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  • Wisconsin Energy - Let's Look At It After The Acquisition Of Integrys [View article]
    Those who mentioned a $47 price number may well get their wish... and more.

    WEC blew through its 50 DMA, and now has blown through its 200 DMA. Not a good sign.
    Nov 9, 2015. 04:23 PM | Likes Like |Link to Comment
  • The Third Rail Of Monetary Policy: Negative Interest Rates - Can The Fed Go There? [View article]
    Thanks to MCM and all the commentators for raising and discussing this subject. Very thoughtful and provocative all around.

    "For the times they are a-changin'..."
    ~Bob Dylan
    Oct 13, 2015. 12:08 PM | Likes Like |Link to Comment
  • John Hussman: 2.3 Sigmas Above The Norm [View article]
    Mr. Hussman, we get it. The market is overvalued. It has been overvalued for a long time. Investors, however, have no place to hide when it comes to financial assets.

    The trick is knowing when to get out. The gist of all of your articles is "now." But the stock market continues to rise even in the face of significant overvaluation. The "broken clock" analogy comes to mind for many who follow your writings.

    Precisely what are the "market internals, credit spreads, and other risk-sensitive measures" that will give investors a clue that it is really, really, really time to abandon ship?

    Can you please be specific? Exactly what "market internals" should investors look at, and what levels scream "get out now"? Exactly what "credit spreads" should be looked at, and what objective measure should ring the alarm bell? What other "risk-sensitive" measures should be looked at in objective, quantitative terms?

    With all due respect, simply saying these things in sweeping terms without specificity doesn't help much. Specific indicators that can be ascertained or calculated by ordinary investors would be far more helpful. Again, we get it. The market is overvalued by traditional measures of P/E, P/sales, etc. But the market can stay this way for long periods of time. What additional factor(s) should be the signal to bail out?
    May 4, 2015. 01:23 PM | 3 Likes Like |Link to Comment
  • 3.5% Dividend Wisconsin Energy's Buy Of Integrys Energy Should Propel It Forward [View article]
    Admittedly, TEG has not been growing its dividend for the last few years.

    Nonetheless, it pays a dividend of $2.72 per share.

    On a dollar for dollar basis, this deal may leave TEG shareholders short some dividend income unless they buy more WEC shares. For example, assume you own 2150 TEG shares. You were receiving $5,848 in dividend income annually. You are going to swap your TEG shares for WEC shares. You will receive 2425 WEC shares in exchange for your TEG shares.

    The base WEC dividend you can count on receiving is $4098 (2425 WEC shares x $1.69). This is considerably less than the $5848 you were receiving from TEG. But let's say WEC boosts its dividend by 7%, as stated by the author. This will bring the dividend up to $1.81 per share. This will bring your annual dividend to $4389, still short of the $5848 you were receiving from TEG.

    So, let's say that you take the entire amount of the cash payment you get in the deal ($18.58 per TEG share x 2150 shares = $39,947) and use it all to buy WEC shares at say $50 per share. This will buy you another 799 shares of WEC, bringing your total holdings to 3,224 shares.

    If you are lucky enough to get the dividend boost to $1.81 right away, your annual dividend income will be $5835.00, or roughly the same dividend income you were receiving from TEG.

    But a lot of moving parts have to fall into place to make this happen. And it appears that you will need to buy more WEC shares to "draw even" with your TEG dividend income.
    Mar 19, 2015. 02:53 PM | 2 Likes Like |Link to Comment
  • Greater Fool Pressure Dropping [View article]
    My compliments to Danielle Park for ringing the bell in the fire house. We are so used to a market that seems to go just one way (i.e., up) that we tend to ignore storm warnings associated with a lack of global demand. Her admonition, "Remember, no one gets it all their way forever," is well made and taken.

    My compliments also to Michael T. Snyder, who also wrote a good article reminding us that a fall in commodity prices often heralds a falling equity market. See his article, "Not Just Oil: Guess What Happened The Last Time Commodity Prices Crashed Like This?" (

    These admonitions certainly "bear" repeating... no pun intended.

    The decline in oil and natural gas prices carries with it some special dangers. Once again, investment banks have created derivatives that hinge on the loans made to thinly capitalized drillers and producers. The risk of over supply causing a continued drop in pricing creates a risk of loan defaults. This in turn could cause a melt down in derivative financial products tied to oil and gas. It is estimated that the amount of derivative exposure faced by big investment banks is almost 16 times the total U.S. National Debt. See The 2008 financial crisis will look like a day at the beach compared to this potential disaster.

    Keep a watchful eye on commodity prices. They could be telling us what lurks around the corner.
    Dec 25, 2014. 04:59 PM | 1 Like Like |Link to Comment
  • Has QE3 Really Come To An End? [View article]
    @Robert Duval

    I've been looking for the same thing/answer for months.

    If the QE money flowing from the Fed to the banks simply ends up as a credit to excess reserves, which the banks cannot loan out, how, mechanically, does this QE money find its way to the stock market so as to boost equity prices? I don't know.

    I get the theoretical part about Fed purchases driving down treasury yields, thus compelling yield hungry investors to invest in stocks in search of yield, thus driving up the price of stocks, but I can't find a direct link that shows or proves Fed money going directly into the stock market (which is prohibited, as I understand it).

    The amount of excess reserves is starting to come down ( Is this money, that was being held as reserves, being released back to the banks? And can the banks put it to work?
    Dec 20, 2014. 06:07 PM | 1 Like Like |Link to Comment
  • Oil, Contagion And Equities: U.S. Equities Are The Next Shoe To Drop [View article]

    It is sad indeed that many people have been duped by the "global warming" hoax. It is distressing that this indoctrination is being spread continuously on our college campuses and in our public school systems by teachers and academics that have been snowed by the "feel good" green movement.

    The belief that we in America can affect the earth's climate if we will only reduce our so-called "carbon footprint" and reduce our use of fossil fuels is sheer lunacy.

    If one wants to assume that human activity relative to carbon can make a truly beneficial difference in our climate, it is unlikely that developing economies throughout the world will reduce their carbon footprint. Meanwhile, the political elite is determined to cripple our society and our economy with wild eyed rules and regulations. This is foolhardy, in my opinion.
    Dec 15, 2014. 10:19 AM | 22 Likes Like |Link to Comment
  • A Growing Black Cloud Over The Market [View article]
    Think in terms of "putting the squeeze" on Russia. Is it possible that the USA and OPEC are in cahoots to punish Russia?

    Yes, U.S. producers stand to suffer, but consumers get a "gasoline dividend" while Russia really takes it on the chin. And if the "important" U.S. producers get into real trouble, there is always a government bailout lurking around the corner. The name General Motors rings a bell for starters.
    Dec 13, 2014. 11:41 AM | 1 Like Like |Link to Comment
  • A Growing Black Cloud Over The Market [View article]
    This article reports that China is stockpiling crude oil in record quantities:

    "The number of supertankers sailing to China jumped to a record in ship-tracking data amid signs that the oil-price crash is spurring the Asian nation to stockpile. There were 83 very large crude carriers bound for Chinese ports, according to shipping signals from IHS Maritime compiled by Bloomberg at about 8:30 a.m. today in London. The ships would transport 166 million barrels, assuming standard cargoes, the largest number in data starting in October 2011. The cost of hiring the vessels surged to the highest in almost five years, according to Baltic Exchange data. ...China has to buy at least another 50 million barrels of crude in 2015 for its strategic petroleum reserve, according to Amrita Sen, chief oil market analyst at Energy Aspects Ltd., a London-based consultant. Plans to expand commercial crude inventories could raise that total above 100 million barrels, depending how quickly the country can build new storage units, she said.

    “China filling up big parts of its SPR essentially helps to absorb the oversupply” on international oil markets, Sen said by telephone today. “You’re not going to get China slowing down on filling before 2016.”

    Here is the link:

    It looks like China may get a bargain price on the next 100 million barrels!
    Dec 12, 2014. 04:39 PM | 3 Likes Like |Link to Comment
  • A Growing Black Cloud Over The Market [View article]
    Nice article, Eric.

    I disagree that UPL should be grouped with companies that may be in danger of a credit default as the price of oil drops.

    UPL is primarily a natural gas producer, and the price of natural gas is thus critical to its revenues and profit. While the price of natural gas has been falling, and stands at $3.77 at this moment, one should not overlook that UPL is the low cost producer in the group of companies in the natural gas business.

    During a recent conference call, UPL’s president alluded to an “all in” cost for natural gas of around $2.00. Reference to UPL’s most recent 10Q shows that the “all in” cost for both oil and natural gas in the quarter ending 9-30-2014 was $1.49/Mcfe excluding depletion, depreciation and amortization. Adding this non-cash item to this number brings the “all in” cost to $2.71 for both oil and gas. This number will probably fall a bit, as UPL elects the shut in its small crude oil production due to falling crude prices. But the point is that natural gas prices can fall a long way, and UPL will still make money gathering and selling natural gas.

    Will UPL be able to meet its debt obligations over the next 4 years? A review of the company’s most recent 10-Q contains extensive information about UPL’s debt situation. The following points are notable: (1) The first indebtedness falling due occurs in March 2015 in the amount of $100 million; (2) Then comes $62 million in “high yield” notes due in March 2016; (3) Then comes $116 million due in 2017, followed by a total of $650 million in 2018. In October 2016, the company’s credit facility with $516 million outstanding will be due. As of September, $434 million in borrowing capacity remained available under this credit facility. The credit facility can be expected to be renewed, I would think.

    Where will natural gas prices be 4 years from now? I don’t know. Will prices have recovered? I don’t know. But logic tells me that the answer is “yes.” Natural gas is not going away. And while revenues can be expected to be lower for the foreseeable future due to falling prices, UPL will still make money due to their low cost producer status. Thus, I believe that this puts them outside of the group of those producers who “might” default on their indebtedness.

    Thanks again for a nice article, as always.

    Dec 12, 2014. 12:19 PM | 4 Likes Like |Link to Comment
  • Kinder Morgan: Don't Throw Out The Baby With The Bathwater [View article]
    Investors in KMI might do well to review KMI's discussion of "Risk Factors" in their 10-K.
    Nov 30, 2014. 05:21 PM | 1 Like Like |Link to Comment
  • 3 Critical ETF Trends That Require Monitoring [View article]
    Excellent article.
    Nov 22, 2014. 01:15 PM | Likes Like |Link to Comment
  • John Hussman: These Go To Eleven [View article]
    "Warning lights are flashing down at Quality Control
    Somebody threw a spanner and they threw him in the hole..."

    ~Industrial Disease
    Dire Straits
    Nov 17, 2014. 05:12 PM | Likes Like |Link to Comment
  • Watch Excess Reserves Post QE3 To Gauge Stock Market Risk [View article]
    Excellent article.

    Thanks for the analysis. The quest for yield has been the prime mover of the equity market IMHO. Once rates go up, the house of cards will tumble. I agree with the author's statement that most of us will not be nimble enough to get out of the way before damage is done to one's portfolio.
    Nov 7, 2014. 11:43 AM | Likes Like |Link to Comment
  • Stocks: The Most Important Week In 6 Years [View article]
    It's not a question of "whether" there will be a downturn, it is a question of "when."

    Bounces and Santa Claus rallies may be good opportunities to exit stage right, but they will not forestall the inevitable downturn that is coming.

    Eric has done a marvelous job of acquainting us with what has been happening with some very reliable indicators of rough water ahead. There is a consistency of "decline" across multiple indicators, as Eric has so vividly illustrated for all to see (XLI, HYG, $RUT, $MID, $NYA200R, EFA, EZU and others). Ignoring these indicators of trouble ahead is like ignoring an iceberg in the path of the Titanic.
    Oct 12, 2014. 04:59 PM | 1 Like Like |Link to Comment