felixd

Natural Gas Oversupply to Weigh on Oil Prices?

autor confuses apples and oranges. Yes it is true that there are new and potentially huge new supplies of NG in North AMerica. But at what cost of production? He does not note that the recovery cost for these new sources is much higher than $4 , so unitl prices rise, these new sources will remain undeveloped. He also does not note the political costs of development. Lets face it, US does not like energy production (thats why so much of the oil and gas reserves in and around the country go undeveloped). Bottom line to all this is that there is a huge historical divergence between costs of oil and NG..that should give investors a chance to profit from Mr Market as he corrects. Question is, will gas go up or oil go down? My guess is gas goes up. THe reason is that most of all the oil in the world is governmet controlled or owned. Governments (not just ours) are broke and they need the cash. Hence the unwilliingness to adjust price down. SO...the wiser bet is to go long NG and wait for the correction. Industry is soon or already going to switch to NG if they can which should start reducing the huge supplies of NG. Watch the storage numbers...when they start to fall, Natgas will move sharply higher.

With Oil on the Rebound, Natural Gas Could Follow

Would also add that number of rigs exploring for and drilling for new Natgas has dropped some 50% over last year. Eventaully the declining rig count is going to start showing up in lower supply. When that happens natgas should move quickly higher as it takes a lot longer to bring supply back on, than it is to shut it down. That means a long rally in natgas. Only question is when will it start? Wish I knew that.

Stress Test Leaks: Endgame Emerging

I bet the guy that leaked was Rahm Emmanuel...He has a history of that in the past and is skilled in how to best push an agenda with a skillful and timely leak. By leaking all this yesterday , (just in front of the testimony of Fed Chairman Ben Bernanke) the goal might well have been to put a little extra pressure on the fed chairman and make him feel a little extra heat from riled up (and largely uninformed) elected members on the Hill. My conspiracy theory holds that Ben might prove to be a thorn in the side of the Obama economic team sometime soon as he moves to limit Fed easing to curb future inflation. For Team Obama, a conciliatory Fed is crucial and it would be far better to put their own guy in there (read Larry Summers). To get that done, they need to question Ben's leadership and start eroding his credibiliyt. Hey just a theory!

Revisiting the Inflation / Deflation Debate

Your fears are justified, even understated. The currrent US budget now about to be approved still carries the rosiest of all assumptions that growth will appear in qtr 3 and accelerate in qtr 4.Assumptions for growth next year are 3%. The rub of course is that those assumptions are now hopelessly optimistic, which means the buget defict is going to be much larger than you report. Borrowing costs can only grow as govt receipts come in far lower than govt now assumes. To be sure, we are in for one rough ride when we face the unavoidalbe choice of cutting spending, raising taxes even more, and/or inflating away our debt, all while we attempt to or find some other foreign rube to buy about a $1 trillion a year in bonds....each year.. for at least 10 years.

Why High Inflation Will Not Take Hold

You discuss behaviour of consumers and private investors but somehow miss the single biggest force in the economy....government. Government spending is on its way to 30% of GDP, which is probably artificially low given the fact that new government regulations (tax onC02 for example) will certainly choke future growth. History shows that huge growth in money supply and simultaneous growth in government as % of GDP does indeed lead to hyperinflation. We could escape the trap by cutting gov spending and limit regulatory regime to spark entrepeneurial growth but, at least right now...we are moving in the opposite direction. Pipers eventually have to be paid.

The U.S. Is Spending Its Way Out of the Recession

My fear is that we are depending more and more on borrowed money to finance all this spending. We expect China to buy roughly $2 billion a week in bonds for the next 5 years. What happens if they stop?

Why I'm Shorting Commercial Real Estate

Interesting thesis and you may well be justified. However, there are huge regional differences to real estate market, both commercial and residential. Lots of ink already on the southwest and florida markets and how long it willtake for them to recover. Funny you dont see much talk about Washington DC real estate issues. With the losest unembloyment rate in the nation and Obama promise to hire more fed workers, it would appear that the DC market is going to boom. take a look at WRE. Would you reall want to short that?

FDA, Clinical Trial Calendar Updates: SOMX, EPIX, HLUKY, ARKTF

I understand that Pharma is keenly focused on getting their products on the FDA docket for approval but it is not much use to an investor. The FDA approval process is just too slow, problematic, and almost always results in a delay. Indeed, FDA approvals of new drugs is a national embarrasment as fewer and fewer new drugs are being approvaed, despite the fact that pharma spends huge amounts in R&D.

If you want an investible new development from the FDA it might well be in cigarettes. Now that FDA looks to take over full regulation of tobacco, and given the new added taxes on cigarettes, costs in US for a pack are now over $5 and will likely rise some more. In Mexico you can buy a pck for 20 pesos, or about a $1.80. Seems to me that the better investment is in a small tobacco barn located on the other side of the border in Mexico that is seeing business boom thanks to US taxes and the FDA.

The Worst Isn't Over Yet

I am keen to understand the details of the announcement to increase funding to the IMF by an additional $1.4 trillion. I cant seem to find the details regarding who is actually going to pony up all the money to the IMF. My strong suspicion is that Obama has promised the G20 more US funds which will form the largest part of the $1.4 trillion. If so, this is just another $750 billion or so of US funds that we will need to borrow. Put another way, the US debt just got even bigger.

Abbott, Teva: Tough Enough to Withstand Rocky Market

I think the author here has missed the bigger point about the FDA and the inherent problems for pharma. The slow approval process for new drugs by the FDA and the huge cost (average of $ 1billion)has little to do with lack of staffing at FDA but rather the systematic emasculation of the FDA over the past few years. After a series of brutal Congressional hearings from Henry Waxman, where FDA officials were racked over the coals, they have simply learned that it is far easier to slow the approval process and be more risk adverse, approving fewer and fewer drugs each year.
Alas, you can expect this problem to get worse. The person on Waxman's staff that orchestrated this entire drum beat on the FDA was a fellow named Joshua Sharfstein........he now has been appointed by President Obama to be the #2 at the FDA with responsibilites for drug approvals and reviews of pharma. If he is true to form, Sharstein will continue to rail against big Pharma...and continue his push to choke off new drug developement. Instead, he will push for faster generics. This might be great from generic companies but bad for big pharma that depends upon new blockbusters drugs, and especially bad for your aging aunt and uncle that are hoping for new miracle drugs.

Obama nominates Helen Elizabeth Garrett as assistant Treasury secretary for tax policy; Michael Barr as assistant Treasury secretary for financial institutions; and George Madison as the department’s general counsel.

one more thought....these three new obama/summor's picks also continue the trend of selecting academics and former govt people for top treasury posts. Confess to wanting to see some top level businesses people in some top postions too. The Abministration would benefit from having some senior advisors that have had to meet a payroll.

Obama nominates Helen Elizabeth Garrett as assistant Treasury secretary for tax policy; Michael Barr as assistant Treasury secretary for financial institutions; and George Madison as the department’s general counsel.

Uhhh oh. These might be well qualified people but they were almost certainly hand picked by Larry Summers and not Geithner. Most of them all have ties back to the Rubin/Summers era of the Clinton Administration. Nothing wrong with that, But the key point here is that Treasury is being staffed out with loyalist to Summers and not Geithner, Put another way, Geithner is isolated and increasingly surrounded by Summer's people. Gonna get lonely for Tim.

Big Banks: Pulling Off the Ultimate Bait and Switch

I contend that the PPIP offers some great new opportunities for small investors. My contention is that the big banks participating in the Geithner plan (morgan, Goldman et al) are not going to have to put in any of their own money at all. They are going to raise the money from clients, and tack on the 2-20 fee structure. If the investment turns out well, banks pocket around 15% of the entire upside without any captial at risk. If the scheme goes bust, they still get the 2% fee, so there is no downside at all. Bottomline is that this is a great time to invest in the big banks that will be participating in the program, but dont invest directly in PPIP.

Live Discussion: Treasury's Bank Recovery Plan

It should come as little surprise that all the big banks are solidly supporting the PPIP. It sure looks as if this plan is going to be a real gusher for bank profits. Lets take a look at what we know so far: Banks like Goldman, will raise only a small amount of capital and leverage lots of government funds to buy up these assets. All they need to play the game is 7.5%. Seems to me that Goldman will then go out to investors willing to pony up funds (on a strict 2-20 basis of course) to raise the funds. So we end up with Goldman and the other banks earning a 2% fee on money the private sector has put in, They buy up the toxic assets with all the leveraged funds. If it goes well, they should earn nice profits on not only the 93% of the govts money, but also the 7.5% raised by the private investors. In short, they can earn the 2-20 at absolutely no risk. If it goes wrong..govt takes the biggest hit and investors take the rest, but bank still takes the 2% fee. Whats not to like? Any wonder the banks support this plan?

Pharma Investments Are Starting to Pay Off

anyone wanting to invest in any pharma of biotech stocks ought first to think long and hard about government risk. The FDA is probably the worst federal agency in the government and has been beaten by Henry Waxman and others in Congress for so long and so hard, that they are now shell shocked and extraordinarily risk adverse. Check out the historical low levels of drug approvals for 2008...about 25% of the approval rate of just 10 years ago. Now we learn that the FDA number #2 just nominated by President Obama in non other than the former Waxman staffer that led the assualt on the FDA. You can absolutley expect them to huncker down even more and drug approvals will likely get even more difficult to obtain and more expensive. Hard to invest in new drugs discovery and bio research if it is unlikely that a company can bring a novel new drug to market.