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  • Energy East pipeline would raise greenhouse emissions, report says [View news story]
    My, how short sighted in Geo-politicals some people seem to be. I am especially irritated that the enviro groups feel they have a right to interfere with foreign country interests as they develop resources from afar. The plain truth of the matter is, CHINA is hoping Keystone is delayed or halted to the point where the Canadian government decides to send a bigger pipeline to B.C. only, for export to China, leaving the U.S. positioned to eventually enjoy much higher prices at the pump.
    Get real folks. if you really want to do something about carbon footprints globally, since there are winds dispersing pollution across the globe, then go after China for starters. Man up guys!
    Our bigger threat is the EXPORT of U.S. hydrocarbons. When we get the U.S. totally off imports of terrorist supported crude producers and the U.S. totally self reliant (with the assistance of our Canadian partners,) I would then argue that the enviro groups should get behind T. Boone Pickens' plan and put heavy trucks and cars on CNG.
    We can synthesize coal into fuels, (CTL) specifically number two diesel, clear and sulfur free.
    Special interests are the blockage and a for sale Congress, both isles.
    Coal burning power generation has done much damage.
    Only a decade or so ago the power generators ran from nat gas powered CCGT's. Now they are coming full circle.
    Too bad we all can't come together to redirect our focus to put this country on the right path.
    Do we want pollution? No. It has been creeping up since the industrial revolution.
    Like that new song says: "wake me up when it's over."
    Feb 6, 2014. 10:40 PM | Likes Like |Link to Comment
  • Gold and Silver Will Not Save You From a Sell-Off [View article]
    pinelli, don't sweat the small stuff, consider the following: seekingalpha.com/artic...;u=65866
    Aug 22, 2007. 01:26 PM | Likes Like |Link to Comment
  • Gold and Silver Will Not Save You From a Sell-Off [View article]
    PERHAPS A MORE ACCURATE INTERPRETATION FOR GOLD AND SILVER NEAR TERM DECLINE IS MORE MICRO BASED, AS LIQUIDITY IMMEDIACY HAS DRIVEN INVESTORS TO LIQUIDATE HOLDINGS NO MATTER THE GENRE FOR THE PURE SAKE OF CASH. AS THE LIQUIDITY RIPPLES SPREAD ACROSS EACH POND, ALL LITTLE BOATS HAS BEEN AWASH. WHEN THE CYCLE IS COMPLETE, GOLD AND SILVER WILL REGAIN THEIR MACRO POSITIONS UPON THE BRIDGE OF THE GLOBAL SHIP AND MAKE WAY NORTH BOUND. GOLD AND SILVER NEAR TERM DEMISE IS PURELY LIQUIDITY BASED. AS THE SMOKE CLEARS, AND EQILIBRIUM IN GLOBAL CARRY TRADE IS ATTAINED, FLIGHT FROM FOREX FIAT WILL FIND IT'S WAY TO THE DOORSTEPS OF PRECIOUS METALS. WHILE WE ALL FIDDLE OVER HOW ROME BURNS, PERHAPS THE SMART MONEY IS AWAITING THE CLARION CALL TO LAY SEIGE UPON THE GILDED GATES.
    Aug 22, 2007. 04:46 AM | Likes Like |Link to Comment
  • Treasury Bill Yields Collapse [View article]
    PERHAPS NOW IS THE TIME TO SHORT THE DOLLAR. SOON, THE FLIGHT TO SAFETY WILL ECLIPSE ALL OTHER EFFORTS. CAPITAL PRESERVATION WILL TAKE ON NEW EXPEDIENCE AS CASH WILL NOT BE THEIR FRIEND. DRIVEN LIKE A WILD ANIMAL FROM HIDING PLACE TO HIDING PLACE, FLIGHT TO SAFETY, FROM MARKETS TO CASH, THINKING LIQUIDITY IS SAFE HAVEN, ONLY TO REALIZE THE SAFE HAVEN FIAT IS NO VENUE OF VALUE, THEN TO FOREX EXTREMITIES. MUSICAL CHAIRS. FOR LONG TIME NOW THE DOLLAR HAS LOVED US, BUT THE MUSIC SUDDENLY STOPPED A WHILE BACK AS THE FIRST SHOTS WERE FIRED AS CERTAIN COUNTRIES BEGAN TO DEPEG FROM THE DOLLAR. NOW MORE CHAIRS THAN ONE HAVE BEEN REMOVED AND PLAYERS OF THE GAME SCRAMBLE IN AN INSTANT TO GRAB ANYTHING PERCEIVED AS MOMENTARY SOLACE. I FEAR, THE GAME HAS REACHED A PROGRESSION WHERE IT CAN NOT BE STOPPED, UNTIL DEVALUATION WRINGS OUT TRUE VALUATION. VULTURES PERCH UPON OVERHEAD WIRES, CROWS AND SUCH CIRCLE. THE BEAST HAS BEEN AWAKENED AND IT IS HUNGRY. THE CARRY TRADE IS GOING TO CARRY-ON IN IT'S REBALANCING AND DEBTOR NATIONS NO LONGER HAVE THE DECIDING VOICE IN WHERE OR WHEN OR HOW THE MUSIC IS PLAYED.
    Aug 22, 2007. 04:02 AM | Likes Like |Link to Comment
  • Rising Inflation, Non Rising Interest Rates: The FOMC Have Their Hands Tied [View article]
    WE APPRECIATE THE CONSIDERABLE EFFORT REQUIRED TO PRESENT THIS EXTENSIVE ANALYSIS. MOST INFORMAIVE. LOOK FORWARD TO READING MORE OF YOUR WORK. DEGRADATION OF THE U.S. DOLLAR BELIES THE TRUE STATE OF THE OVERALL STRENGTH OF THE ECONOMY. DIVERGENCE BETWEEN CORPORATE PROFITS/HEALTH, AND CONSUMER FINANCIAL HEALTH MASKS THE FACT THE U.S. ECONOMY IS EVER MORE DEPENDENT UPON EVER CHEAPER PRICES WRUNG FROM COST SAVINGS. AS THIS OPERATIONAL LEVERAGE IS WRUNG OUT AND FLATLINES, CONSUMERS ON TREADMILLS MUST COMPENSATE BY TRANSFERRING DEFICITES THROUGH FINANCIAL LEVERAGE. REGARDS, HGC
    Aug 14, 2007. 04:36 AM | Likes Like |Link to Comment
  • Fed On the Right Track By Adding Liquidity, Not Cutting Rates [View article]
    Mr. Kee, Your focus is upon CONSUMPTION and your assumption that all INFLATION is driven by the U.S. consumer is flawed. The conundrum for the FED exists between the abyss of supporting a DEGRADING U.S. DOLLAR and trying as you suggest, to control U.S. inflation at the expense of the average U.S. citizen, when we are the tail of this snake, not the head. U.S. INFLATION is more a function of global export of inflation by net producing countries and the carry trade paas-thru of consuming debtor nations, like the U.S.A. Your analysis is flawed, your thesis is limited in perspective, thus your evaluations of the top down problem go understated and your conclusion disfunctional. please review the U.S. DOLLAR INDEX, PLOT CRUDE VS. GOLD SPOT MARKETS, THEN, PLOT GOLD/CRUDE VS. THE U.S. DOLLAR and then my presentation begins to compel your reconsideration. Our Marketocracy Fund called going long GOLD at 4:00 a.m. recently as GOLD SPOT, EUROPE spiked up 2.50 U.S. amidst the EURO CREDIT LIQUIDITY PANIC as ECB called for the FED to inject liquidity. Later that day in U.S. market trading, gold was up over 12.00. The trend remains in tact. THE POINT IS, BY VIRTUE OF INJECTING LIQUIDITY, THE FED IS ADDING DOLLARS, PRINTING MONEY, CREATING THE VERY INFLATIONARY SPIRAL YOU ARGUE AGAINST. Step back, take an overall top to bottom re-appraisal of the dynamics involved. IT IS BY FAR MORE COMPLEX THAN U.S. CONSUMERS DECIDING TO PAY MORE FOR GOODS AND SERVICES DUE TO THE PERCEPTION THEY HAVE MORE WORTHLESS DOLLARS AVAILABLE TO THEM. You will be unable to control the excalating food costs being passed thru or the demad driven energy pricing strip, a global factor, not a U.S. Consumer controlled function. Time for voices to get real about the problems with which we deal. Regards, hgc, aka extremebricknmortar
    Aug 14, 2007. 01:15 AM | Likes Like |Link to Comment
  • China's 10% Stake In Blackstone Group: Should We Start To Worry? [View article]
    We agree that securing commodity supplies is indeed a major strategic motivation for the Chinese government, presiding over the biggest buildout in human history. But there is also a strong tactical incentive for them to convert as much as possible of their huge hoard of dollars into tangible assets before the greenback's inevitable demise.

    This is a complex and fascinating balancing act, because at this point it is still in the interest of the Celestial Kingdom to leverage the addiction of the US consumer for cheap goods to continue to nurture their own industry, and buying more time for the growing Chinese middle class to step up to the plate consumption-wise. To that end, they still need to prop up our spendthrift ways by financing our debt, which means they must continue to buy dollars. Not to mention the fact that buying dollars maintains their value - or, at least, slows the decline - and affords them more time to convert dollars into something with real value.

    Once the consumption capacity of domestic Chinese approaches that of the US - which could happen sooner than we might otherwise expect should there be a precipitous decline in US consumer spending - then the game will be up.

    The takeaway here is that in the interim, in order to get the most for their dollars, we could see Chinese investments moving outside the commodity sector. Florida beachfront property may be overvalued here given the probable coming decline in US economic fortunes and rising sea levels, but if you are paying with dollars that will manifestly be worth drastically less in a few years and you can't otherwise get rid of, it starts to look good at any price.


    Brad Hessel
    Manager, The Kennel
    Jun 12, 2007. 08:50 AM | Likes Like |Link to Comment
  • Dendreon: Revisiting the Risk/Reward Scenario [View article]
    We rec'ced Dendreon back on 10 Jan 07 (stock closed at $4.01) and have held ever since. We believe the odds of full FDA approval by 15 May or shortly thereafter - probably with the condition that 9902B be fully enrolled and completed - are better than the odds that Provenge really works...and the FDA biostat guy set those latter odds as 39-out-of-40. We believe the FDA want to approve Provenge and open the door to immuno therapies. (We also believe that not approving it here would be wrong, considering that thousands of prostate cancer victims who might be helped by Provenge will certainly die between now and 2010 without it.)

    Having said that, I am constrained to admit that, in the unlikely event we should get an approvable letter dependent on positive results of 9902B, then I expect the stock will go MUCH lower than $15. It will be 2010 before those results are known. By then Dendreon will have been forced to dilute to raise cash to survive, the competition will have three years to catch up, and there remains that risk that Provenge actually doesn't work. We would be lucky to stay north of $2, imo.

    But then we don't expect to be testing that theory in this dimensional universe.


    Brad Hessel (personally long DNDN common and LEAPs)
    Manager, The Kennel
    Apr 23, 2007. 03:09 PM | Likes Like |Link to Comment
  • The "Oil Weapon" is Unleashed Against Iran [View article]
    The Saudi moves to reduce the price of oil in order to put more financial pressure on the Teheran regime may, as Mr. Dorsch maintains, only be marginally successful, but the decline of Iran's oil infrastructure continues unabated. This is happening not just because the mullahs eschew western oil companies (and their technical know-how), but also because the government has created a negative feedback loop by mandating subsidized gasoline for domestic consumption thus eviserating any financial incentive to invest in maintaining or improving both E&P and refining operations in Iran with either private or public money. Iranian production is steadily declining, and as the government needs the oil export revenues to prop up their diseconomic policies, something has to give here.

    Iran's best chance is to strike a deal with someone to [a] rescue their dilapidated E&P and refining infrastructure and [b] extend protection against the USA. What are the prospects of such a regime-saving deal?

    The Russians are helping with nuclear technology - presumably hoping the USA will be goaded into attacking yet another Islamic country, thus weakening us still further - but don't need Iranian oil so they are not the answer. India wants the oil but is aligned with the USA. China wants the oil but has no practical way to get it -
    neither Pakistan nor Afghanistan would allow delivery overland if the USA nixed it and the USN could easily blockade Iranian maritime traffic. So as things stand, it probably doesn't pay for the Chinese to invest a lot in the Iranian oil infrastructure.

    So in assessing the likelihood of things getting hot in the Gulf - thus driving the price of oil back north - it really comes down to a question as to whether the Iranian regime's stubborn insistence on the primacy of religious principles over economic realities causes them to crash and burn domestically before they can develop nukes...or, more pragmatically, on the assessments of the US/Israeli intelligence services with respect to the outcome of this horse race. If the risk the nukes will win grows large enough, things could boil over in a hurry. Otherwise, the pot will likely just keep simmering until regime change in Iran throws a new ingrediant into the stew...at which point we will all need to reassess the menu.

    Brad Hessel
    Feb 18, 2007. 04:09 PM | Likes Like |Link to Comment
  • Time To Buy Oil? [View article]
    Todd Sullivan wrote:

    > ...There are only so many centers in the U.S. to process the wood into blocks, so we have a finite capacity to supply the
    > finished products despite growing demand (there are no plans to expand this capacity anytime soon and as a matter of
    > fact, it has not been expanded in over 30 years)....

    > ...Iran produces about 14% of the world's oil. We currently have 57 days of total U.S. imports in our reserves. If we import
    > from Iran at same percentage as they produce for the world markets, what would their elimination of oil exports do to our
    > reserves and how long could we go without? I will use this 14% for the comparison, the actual amount may be more or less
    > but there would be vast debate on it were I to "assume" a number. If we released oil from the strategic reserve to eliminate
    > the effect of Iran's stoppage, in 406 days the reserves would be empty. Iran's economy would have collapsed well before
    > then. Translation? This threat is a non issue....

    I agree with your conclusion that it is a good time to be long oil, but first of all, while it is true that there has not been a new refinery built in the USA in 30 years, it is decidedly not true that our refining capacity has not increased in that time. On the contrary, many refineries have been significantly upgraded and if you total the production increases, you will see that we have substantially more refining capacity in the USA than we had in the 1970s, despite the lack of new refineries.

    Secondly, while again I agree with your conclusion that Iran is unlikely to withhold oil, if they did the effects would be much more dire than you allow. You are looking at this as if we live in a vacuum and the rest of the world is there for our convenience. In point of fact, everyone else would not all step aside politely so we could continue to import what we want (minus the Iranian portion) with no disruption. Rather, if 14% of production capacity disappeared off the world market, regardless of how much of that impacted oil production we were actually importing - even if it were zero - there would be a mad scramble for the remaining 86% that would swiftly drive the price/barrel up into triple digits for everyone, and possibly provoke a military reaction from some.


    Brad Hessel
    Manager, The Kennel
    Feb 3, 2007. 07:30 PM | Likes Like |Link to Comment
  • Prop 87: Follow the Money [View article]
    PS - President Clinton needs to check in with his own former Secretary of Labor, Robert Reich, on the subject of ethanol. If he should do so, he would apparently be surprized to learn that in Brazil they make ethanol out of sugar, which is both cheaper and more energy efficient than making it out of corn, as is done in the USA -- because, ironically, it is not globally warm enough for us to have a significant sugar crop. Corn-based ethanol actually costs more energy to plant, fertilize, harvest, and process than it saves. As it is, President Clinton's specious suggestion that what worked in Brazil will easily work in California does his cause no honor.
    Nov 5, 2006. 08:43 PM | Likes Like |Link to Comment
  • Prop 87: Follow the Money [View article]
    There are actually two separate issues here: [a] should California have an extraction tax? and [b] if they do, how should the money be spent? As you point out, the first issue is DOA for the oil companies considering that even Republican bastion Alaska and W's own Texas have them while Calfornia is the only state without one. Had the Prop 87 writers just been satisfied with the tax and left it to the legislature to set up the alternative energy program, they would have had a slam dunk, IMO.

    But by explicitly proposing to set up a bureaucracy to oversee funneling the extraction tax to alternative energy programs, the Prop 87 authors provided an opening to the oil companies, who are strenuously talking around the issue as to whether there should be a tax and focusing instead plans for spending the money...whereof, it seems to me, they do make some valid points...but then, when weighing the anti-alternative energy opinions of oil companies, one must consider the source.

    I guess we will soon find out how much Californians appreciate unsolicited advice from Chevron et al as to how to spend/"waste" their money.


    Brad Hessel
    Manager, The Kennel
    Nov 5, 2006. 11:37 AM | Likes Like |Link to Comment
  • Crude Contrarian To the Extreme: Philip Verleger's At It Again [View article]
    We have been debating Verleger's reverse spike prediction for the past several days over at The Kennel (where we are heaily invested in energy). The general consensus is that we would like to know what he's been smoking. However, to give the devil his due, your piece does not come close to doing justice to his argument.

    Verleger's main point is that while the supply/demand curves point inevitably to higher prices on a strategic level, that tactically prices are extremely volatile, partly because of on-again, off-again geo-political factors and partly because of the influence of speculators such as hedge funds who are drawn to the "action" on the energy front. Combine a Kohoutek-like hurricane season, a NATO-force in Lebanon to cool down that flash point, and the prospect of successful negotiations with Iran on their nuclear program with extremely high inventory levels (we are approaching circa-1990 record highs), and it might be enough to chase the hot money out of energy in general, and oil futures in particular. If that were to happen, prices would fall hard and fast. Exactly how hard and how fast is anyone's guess, but once one of these momentum balls gets rolling, it is certainly feasible that the price could temporarily fall below sustainable levels.

    The takeaway from Verleger's analysis is not that we could go back to $15 oil for the next five years, but that conditions are present the could result in a vicious reverse spike. If that happens, those with cash to buy in near the bottom will be happy campers.


    Brad Hessel, Manager
    The Kennel
    Sep 18, 2006. 09:31 AM | Likes Like |Link to Comment
  • Why The Analysts are Wrong on Alon and Delek [View article]
    LOL we are long both Alon and Delek (and Western Refining and Giant, soon to be one and the same)...we love the business model and expect them all to thrive short of a complete collapse of the USA economy...but having said that, the reality is that cheaper oil results in reduced refining profits simply because the total difference in dollars between what these companies pay for crude and what they charge for their refined products, assuming margins are proportinally constant, is arithmetically smaller. Meanwhile their fixed costs to run their refining operations are the same. Ergo profits decline.

    If your theory that profits should increase while crude prices decline and vice versa is correct, then how do you explain the record 1H06 profits these companies posted as crude prices soared?


    Brad Hessel, Manager
    The Kennel
    Sep 18, 2006. 09:00 AM | Likes Like |Link to Comment
  • Why The Dollar Hasn't Collapsed Amidst The Trade Deficit [View article]
    > The plain fact of the matter is, we are a service related economy...and it's cheaper for us to buy goods
    > from overseas, while simultaneously being the world's financial and banking center. Investors from all over
    > the world have been continually rushing into our financial markets.... And that's why the dollar doesn't
    > collapse (nor will it) every time we buy something from overseas. The businesses on the other end are
    > accumulating the cash they receive from us and investing it right here in our markets.... If you were to
    > value one widget produced by one American worker, it could be valued in the hundreds or even thousands
    > of dollars. If you were to value one widget produced by one worker over in these regions, it might be
    > worth only $1.25. Who would you rather invest in?

    Let's see if I have this right: the dollar won't collapse despite the trade deficit (not to mention the budget deficit and the savings deficit) because investing in the USA is so attractive. And investing in the USA is so attractive because we make expensive widgets.

    You are so far off base on this that I suspect you are having us on and your essay is an attempt at ironic humor. But on the off chance you are serious, then it would be helpful if you would take note of the following:

    [a] The largest buildout in human history is happening right now in Asia.
    [b] Generally, the best investment opportunities are where the growth is.
    [c] The negative savings rate (deficit) in the USA - which exists because of our reknowned appetite for foreign widgets - constrains us to rely on foreign "investment", much of which is used to fund our interest payments on the budget deficit and thus is not a genuine capital investment.
    [d] We attract these investments by offering interest rates that compete with the organic ROI generated by high growth in China and India; these in turn engender a need for more foreign "investment"...can you say, "ponzi scheme"?
    [e] The ability of the Fed to maintain high interest rates is tempered by the danger of throwing the domestic economy - spearheaded by the interest-rate-sensitiv... real estate market - into recession, which would inhibit our ability to continue to consume foreign widgets and degrade the value of our real estate and equity markets, and thus make us less useful.
    [f] To the extent that they accrue dollars, US government debt, and investments in USA real estate and equity markets, these foreigners are themselves at risk of a dollar collapse/USA recession, and thus have an interest in propping us up.
    [g] Right now, the emerging Asian economies need the irrational USA consumption engine to fuel their growth, but they are rapidly building their own consuming middle class (who, btw, are already largely capable of producing expensive widgets and providing expensive services, and whose prowess re:same improves every week).
    [h] Eventually, the Asian economies will generate enough consumers to be self-sustaining, at which point we will be superfluous, and the risks of accrueing greenbacks/USA "investments" will outweigh the benefits. Those who lacked the foresight to exchange their dollars for yuan (or gold, or pennies - *already* worth 1.4 cents each - or razor blades) will be needing wheelbarrels to trundle enough cash to the grocery store for the weekly shopping trip.
    [i] The dollar is *already* in decline: in 1976, you could buy 10 barrels of oil for an ounce of gold or one barrel for $11...in 2006, you can buy nine barrels of oil for an ounce of gold, or one barrel for $72.

    So, if you were just kidding, congrats; you got a rise out of me. But if you were serious, and stubbornly are going to eschew laying in a supply of razor blades, I recommend you practice growing a beard, because once all your dollars collapse, you won't be able to afford to shave.


    Brad Hessel
    Manager, The Kennel
    Aug 11, 2006. 10:53 AM | Likes Like |Link to Comment
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