Lehman is Garbagio

The Koreans laughed at Dick Fuld’s asking price.

Negotiations have been “difficult because of differences over price,” Korea Development Bank CEO Min Euoo Sung said today.

And, the first of many hedge funds, with GIANT expsoure to commodities, calls it quits.

The Ospraie Fund lost 26.7 percent in August, after a “substantial sell-off in a number of our energy, mining and resource equity holdings,” Anderson, 41, wrote in the letter today.

Ospraie’s top 10 holdings:

International Paper Company [[IP]]

Cytec Industries Inc. [[CYT]]

XTO Energy Inc. [[XTO]]

WESCO International, Inc. [[WCC]]

Alcoa Inc. [[AA]]

[[SEB]]

Arch Coal, Inc. [[ACI]]

Lennar Corporation [[LEN]]

Calpine Corporation [[CPN]]

E-House (China) Holdings Limited [[EJ]]

Damn they got rolled on.

Clarification Update: Some of you must be scratching your heads wondering, “hmmm, what the hell is Fly talking about?”

Well, just so you know, the retards at Lehman owned 28% of the Ospraie fund.

Now, I know many of you are appalled by the ridiculous one month loss posted (27%) by the fund. However, you need to remember, this was a commodity focus fund. Therefore, it’s the nature of the beast, to a small degree. I am sure the investors of that fund had some pretty good months, prior to the recent collapse.

Commodities are for people who wear bow ties and do lines of blow off of cows.

This failure is the canary in the coal mine; mark my words.

All of the i-banks were lauding their commodity desk gains, over the last 6 months, especially Goldman Sachs Group, Inc. [[GS]] and Morgan Stanley [[MS]] . They were pounding their chest, as “Santa Claus of the corn fields” brought them great fortune, from his evil bag of rapid inflation and whorish dollars.

Oh, well, that trade is dead and so are its participants.

Watch very closely as the i-bankers begin to report massive trading desk losses.

[youtube:http://www.youtube.com/watch?v=GTQaocgjLqo 450 300]

When the dot com bubble burst, we all paid, in spades.

When the banks crapped out on the treadmill, we all paid, in spades.

As sure as I am sitting here, the disaster unfolding in the commodity markets will come home to roost, in spades mind you, effectively dragging everything lower.

Now, it is my personal belief that oil will not take the elevator straight down. I’m looking for a few good trades, via Hurricanes and other similar natural disasters.

Remember, 90%+ of all successful money managers have HUGE exposure to oil. Everyone took out the financials and plugged in energy. Now, with the bottom falling out, expect to see widespread panic, as funds close and people scramble to get out of underperforming funds.

There is no leadership, unless you call Ambac Financial Group, Inc. [[ABK]] and MBIA Inc. [[MBI]] leaders.

For the day, I averaged down on my [[DIG]] and [[IEO]] positions. However, I sold out of Ultra Petroleum Corp. [[UPL]] and Global Industries, Ltd. [[GLBL]] . Basically, when things get sporty, I like to focus on a few items. UPL and GLBL were just in my way.

Also, I added to my [[SKF]] , [[SRS]] and [[FXP]] positions. It is my belief that the market will get mud stomped in September. However, do not misconstrue my motives. I am not selling because it’s September, per se. I am selling because I believe multiple funds will close down, causing a selling ripple effect across Wall Street.

It’s been too tough. If you are up this year, bravo. You are good.

It is not easy to navigate markets like this. To do so, you need a “calculator brain,” no doubt.

Finally, I bought some Freeport-McMoRan Copper & Gold Inc. [[FCX]] today, only because I promised I would—if it reached the low 80’s again. The sell off in National-Oilwell Varco, Inc. [[NOV]] is mind boggling. Despite all the weakness, military stocks keep shooting higher. There, my favorites are Lockheed Martin Corporation [[LMT]] , General Dynamics Corporation [[GD]] , AeroVironment, Inc. [[AVAV]] and National-Oilwell Varco, Inc. Northrop Grumman Corporation [[NOC]] .

NOTE: My refiner play, Western Refining, Inc. [[WNR]] , held up well—considering.

Poof. Your rebate check spending game is gone.

-Merlin

With like 10 hurricanes set to smash into the U.S., it is expected that oil will drop another $100. Basically, for each hurricane that hits the U.S., deduct $10 from the price of crude. With Hannah and Ike on deck, just take off another $20 right here, take the money—then go to the mall.

Look at the mall, it’s booming today.

Wow, J. Crew Group, Inc. [[JCG]] , American Eagle Outfitters [[AEO]] , Borders Group, Inc. [[BGP]] , Coldwater Creek Inc. [[CWTR]] and Zumiez Inc. [[ZUMZ]] are smoking off of cheap oil. And, let’s not forget to stuff our faces, via Chipotle Mexican Grill, Inc. [[CMG]] , Einstein Noah Restaurant Group, Inc. [[BAGL]] , Jack in the Box Inc. [[JBX]] , Brinker International, Inc. [[EAT]] and Yum! Brands, Inc. [[YUM]] .

How delightful!

Oh, just in case you were unaware, the housing market has bottomed too. Just go ahead and get long [[LOW]] and The Home Depot, Inc. [[HD]] , while you’re rich.

With all of these commodity prices coming down, I feel like tracking down Jim “the bow tie” Rogers, so that I may punch his eyebrows off. What say you, pinhead?

Booyah, the homies are running. Can you hear the jack hammers going? Listen very closely, I bet you can hear the profanity coming out of your local construction site.

Wow, God bless President Obama and candidate McCain. We have ourselves one heck of a good economy.

By the way, since everyone is rich again, why not go eat a few rib eyes, at [[RUTH]] ?

Okay, I’m done. Back to throwing darts at pictures of Hurricane Gustav.

NOTE: In real life I am long Barnes & Noble, Inc. [[BKS]] , [[HD]], Wachovia Corporation [[WB]] , Starbucks Corporation [[SBUX]] and The Clorox Company [[CLX]] . Booyah times two!

I bought 2,000 Freeport-McMoRan Copper & Gold Inc. [[FCX]] @ $83.14, 2,000 [[DIG]] @ $78.40, 2,000 [[IEO]] @ $63.29, 3,000 [[SKF]] @ $113.16, 1,000 [[SRS]] @ $84.25 and 2,000 [[FXP]] @ $84.98.

Disclaimer: If you buy any of the above stock because of this post, Hurricane Ike will smack your portfolio around like Tina. And, you may lose money.

Fine. Give it to me. It is a well deserved lashing, getting all ecstatic over ‘canes and oil rigs. Sometimes I can’t help myself. Anyone who is lucky enough to know me is aware of my obsessive/compulsive behavior towards hurricanes and how they affect oil rigs.

However, many of you gay people out there, who are short oil, didn’t expect the market to rip higher like this, did you?

See, you may have your little thesis, written down in a pink Hello-Kitty book, somewhere, that states: “when the economies of the world are weak, oil shall trade down.” I’m sure you kept that page bookmarked, and sprayed with bubble gum perfume, right? But, the market is not reflecting that.

Instead, we are trapped inside a stupid “Bernananke box,” where the destruction of inflation somehow means jobs will be created and people will buy Coach bags, ad nauseum.

Personally, I like oil men. I have lots of oil men as clients. They know how to throw a party, let me tell you.

The knee-jerk move here is to buy the oil dip. However, I never like to buy into this type of blood, while already underwater. Instead, I will direct new capital to my new trade: long [[SKF]] or Equinix, Inc. [[EQIX]] .

Also, just for fun, I’ve been buying [[FXP]] , which also gets me short PetroChina Company Limited (ADR) [[PTR]] and CNOOC Limited (ADR) [[CEO]] —making it an effective hedge against my egregious oil longs.

NOTE: There are more hurricanes coming. I promise.

On days like this, you have to love the market.

There I was on Friday, taking down oil stocks/shorting banks, thinking I was cooler than a penguin in an ice box, then BAM: hurricane Gustav destroyed me—instead of those stupid rigs.

Sweet irony.

No, really, it will not destroy me; but it will be a set back.

It’s 6:50am (et), my early guess, [[DIG]] trades down $9, Arena Resources, Inc. [[ARD]] makes Woodshedder look like a genius and [[SKF]] will touch down on $112 again.

Essentially, the oil/commodity trade is being dismantled/shot in the head, because a stupid storm did not destroy our oil/gas infrastructure.

Naturally, it’s a little more complicated than that. However, as gay as it sounds, Hurricane Gustav just gave a blow job to gay men who are short oil. How do you like that?

In short, I was wrong on this trade. It was risky and I knew it.

Nonetheless, we must all make our beds, then lay in them, no?

Immediately, to stem my losses, I will get long a variety of names. Off the top of my head, more Barnes & Noble, Inc. [[BKS]] and Equinix, Inc. [[EQIX]] sounds good.

The oil bubble is pissing in the street. Be sure to not attempt to catch it. You’ll just get your hands wet with urine—and that would be disgusting.

Losers:

Broker A and the long oil, based upon a ‘Deacon of Death’ appearance, ilk.

Winners:

Retail names and gay men who are short crude.

Losers:

Montpelier Re Holdings Ltd. [[MRH]] will get hit hard with insurance claims.

Winners:

Pike Electric Corporation [[PEC]] , DXP Enterprises, Inc. [[DXPE]] and The Shaw Group Inc. [[SGR]] will have work to do.

Losers:

This guy.

Winners:

Possible spike in lumber prices may help out BlueLinx Holdings Inc. [[BXC]] and [[JCTCF]]

Losers:

General Motors Corporation [[GM]] , due to closure of the Port of Louisiana (rubber, steel)

Winners:

With oil coming down, stocks like Eagle Materials, Inc. [[EXP]] , Martin Marietta Materials, Inc. [[MLM]] and Vulcan Materials Company [[VMC]] may get a pop, much to my chagrin.

Losers:

People who bet on long shot plays, like [[GV]] , [[IPII]] , [[FUEL]] , [[CLWT]] and Builders FirstSource, Inc. [[BLDR]] .

Winners:

“The Fly,” since he is always in a state of victory, even when he appears to be losing badly.

Sadly, there was no catastrophic damage appropriated to the stupid rigs in the gulf. Now, it’s no longer fun. I do not want to see the levees break, effectively wiping out Geraldo Rivera.

That would make for “good television,” but entirely “unfun.”

In other news, my weather man is telling me to “watch out for Ike.” He’s coming hard off of Africa and is looking to slap a few oil rigs around.

As for the sell off in crude: entirely overdone.

On the other hand, if oil is to get its brains blown out, due to a “Global Recession,” well then, so will the industrials and the banks.

You cannot have it both ways.

More on this later.

UPDATE: There was some minor damage done to oil/gas infrastructure. I’ll be out for most of the day. Check out the Oil Drum blog for excellent commentary, pertaining to the energy markets.