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  • Three Oil Stocks to Weather Any Storm [View article]
    Jake, in a sense you're right, Petrobras certainly owns and operates a lot of the Campos Basin rigs that account for 80% of their production. PBR is also conducting an aggressive presalt exploration program. Altvaras is also correct, that PBR has contracted semisubmersibles and FPSOs from "pure drillers" who provide upfront FEED, hulls, topsides, subsea engineering and crews to conduct drilling operations on behalf of Petrobras.

    Unfortunately, the dayrate drillers are going to get screwed bigtime when it becomes obvious to all concerned that there isn't any recoverable oil in Tupi and Carioca presalt, and PBR defaults on their contracts.
    Jan 9, 2009. 02:37 AM | Likes Like |Link to Comment
  • Gold ETF Reaches New Inventory High [View article]
    A couple of items to consider. Bron Suchecki wrote 10/7/08 "While not having anything more to rely on but GLD's assurances that it has the gold, personally, I consider that since it was created and sponsored by the World Gold Council, which is owned by gold miners (who want the price to go up), that they would not be involved in an ETF that wasn't talking physical off the market (which is ultimately the best way to make the price go up)."

    -- which is fine, except that all 787 tonnes are deposited at HSBC and it's not entirely certain what would happen if the bank failed: "The metal backing GLD should be in allocated form and thus off the balance sheet of HSBC, but who wants to be sitting around waiting for liquidators to work out what can and cannot be put in the creditors pool." [ibid]

    Lastly, I wanted to mention the emerging redemption scandal at Comex. See, e.g., Jesse's recent heads-up re fractional reserve deliveries:

    Whether I understand all of this correctly or not, I'm suspicious of paper assets, promises, and reports. I can count the coins in my hand. With counterparty risk the Deutsche Bank ETN seems scary. Is GLD safer?

    What happens when jewelry demand falls?
    Jan 8, 2009. 11:15 PM | 5 Likes Like |Link to Comment
  • The Stimulus Plan Is Starting to Stink [View article]
    It is not politically expedient to do arithmetic.
    Jan 8, 2009. 08:51 AM | 3 Likes Like |Link to Comment
  • Why I'm Selling Apple and Google Today - and Holding Amazon [View article]
    Fred, the more I watch and read your posts, the better I like what you have to say and your straightforward manner. Thank you for briefing us.
    Jan 7, 2009. 08:22 AM | 2 Likes Like |Link to Comment
  • The Haughty Bond Market [View article]
    Great writing, Paul.
    Jan 6, 2009. 03:35 PM | Likes Like |Link to Comment
  • Was Q4 2008 the Worst of It? [View article]
    Hi Jim,

    Always good to read what's on your mind. I think I understand what you mean about too little too late, allowing deflation to spiral downward. But the other threat is amusing: "...the Obama stimulus plan fails completely."

    It has to fail, don't you think? $1T = $3,000 per household.

    $20T wiped off stocks; $8T wiped off residential; $5T unsecured. Not a hope in heck that Obama will succeed in reflating by borrowing more.

    Disclosure: long TBT, physical PM
    Jan 6, 2009. 04:07 AM | 2 Likes Like |Link to Comment
  • Is Financial History Bunk? [View article]
    Paul, it's always refreshing and enjoyable to read your latest. We're in uncharted territory. The scale of "fire brigade" Fed-Treasury bailouts and forthcoming fiscal stimulus is unprecedented. Ditto global CDS, MBS, bank leverage, unsecured consumer debt. I have my doubts about the historical comparability of employment and inflation data, too.
    Jan 5, 2009. 11:07 AM | 2 Likes Like |Link to Comment
  • Credit Started This Recession; It Will Also Help End It [View article]
    I feel sorry for you, Ray. Once upon a generation ago, government policy mattered because the US economy was resilient enough to shrug off whatever wasteful, pointless crap that politicians inflicted. You know, Social Security. Medicare. Price fixing.

    Not any more. The global scope is beyond government control. Citi's balance sheet is $2 trillion, bigger than the Federal Reserve (or six times bigger than it was before Paulson puffed it up and Bernanke traded all the AAA bonds away for worthless subprime drek).

    Once upon a generation ago, Americans produced more than they consumed. Not any more. Sure, Mr. Obama and crew are going spend a bundle that they'll have to borrow overseas, and the Fed can puff itself up another trillion, maybe. Then what? We'll be so far in debt, the dollar will be worthless and taxes sky high. Inflate our way out of debt to whom? Our children.

    But that doesn't matter to you, does it, Ray? You got yours.
    Jan 5, 2009. 03:44 AM | 2 Likes Like |Link to Comment
  • If Manufacturing Is So Bad, Why Did the Market Go Up? [View article]
    Terrible spelling and punctuation, but I vote thumbs up anyway.

    I agree that we're riding the Obama feelgood escalator, which ends in February, unless it breaks down before Inauguration Day. Remember the quants who underestimated black swan risk? This is a fragile rally. I'm trading from day to day, hour to hour. No investable ideas.
    Jan 5, 2009. 12:28 AM | Likes Like |Link to Comment
  • Anyone Know How We Got to 2009? [View article]
    Silly, beautiful, and wonderfully literate. This is the year when we discover that the Empire is buck naked under all that fungible paper.
    Jan 2, 2009. 03:03 AM | 2 Likes Like |Link to Comment
  • The Banker: Connecting the Dots [View article]
    Dec 31, 2008. 08:57 AM | Likes Like |Link to Comment
  • The Banker: Connecting the Dots [View article]
    You've done a great job of reporting a very serious and nuanced threat to community banks. Thank you.

    Several points worry me. Yves Smith and others have been pushing the "Swedish model" of seizing banks (all of them), declaring force majeur on swaps and Tier 3 junk, winding up the zombies and IPO floating the survivors to new sharholders. The truly worrisome aspect is that the US won't bat an eye or lift a finger in protest. Jesse had an important post yesterday. The United States of Ennui
    Dec 31, 2008. 08:56 AM | 2 Likes Like |Link to Comment
  • Deepwater Drillers: Not in a Very Deep Hole [View article]
    Daffy, I've written about the Petrobras subsalt play and that's my chief concern re deepwater drillers, especially semisubmersible platforms....
    Dec 29, 2008. 11:54 AM | 1 Like Like |Link to Comment
  • Deepwater Drillers: Not in a Very Deep Hole [View article]
    Goldman RIG target was $178
    Market Folly said buy at $120
    Goldman new target is $79
    Petredis likes it at $44
    how about $30?
    Dec 29, 2008. 02:36 AM | Likes Like |Link to Comment
  • Deepwater Drillers: Not in a Very Deep Hole [View article]
    I expect crude to climb in price sometime in 2009, maybe Q2 and beyond, but at present world supply is slightly in surplus, led by increased oil production in Angola, Azerbaijian, Russia, and China (Mexico, Norway and Nigeria down). My remarks about shut in US onshore production and oil service job losses have to do primarily with debt financing. The first thing to go and last to bounce back will be high wage US jobs.
    Dec 28, 2008. 06:10 PM | Likes Like |Link to Comment