Let’s Become Oil Men

Even if you’re not a man.

With Hurricane Ike (here I go again) barreling down the highway of rigville, “The Fly” is very keen on buying shares of Western Refining, Inc. [[WNR]] here, in a very pointed and deliberate way—mind you.

You loosers [sic] can go play with the banks and end up getting ripped off like a rich dude at a Coney Island side show. However, with my money, I’m into new things.

As you well know, “The Fly” will not sell his [[SKF]] , sub $140. So there.

Anyway, with gasoline spiking and oil gay, I like Valero Energy Corporation [[VLO]] , Frontier Oil Corporation [[FTO]] , Tesoro Corporation [[TSO]] , Western Refining, Inc. [[WNR]] and even Delek US Holdings, Inc. [[DK]] .

In addition, I am feeling brave, with a chestful of venom, holding shares of [[DIG]] and [[IEO]] , which gets you long the whole oil/gas space.

Finally, I believe the forced selling in Freeport-McMoRan Copper & Gold Inc. [[FCX]] is almost done. I like that name, a lot, sub $70.

I sold short 5,000 PacWest Bancorp [[PACW]] @$29.54, 2,000 Marshall & Ilsley Corporation [[Mi]] @ $16.60 and 2,000 Fifth Third Bancorp [[FITB]] @ $14.40.

Disclaimer: If you short the above names, your neighbors will accuse you of being a nazi sympathizer. And, you may lose money.

I bought 25,000 Western Refining, Inc. [[WNR]] @ $10.15 and 2,000 Freeport-McMoRan Copper & Gold Inc. [[FCX]] @ $65.75.

Disclaimer: If you buy the above stocks because of this post, your pension fund will be switched to the direct management of Bill Miller. And, you may lose money.

You think I like shorting stocks? There was a time, not too long ago, when I’d spit on people for being bearish. This is America. I love it. There is nothing like it.

However, after 9/11, everything changed. With the country distracted and Washington panicked over the economy, Wall Street took advantage and misbehaved, sort of like when a child does something sneaky when his parents are not watching.

While brave men traveled overseas to fight for the honor of our nation, losers at home loosened credit and housing regulations, then opened floodgates of capital, in order to reinflate the ailing economy. They were very brazen, indeed.

Homes for the rich, middle class and even the poor were permissible, under any circumstances. Systems in place to protect prospective buyers, that worked fine for generations, were scrapped and replaced with zero down payment/zero document/exotic loan packages. Companies like CountryWide, Wamu, Lehman, Indymac and Bear made a fortune for themselves, enticing the little guy to grab a piece of Americana. The deal guys made so much money, the high end art galleries in NYC were running low on supply.

All of this was fueled and encouraged by the government and the Federal Reserve.

Fast forward 7 years, we see the damage of a society that acted irresponsible.

We, as a nation, dishonored the deaths of those who perished on 9/11— and those who died in combat following. Instead of building a better country, one that valued the important things in life; we got greedy and literally ruined the financial system—all in just 7 short years.

Think about it.

Now we have a new crisis, a financial one. This one cannot be rebuilt by a few dozen construction companies. In a sense, one could argue that we have caused more damage to this country, following 9/11, than the actual terrorist attack itself.

I am sure the bastards who flew planes into our buildings are pleased.

Yet, here we are, many years later, with no leadership and no good ideas. It’s just more of the same.

As for the markets:

The Lehman Brothers Holdings Inc. [[LEH]] story is not going to end well. I sense they are the sacrificial lamb for the Treasury. They will justify their Fannie/Freddie crime by saying: “look, we let Lehman fail.” The ripple effects will be staggering.

Also, the Washington Mutual, Inc. [[WM]] situation is far more serious. Once they default, the FDIC will have to pony up some serious capital to insure depositors.

Finally, I like short Legg Mason, Inc. [[LM]] , PacWest Bancorp [[PACW]] and Comerica Incorporated [[CMA]] here, in addition to may others. And, of course, [[SKF]] and [[SRS]] are still very, very cheap.

NOTE: So much for Merrill Lynch & Co., Inc. [[MER]] holding that deal price, right? Morons.

Roubini is on fire in his latest piece. Here is a teaser; go read the whole thing:

This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).

Consider the idiocy of technical analysis (no offense to Brian from Alpha):

Had you been playing Gordon Gekko in your basement office a few weeks ago, fiddling through Fannie Mae [[FNM]] , Freddie Mac [[FRE]] and Lehman Brothers Holdings Inc. [[LEH]] charts, you might have bought them—due to a “pending breakout from the base,” or something stupid like that. Then, all of a sudden, one day you walk down to your moldy office to check a few morning quotes, then BAM: FNM and FRE are at zero, punching a hole through your “morning mug,” courtesy of Premier Paulson.

Seeing how positively the other banks were reacting, with most up more than 6% that day, you bought more LEH— with the courage and fury of a mountain lion trapped inside a gay club, located near the outskirts of San Fransisco.

The following morning, you step into your “work arena” and BAM: your face gets ripped off by another 45%.

The moral of the story is: if you do not have it, you cannot manufacture ways to get it. Only a select few can manage money, with God-like precision, like men who walk in the shadows and punch people in the kidney’s with empty monster energy soda cans, just for a few good trades.

As it pertains to this tape:

Use your charts for the indices, not individual stocks.

Finally, this was your bounce, gentleman. Now get ready for the real fun.

NOTE: For the day, “The Fly” was up more than 4.9%, led by gains in commodity related names and betting against Bill Miller.

NOTE II: The preferred market is officially closed for many banks, thanks to Comrade Paulson. It will be interesting to see how they raise capital, within the next week.

I sold short 2,000 Legg Mason, Inc. [[LM]] @ $43.80.

Disclaimer: If you short LM because of this post, your only daughter will marry Keith Olberman. And, you may lose money.

The [[RKH]] is way too high, considering Lehman Brothers Holdings Inc. [[LEH]] is half dead. The very notion that the banks have bottomed is laughable at a minimum, violently vomiting with craze at a maximum.

Remember, many of the regionals got “rear ended” by Paulson. Many of them were long Fannie and Freddie preferred, even common stock.

The easy short cut is to sell short RKH.

To execute like a highly trained ninja, who has sharp swords and ample supply of smoke bombs, sell the following too:

Sovereign Bancorp, Inc. [[SOV]]

[[FED]]

PacWest Bancorp [[PACW]]

Marshall & Ilsley Corporation [[Mi]]

CapitalSource, Inc. [[CSE]]

Pzena Investment Management, Inc. [[PZN]]

Legg Mason, Inc. [[LM]]

KeyCorp [[KEY]]

East West Bancorp, Inc. [[EWBC]]

Synovus Financial Corp. [[SNV]]

That’s my list and I’m sticking to it.

As an aside, it’s rather amusing to see the home wreckers aka casino stocks getting the knife to gut treatment. Unfortunately, I am no longer short Las Vegas Sands Corp. [[LVS]] . However, I wish I were.

In that space, Wynn Resorts, Limited [[WYNN]] , Boyd Gaming Corporation [[BYD]] , MGM MIRAGE [[MGM]] and LVS are my favorite ways to bet against legalized crime.

On the long side, the commodity related stocks have bottomed, ahead of the actual commodities. This is an early tell, God willing.

Again, the quick short cut is to own [[DIG]] , [[IEO]] and [[UNG]] . However, if you’re into individual equities, take a closer look at National-Oilwell Varco, Inc. [[NOV]] , EOG Resources, Inc. [[EOG]] , United States Steel Corporation [[X]] , Potash Corp./Saskatchewan (USA) [[POT]] , Arena Resources, Inc. [[ARD]] and Freeport-McMoRan Copper & Gold Inc. [[FCX]]

Do American capitalists still exist?

All of this jargon, discussing the “greatness” the government bailout of Fannie Mae [[FNM]] /Freddie Mac [[FRE]], is making me sick and ashamed to work on Wall Street. As a matter of fact, I would like Hurricane Ike to make a quick turn and come up here (NYC), in order to wipe out the exchange. Wall Street needs a good category 5 hurricane to “clean up” the garbagio.

How is it a “good thing,” when the U.S. government is now the proud owner of your house? Directly, they now own more than 75% of the mortgages, implying they own the land too. So, has anyone thought through the long term ramifications of this? Anyone?

Abuse of powers, land grab, you name it—it stinks to high heaven.

On top of that, no one is going to want to work at Fannie anymore. From here on, Fannie and Freddie will be operated by the same bureaucrats who run welfare, medicaid and social security: fargin’ losers.

On top of that, President Paulson has subordinated the tax payers money to the GSE bond holders, such as Russia, China and oh yeah Bill Gross and the Pimco pimps. This all sounds like a grand idea, if you are a sovereign wealth fund or have a net worth north of 2 billion.

However, for the average Joey Bag o Mortgages, this is a disaster. In time, Fannie and Freddie will become so corrupt and so gay, credit will seize up—due to unavailability of loans. I wonder if the government will elect to tap the Fannie/Freddie surpluses (providing they will ever have one), just like they “tapped” our social security fund, over the decades?

Heck, if the government is right, and housing bottoms, they can make a fortune owning both agencies. With the profits, they can buy all sorts of stuff and fund exorbitant amounts of “pork barrel” projects.

In other news, the basic resource stocks are bouncing hard here. I am still “deeply out of the money” on my positions; but it’s nice to get a little respite, nonetheless.

I would not add to any basic resource positions yet. If anything, I’d wait until 3:30 to execute new positions.

Finally, the Lehman Brothers Holdings Inc. [[LEH]] news was so non-eventful I feel like shorting the stock again. They have nothing. They are trying to douse the flames; but it’s too late. Once LEH is out of the way, all guns will aim to Merrill Lynch & Co., Inc. [[MER]] . Regardless of what Cramer says (he’s just a Thain jerker), MER blows.

Top pick: [[SKF]]

I don’t know why, but when other people in the financial industry do poorly, I get all happy. Don’t panic. I’m not alone in this shameful display of schadenfreude; everyone in the business wishes doom upon his competition. The only person “The Fly” roots for is Howard. I’d like to see Howard make 200% for the next 10 years, raise 50 billion dollars, then fart on live television, following a Larry Kudlow question.

Anyway, as you know, with the commodity tap out, many funds are rumored to be folding tent, including Cramer’s favorite: Atticus Capital.

With 13 billion under management, an Atticus failure would definitely cause ripples. The question is: are they done?

You decide:

Here is their most recent reported holdings, in order:

Union Pacific Corporation [[UNP]]

Burlington Northern Santa Fe Corporation [[BNI]]

ConocoPhillips [[COP]]

MasterCard Incorporated [[MA]]

NYSE Euronext [[NYX]]

Occidental Petroleum Corporation [[OXY]]

Freeport-McMoRan Copper & Gold Inc. [[FCX]]

Crown Castle International Corp. [[CCI]]

Baidu.com, Inc. (ADR) [[BIDU]]

Norfolk Southern Corp. [[NSC]]

Peabody Energy Corporation [[BTU]]

Canadian Natural Resource Ltd (USA) [[CNQ]]

The Boeing Company [[BA]]

Praxair, Inc. [[PX]]

Focus Media Holding Limited (ADR) [[FMCN]]

Genomic Health, Inc. [[GHDX]]

In other news, U.S. Treasury default swaps hit a record today, thanks to the Fannie/Freddie bailout.

Contracts on U.S. government debt increased 3.5 basis points to a record 18, up from 6 basis points in April, according to CMA Datavision prices for five-year credit-default swaps at 5 p.m. in London. Credit-default swaps on German government bonds cost 8 basis points and Japanese bonds 16.5 basis points.

So, contrary to what all of the dollar circle jerkers are saying, the U.S. is not better off than Europe, when it comes to possible insolvency. In other words, in order to insure yourself against the U.S. Government defaulting on their obligations, you now have to pay through the nose.