beaux

Rising Crude Oil Could Boost Natural Gas ETFs

i am long ung calls

Rising Crude Oil Could Boost Natural Gas ETFs

The natural gas rig count has fallen from a high of 1600 to 741. The flattening of this decline has, in my view, signaled to some that prices may have bottomed. Moreover, when a real economic recovery begins to materialize we will see a corresponding increase in demand for nat gas. Given the lag time inherent in bringing rigs back on line we may indeed witness a spike in nat gas prices. Futures appear to have already begun pricing this dynamic in with prices 12 months out exceeding $6. Longer term, with a spate of electric cars soon to hit the market one can expect demand for electricity to spike (albeit off peak). Electricity is produced mostly through the burning of coal, but secondly through natural gas. It is a good bet that the current administration will invoke legislation that favors nat gas over coal power generation. This can only drive incremental demand longer term.

Book Review: Great Depression Ahead

I found Dent's prognostications in Bubble Boom to have been directionally correct though a little noisy on timing. As I recall he advised equities would crash in 2009 or 2010. He also advised on selling primary residences and downsizing -- demographics would simply not support the supply of 5 bedroom homes, he advised. Made sense to me. Well, the market crash came early and that was expensive and painful for me. Long and wrong. But I DID sell two houses in 2007 and have never been more pleased that I did so. My take is that his batting average is good enough to warrant your respect and consideration.

Insights from a Derivatives Salesman

I too was a derivative salesperson for a decade and presently run a number of businesses including several derivatives units participating in multiple asset classes. I concur with Roger's comments. My perspective on this varies, however. In my view the Fed cannot be ostensibly held responsible for managing and mitigating systemic risk if they cannot ascertain the component risks. And today their mandate excludes investment banks (ok, there are no investment banks anymore), hedge funds, private equity firms, and other non-bank financial institutions. The advent of standardized contracts will greatly aid the Fed in measuring and, with proper regulatory authority, managing these risks on a pro-active basis. Think of the Fed's role as playing air traffic controller and each firm acting as independent pilots. The mid-air collision we are currently living through will undoubtedly conspire to make us all believers in a robust air traffic control function. This differs meaningfully from the current system under the CFTC. A combination of expanded standardization and regulatory oversight will go along way to making life in the capitalist skies safer. And what if we do not do this? Your old W2 can always be used as a floatation device...