Saturday, April 30, 2016
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Joined Nov 10, 2007
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Here’s My Favorite Part of the $CVX Earnings Miss

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Production is essentially flat year over year. Let’s recap the current and apparent oversupply situation in the oil patch.

Russian production: all-time highs

Saudi and OPEC production: all-time highs

CVX oil production: all-time highs

The King of the Frackers, PXD’s oil production: all-time highs

etc., etc., etc.

Boy, this price decline has really hurt oil production, no? That’s how oil bottomed, right? All of the marginal players stopped producing and the supply/demand situation tipped the scales into the bulls favor, right?

None of that shit happened. These companies are drilling faster than ever. Supply is at record levels. The terminals at Cushing, OK are brimming with light sweet crude.

Highlights of the CVX quarter, courtesy of Briefing.com.

  • Reports Q1 (Mar) loss of $0.39 per share, $0.23 worse than the Capital IQ Consensus of ($0.16); revenues fell 31.9% year/year to $23.53 bln vs the $22.74 bln two analyst estimate.
  • Co said, “Our Upstream business was impacted by a more than 35% decline in crude oil prices. Our Downstream operations continued to perform well, although overall industry conditions and margins this quarter were weaker than a year agoOur efforts are focused on improving free cash flow,” Watson stated. “We are controlling our spend and getting key projects under construction online, which will boost revenues. We announced first LNG production and first cargo shipment from Train 1 at the Gorgon Project in March. Production from the Angola LNG plant is imminent and a cargo shipment is expected in May. Earlier in the year, we started up production at the Chuandongbei Project in China, and we continue to ramp up production in the Permian Basin and elsewhere.”
  • Upstream: Worldwide net oil-equivalent production was 2.67 mln barrels per day in first quarter 2016, compared with 2.68 mln barrels per day in the 2015 first quarter
    • Production increases from project ramp-ups in the United States, Nigeria and other areas, and production entitlement effects in several locations, were offset by the Partitioned Zone shut-in and normal field declines.
  • International: International upstream operations incurred a loss of $609 mln in first quarter 2016 compared with earnings of $2.02 bln a year earlier.
    • The decrease was due to lower crude oil and natural gas realizations, the absence of a first quarter 2015 reduction in statutory tax rates in the United Kingdom, and lower gains on asset sales. Partially offsetting these effects were higher liftings and lower exploration expenses. Foreign currency effects decreased earnings by $298 mln in the 2016 quarter, compared with an increase of $522 mln a year earlier.
    • International downstream operations earned $488 mln in first quarter 2016 compared with $717 mln a year earlier. The decrease was primarily due to lower margins on refined product sales, partially offset by lower operating expenses and a favorable change in effects on derivative instruments. Foreign currency effects decreased earnings by $48 mln in first quarter 2016, compared with an increase of $54 mln a year earlier.
      Refinery crude oil input of 795,000 barrels per day in first quarter 2016 increased 13,000 barrels per day from the year-ago period, mainly due to lower turnaround activity, partially offset by the divestment of Caltex Australia Limited
  • Downstream: U.S. downstream operations earned $247 mln in first quarter 2016 compared with earnings of $706 mln a year earlier
    • The decrease was primarily due to lower margins on refined products, an asset impairment, higher operating expenses primarily due to planned turnaround activity in first quarter 2016, and lower earnings from the 50%-owned Chevron Phillips Chemical Company LLC. Refinery crude oil input in first quarter 2016 increased 4% to 957,000 barrels per day from the year-ago period

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AK Steel Just Diluted by 30% with Monster in the Hole Secondary

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The company just issues 52 million shares at more than a 10% discount to yesterday’s closing price. Before this, the company had 178 million shares. For those of you with rudimentary math skills, that equates to a little more than a 29% dilution to the current shareholder base.

The stock is sharply lower in the pre-market, obviously.

The reason for the filing? It’s simple. They want to survive.

They intend to use the proceeds to pay down a $1.5 billion credit facility. The banks in 2008-2009 did the same thing. You should know what you’re getting involved with, prior to buying into the energy space. Starting 2017, there is going to be a hell-storm of debt starting to mature. To meet the expenses or refinance the debt, companies will either tap the bond market or file dilutive jaw-breaking secondaries, like the AKS one today.

Enjoy.

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European Markets Crushed Lower; U.S. Futures Point to a Pain Filled Friday

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Good, you all deserve to lose money, betting long in a market destined for horrible things.

Dow futures are off by 70, which is amusingly hilarious, since The Facebook, LinkedIn, Amazon and so many other fantastic companies beat estimates. This is classic misdirection. You are provided with a few sexy bullet points, while the whole system underneath erodes and rots away.

Both the CAC and DAX are sharply lower, by 1.7% and 1.9%, respectively.

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Gold and Yen Hit New 15 and 18 Month Highs

Miners dig for gold in an open-pit concession near Dunkwa

Both gold and yen aren’t supposed to go up with stocks, right? The Japanese banking system is fighting tooth and nail to undermine its currency, yet it rises on a daily basis, now at 18 month highs.

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Traditionally, gold had risen with inflation. But since that’s non existent and deflation is the real enemy, as indicated by the explicit actions of virtually every central bank in the world, one has to surmise the recent run in gold is due to more of a fear trade, not inflation hedge.

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China’s Banking System is a Lit Powder Keg

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Stick around and it’ll blow your arms and legs clean off.

Here’s an old article from January of this year.

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Okay, you read it right? Bad loans are soaring in China, amidst the sharpest economic slowdown in 25 years.

Now watch this.

You tell me how this ends.

The noose is swinging from the gibbet waiting for a neck to wrap itself around.

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Bezos Wins Again; $AMZN Posts a Ridiculously Great Earnings Report

Amazon.com President, CEO and Chairman Bezos  laughs as he answers a question at the Consumer Reports headquarters in Yonkers

Bezos is everything Tim Cook wished he was, sans the bald head and proclivity to procreate with the opposite sex.

Amazon absolutely crushed numbers. Did I mention that the Amazon Echo is, by far, my favorite electronic device?

Reports Q1 (Mar) earnings of $1.07 per share, $0.47 better than the Capital IQ Consensus of $0.60; revenues rose 28.2% year/year to $29.13 bln vs. $28.0 bln consensus; operating income $1.1 bln vs. ests of ~$545 mln and $100-700 mln guidance.

NA operating income +131% to $588 mln; net slaes +27% to $17 bln
AWS operating income +210% to $604 mln; sales +64% to $2.6 bln.

Co issues in-line guidance for Q, sees Q revs of 28.0-30.5 bln vs. $28.34 bln Capital IQ Consensus; operating income of $375-975 mln vs ~$850 mln estimate.

AMZN is higher by 12% in the after-hours, within range of new highs. That’s just plain crazy.

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Icahn Blows Out of $AAPL, Cites Chinese Slowdown as Catalyst

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This is a big deal, unless of course Uncle Carl has gone senile. Last I checked, he was still winning in HLF, however.

Nevertheless, Icahn exiting Apple, the world’s largest company, is the same as saying he’s getting out of tech. If big money managers are exiting tech, which constitutes 23% of the S&P 500, the market isn’t going higher from here.

“We no longer have a position in Apple,” Icahn told CNBC. Icahn sold most of his remaining stake in February, he said. “I got out because I’m worried about China.”

Icahn perceives a risk in Apple’s relationship with China and that made his already profitable investment in the company no longer a “no-brainer,” he said. China shut down Apple’s iTunes Movies and iBooks services recently, showing that the company is no longer immune to the reach of Beijing regulators.

“You worry a little bit, and maybe more than a little, about China’s attitude,” Icahn said. Apple has a good relationship with China, providing vast employment there, but also relies on the country for lots of sales, he said.

“We have this huge profit so by definition it’s not the no-brainer it was — but two — if China was basically steady I would probably go back into” Apple, which he reiterated he viewed as a great company with great management. “I hope one day to get back into it.”

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TERROR STRIKES WALL STREET; THE DOW DROPS BY MORE THAN 200 AS DOOM BECKONS

The Wall Street bronze Bull looks out to

This is distribution. The market has topped during late April. I wonder who said this would happen, almost to the exact day.

Stocks are, for lack of a better term, plunging lower. We are seeing losses strewn out, across the board, in a most heinous fashion. For the better part of the past two month’s homosexual giraffe’s have been running this market higher, based on the theory that men could indeed urinate, standing up, in the ladies room, and that QE would save the day, and that oil was bottoming, etc, etc, etc.

All of that was wrong, AND MORE.

Earnings have been an abomination. The very thing that is supposed to fuel stocks higher, will indeed crush them back to the February lows, and even lower.

TLT is trading higher again, now up more than 9% for 2016, by far the best performing asset class worth allocating into.

Dark, dark, even grim, days lie ahead. Brace yourselves for the storm to come.

NOTE: The iBankCoin Bootcamp schedule has been posted. I hope to see you all there.

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Now This is My Sort of Sordid Market

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I feel like the Devil on here, always prognosticating doom. But the voices inside of my head tell me to say these things.

Pardon the lack of news on the site today. There was a lot of things to cover, such as J. Boehner calling Rafael Cruz ‘Lucifer in the Flesh’ and what not. But I’ve been a little busy dealing with some things, which have–inexorably– led to this.

Say, for example, someone put a shotgun to my head, demanding to know where I thought the markets would be by X-mas. Although reticent to work under such undue pressures, finally, I’d succumb and offer my advice. Without question, I’d say we’d be 30% lower from where we are today. See, that’s the statement of a madman, one steeped with bedlam, from a man wholly interested in seeing everything rip from its roots.

This is all true, but for good and just reasons.

Markets will knife lower. When it does, you will all flock to these halls hoping for a ride on my ark, at which point I will hit you with my solid oak oars and tell you to be gone.

Back to reality, the SPY is lower by 0.35% and the whole centaur on the NYSE dream of mine is nothing more than fantasy.

To dream is to live, is it not?

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Figures…Market Wants Moar Gains

Orson Welles 1960s

Boy have I missed out on one heck of a run. Then again, I was burnt the fuck out, like a frozen waffle left in the oven at 500 degrees for 2 hours. I’ve been trading these stupid stocks my whole life, ever since I was 10. When I was a teenager, I took some money that was given to me through a lawsuit and started to make my mark.

I became a stock broker, made buckets of coin, became cynical and jaded, made an egregious error in 2014, then burnt out. That pretty sums up my career, one that I do not look back upon as an experience worth my time.

Writing this blog, creating stuff in Exodus, banning readers, ranting and raving, that’s what I was born to do.

I WAS BORN TO RANT AND RAVE.

Stocks do not want lower today. The clowns are out in full force, sashaying around in the wrong bathrooms, buying the wrong stocks, for all the wrong reasons.

There is going to be a brutal sort of hell to pay for all of this perfidy. When it happens, you’ll be able to find me on the ark. I’m always on that thing, watching the waves and examining cloud formations.

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