It’s been long enough that I’d say I actually need to give an introduction and background here.

I’ve owned Cameco since Fukushima; literally, I bought my first round of shares at $29 while the reactor was melting down. Since then, I’ve built a position, by averaging in and trading rips, that has a cost average around $21.

My belief was that, at the time, commitments to roll back nuclear power facilities were vastly overconfident (if not totally unrealistic) and would ultimately end in retraction. So far, I haven’t seen anything to make me change my views on this. I also felt that the dangers of nuclear power and the consequences of the Japan problem were being overblown. Nuclear accidents have traditionally been forecast to be, literally, millions of times worse than they actually are.

Recent developments in the space include:

1) Japan is prepping 4 more reactors to reopen, while creating the review process to speed things up a bit
2) Tokyo Electric is getting impatient, using a subsidiary of itself to start pushing back against government agency claims that any of its reactors lie on fault lines
3) China is ramping up construction of power plants
4) They’ve also discovered Fukushima is leaking radioactive water – could stiffen the process back up
5) The forced shut down is starting to do its damage to nuclear power companies – Japan Atomic Power, for instance, will be forced into a hard bankruptcy shortly if they can’t get operations up and running or, worse, are forced to decommission any of their three reactors. This would flood the market with fire sale priced uranium fuel
6) Russia has not expressed any desire so far to extend the HEU (Megatons for Megawatts) agreement; it currently stands at over 95% completed. Although interestingly enough, Executive Order 13617 (which floods Russia with money for decommissioning nuclear weapons for fuel) has been extended by the Obama Administration under emergency decree. I’d be more inclined to think that’s an indication a new agreement is being drafted, if I didn’t know how much politicians like to fling slush fund money around to friends and enemies alike. For the moment, I’m predisposed to believing Putin will not be crafting a new agreement

Altogether, the ability of the uranium market to shore itself up depends on Japan for now. There is a visible push to get the reactors up and running, and elements of the government seem at least partially favorable to it. For the last two years, the uranium market has been frozen, as the fuel miners and electricity producers sat in a stalemate, waiting to see what would happen next.

We’re about to find out, I think.

If Japan can successfully navigate back to nuclear power, it would thaw the uranium space, encouraging power companies that have been so far waiting to see if nuclear opposition would gain more traction, or if Japan’s unspent fuel would be up for sale, back to the markets to bring their fuel cycles up to speed.

If not, Japan power companies will likely start to arrest, plunging the entire sector back into violent fluctuations. For this reason I am exclusively a holder of CCJ, and no others, because they are too small and will have trouble surviving if everything doesn’t pan out just right. This does worry me, as Japanese culture is notoriously slow and patient, almost to a fault. It is not completely out of the question that they let their power companies crash. I simply have to hope that they don’t.

Long term, the sector is ripe, with lots of new demand, and supply concerns at current production targets. However, any disruptions could easily drag out the recovery another few years.

CCJ is greater than 20% of my account.

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I will not suffer another disappointing year because of the intransigence of the oil market. If you fools want to fling your money at oil as manufacturing disappoints and demand falls, all because of a little Egyptian Suez’ concern, by all means, lose your shirts.

You’re not taking me down with you.

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If there’s one thing you can count on lately, it’s for the oil market to make exactly the wrong decision going into summer. It’s almost a joke, really. To whichever analysts are sitting at office right now, prepping that liability report explaining why they loaded up on oil contracts going into the summer for the third year in a row, I have the following advice.

For the moment, just carve out any data sets you may have from before 2009. They aren’t worth the bits they’re stored on.

The entire move testing $100 has been shut down. The only remaining question is, do we hit $88, $85, or $79?

The worst hedge of all time, SCO, came through for me after all.

In other news, one of the Greek political parties has decided to nix the union that has held the country together with a government body. This is of course impeccable timing on the part of the Greeks, as there just wasn’t anything else we may have been worried about at this exact moment.

Today, I will be enjoying a fine chicken breast seasoned with fresh thyme from my garden, set out on the veranda, to celebrate the unstemming slaughter.

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Waiting for an oil market correction is a lot like watching toddlers playing with toys from the next age category up. The pieces are all there, and they’re having the time of their lives, but they sure as hell have no clue where anything goes.

Italian numbers were just abhorrent this morning. And the long assumed 8% growth rate of China has been humiliated. European recovery and Chinese domination were all cornerstones of the global growth theory. They have since been shattered, but like Wile E. Coyote, the market hasn’t quite worked out that things have changed.

The oil inventory number that got everyone excited last week can be explained away as a one off. Moving inventories around and offloading them to storage facilities. But there’s no doubt that oil demand continues to fall. ISM numbers, manufacturing, foreign economic GDP…it’s all telling the same story. There have been only a handoff of positive reads, and they’re being put on a pedestal, when they should be put under scrutiny.

I’ve seen this plenty of times before now. Oil prices stay elevated, ignoring the bad news, assuming that sooner or later something good will come along to set it all straight again. And the market ignored the news for months.

Then it implodes.

The losses never last long; just a few months. But the moves are fast and gargantuan.

So sit back and enjoy the game for a while. Play it if you want. I’m content to spend nine tenths of the time waiting for that one special moment when all the real money gets made. It’s coming – like gravity.

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Per the course, some dipshit(s) is loading up on oil going into the teeth of the summer slowdown, keeping steady pressure on the contracts. Who exactly it is that thinks buying crude oil while inventories are undergoing surprise builds and PMI is missing expectations, I cannot say. All I know is that this is cliché.

The market is rolling over and some genius is trying to strip down my shield and use it for a wake board on a lake somewhere.

The euro is also hitting pressure around that 1.3 area. Look, Europe is inevitably at the heart of this slowdown. Their unemployment and economy issues are what is derailing China. Japan is front and center, but Europe is always lurking in the background.

If we slow down, there is zero chance that the euro can hold this strength.

On the positive side, CLP shook off analyst downgrades and lawyer harassment and rallied more today; mostly because it’s a good deal.

I don’t know what it is about the bar exam that turns people into sociopaths – I don’t want to know. The truth is, I actually hope these law firms piling on fiduciary inquiries succeed in getting MAA to pump up the offer, just to seal the deal. But when it’s all said and done, the lawyers pushing this harassment of CLP’s management should seek professional help.

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This is not what the dip buyers expected, oh my no. The crowd that has been carrying around banners and blaring on trumpets, to inform you that the economy is growing and stocks are of great value here, did not anticipate that such a PMI number could ever be sold.

I watched them with particular ire this morning, as they skipped around Twitter like the blasted little bastards that they are, mocking anyone who was so “audacious” to question it.

“So US economic data just keeps beating, and people are scratching their heads that stocks aren’t going down? Lulz,” they said, perhaps exactly literally.

“Up next, everyone who said #GrowthSlowing yesterday will have to ignore today’s data,” they cried, perhaps being lifted verbatim from their handle.

I laid out on January 15th exactly how events would transpire, and you are beginning to watch them unfold, plus or minus a little time margin of error.

For the fourth year in a row, the mighty intelligentsia have managed to pull off a mind numbingly stunning failure, buying too much into some holiday numbers and a hundred-billion-dollar-a-month shower; then washing it all down with a UoM confidence report that I still can’t for the life of me figure out why we bother reading.

Watch oil, champs. The summer slowdown is here.

Off to count my stacks of cash…

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