What A Wonderful Day

539 views

I am 70% long, and this is what my day looked like:

BAS +12.61%
CCJ +7.56%
HCLP +3.42%
ALDW +1.99%
VOC +1.76%
TIS +1.48%
OMAB +0.70%

It’s difficult to scoff at a day like that.

Yes I am still down from 2014. I have no desire to hide behind spin. 2014 was a horrible year. But as I said to those of you asking why I was still hanging around BAS, it was because BAS had 100% of upside…at least. And now here we are, closing in on $10 from $5.

I like all on the list. I’ve carefully vetted these positions and wouldn’t it be something if it was these same positions that ultimately redeemed me? I’m not wedded to the thought (for fear it will kill me) but it’s certainly quite possible.

OMAB Traffic Trends 23% Higher In March, Year Over Year

1,300 views

OMAB operations continue the ascent as traffic in March rose 22.9% year over year. Total traffic in the first three months of 2015 compared to 2014 rose 17.5% across domestic and international travel. This compares to February passenger growth of 17.0% with total traffic growth in the first two months of 14.5%. January traffic growth, 2015 from 2014, was 12.2%.

OMAB is on fire right now, and the name is on nobody’s watchlist. The stock is in a long uptrend and still cheap. It’s paying out over 7% annually, which in this interest rate environment is some sort of crime.

I cannot wait for the next quarterly earnings report. It is going to be gangbusters.

9th Floor, out.

Tumultuous Action In Oil Names

1,488 views

The inventory build in oil was about three times greater than what the market was expecting. Oil prices slid fast throughout the day and the sector by and large reversed the recent move. But going into the final hour of trading, there does seem to be some minor strength ticking up. BAS notably was flat just about an hour ago and could tread water some more.

My guess: oil returns sub $50 for a spell and weak players get slapped around some more until someone finally closes shop. The inventory builds are big but the overall market imbalance is much less so, in the grand scheme of things. US inventory is building rapidly but only partially due to overproduction. Recent currency moves have contributed to the problem by trapping US crude with uncompetitive manufacturing and refinery businesses behind an export barrier, which is why oil companies are banging the drum so loudly on crude export rules. My guess is that at least half the build is probably from dollar strength pricing US competition out of foreign goods markets.

There is no reason to think the Fed will just sit by while the US economy slides into a recession. They’ll have to defend the dollar at some point (or what do you call intentionally making it weaker anyway?). But in the meantime, things could get rough. Oil majors are only halfheartedly looking to fix the problem; they’d really like to gobble up all the small competition for pennies on the dollar first to keep their proven reserves stacked. So yeah this could get worse before it gets better.

Still, I’m thinking now is a perfectly good time to start building positions in known survivors. The majors themselves are cheap, given how huge they are and that they aren’t going anywhere. Everything that made oil majors a crappy investment when they had a premium attached makes them the perfect choice now that they’re going for no premium. If you pick the right foreign oil major, you can even get paid in non-dollars and – God help us when the Fed finally delivers a weaker dollar – make a second strong killing on the exchange back into the US.

New Position ALDW

2,281 views

This morning I purchased a full 10% position of ALDW for $18.73 per share. The company is on fire from cheap crude oil and a wide crack spread. Prices for refined products like gasoline have firmed up noticeably in the past month or so, and the company’s 2014 numbers were solid.

I have a full write up on ALDW coming in the next edition of the Income Investment Report (to be released this weekend) and will be releasing the analysis of this company as a freebie to the masses, as a token act of goodwill.

My cash position is down to 30%.

Oil Markets Are Destroying Themselves

3,466 views

We’re still in the midst of watching the oil industry unravel in spectacular fashion. I do not feel comfortable even uttering the word “bottom”, not even in jest, for the fear the entire structure would unwind and usher in $10 oil for two decades.

We need more expensive oil. I know you do not want to hear that; why just a few weeks ago I saw a long dormant Hummer H3 roaming the tundra planes of southeast Michigan. A once formidable species, these vehicles could once be seen all across the North American continent.

Their reemergence was a startling sign. Gasoline has gotten cheap.

It is comforting to think of these lower input costs as an unchallenged blessing to America. It is more complicated than that, I am afraid.

High oil prices have been one of very few elements that has actually helped foster stability in third world countries. Watching the recent turmoil and wars, it is easy to forget just how unnaturally peaceful the most recent decades have been in the grand scheme of things. Oil money has been used to weave the social fabric in these places and if oil prices stay low for a sustained period, we are going to see much more egregious cases of foreign sovereign collapse.

Oil prices have also driven the US recovery. The shale revolution was named thusly for a reason; job growth in the US would not have been possible without the advances in shale oil. This is a major pillar of the US recovery and without it our economy is going to suffer. High input costs were a minor inconvenience that came with job growth.

And of course there is the euro. The euro may just be the cause of the oil collapse in and of itself. I cannot say for certain yet, but I am suspicious. The euro and dollar are now almost at parity and this has crippled US exporters. If our own markets are suddenly sloshing around with oil to spare, it is because we are suddenly priced out of foreign markets. This is a precarious barrier…how cheap would oil need to be in this country to enable exporters to compete against euro/dollar parity? The dollar is going to isolate our business and tank us if we let this continue.

We need to start taking steps to regain stability. Bernanke would have never let this happen. Yellen is pushing for normalization of policy and this is not a bad thing. But they are far too comfortable watching a currency move like this happen with our probably largest trade group. We need a weaker dollar and we need more expensive oil and we need it now.

Now, because oil is so cheap, struggling shale producers are clocking overtime to meet payments. This is the exact opposite of what the oil markets need to find a bottom – a glut of even more oil.

In addition to addressing currency and demand issues, we really need a JP Morgan figure to emerge and start brokering some M&A moves that stitch up the supply side. Oil markets are leaking supply uncontrollably and this is going to cause extensive damage if not treated like the dire risk that it is.

The weak hands need to be either bought out or flushed or secured with long term financing. If we can’t shut some of these wells off, we’re going to have irreparable damage on our hands.

EURUSD Parity Is Nearly Here – A Quick Look Back

2,496 views

There was a time just a few years ago when it was quite fashionable to talk about the European Debt Crisis. Why, we would wake up in the morning, have a spot of tea, some toast and some eggs, then jabber on until noon of eurocrises and pending doom of “The Old World”.

Around that time, I made a prediction that the euro would trade to parity against the dollar. It wasn’t something I could really trade on, since the only available products were untrustworthy scams and the timeline was long and unpredictable.

Here’s the link to the last time I mentioned the call, back in 2012. I suspended it because the then idiot Tea Party freshmen decided to destroy the credibility of the US government and we were still in the middle of easing programs designed to destroy the US dollar.

But I warned then, the future would be full of sudden shocks where the EURUSD would be prone to collapse and near parity. Well, here we are, with the EURUSD rate just now hitting 1.07 today.

This is the key reason why our markets are so volatile right now; especially true for commodities. Oil doesn’t know up from down specifically. The balance of trade is being thrown off.

This ends with stability of currencies. We don’t need the old EURUSD range back per se. We just need the bleeding to stop so we can find a new equilibrium.

What A Wonderful Day

539 views

I am 70% long, and this is what my day looked like:

BAS +12.61%
CCJ +7.56%
HCLP +3.42%
ALDW +1.99%
VOC +1.76%
TIS +1.48%
OMAB +0.70%

It’s difficult to scoff at a day like that.

Yes I am still down from 2014. I have no desire to hide behind spin. 2014 was a horrible year. But as I said to those of you asking why I was still hanging around BAS, it was because BAS had 100% of upside…at least. And now here we are, closing in on $10 from $5.

I like all on the list. I’ve carefully vetted these positions and wouldn’t it be something if it was these same positions that ultimately redeemed me? I’m not wedded to the thought (for fear it will kill me) but it’s certainly quite possible.

OMAB Traffic Trends 23% Higher In March, Year Over Year

1,300 views

OMAB operations continue the ascent as traffic in March rose 22.9% year over year. Total traffic in the first three months of 2015 compared to 2014 rose 17.5% across domestic and international travel. This compares to February passenger growth of 17.0% with total traffic growth in the first two months of 14.5%. January traffic growth, 2015 from 2014, was 12.2%.

OMAB is on fire right now, and the name is on nobody’s watchlist. The stock is in a long uptrend and still cheap. It’s paying out over 7% annually, which in this interest rate environment is some sort of crime.

I cannot wait for the next quarterly earnings report. It is going to be gangbusters.

9th Floor, out.

Tumultuous Action In Oil Names

1,488 views

The inventory build in oil was about three times greater than what the market was expecting. Oil prices slid fast throughout the day and the sector by and large reversed the recent move. But going into the final hour of trading, there does seem to be some minor strength ticking up. BAS notably was flat just about an hour ago and could tread water some more.

My guess: oil returns sub $50 for a spell and weak players get slapped around some more until someone finally closes shop. The inventory builds are big but the overall market imbalance is much less so, in the grand scheme of things. US inventory is building rapidly but only partially due to overproduction. Recent currency moves have contributed to the problem by trapping US crude with uncompetitive manufacturing and refinery businesses behind an export barrier, which is why oil companies are banging the drum so loudly on crude export rules. My guess is that at least half the build is probably from dollar strength pricing US competition out of foreign goods markets.

There is no reason to think the Fed will just sit by while the US economy slides into a recession. They’ll have to defend the dollar at some point (or what do you call intentionally making it weaker anyway?). But in the meantime, things could get rough. Oil majors are only halfheartedly looking to fix the problem; they’d really like to gobble up all the small competition for pennies on the dollar first to keep their proven reserves stacked. So yeah this could get worse before it gets better.

Still, I’m thinking now is a perfectly good time to start building positions in known survivors. The majors themselves are cheap, given how huge they are and that they aren’t going anywhere. Everything that made oil majors a crappy investment when they had a premium attached makes them the perfect choice now that they’re going for no premium. If you pick the right foreign oil major, you can even get paid in non-dollars and – God help us when the Fed finally delivers a weaker dollar – make a second strong killing on the exchange back into the US.

New Position ALDW

2,281 views

This morning I purchased a full 10% position of ALDW for $18.73 per share. The company is on fire from cheap crude oil and a wide crack spread. Prices for refined products like gasoline have firmed up noticeably in the past month or so, and the company’s 2014 numbers were solid.

I have a full write up on ALDW coming in the next edition of the Income Investment Report (to be released this weekend) and will be releasing the analysis of this company as a freebie to the masses, as a token act of goodwill.

My cash position is down to 30%.

Oil Markets Are Destroying Themselves

3,466 views

We’re still in the midst of watching the oil industry unravel in spectacular fashion. I do not feel comfortable even uttering the word “bottom”, not even in jest, for the fear the entire structure would unwind and usher in $10 oil for two decades.

We need more expensive oil. I know you do not want to hear that; why just a few weeks ago I saw a long dormant Hummer H3 roaming the tundra planes of southeast Michigan. A once formidable species, these vehicles could once be seen all across the North American continent.

Their reemergence was a startling sign. Gasoline has gotten cheap.

It is comforting to think of these lower input costs as an unchallenged blessing to America. It is more complicated than that, I am afraid.

High oil prices have been one of very few elements that has actually helped foster stability in third world countries. Watching the recent turmoil and wars, it is easy to forget just how unnaturally peaceful the most recent decades have been in the grand scheme of things. Oil money has been used to weave the social fabric in these places and if oil prices stay low for a sustained period, we are going to see much more egregious cases of foreign sovereign collapse.

Oil prices have also driven the US recovery. The shale revolution was named thusly for a reason; job growth in the US would not have been possible without the advances in shale oil. This is a major pillar of the US recovery and without it our economy is going to suffer. High input costs were a minor inconvenience that came with job growth.

And of course there is the euro. The euro may just be the cause of the oil collapse in and of itself. I cannot say for certain yet, but I am suspicious. The euro and dollar are now almost at parity and this has crippled US exporters. If our own markets are suddenly sloshing around with oil to spare, it is because we are suddenly priced out of foreign markets. This is a precarious barrier…how cheap would oil need to be in this country to enable exporters to compete against euro/dollar parity? The dollar is going to isolate our business and tank us if we let this continue.

We need to start taking steps to regain stability. Bernanke would have never let this happen. Yellen is pushing for normalization of policy and this is not a bad thing. But they are far too comfortable watching a currency move like this happen with our probably largest trade group. We need a weaker dollar and we need more expensive oil and we need it now.

Now, because oil is so cheap, struggling shale producers are clocking overtime to meet payments. This is the exact opposite of what the oil markets need to find a bottom – a glut of even more oil.

In addition to addressing currency and demand issues, we really need a JP Morgan figure to emerge and start brokering some M&A moves that stitch up the supply side. Oil markets are leaking supply uncontrollably and this is going to cause extensive damage if not treated like the dire risk that it is.

The weak hands need to be either bought out or flushed or secured with long term financing. If we can’t shut some of these wells off, we’re going to have irreparable damage on our hands.

EURUSD Parity Is Nearly Here – A Quick Look Back

2,496 views

There was a time just a few years ago when it was quite fashionable to talk about the European Debt Crisis. Why, we would wake up in the morning, have a spot of tea, some toast and some eggs, then jabber on until noon of eurocrises and pending doom of “The Old World”.

Around that time, I made a prediction that the euro would trade to parity against the dollar. It wasn’t something I could really trade on, since the only available products were untrustworthy scams and the timeline was long and unpredictable.

Here’s the link to the last time I mentioned the call, back in 2012. I suspended it because the then idiot Tea Party freshmen decided to destroy the credibility of the US government and we were still in the middle of easing programs designed to destroy the US dollar.

But I warned then, the future would be full of sudden shocks where the EURUSD would be prone to collapse and near parity. Well, here we are, with the EURUSD rate just now hitting 1.07 today.

This is the key reason why our markets are so volatile right now; especially true for commodities. Oil doesn’t know up from down specifically. The balance of trade is being thrown off.

This ends with stability of currencies. We don’t need the old EURUSD range back per se. We just need the bleeding to stop so we can find a new equilibrium.

Previous Posts by Mr. Cain Thaler