Investors are looking for further easing around the world, but that is difficult to see as Europe is currently tightening spending through austerity measures, the U.S. is holding pat with what has already been done and the rest of the world is slowly chugging along. China appears to be the only country loosing policy at this time, but that could change if all the talking heads discussing a double dip here in the US turn out to be right. That is certainly something that commodity investors need to pay attention to moving forward.
Oil & Natural Gas
Chesapeake (CHK) cannot seem to put the recent bad news behind it regarding the CEO's participation in the Founders' Well Participation Program. It now appears that the company did not disclose everything in regards to business dealings between board members and that there may have been some conflicts of interest for those serving on the board. This will all be highlighted on the conference call in the Q&A session, but we highly doubt that the company will address those questions. The fact that the company will have to pay Mr. McClendon to end this program early will further enrage shareholders and activists alike and will lead to further analysis on the company's dealings. It must be pointed out however that SandRidge Energy (SD) did pay their CEO (a former Chesapeake exec) to end their program a few years back. The news is not going to be getting better in the next few days, simply louder.
CONSOL Energy (CNX) is a stock which we are looking at playing in some way, we are doing our due diligence on it and trying to figure out the best way to approach it however. Being diversified is not always a great thing as it can cloudy up the water and not allow investors to play you one way or the other. A diversified coal player and a diversified natural gas player all in one, and with that information readers can probably figure out which way we are trending with this one.
Energy Transfer Partners (ETP) announced a $5 billion acquisition of Sunoco (SUN). This will make Energy Transfer one of the largest MLPs in the country and will greatly expand its product offering and services. According to the company this should be accretive to distributable cash flow. You can read the entire press release announcing the deal here.
Cameco (CCJ) may very well be a stock to look to accumulate over the summer doldrums in anticipation of a run-up to 2013. The uranium stocks should rally as the commodity is repriced based on real market supply and demand and not based off of the Russian HEU Program. The Russians themselves have been telling us for years that prices are going higher as they have heavily invested in uranium producers and explorers at current "depressed" prices. This one can easily double when the uranium spot price begins to march upwards.
After bouncing off of the $30/ounce level, silver prices have rebounded to around $31.15/ounce and looks like it is going to hang in there for a move higher. We have to test and move through $35 before we can get to $40/ounce, and we feel many are forgetting this. That move will not be easy as the bears are armed and every bull move of any strength has been quickly and sufficiently beaten down.
Gold is up to $1665/ounce this morning, but we feel that even with the recent strength it is too soon to move into this area. Let gold move above the $1700/level and show real strength, thus confirming that the bulls are in charge and the bears are licking their wounds. Otherwise one risks losing the trade as the bears beat back the rally. Yes it sounds crazy, possibly like a child's nighttime story, but if this advice is not heeded then it could very well become a trader's nightmare.