Tuesday, April 15, 2008

What's New Under the Sun ?

1. Russian oil production growth stops.
2. Industrial Eaton reports good earnings.
3. Home foreclosures up.
4. Stock buybacks result in buy high, sell low for banks.
5. BS made a profit in Q1.
6. Big deepwater oil find off Brazil.

None of this is "really" new, but shows how much perception is diverging from reality. And how little most people really think or understand dynamic trends.

1. Old oil fields are declining and thus making any further increase in the annual oil output worldwide almost impossible. Notice I said "annual output" - that's the flow from the "tank", not the capacity of the tank. People seem to be unable to comprehend a flow problem and confuse it with a capacity problem. Lack of further annual output growth mean that prices have to rise to a level to ration new demand , i. e., eliminate any increase in total demand. I think current prices are high enough, given time for adjustment.

2. This fact means the real economy is fine worldwide. Eaton is a big exporter, too.

3. Of course home foreclosures are up - foreclosures are the end of the flow - that word again - starting with subprime & Alt-A loans to speculators. They default quickly since they never really wanted the home in the first place. The loan eventually goes into foreclosure and the home gets sold. As my thinking is that defaults peak this spring, foreclosures must rise through summer. That the dynamics of the flow.

4. Nothing new here. This is the "dirty, little secret" of stock buybacks. Stock buybacks merely aid those wanting to sell a stock, not an investor. Hence stock buybacks are "anti-investor". Management buys back stock when times are good at high prices, then re-sell it when they need more capital . Smart, eh ? NOT! Management should pay down debt instead of buying back stock, and maintain stable dividend levels through downturns.

5. Bear, Stearns was not insolvent, having made a profit in Q1 as just reported. BS died of its own past sins, as the Street decided not to do business swith it anymore. And clearly JPM got a great deal if it can retain the good people. Even if not, the acquisition well under book means a good deal for JPM.

6. Where else can big oil finds be made ? Huge finds have already been made in the Gulf of Mexico. I own RIG and DO for this reason. And CVX was the firm that has lots of those deep water leases and made the finds, also with DVN to a lesser extent. These new finds will take years to produce significantly and the costs are large. Don't expect relief in oil prices from them. These will just limit further price increases in the future.

Yesterday I was disapointed by WB. I think management did a "kitchen sink" quarter and has lowballed projections. And they cut the dividend to force the large Golden West former shareholders to bear the pain as that was where the projected losses were to occur. Clearly management needs some changes. I an holding and bought some more for a trade related to my tax issues. I'll sell my early purchases in 30 days for a short term loss to offset a bit of my large gold & silver profits [28% federal plus 12% state tax] and thus save a lot of money on taxes. Then my long term WB holdings will have low basis and when I eventually sell, I'll have a low tax, long-term gains.

I also sold 1/2 of my DVN since that stock no longer looks cheap and seems a bit extended/parabolic on a weekly chart.

Word of the Day

[hold the flack - I sort of knew the meaning of these, but looked them up to be sure of the exact meaning]

"Phlegmatic" - adjective [$10] pronounced fleg' matik
Phlegmatic means stolidly calm; unexcitable, unemotional
Sentence: Imagine a phlegmatic Bunkerman sitting in front of his crappy Vista PC listening to Blabberg while the panic mongers screech, as he thinks about the "real" news and what the future economic trajectory is most likely to be. Well, that's the ideal.

"Stolid" - adjective [$10]
Stolid means 1. lacking or concealing emotion or animation; 2. not easily excited or moved.
Sentence: Investing the bulk of one's assets using the Krypto Fund strategy permits one to maintain a stolid, thoughtful frame of mind during times of economic stress.

49 comments:

Bunkerman said...

hmmm Empire State mfg is positive vs. big negative last month ... Did I blink & miss the R_________ ?

Hmmm Dec, Jan, Feb, March = 4 months ... uh ... aren't six needed for the R word ?

Bunkerman said...

year over year core PPI is only 2.7%, where is the broad inflation ?

Bunkerman said...

Sigh, that familiar statement again enters my mind.

Trivia: What is that statement ?

[hint: it's a simple declarative sentence.]

;-)))

Bud said...

is this a recession?

Bud said...

Dear Sal,

You've probably heard about some of the big changes going on in Hillary's campaign lately. My name is Geoff Garin, and along with Howard Wolfson, I'm now leading the campaign's strategy team. My job is to plot the path to the nomination and lay out the strategy that will get us there.

There are two reasons why I said yes immediately when Hillary asked me to do this job. First, I believe that the Hillary Clinton I know will be a great president who will do great things for our country. Second, I am confident she can win.

Let me lay out for you the situation as I see it right now. The Pennsylvania primary is approaching -- just eight days to go -- and a win there will do two things: give us momentum that will carry us through the races that follow, and show that Hillary is still the best choice to beat John McCain in the big, competitive states that will decide the race in November.

The Obama campaign is outspending us three to one in Pennsylvania. But I'm confident we can win in Pennsylvania, and I know Hillary is too. She is campaigning hard and really connecting with the voters there.

The voters in Pennsylvania know that she is the candidate who understands their lives and respects their values, and that every day she will be a president who stands up for them instead of looking down on them.

If I had to point to two of our best weapons in this campaign, one would be the incredible strength of our candidate, and the other would be the phenomenal role people like you have played in sustaining this campaign, even through some pretty tough times. Everyone from Hillary on down has made sure I know about the vital role her online supporters have played in this race.

I made a personal commitment to Hillary that her campaign would be as good and as strong and as smart as she is. And I want to ask you a favor to help me keep that commitment. In the days and weeks (and hopefully months) ahead, I want to know what you think -- about the state of the race, our campaign strategy, or your ideas for doing things differently. You've made an investment in this campaign, and I want your input as we plan the days, weeks, and months to come.

I can't promise that I can reply personally to every single message -- but I can promise to read them all.

Click here to send me your comments, thoughts, and ideas about our campaign.

I'm really looking forward to reading what you have to say, and to working with you to help Hillary win!

Thanks,
Geoff Garin

Bud said...

i don't get the Bman

no one is arguing ( except him ) that we aren't in a recession........john mccain said yday the US is in a recession

the best hope we have is that it may be mild....or as the Bman says....'touch and go'

i stopped talkin about the recession since we all know it's here

Bunkerman said...

that's a question, Bud. Not a statement.

Bunkerman said...

oh, I'm just having a bit of fun - to me the question is "open" until proven.

btw, touch & go is not a recession.

Most of the tires have to blow on the "touch" for a recession.

mern said...

empire index showed no growth vs a slight implosion, ie weak economic growth.

headline PPI insane. articles littering the internet about how people r not seeing income rise fast enuff to keep paces with the increases in their bills.

Stagflation is a macroeconomics term used to describe a period of inflation combined with stagnation (that is, slow economic growth and rising unemployment, possibly including recession).[1]

about 90% of the country fits this picture.

just dont tell the bls or the fed.

Bud said...

so what is the answer to the trivia question

Frosty said...

Bunkerman...covered my short fin exposure and went long, just to help you out...XLF over 24.50 keeps me in the game with a short of the SKF (double juice dark).

Bunkerman said...

the asnswer is "Sigh, Bunkerman is right again."

;-))

Bunkerman said...

sheep herding today .. leaving in an hour.

Frosty said...

man, try to help a guy out and he decides he would rather play with farm animals.

XLF put call 4.74, tinder is there, just need a spark...dr. dolittle indeed sir.

Bunkerman said...

Big John sounds good.

mern said...

meanwhile in the real world

Obama's ad features Pennsylvania Sen. Bob Casey walking in Scranton, his hometown, and saying that Obama does understand working people.

"In towns like yours and mine, families are struggling with bills they can't afford and jobs moving away," Casey says.

i dont think these people pay the bills based on "core" inflation.

Bunkerman said...

bought another 1/3 of those GE Sept. calls.

Frosty said...

obama must want to be vp to the hildog...what a sad showing...when does life begin...who said it is possible that life begins at conception and who said I don't know?...this guy is serving them up like Bud...touch them all hildog.

mern said...

the catholic church says life begins at conception.

ummmmmmm their track recrod, well, worse than bushs. WAY WORSE!

question: how many brown iraqis children r equal to one ameri white fetus?

bush has the ratio at 10,000 to 1.

another glorious achievement

Bud said...

uh frosty.......shouldn't you be lookin for some 'ops expo' trades??

Frosty said...

ops expo...I would rather talk politics...paying attention to market action is for those paid chat rooms.

mern said...

im loaded up on the pedro may puts!

i nibbled on the june puts, betting he doesnt see action until after the all star game.

die mets die!

Frosty said...

uh Mern...you didn't even see that pitch...your whipping that bat around like bunky with a k-bar playing common man...take seat kid.

mern said...

thought that was a lob for bud.

i sux!

ive got puts on the houston rockets, too.

they dont belong in the playoffs. tmac is gonna choke, again.

Bud said...

mern .....how about some more catholic church posts?

Bud said...

take off the double cup frosty......i'm in a good mood today.........i'm very proud of my girl hillary

couple beers and a shot of whiskey

i love her !!!!!!!


die obama die !!!!!!

mern said...

a priest and racheal welch were in a life boat and yada yada yada "those arent a teenagers balls"

u anti dentite!

Bud said...

i wonder why mern is so angry at the catholic church

did some priest.....uh.....'touch' him

mern said...

Are you concerned that inflation will present serious economic trouble in the months ahead? * 37 responses

Yes, the price of everything is going up, up, up.
70%

No, get the mortgage mess under control then worry about inflation.
30%


only 37 respondents. this is on cnbc.com, so probably not many blue collar votes. 70% think inflation is out of control.

that is self fulling, i wud think

mern said...

yes bud.

i tried to become an alter boy and was rejected when i was about 12. it really pissed me off!

then in 2001 or 2002 the priest who panned me was brought down.

so when i was 12 i took a big hit in the self esteem department only to find out about 20 yrs later i didnt become an alter boy becuase he didnt think he cud rape me.

that was a tad disturbing, dont u think?

mern said...

but by the time i was 15 i decided after life, god, and basically organized religion was a joke. i remember the night very well. was in avalon nj, looking at the stars, thinking about my dad.

i just decided it was all BS, and been on that tangent ever since.

used to be aethiest, but ive been agnostic since college.

who the hell knows what happens when u check out?

maybe something, maybe nothing. smart money is on nothing, but again cant be proved either way, so y pretend?

Frosty said...

politics suck...let's get down with some god talk...Bunkerman hurry back, I want to discuss the uptick rule.

Bud said...

what is this obsession with sheep-herdin anyway

does the Bman wanna roam around the desert like Moses

or does he just like playin with goats.......i know frosty does

Bud said...

Dear Sal,


No candidate can guarantee victory. But throughout this campaign, I have made one promise to you, and I intend to keep it.

As long as I have your support, as long as you are fighting by my side, I will work as hard as I can to win.

Here is the challenge we face. With the Obama campaign outspending us 3-to-1, the polls are tightening in Pennsylvania, and we have exactly one week left to get our message out.

Before the Super Tuesday primaries on February 5, I told you that if you reached out to support my campaign, you would see the results -- and you did. I told you we could win Texas and Ohio on March 4 with your help -- and you put us over the top.

I need your help right now to win in Pennsylvania, and this race is close enough that the decision you make could be the difference between winning and losing.

Contribute now to help us close the spending gap and win in Pennsylvania.

I've talked, listened, and learned my way across the Keystone state these past few weeks, and I've met people who are optimistic, hard-working, and ready for a president who stands up and fights for them every single day.

I've felt such a deep connection to the people I've met in Pennsylvania, and I'm proud of the campaign we're running here. But we are still being outspent 3-to-1, and I need your help to close that gap if we want to win.

In the next seven days, thousands of people will be making their final decision in the Democratic primary, and we must make sure they hear our message. We can't let our voices be drowned out by the Obama campaign's limitless spending.

Contribute today to help me make sure our message is heard across Pennsylvania in the next seven days.

Thank you so much for doing everything you can do to keep our campaign driving forward.

Sincerely,


Hillary Rodham Clinton

Bud said...

sent Hillary 200bux more

i'm gettin close to maxing out....$2300


can i ask you guys to contribute? i'll reimburse you guys in cash.....uh wait.....i think that's a felony.....oops......never mind

Frosty said...

Bud...your boys at GS saying another 15% decline due to lower forecasts for US stocks duing this earnings season...the super beefer...why did they fire abby joe.

Frosty said...

the research note: "Fasten you seat belts".

Bud said...

"seats and tray tables in the upright position"

if oil keeps goin up.......this market is in big trouble

mern said...

dont worry t boone has been short since 100. he is never wrong.

shud hit his yr end price target of 120 by mid may.

the fed needs to cut rates to 1%

mern said...

* 101 responses

Yes, the price of everything is going up, up, up.
81%

No, get the mortgage mess under control then worry about inflation.
19%


the 80/20 rule at work again.

80% live in the real world. 20% the sky is yellow and the sun is blue.

fed been saying for well over a yr inflation shud roll over in the coming quarters.

what a joke!

Frosty said...

fresh pacific king salmon $36 lb., gone as fast as caught...there will be salmon wars soon much like the rest of the world fighting over a bowl of rice...the end is near mern.

mern said...

the fishermen need to chill out your way for about 5 yrs and let the fish remultiply.

luckily salmon is not in the cpi, but then again, the bls strips out anything that is showing the truth.

Frosty said...

Bunkerman...where are you...you best get that arm warm...I keep setting them down, but they are catching up to the heater.

Not...take your time, enjoy the live stock, I know I would.

Bud said...

i bet you would enjoy it

frosty loves farm animals

mern said...

lol

mern said...

* 172 responses

Yes, the price of everything is going up, up, up.
82%

No, get the mortgage mess under control then worry about inflation.

18%

the people have spoken

Bunkerman said...

back.

INTC good earnings. Guides up.

uh ... now the question comes to mind.

Frosty said...

every other sheep day up 400 dow...INTC, will cut you some slack, don't wate it :)

Frosty said...

Bunkerman...WM not taking on water ah...now it comes down to your hero at MER...what say you sir...we need this one, we have the tinder, just need the spark.