Re 152, the “herd” has taken notice of CIGX.

  155. 155
    crysball Says:

    AXAS operational update 7/26:
    SAN ANTONIO–(BUSINESS WIRE)–Abraxas Petroleum Corporation (NASDAQ:AXAS – News) today provided an operational update.

    Operational Update

    Rocky Mountain:

    In McKenzie County, North Dakota, Abraxas has spudded its first of three operated horizontal wells in the Bakken/Three Forks oil play. The first well will target the Three Forks formation and is currently drilling the vertical section at a depth of 1,110 feet. The second well will target the middle Bakken formation. It is anticipated that all three wells will be drilled sequentially and that each well will have horizontal laterals of approximately 9,000 feet and that each well will be completed with 20 or more stages of fracture stimulation. It is anticipated that each well will take approximately 30-45 days to drill but a shortage of frac crews could delay completion. Abraxas owns an approximate 64% working interest in the first well and an approximate 70% working interest in the second well.
    In Divide County, North Dakota, Abraxas participated in a Three Forks horizontal well for its 1.9% working interest. The well was drilled to a total measured depth of 18,500 feet, including an 8,500 foot lateral, and completed with a 24-stage fracture stimulation. The well has been on-line for over 30 days and is currently producing approximately 400 barrels of oil and associated gas per day.
    In Williams County, North Dakota, Abraxas participated in a Bakken horizontal well for its 2.1% working interest. The well was drilled to a total measured depth of 19,700 feet, including a 9,700 foot lateral, and completed with a 28-stage fracture stimulation. The well has been on-line for over 60 days and is currently producing approximately 300 barrels of oil and associated gas per day.

    Permian Basin:

    In Nolan County, Texas, Abraxas anticipates spudding its first of two operated wells during the fourth quarter of 2010. The first well will be a vertical well and will target the Strawn, Caddo and Ellenburger formations and the second well will be a horizontal well and will target the Strawn formation. Abraxas owns a 100% working interest in each of these wells.


    In the Twining area of Alberta, Canadian Abraxas (“Canaxas”) is currently drilling its first of two operated horizontal wells targeting the Pekisko formation at an approximate depth of 5,400 feet. The first well is currently drilling the lateral section at a total measured depth of 7,650 feet. Each successful well will earn Canaxas approximately five sections, or 3,200 net acres. Canaxas owns a 100% working interest in each of these wells.

    “We are pleased to announce that we have started our drilling program for the 2nd half of 2010 which will consist of at least seven operated wells, three in the Williston Basin, two in West Texas and two in Canada. In addition, we will participate in a non-operated position as opportunities arise, principally in the Bakken/Three Forks oil play. With the increased number of drilling rigs running in the Williston Basin together with the increased number of stages on a given frac job, frac crews and equipment are in short supply. As a result, there may be a delay in procuring services for the multi-stage frac jobs that we have planned for our operated wells. Nonetheless, we continue to work with the various service providers and expect that once the wells are drilled, we will be much better positioned to secure frac dates,” commented Bob Watson, Abraxas’ President and CEO.

    Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountain, Mid-Continent, Permian Basin and Gulf Coast regions of the United States.

    NOTE: AXAS reports Q2 After HOurs 8/2.

  156. 156
    john11 Says:

    QEP out with production guidance and operations update. Market bidding it up a little.

  157. 157
    blackgold39 Says:

    I may be overstaying my welcome in the BP Aug 45s

  158. 158
    zman Says:

    John – increase to guidance in there. Will review for the morning post.

    BG39 – if you are then so am I, still in the $40s and $45s.

    BP says don’t expect word on Hayward tonight but all sources say he is bound for Russia. Static kill to begin as early as Monday, relief well as early as next week too.

  159. 159
    zman Says:

    AEZ rising into earnings in the next couple of weeks. I continue to hold in the ZLT and will hold through at least this earnings report and most probably for the next several quarters although I do plan on trading it a bit more opportunistically with the band it has recently traded in in mind.

  160. 160
    Hoss Says:


    OAS up to (5) rigs according to NDIC
    (4) Rough Rider’ish
    (1) NW of Ross

    Most Recent Well:

    NJOS FEDERAL 5602 11-13H
    Wildcat – Rough Rider
    Off Confidential, but no completion report or production yet
    IP OIL 1,835 MCF 1,468 Boepd 2,080

  161. 161
    Jerome Blank Says:

    $NYMO, McClellan closed at 97.25, the 4th highest overbought reading in the past ten years…the three higher readings occured relatively recently from late oct 2008 thru the Mar 2009, topping out at 121.86…interesting that the extreme oscillations have generally widened over the past ten years into sort of a megaphone pattern…this extreme overbought reading corresponds with todays test of the 200 day SPX moving avg so a pullback can’t be far off…I think the biggest concern would be the August options, if a trader has a profit in the call options now is the time to consider those positions…$NYMO has a bit of a different personality at the overbought extremes as opposed to the oversold extremes, a consolidation at the 200 day over a period of days could burn off a bit of the over bought reading, but I think one of those big red candle days are now closer ….

  162. 162
    blackgold39 Says:

    re 158: I bailed on my BP Aug 40’s late last week with no G/L, my position in BP became a bit too outsized and figured I’d rather stick with a bit more spec money. Holding the 45s obtained last week @ $0.29. Definitely missed out on some gains, but wanted to reposition early this week. Recent bump probably going to keep that from happening unless it gets bruised prior to kill.

    Also long APC Aug 49s as of last week, obtained @ $3.20, which is a bit rich for me, will be unloading these in short order, as these options don’t appear to be giving me much value for my money at this point, and they’re trading at quite the premium. In at about 48, common trading over 50 currently but giving me very little bang for my buck.

  163. 163
    Jerome Blank Says:

    SSN acreage sale delayed…

  164. 164
    zman Says:

    re 163. Due to an extraordinary increase in leasing activity resulting a rationing of the time for which any individual is granted access to the County’s land title records. That’s not unreasonable in my book, as I’ve seen it happen before. The lack of earlier notice is a bit weak on the part of SSN as they didn’t just find this out but that does not materially affect the deal. More comments tomorrow.

  165. 165
    BirdsofpreyRcool Says:

    BedTime Market Strategist

    Expectations Management.

    We have discussed the influences of sentiment and expectations all month, and today provided two excellent examples of expectations imbalances within the markets. The first is FedEx. On June 15th, FedEx shares closed at $83.01. On the morning of June 16th, the company announced earnings and provided initial guidance for 2011 of $4.70 per share below street expectations of $5.07. The stock dropped nearly 6% that day despite a very upbeat conference call by management. A sloppy broad market fueled an additional sell of FedEx shares over the next couple of weeks. As the market bounced so did FedEx and last week the rally continued on good earnings news from competitor UPS. Today, a mere 6 weeks after that initial guidance, FedEx raised 2011 expectations to $4.90 per share based upon Q1 looking 15% better than expectations. FedEx Shares closed today at $83.39, higher than the June 15th close. It is remarkable that the company has managed to bring expectations down by $0.17 and subsequently wind up with a higher share price. For the time being since the revision has been upward, as have those of the competition, the market will likely expect future announcements to go in the same direction. One might be tempted to call this chicanery, but we have seen them do the same exercise in reverse in the past. Regardless, the actions and results merit being mindful of them.

    The other attention getter today was the 23.6% rise in New Home Sales in June. The problem is that May numbers were revised down 11% to a new record low (going back almost 5 decades) of 267,000 units. Everyone knows that the expiration of the homebuyer tax credit created large distortions. The irony is that coming into the release with May’s initial print of 300,000 new homes sold and expectations of 310,000 new homes sold in June, investors were looking for a two month total of 610,000. Instead, they wound up with a two month total of 597,000, but a nice market rally with builders among the leadership. As usual, the market likes to see the data heading in the right direction if we did not know the poor level it started from. The reason for the positive action is that despite May’s initial post tax credit slowdown, people will still buy new homes and at a rate not too far off from where sales were running most of the year with the tax credit. We remain confident in our belief that the data going forward for the publicly traded builders will only improve over the next 1-2 years. Despite the headlines and the foreclosure inventory, the improvement is a matter of when and not if.

  166. 166
    stealth bull market Says:

    visit the following website


  167. 167
    financial industry Says:

    organizations Starting business


  168. 168
    nursing profession Says:

    Ultimate Nclex


  169. 169
    authentic mobile Says:

    service Repair


  170. 170
    explore different dent Says:

    owning a hot rod is having a responsibility as well. you need to Know how to maintain And keep your car clean inside and out


  171. 171
    Innisfree proxy solicitation fraud Says:

    http://Www.Mayanrocks.Com/Hoobaholics/Feedback/?N=1Clash Of Clans Cheats On Ipadexternal NofollowCandy Crush Cheats No Downloadnofollowbest Site To Host A Blogexternal Nofollowwww


Leave a Reply

Zman's Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette