I brought cash down to 40%, making purchases of all three names.

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Not bad all things considered. CCJ, HCLP, OMAB and TIS all went higher, with HCLP up more than 4%, OMAB up more than 3%, and TIS up more than 2%. BAS was down 1%, but this is a process.

BAS just recently announced their rig count numbers. Utilizations are way down, from 67% at the beginning of 2014 to 56% today. 4% has occurred just since the start of the new year.

Well? We’ve seen that these methods are more expensive. Now let’s see how cheap they can be. And who’s going to be around next year. My guess; BAS are champs.

If oil prices run back to $100 now that Russia has decided to play nice, I will die from laughing. The days of global competition are done; the USA is the victor. I know you defeatists want to apologize for our might – it’s nothing but luck of course, and that is somewhat true – and rekindle the “peaceful” yester-years of blood thirsty despots butchering the peasants for land and spoils, never ending. Save your breath.

Someone was going to win this game sooner or later, and it looks like that someone is us. Rather than wishing upon us another 1,000 years of savagery, suck it up and move on. You could hardly ask for a more genteel ruler than America, no? What other nation has ever spent this much time self-reflecting and prostrating over the vanquished?

Our President’s order is about to smote tens of thousands to ruin. And when he is finished, he will give a long, sophomoric lecture on the importance of civility and equal opportunity in the global marketplace. Could you imagine the look on the faces of Genghis Khan or Alexander the Great, if they could see such a spectacle? I imagine they would have both cast down their arms and retired to spend their final days as hermits.

What comes next is very important. The crowd is skittish, but today surely helped. We need Brent to breach $60 soon, and it would be very constructive if bond yields of the safe havens could, you know…yield something again.

The people are very scared of the Eurozone breaking up…for why, I could not possibly tell you. The euro has brought nothing but suffering on the nations of Europe. It was as if a spattering of intellectuals across the continent tried to trick Germans, French, Greeks, Italians, Spaniards, Finnish, Austrians, Belgians, Irish, Dutch, and Portuguese people into thinking they were all from the same place, like they wouldn’t figure it out.

It seems that way because that was exactly what happened. Such a brainless ploy. And almost set up to fail, from the beginning. The number of American economists, almost uniformly and unanimously across all walks of life, that laughed at this idea; it is incredible.

I will spoil the ending. Greece is going to walk away from the Eurozone, and nobody will care.

Did creating the Eurozone destroy the global economy in the first place? There were many currencies that were trading one day that didn’t the next. The euro came out and life went on. Reversing the process is no different, except at the end of the rainbow, Greece defaults and ruins their credit rating for a decade, and a bunch of banks get whacked (what else is new?). Then voila! we have a brand new example of what not to do when managing a country, as Greece becomes the butt of jokes for a half century (see France as to fighting wars or Venezuela as to not being filthy animals, for reference).

I remain cash heavy for now, but am looking for that moment when people start getting excited again.

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I am getting constructive on oil markets, and starting to feel more comfortable with my BAS, VOC and HCLP positions. I may just edge in a little further, in another month or so.

I understand how dark prospects for oil are right now; we have numerous estimates calling for the total dismantling of oil, sending it into the $20’s, and suddenly those forecasts aren’t feeling quite so fanciful. It’s the fear creeping up in people.

But how many of these forecasts existed before last October? Tell me that, will you? Back in July, it was only a matter of how many $10’s we could stack on top of the $100 mark. Nobody I know was seriously calling for sub-$40 oil. Even those of us who were expecting a pullback had the $70-90 range as a guide. Which is why almost everybody long got smoked. Even scaling a position back to half the size wasn’t enough to escape this (trust me I know).

Which leads me to think a lot of these “experts” talking up ultra cheap crude oil are just trolling the public. Goldman Sachs has a pretty horrible record of forecasting commodities, actually. That’s not how commodity storage facilities work – there you have cheap cost to store and opportunistic offerings and purchases. You also have a futures trading desk which you can tie into to cooperate with. But you still don’t know what’s going to actually happen. You just roll with it and make money as you can.

Names like BAS are chopping 8% every other which way. But they are working a floor in, and steadily, slowly, offering higher prices.

And what about the demand for crude globally? Yes there was a (not really that) significant excess supply gap, which is growing. But that gap existed with $100 crude oil and well development pricing in $100 crude oil. We are seeing just massive layoffs as the industry reacts to new facts on the ground. So future supply is being taken offline.

And to boot, oil is cheap now. So cheap.

Look at industrial output in the Eurozone; one part oil prices, one part a cheap currency. Is that killing the US? Nope, we seem to be absorbing the currency strength but still happily putting along. Cheap oil lifts all boats. I was very concerned that oil prices would make a serious headwind to the US – and certainly on some level it is, gross – but net jobs are working out fine as any complications from the Dakota’s are being more than offset.

Currency games are fun, but net economic growth is all that really matters at the end of the day. If a few thousand losses in one spot beget a few thousand gains in another, then activity will continue apace and crude demand will keep growing. You’re only really in trouble if you start getting net losses.

I think the oil market got way ahead of itself as unabashed speculators got their comeuppance. This is drawing to a close and I wouldn’t be surprised if oil abruptly rediscovers that $70-90 range we all sort of guessed was a fair price. I would not count on crude oil hanging out at levels from the 20th century, because that’s just not how extraction costs have trended.

And ultimately, no matter what crude oil does, I think there are going to be limits to how much devastation we see in oil companies. It doesn’t take much to swing the oil market back into balance; the imbalance is really not that significant. If oil sustains these prices, it will be because it is profitable for enough US shale companies to do so. If US shale cripples, you are going to see way more than just US shale cripple. Which is sort of a Catch 22.

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MONTERREY, Mexico, Feb. 5, 2015 (GLOBE NEWSWIRE) — Mexican airport operator Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., known as OMA (OMAB) (BMV:OMA), reports that terminal passenger traffic at its 13 airports increased 12.2% in January 2015, as compared to January 2014. Domestic traffic increased 11.5%, and international traffic increased 15.8%.

Look I understand; Mexico has a bad rapport…mostly because they can’t seem to maintain laws, their public officials double deal with the mobs to decapitate college kids, and mostly they are a third world country.

But in between being a third world country, they get to be neighbors with us. And as long as they know better than to have relations with dirty commies, there’s no trouble here.

And on that subject, it’s not like Cancun is Mexico anyway. Cancun is America. We just call it Mexico so we can duck labor laws and hide out for a bit. And hang out with Jesse Ventura (who is bat shit crazy, by the way).

So go ahead and ask yourself, who benefits the most from a strong dollar, super cheap fuel (driven by an entire domestic oil boom going bust right above them), and American labor recovery.

The answer my friends is a Mexican airline company. One that has its foot in every stage of the business (from the travel all the way right down to the vending machine you buy from before loading for the trip) like OMAB does.

OMAB is distributing 8% right now, and growing at double digits. Strong currency will make travel for Americans cheap. Think back to our recent history; or even our less recent history when Americans were buying up French property like it was nothing, then burning francs in their faces when they protested.

Dropping the “arrogant American, foreigners are chimps” act, Mexico is making strides to get their act together. Honestly the last chip that needs to fall in place is for the American drug “war” to end (who the shit starts a war with an inanimate object? Crazy people, that’s who…). If that goes, then pretty much the entire purpose and life force of the Mexican mafia dies with it; you would watch Mexico make leaps and bounds forward.

Right now they’re too busy demanding American citizens be forced to disarm (ha…ha ha…hahahah ahahaha…) to make an effective plea to the public. America would be receptive to the “your prohibition movement is getting our people killed” argument if they stopped targeting constitutionally enshrined freedoms and pissing everyone off.

There are many reasons I like OMAB, which range from their performance to their pricing and also their positioning. They have a good lock going on travel around America and Canada’s favorite playground – locations spanning the Gulf Coast to the islands in the center – and increasingly I think you’re going to see the Central and South America’s become more and more important.

The United States have ignored the Southern continent zones for too long. We’re busy playing around in an increasingly less relevant desert for oil that we’re brimming with, and meanwhile a huge resource laden land mass much closer to us is free to be overrun with Bolshevik wannabes. With the self-imposed collapse occurring in several of these places right now, the time is right, and the mood of the resident nations is looking for a change. The U.S. and capitalism can be there so long as we strike good deals and keep the playing field fair and level.

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I purchased shares of TIS for $25.57, bringing my cash position down to 50%.

TIS is a smaller scale North American company that specializes in toiletry paper products. They have good financials and a reliable little operation. A nice little cash generating machine which, as of today, is available at an 8% discount to yesterday.

Not exciting or interesting at all, yet well positioned.

I’ve also got a hunch that companies like TIS will have surprise growth ahead. As I look at more or less the complete dissolution of an entire economy in South America, I can’t help but think that this kind of boring business will have some interesting opportunities over the next few years.

Venezuela is not going to stabilize without outside help. Maduro is too stupid to pull this off alone; the bus driver is going to need to allow some major imports of foreign goods at market prices to stabilize his economy. Or, more likely, whichever successor is first to be found standing over Maduro’s lifeless body will. An entire country is not going to be supplied by any one source, so I’d put good odds that manufacturers of basic products like this, all over North and South America, will stand to profit as supplies redirect southward.

Venezuela may be the worst, but hardly the only party here. There are a handful of similar styled countries in South America that have looming problems and will likely end up becoming ripe targets for North American supply.

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HCLP was up more than 10% today which is of course a very generous reprieve. My book was up just under 2% today which is…um 40% more to go.

For sure, the fastest path to redemption lies in the irons that bound me…the oil sector. If I am going to get a big 50% year (which is not uncommon around these parts, actually), then these oil names are definitely one possible, tantalizing path.

I need to have self control though. I cannot just start loading back up at every little blip.

HCLP numbers were hot but I think that has more to do with men and women rediscovering that, yes, actually there are specialty plays within the oil space that are insulated (at least momentarily) from price shock.

There was never a great reason to sell off HCLP so hard, since as you will recall their operation grew tremendously and it was all contractually accounted for.

Actually, a iBC regular wrote up a rather excellent analysis in the comments of my last post. You should read it here.

To stand, 60% cash and searching like a hawk for the next kill.

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