SubscribeThe Fat Lady ain’t singing!
July 21, 2008
It ain’t over it seems. Apple (AAPL) aside, the big news after hours was American Express (AXP). The earnings are awful, the business is in the dumps and now AMEX wants to withdraw any 2008 forecast. Bloomberg reported:
Profit in the company’s U.S. card business dropped 96 percent to $21 million from $580 million a year earlier as provisions for losses more than doubled to $1.5 billion from $640 million. uncollectible debt in the unit rose to 5.3 percent of loans from 2.9 percent a year earlier.
After hours, my old friend Capital One (COF) was knocked for a loop on the news as well. The credit card industry has proven itself to be no better that two-bit loan sharks. They rape customers with exorbitant fees, ruin your life if you cannot pay and now lie to protect themselves. I am totally disgusted with the way they have handled themselves.
Still Diggin’ DUG
July 13, 2008
For the past several weeks, we have been adding to our position of UltraShort Oil & Gas ProShares (DUG) as we believe that the underling fundamentals for the Oil Sector are faltering. The fact that the price for oil is rising and DUG is rising continues to show that the thesis is solid. Here are some interesting points from economy.com:
* Rising energy prices have cut almost half a percentage point from real U.S. GDP growth in each of the past five years.
* The recent surge in oil prices is being powered by increased financial demand and not tighter underlying demand and supply fundamentals.
* Oil prices are expected to soon peak and to decline measurably by this time next year.
* Lower prices will allow the Federal Reserve to hold policy unchanged for the remainder of this year, and will help the economy find its footing by this time next year.
The fact remains that our general oil dependency will continue to prove difficult on our economy. More so, the fact that we cannot keep our financial house in order will continue to show the world that ours in not an economy worthy of investment. Once more it is easy to see why our dollar is so weak.
Now, add that to the crude reality that oil and the dollar are tied together and it becomes obvious that unless we can figure out a way to cause the dollar to strengthen, there will be higher oil prices to come. No matter, it is becoming clear that oil companies are still tied to the global economy and we are finally seeing the dislocation of oil prices to oil company share prices. Therefore: No longer will they be positively correlated.
The Week Ahead: A Few Nuggets
July 12, 2008
This week will be full of exciting earnings announcements that may actually show some promise. As investor anxiety grows, sometimes a stock will mistakenly get caught up in the hysteria/euphoria and shares will behave erratically. In these conditions, if a company can prove that it isn’t in imminent danger by showing a string of solid earnings in the face of financial adversity, investors will bid shares up with a vengeance.
There may actually be a few nuggets that will show up this week. Yes, even in a market that seems to whipsaw investors around daily, there may be a few good stocks out there. Even in the worst forest fire there is usually some form of life left that will help to bring life out of the ashes. With that in mind, here are few ideas to ponder:
Stocks: (SCHW) (C) (IBKR) (FNM) (FRE) (OXPS) (INTC) (EBAY) (COF) (GOOG) (MAT)
Greenberger on the Hill - Enron Loophole Video
June 29, 2008
As a follow up to to the recent articles you may have read here, you may want to consider watching this. The recent testimony of Prof. Michael Greenberger on The Enron Loophole…Scary Stuff.. (turn your sound down a bit.. it is a touch loud!)
(Note: Prof Greenberger joined us on TDI Podcast #63 to answer some of difficult questions…)
On Oil and Manipulation
June 27, 2008
I have been following the Enron Loophole discussions and had a conversation with Sen. Feinstein’s office last week. I was looking for answers to the very confusing timeline of a bill that initially looked as if it was not passing, but was later attached to the Farming Bill that was passed after veto attempts. See more details here.
I believe my confusion lies with the fact that the “ENRON LOOPHOLE ” is part of CFTC Reauthorization Act of 2008, which is a title attached to the Farm Bill that was recently passed. There seems to be a good deal of confusion here as the Farm Bill was initially Vetoed and then overridden. THEN it was found that 35 pages were “missing” from the original bill that was already passed. Both the House and the Senate eventually passed it with with enough votes to override veto. It is now law.
To be honest, I am not sure I have seen such a level of obfuscation with any bill before, but that is just me I suppose.
Much of my focus of late has been the concerning fact surrounding manipulation and limited oversight of commodity future’s market…O I L !
In my research, it appears that The Enron Loophole was opened in what seems to be a less than honorable manner by Phil Graham when it pushed in as a last minute attachment to a bill as the Senate was trying to finish up for Christmas break. This is what has been blamed for helping to push oil prices up beyond the simple price/demand levels. In addition, since the loophole was opened, the Intercontinental Commodity Exchange (ICE) has been trading oil futures without U.S regulatory oversight. This is precisely what the CFTC Reauthorization Act was designed to fix.
Just as I thought the bill’s passage has been able to close the door on excessive leverage and other manipulations of the oil futures market, I find out that it somehow does nothing of the sort. The loophole is closed, but only for the natural gas markets! HUH? How did that happen?
Well, there is now good news for those that believe that oil prices have moved well beyond any normal pattern. The House of Representatives has approved a bill on Thursday, June 26 that would provide for the Commodity Futures Trading Commission (CTFC) to enact emergency measures to “maintain or restore orderly trading.”
There has only been four times before that the CTFC has been able to utilize these broad powers and in their own words:
“The Commission has exercised its emergency powers in response to extreme events, such as manipulation or a specific disturbance that caused a sudden shock to the markets. The CFTC has never exercised emergency powers based on price trends that have developed over months or years.
Go get ‘em!
Note: Make sure to listen to The Disciplined Episode Podcast # 63 as we have Professor Michael Greenberger, former CTFC Director of the Division of Trading and Market to discuss his fight against the Enron Loophole and the speculative manipulation within the oil future markets.
(Click here to subscribe via iTunes to get the
Greenberger interview as soon as TDI Podcast #63 is released)
-
-
GoToMeeting
Links
