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Michael Fitzsimmons
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Michael Fitzsimmons focuses on investments in the oil & gas sector with an eye for dividend income and long-term capital appreciation. Fitzsimmons is an engineer, not a CFA. The information and data presented in his articles are obtained from company documents and/or sources believed to be... More
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  • August Foreign Oil Bill
    From Boone Pickens' email today:

    "In August alone we imported 355 million barrels of oil and sent $25.2 billion overseas – the most spent on foreign oil out of any month this year." 

    How President Obama, Energy Secretary Chu, and Congress (let alone Bernanke and Geitner) can be "agnostic" about natural gas transportation in face of this monthly bill is truly amazing. Their being asleep at the switch means a dire future due to America's continued addiction and dependence upon foreign oil. Amazing. Just amazing. Not to mention moronic, sad, unpatriotic, and unconscionable.
    Tags: Energy Oil
    Sep 10 3:33 PM | Link | 8 Comments
  • Moyers, Maher, and Gold
    Bill Moyers was featured on this week’s edition of Real Time with Bill Maher on HBO. It was a compelling 30 minute interview in which even the talkative Maher was captivated and mostly silent during Moyers’ spot-on analysis of current U.S. political realities. Here are a couple videos of the interview:
     
     
     
    Moyers explains how very narrow corporate interests have shifted financial support from the Bush republican administration to the current Obama democratic administration. Obama is so concerned with his reelection, the financial support of these powerful forces has muted his will to “change”. There is now effectively no difference between the two parties any longer. Obama has caved. The insurance, health care, coal, oil, and Wall Street interests are in charge of policy making regardless of which political party is in control. These narrow interests are focused on corporate profits and self enrichment (what a surprise) and are allowed under Supreme Court decisions to donate and influence candidates. The Court has repeatedly ruled that, like an individual’s right to free speech, corporate entities are also entitled to the same privilege. Therefore, the good of the many is overtaken by the power of the few. More money is flowing into the hands of a very few from the hands of the very many. So, let’s call this what it is: fascism. Regardless, anyone who hasn’t seen this show should view. The first half hour was an interview with Jay-Z, and the second half hour is with Bill Moyers. It was the best 30 minutes of TV I have seen in quite sometimes as it is rare for any media personality to speak to accurately and truthfully about what is happening to our country. Obama definitely needs to watch this video and heed Moyers’ advice.
     
     
    “Fascism opposes class conflict, blames capitalist liberal democracies for its creation and communists for exploiting the concept. In the economic sphere, many fascist leaders have claimed to support a "Third Way" in economic policy, which they believed superior to both the rampant individualism of unrestrained capitalism and the severe control of state communism. This was to be achieved by establishing significant government control over business and labor (Mussolini called his nation's system "the corporate state").” (Underline added by the author).
     
    Who can argue that this has not happened in the U.S.? With the government takeover of the insurance, banking, auto and national mortgage market starting under the Bush administration and continuing and expanding under the Obama administration, is there any doubt what has happened and that both political parties are involved? Meanwhile, where else but a fascist country would multi-millionaires and billionaires receive executive bonus payouts stolen from middle class taxpayers (and endorsed by a corrupt Congress...) as a reward for bankrupting their companies and requiring yet more middle class taxpayer bailout monies bailout to revive the companies and keep the executives employed at greatly inflated salaries?! It’s disgusting! Meanwhile, as trillions of dollars were sucked out of the system by fraud and the financial market meltdown, we’ve only had a few indictments like Madoff and Stanford. Obama’s appointment of Shapiro to head the SEC was a clear and obvious signal that, like the Bush administration, Wall Street was going to be treated with kid-gloves and given a free ride.
     
    Some comments to my articles ask me to refrain from mentioning politics as it has no place on an economic and investment site like Seeking Alpha. Yet, in the current state of U.S. government policy initiatives – what is a bigger influence on economics going forward? Even the chief of Pimco, the giant bond fund asks how one can ignore an entity like the U.S. government that is not only now a huge market participant, but at the same time makes the rules? His entire bond investment philosophy now seems to merely keep one step ahead of U.S. government policy and profit off those areas in which the government, the Federal Reserve, and Secretary of the Treasury will support. Currently, the government strategy appears to be deficit spending and printing as many dollars as necessary to reflate the economy i.e. keep the money flowing to the very few special interests.
     
    The only solution I can see is for the 50 states to band together and exercise their Constitutional right to call for a Constitutional convention. We should keep the basic rights, freedoms, and liberties insured by the Original Constitution and Bill of Rights, wipe the rest of the slate clean, and start over. At the centerpiece of U.S. government reform should be term limits, no corporate donations to politicians, and a balanced budget amendment. The checks and balances of the government as envisioned by the original framers of the Constitution should be restored. These measures would be a good step in the right direction.
     
    So what is an American investor to do given such political reality? Well Pimco seems to have a pretty realistic picture of what is happening, so perhaps the Pimco Total Return Fund (PTTAX) might be a good place to start. If one looks at the historical impact of Fascism, it seems as if the U.S. currency is very risky. This means a position in gold (breferably bullion in your hot little hands or the ease of buying "paper" GLD) and precious metals (silver and platinum for example) is mandatory for U.S. investors. Others believe taking advantage of the obvious power behind governmental policy is the right approach and recommend investing in the drug, coal, oil, health care, and defense industries as the way to go. However, ironically, it is exactly these industries that will suffer most with the destruction of the middle class and a resulting currency plunge. And that is why it is so hard to understand why these powerful men, with millions and sometimes billions of U.S. dollar denominated assets are seemingly working so hard to destroy the American financial system. After all, they have the most to lose. What is their exit strategy?
     
    Disclosure: the author holds some gold but wishes he could afford to own more.
    Aug 30 11:15 AM | Link | 1 Comment
  • It's a Cutthroat Market

         In my opinion, one of the most beautiful fish in existence is the Colorado Cutthroat Trout. In its spawning colors, one can easily see how the fish was named as it truly does appear to have had its throat cut and is bleeding all over itself. This trout was caught (and released) in the Flat Tops Wilderness area of Colorado. Some say it is the only trout native to the waters of that state. However, I believe the Rio Grande Cutthroat found in the waters in and around the San Juan Wilderness area are also native to Colorado.

    Flat Tops Wilderness Colorado Cutthroat

    The term "cutthroat" also reminds me of the US stock and bond markets. I continue to wonder how the US equity markets can be strong when the US has no coherent energy policy and the middle class is being systematically decimated - their taxpayer money being funneled to the already uber wealthy and their jobs going bye-bye. Last Thursday's market action was another stark example of what poor US employment data can do to the markets.

         It seems like the braintrust at Goldman Sachs has already figured out that making money "the old fashioned" way is no longer possible, so the last remaining honey-pot store of wealth to plunder is the good old middle class tax-payer. An acquaintance made on SeekingAlpha sent me this interesting link:

    http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine

    Matt Tiabbi is one of my favorites - he cuts right through the fog and shines light on topics no one really wants to talk about. Early on, one of my biggest disapointments with Obama was his appointment of Shapiro to the SEC which means nothing will change anytime soon wrt to Tiabbi's subject matter in this article. I believe he is spot on. The only disagreement I have with TIabbi is that he appears to blame Goldman Sachs for the entire run-up in oil prices. Although GS and speculators in general did indeed play a role, the supply/demand fundamentals in 2007-2008 were indeed very tight - the result of years earlier increases in Chinese demand coincident with Iraqi oil taken off the market because of you-know-who.

    SeekingAlpha likes contributors to write articles focusing on particular stocks or investments. However I am going to take a chance they'll still publish this article even though I am all over the place today and going to make some more general summertime observations:

    • Driving across the mid-US, I don't recall having previously seen so many billboards faced with "Your Ad Here". Advertising must be in the dumps bigtime.
    • Trying to follow the US Open Golf Tournament on my truck's radio was impossible. Even ESPN's radio show only mentioned Tiger Woods and Phil Mickelson. Yet, there were so many other stories - Duval, Glover, Barnes. At times, their updates only mentioned how far Tiger and Phil were behind and never even mentioned who was in the lead! Ridiculous.
    • While scanning the AM and FM dials for US Open scores and updates on Sunday, I was simply amazed at how many religious channels were in operation. Who funds all these stations? Do Americans really send in the millions of dollars it must take to keep this shows on the air? Interestingly enough, on Monday those same stations were right wing political talk shows. Religion is a far too successful control mechanism in America today.
    • Demand for gasoline is down, but let's keep things in perspective. Although gasoline demand might be down 7-9% year over year, how does that compare to home sales? Retail sales? Car sales? Sure gasoline demand is down, but there is no alternative to gasoline in the US today and so gas stations across the country are still doing a good business. Most Americans *must* drive and buy gasoline (unfortunately, there is no realistic alternative). So, how can one not stay invested in oil stocks like XOM, OXY, PBR, COP, and CVX? What is left other than gold to invest in? Goldman Sachs?!
    • I feel sorry for people who have never viewed the stars at night from a wilderness area at 10,000 feet. It's awe inspiring. I also found myself wondering what the trout think when they look up through the clear mountain waters and see twinkling points of light.

    OK, so much for random thoughts. Driving across Kansas I stopped at a McDonalds for coffee (and coffee only). While waiting in line I eavesdropped on a conversation between four farmers. They were very witty, down to earth, and had really interesting (and different) perspectives on things. So I sat down next to them with my coffee and waited for an opportune moment to stick my nose in. I asked them "Hey, what do you guys think about natural gas powered farm equipment?" One man whom I would guess to be in his late 60's or early 70's said he used to run his combines on propane years ago and they worked great, but the machinery all went diesel and so, so did he. Another fellow said he got whacked financially when diesel went over $4.50 in 2008, but all they could do was suck it up and pass the costs on as much as possible. The next fellow mentioned a local Cummins dealer and I asked if he had heard about the natural gas powered ISL-G engine from CWI (the Cummins Westport Innovations joint venture). He said he had not, but would look into it when I told him natural gas was under $1/GGE in most of the US compared to around $2.50 for diesel. After we all discussed this for awhile, I asked them, don't you guys feel exposed to rising oil (diesel) prices and why wouldn't you go to US produced natural gas if its cheaper and cleaner and you could fill up on your ranch? The quiet one finally spoke and he said, Michael, there are two things you should know about farmers:

    1) We don't buy anything until we try it first and see it work for ourselves.

    2) A large majority of farmers won't buy equipment their farming neighbors don't also use.

    In other words, a message to CWI and WPRT: if you guys want to seriously penetrate the farming market quickly with your ISL-G engines, you need to get some demo units out to dealers across Kansas, Nebraska, Colorado, Oklahoma, and North and South Dakota. You need to make a case to these farmers that natural gas is cheap, abundant, and that the engines will be fully serviced and maintained through the farmers' local machinery businesses. The feeling I get is that these farmers know diesel prices are going to be a problem in the near future. They want an alternative. But they are concerned about the infrastructure and support.

         Anyone have any updates on HR 1835 - the so-called "NAT GAS Act"? All I know is that the bill has strong bi-partisan support and on Apr 6, 2009 the House Science and Technology referred the bill to the Subcommittee on Energy and Environment. I continue to believe that this bill will pass and that Westport Innovations' (WPRT) stock could see quite a pop.

         Hope you all had a happy 4th of July.

    Disclosure: the author is long WPRT, COP, and PBR.

    Tags: Energy
    Jul 05 4:08 PM | Link | 3 Comments
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