Cara's Commentary & Community Chat, Fri., Jan. 9, 2009

[7:21am ET] In a Toronto Star article [


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Chickenpookie
Chickenpookie
January 12, 2009 2:03 pm

There may be a longer-term ceasefire declared today….

NYUGrad
NYUGrad
January 12, 2009 1:04 pm

but drys is rocking up 5% premarket.

Lori Smyth
Lori Smyth
January 12, 2009 12:12 pm

Check out the video posted on CBS aired last night regarding how speculation drove oil prices through the roof last summer. More to do will Wall Street bankers than commodity fundamentals.

yaba
yaba
Reply to  Lori Smyth
January 12, 2009 1:16 pm

I saw the 60 minutes segment on oil speculation. It seemed a bit lopsided to me. It really made the oil companies look like the victims of the big banks; oil companies are involved in trading oil contracts for purely speculative purposes as well. Fundamentals are based not only on the supply and demand but also on the cost of production. If cost of producing oil in Venezuela is $97 per barrel and $62 for Saudi Arabia, $147 per barrel does not seem that out of whack, once political risk and possible disruption is factored in. Remember the threats of… Read more »

Chickenpookie
Chickenpookie
Reply to  yaba
January 12, 2009 1:55 pm

yaba – I’m curious, where are those ($97/$62) production cost figures posted? I read somewhere Saudi production cost is much lower (~$2/bbl).

yaba
yaba
Reply to  Chickenpookie
January 12, 2009 4:06 pm

Hi CP, I got the cost per barrel from this post. I had to go back and look through all the posts to find it as a gesture of respect for you and a kick in the behind for me for not saving it in the first place. Cheers Submitted by Chickenpookie on Mon, 01/12/2009 – 08:55. #6225 yaba – I’m curious, where are those ($97/$62) production cost figures posted? I read somewhere Saudi production cost is much lower (~$2/bbl). oil and countries newSubmitted by EDC on Mon, 12/15/2008 – 15:53. #3041 From Gartman/Mauldin Cost-year-’00-’07-’08-’09 Venezuela-$34-$91-$94-$97 Nigeria—$32-$63-$68-$71 Iran——$18-$49-$55-$58 Saudi-Arb-$23-$49-$55-$62 Kuwait—-$11-$45-$45-$51… Read more »

rocinante
rocinante
Reply to  yaba
January 12, 2009 4:23 pm

Those numbers look more like what each country needs to be selling oil at for a balanced budget. See http://www.eia.doe.gov/neic/infosheets/crudeproduc… for some costs for production.

Ron Sen
Ron Sen
January 12, 2009 11:31 am

http://tinyurl.com/6trvjo

Open for business.

Chickenpookie
Chickenpookie
January 12, 2009 4:40 am

Is the bullion premium falling? This might be indicative of lower POG?

http://tinyurl.com/7c6u5c

edit: Oh, I see someone exercised an option to purchase…

szoya
szoya
Reply to  Chickenpookie
January 12, 2009 5:29 am

Central GoldTrust Increases Equity Offering to U.S.$38,008,005 as Underwriter Exercises its Right to Purchase Additional Units
http://tinyurl.com/75gfys

Chickenpookie
Chickenpookie
January 12, 2009 3:22 am

Current earnings estimates are 42.24 and trending downward, if we were lucky enough to have a P/E of say 12, wouldn’t that put the S&P somewhere around 500, over 70% less than where we are?

teamonfuego
teamonfuego
Reply to  Chickenpookie
January 12, 2009 4:23 am

chicken – not over 70% less, but yes we’re still overvalued in the context of earnings estimates. that is why i’m still short term bearish. i think we will definitely test those lows from earlier at some point because of valuations. people saying that valuations are cheap are either lying or dumb or both. the only exception to this is that at some point when we hit the bottom in earnings, the growth in earnings will be quite strong. after the bottoms in 01, ’90, the 80’s, etc…earnings for the S&P 500 grew quite rapidly. i believe they were over… Read more »

loannetter
loannetter
Reply to  teamonfuego
January 13, 2009 4:05 am

Teamon…re: “1.) housing prices are still too high; they are roughly 3.65 times average national household income.” Would you admit that is is perhaps the income of average Americans that is not keeping up with inflation and housing? It is unlikely that folks who own property will happily devalue their investment any more than an automaker wants to pay their people according to what actual cost of living suggests is fair and equitable. I foresee a meeting in the middle. Americans made more per capita in light of costs in the 60’s than we do now. (remember getting out of… Read more »

Chickenpookie
Chickenpookie
Reply to  teamonfuego
January 12, 2009 4:50 am

teamonfuego – I suppose the earnings estimates issue can be a bit subjective, and that would skew the resulting numbers slightly, but I think the concept is the underlying important factor: (In this case a downside indicator)

http://www.financialsense.com/Market/daily/thursda

blue bluff
blue bluff
Reply to  Chickenpookie
January 12, 2009 4:16 am

This is of great concern to me that the E in P/E is overinflated and therefore stocks are not as cheap as commonly believed. I have switched to a capital preservation posture by initiating hedges and making only very conservative option selling trades. When the bear is finished ravaging it’s prey most people have thrown in the towel and sworn off stocks forever. Real P/E’s end up very low and dividends very high but only seasoned investors want anything to do with them. That hasn’t happened yet in spite of the prevailing historic economic calamity. There is still a lot… Read more »

Chickenpookie
Chickenpookie
January 12, 2009 2:57 am
Dr. Strangelove
Dr. Strangelove
Reply to  Chickenpookie
January 12, 2009 3:31 am

Chickenpookie –

Diesel is approx 20% more fuel efficient. Not referring to price differential. That old diesel you had in Belgium could run on used motor oil or restaurant grease and a little pump gas all day long. Modern diesels can’t even do that!

Chickenpookie
Chickenpookie
Reply to  Dr. Strangelove
January 12, 2009 3:54 am

Dr. Strangelove – Yes, I knew what you were saying about 20% more fuel efficiency. But with a price that’s more than 20% higher than gasoline, and the extra cost of a diesel vehicle over a gasoline version, I couldn’t justify purchase of a diesel vehicle. This didn’t include the additional expense for oil changes.

I really liked the Countour and looked for such a car once returning home but to no avail… Started looking at the diesel P/U and couldn’t get the numbers to work.

jack black
jack black
January 12, 2009 12:47 am

Finally I found time to to update the Wikipedia entry with the $200 Mil tax benefit info and king Henry moniker. It any of you see that deleted, please put it back.

http://en.wikipedia.org/wiki/Henry_Paulson#Conflic

NYUGrad
NYUGrad
January 11, 2009 10:51 pm

Looks like Detroit 3 have been sitting on long range tech for a while and are only now coming out guns blazing as their backs are against the wall.
http://tinyurl.com/7xpzk2

Check out the Chrysler 200C, which looks like its ready for production, rather than a concept.

My fav for eco friendly is VW BlueSport, 2 liter clean diesel turbo, mid engine, light weight, 50mpg hwy.
http://tinyurl.com/8l7xlf

If i were pres, no new cars shipped produced in America, under 40mpg, in any class, outside of commercial grade, starting 2012. then no petrol cars shipped or produced in America by 2020.

Dr. Strangelove
Dr. Strangelove
Reply to  NYUGrad
January 12, 2009 2:10 am

NYUGrad – Under 2L turbo diesel is the way to go. No more knocks with electronic injection. 16:1 or higher compression for much cleaner burn, low emissions. Diesel is something like 20% more efficient than pump gas. Turbos give power when needed while allowing for the small chamber volume. All we need is high oil prices to make it a reality in America! Automakers, including the Big Three, figured the little diesel out years ago and can sell them for profit in Europe. Rented a four-door Peugot in the U.K. last year with this config and it blew my mind.… Read more »

bsi87
bsi87
January 11, 2009 10:09 pm
daydreamer
daydreamer
January 11, 2009 8:32 pm

Selling Feb xle put in the 38 to 40 range, good opportunity to sell some naked puts at these price levels? Bill has commented that if oil drops much lower, Feds might intervene or a much lower level indicates a much deeper recesion.
Any other ideas for selling some naked puts on Cara 100 stocks early this week for January or next February. Whole Foods big move, is it a buy here?
Any buyers of TBT.

blue bluff
blue bluff
Reply to  daydreamer
January 12, 2009 3:01 am

that was the exact trade I did Friday at the close…I sold the XLE Feb 40 puts

http://optionpremiumcollector.blogspot.com/2009/01

NYUGrad
NYUGrad
January 11, 2009 7:44 pm

Please feel free to poke holes in my analysis as i am still learning. As i commented the other day, i think SLW is in a trading range of $5.50-6.50 usd. Daily charts show stoch and rsi under pressure but the price is holding its ground on modest volume. Weekly charts show stoch still rising, and rsi a bit confused. Money flow has been net positive. I was curious and plotted the relation of SLW to SKF and they seem to be inversely related the past 3 months. albeit disproportionately, but when skf was peaking slw was pounded, vice versa.… Read more »

mikede
mikede
January 11, 2009 7:02 pm
Chickenpookie
Chickenpookie
January 11, 2009 6:08 pm

Bill said – “I love the opportunity to teach others to be winners.”

I’m learning quickly, that’s for sure. By mere observation of my portfolio status I can say my odds have greatly improved for the better. Imparting the wisdom of your experience has tremendously leveraged my ability to think for myself.

For this and my perception of your patient friendship, I remain forever grateful!!!

Fox1
Fox1
January 11, 2009 5:04 pm

Interesting read before the game or at halftime:

vinod
vinod
January 11, 2009 4:37 pm

2nd 1/6/09 sold FAS and TNA which I brought last week and made good on it 1/7/09 brought FAS and TNA and SLWCA at 1.50 and 1.30 and sold this FSA and TNA on Friday and lost 3K which was made previously. In the end all I have to show for in 2009 is plus $250 And still holding 50 SLWCA which I will sell at 1.90 Plan for coming week is to buy put on city CNP and BYONJ. I think after earning C will be under 5 and BAC under 10. My speculation? Will buy some UCO and… Read more »

teamonfuego
teamonfuego
January 11, 2009 4:19 pm

so obama now says 4 million jobs will be create as opposed to their previous estimates of 2.4. how does this go up so significantly without additional stimulus? my initial feeling is they are upping the estimates because the jobs losses over the past few months have been so great. do they really think the public is that stupid? maybe they do. everyone knows that with the original amount, only about 4 or 5 months worth of losses would be negated. my feelings? we will probably see another 3.5 million in job losses and unemployment will probably have gotten to… Read more »

wabrew
wabrew
January 11, 2009 2:31 pm
FranSix
FranSix
Reply to  wabrew
January 11, 2009 3:22 pm

That kind of a move is generally referred to as a “market corner.” Without an operating futures market, it could have gone many multiples higher. The generally accepted wisdom on oil price extremes is that price controls are needed in place to prevent such run-ups, but the run-ups could have been much more exaggerated without call/put options and long term futures. The thing that occurred this time is that there is a massive influx of credit expansion through the use of derivatives which was used to bet on oil prices. This collapsed, which in turn brought down the whole house… Read more »

nemo
nemo
January 11, 2009 2:11 pm

http://www.cutethingsfallingasleep.org/

Well, I guess the kids are cute too.

mikede
mikede
January 11, 2009 1:25 pm

Vad
Nice write up on your blog today..everyone should have a read

tgifbipo
tgifbipo
Reply to  mikede
January 11, 2009 5:50 pm

Could you please post the link to Vads blog, thank you.

tango6
tango6
January 11, 2009 1:11 pm

NYU I have forwarded that link to my grownup kids – all of whom have been hurt by too-easy credit and are struggling to get out of debt. Thanks!

NYUGrad
NYUGrad
January 11, 2009 6:49 am

Thank god i learned this lesson in my 20s.

NYT Series is great!
http://tinyurl.com/5mdy4t

boughtmypoints
boughtmypoints
January 11, 2009 6:35 am

I have had a Citibank Smith Barney credit card for years. No fee, always low interest rates compared to a standard cc, decent balance transfer offers. Suddenly my purchases apr jumps from 8.9% to 31.5%, as noticed on my last statement! Most of my balance is balance transfer at 6.9% until paid off. So I complained and they offered me the new low rate of prime +, giving me 15.9% apr. It seems to me they have the perfect business model now : bleed their best customers and sell the dross to the US treasury. Anyway, they have given me… Read more »

FranSix
FranSix
January 11, 2009 6:03 am

In the U.S. they have the best health care in the world. But fewer people are able to afford it, so the eventuality is that nationalization will become a necessity, much like the banks. I wonder if anyone in Canada considers that perhaps nationalization was the outcome of necessity in the very same way. A a resource dependent economy, a great number of people are subject to seasonal and cyclical outcomes. But then again, I’m no expert on this matter. Still, if they throw x amount of dollars at Wall St. to keep them sailing their yachts, then political resistance… Read more »

tgifbipo
tgifbipo
January 11, 2009 5:33 am