What A Weird Year

1,034 views

The wind rushes through the curtains, which cloak my 9th Floor office from direct light outside. The summer air is fresh and warm.

So here’s my review of the week; it was strange and fit perfectly in line with the year we’ve been having.

A Bloomberg article speculating on the looming bankruptcy of Saudi Arabia touched off a fierce rally in oil names, while oil itself continued to have the icy hand of death caressing its forehead.

I’m not exactly sure why you would speculate that a country which has no national debt to speak of would be at risk of going bankrupt any time soon. Certainly, the perseverance of US oil drilling is a thorn in the side of the Saudi’s. But those of us here in the 9th Floor had already worked out that might be the case.

The Saudi target was either their other OPEC members or else they just wanted to hang up future well development. In either case, that mission seems accomplished, and what we are seeing – finally – in media is some resistance to the idea that oil prices should go any lower.

Sure we’re all manic depressive now, but these are good signs. Oil will be back to $80 just as soon as we figure out where to put it.

I know I’ve had been in a black mood all year; but not all is going wrong with Cain Hammond Thaler, have no fear of that.

OMAB continues to experience traffic growth of about 16% per year. It’s come down a little from earlier but that is still strong and the stock should continue to outperform.

TIS was a newer position which took a bit of a 30% spill when I bought it – oops – but I liked to the name so I held on. We’re back above $26, reaching for break even and the company just announced sales increased by 45%. Income per share is up 37.5% year over year and unless I’m misreading something, that is coming straight from product sales – no financial gimmicks to speak of. I need to dig in to the numbers a little deeper to be absolutely sure of that, but for the moment I’m pretty pleased.

TIS is one of those names no one has heard of with a really boring business that is going to make me a lot of money. They make toiletry paper products, something South America is going to be in high demand for as their banana republics keep folding.

And ALDW is playing the part of the faithful hedge, now up 32% since I bought it elevated by lower oil prices and stable gas prices at the pumps.

Saudi Announcement Met With Disdain

1,696 views

I was hopeful earlier this week that when Saudi Arabia announced they intended to start reining in their above average pumping activity with the sunset of summer, we might see some relative strength in the price of oil.

The market reaction has been to mostly shrug off the new and keep the price of crude oil sliding, so far. The oversupply of oil is a more pressing and immediate weight on the price per volume which is going to have to be alleviated before any pricing strength can take hold.

Despite the continued weakness in oil prices, oil stocks are staging a small relief rally into the weekend, although I cannot say if it will last much longer.

Outside of oil (which for obvious reasons is something of a point of focus for me), my other positions are doing alright. TIS, OMAB, and ALDW are all staging some strength which is taking some of the edge off.

Now, we are in the midst of one of the more beautiful summers we have had of late; turn your screen off and go outside.

‘Nice Reprieves’ Won’t Stop The Suffering

1,212 views

Here we are on a Tuesday, getting a day of comfortable green price action. It’s remnant of a time when every day stocks melted higher and bears were committing suicide by the hour.

But buddy, this isn’t going to cut it.

While I love finally seeing a little bit of upside I know in my heart that this is just the waft of fresh air that gets you to patiently wait in the smoke filled room while the fire starts to work through the next layer of the walls.

My recent patience with this day after day of unfolding tragedy may be the most unsubstantiated move I have made in more than seven years. I shouldn’t be this comfortable, but here I am anyway, watching the villain saw me to pieces whilst I sip from a small cup of tea.

Only work outside of the task of managing my wealth keeps me from fixating exclusively on this nightmare and probably suffering a massive nervous breakdown / stroke combo.

I want you to hear this, right now: the world isn’t changing that much.

Sure it’s an exciting time to be alive, but you think oil won’t be valuable in thirty years time? You need to open an organic chemistry book or three and get with the program. I have watched this happen enough times to know that the same scumbags who are preaching environmentalism and a return to the times of Friar Tuck from one hand are busy buying anything oil and coal related with the other. Just because you can’t see where or how doesn’t mean that they aren’t.

Venezuela is melting down completely now. There are reports on twitter of inflation rates that crest an annualized 800% – real inflation is more than 120% per year right now. That country is going down, and when it does I do believe the oil market might become a lot less oversupplied.

Or maybe it will be somebody else? Who knows…but so far the US domestics have been holding on like champs. I’m will not get shook out by the freaking Saudi’s, of all people.

I remain convinced that the US domestic boom in oil production remains the best place to hold money for 10 years or longer. Just so long as your positions don’t go out, watching them go down will just make the story better for the kids.

In The Funnel Again

2,014 views

Oh hurray, it looks like deflation is the path forward. All commodities are getting creamed, and no commodity is more commodity-y than oil.

I’m back to flat for the year and feeling as if my head is firmly placed in a vice.

If you had a puppy, I would kick it.

Big Europe Makes The Move…Hopelessly

945 views

This weekend, the Eggs Benedict Presidency himself, Mr. Francois Hollande, is calling for a new government to unite all of Europe. This is the last ditch effort of redlining welfare states to avoid change. If they can create a unified government, the Greeks, Spanish, Italians and French can have a fair shot of papering over their floundering social nets without being forced to undertake any meaningful reforms.

And they have no chance of pulling it off. The mood has decidedly swung against “Europe”. Plus Germany isn’t that stupid.

But it’s quite amazing that we’ve gotten to this point at all and it’s worth spending a few minutes talking about the progression itself. Because just fifty years ago, it would have been unthinkable for an elected leader of a European country to call for full integration of the continent.

It’s worth starting the narrative after the end of World War 2; mostly because so many people were dead at that point that it was essentially a complete reset of the culture anyway. History before World War 2 exists as a sort of odd, discolored picture in time…one who’s inhabitants are almost forgotten.

And as Europe began to pick up the pieces, ghastly images began to emerge of a culture that did unspeakable acts. The death and carnage was so pervasive that it had the almost singular effect of destroying one of the more popular scientism movements – eugenics – practically overnight. As word of the concentration camps that the Axis had erected spread, very uncomfortable associations between our own work with forced sterilizations and gene and culture control here at home began to creep up, and almost instantaneously no one had ever believed in eugenics (despite it being almost blasphemy to argue against it just years early). Michael Crichton had a very excellent speech on this subject and if you haven’t read it, I recommend it in its full form.

And a major knock off effect of this self reflection was a Europe which had become more afraid of its own citizens than ever. I recently read another article (I couldn’t track it down, leave a link if you know the one) that I feel convincingly argued that much of the current EU form was erected to overrule democracy in favor of technocratic decision making by an “enlightened” class. If you want an example of how this plays out, consider that in the UK upwards of half of all new laws originate from Brussels. Lawmaking of this variety clearly denies basic rights of representation; and indeed that is the whole point.

Per this argument, the EU’s terror of its own citizens – which is at the heart of the EU rule making process – is a cultural development in response to the acts of populist movements across Europe in the prior generation.

But this is something of a contradiction. It wasn’t exactly democratic actions that committed those atrocities. Certainly a very vocal and nationalist undercurrent of supporters set those things in motion. But talking to the survivors of those years, one fairly consistent theme is that the common citizens that formed the backbone of the democracies had almost no idea of what was going on.

Rather, it was the very same form of technocrats, withholding information and utilizing propaganda, that had carried out the worst human rights violations. A lack of information stifled the ability of democracy to react, until much later, after the veil of ignorance was lifted by warfare, and the sights and accounts were allowed to flow through the populace.

And so it is also worth considering that it would be exceedingly difficult for any atrocity on the scale of the early 20th century to happen again in our history, so long as the information sharing which is reshaping our society is allowed to spread unhindered. With so much access to free information, even unwilling participants accessory to such crimes would be able to anonymously spread the word.

Which leaves the EU in its current form of stifling, undemocratic processes. And one has to wonder, “what’s the point of this?”

The EU is predominantly about the euro, which is the second layer of trouble. The modern welfare state also evolved in response to the end of the World Wars; a period of time when starvation and economic poverty was running rampant across war torn nations and when modern political movements were asking how they could avoid letting events like that ever replay themselves. The proposed solution was to directly aid citizens, which would have the secondary effect of giving everyone an incentive not to participate in forms of political upheaval or risk losing those benefits.

But the heart of the welfare state is a type of nationalism; open borders and free moving populations make for trouble when trying to run national benefits.

Which makes it so odd that welfare states in the 90’s decided to adopt a common currency that they have no direct control over. The welfare state de facto playbook is to address any inevitable economic stagnation, recession or depression with new economic equilibrium, rather than economic reform. The entire point of practical political welfare is to entrench interests of a political majority and avoid challenges. The other guys get to deal with economic variability. See public sector labor unions for an idea of how that works.

By switching to the euro, perhaps unknowingly, the welfare state model sold out its most powerful tool to achieve that outcome. Modern problems are very much a product of adopting the euro. Pro-welfare commentators in the media take it a step further by pinning the fault of those problems on the euro as well. That belies a bias towards a welfare model of government. You could easily argue that the welfare model is itself the problem and that the euro was just a monumentally stupid strategic move on the part of the major players. In either case, the common currency without political union is causing fissures to form across Europe, for the better part of 5 years now. We’ve sort of beat this theme to death by now, so I’ll cut more commentary short here.

And so now, in 2015, we have the president of France actually considering a political union with old cultural enemies Germany and the UK, and Greece immediately trying to undo the effects of a referendum they themselves wanted to have. It’s almost preposterous, if not for the desire to preserve the welfare programs. That’s the only driving force holding this thing together at this point.

So on a warm weekend in July, Francois Hollande is making a last ditch and desperate appeal that amounts to selling out everything French about France, just to avoid the discomfort of some relatively modest cuts and the bravery required to trust his own citizens.

You have to wonder if even Friedman would have seen that coming.

In short order, as the euro collapses towards dollar parity, this call will be picked up by the globalists here in the US as well. It will be their one chance, for perhaps hundreds of years, to stitch the US into the European framework. God willing we crush them without much trouble when that happens.

What A Weird Year

1,034 views

The wind rushes through the curtains, which cloak my 9th Floor office from direct light outside. The summer air is fresh and warm.

So here’s my review of the week; it was strange and fit perfectly in line with the year we’ve been having.

A Bloomberg article speculating on the looming bankruptcy of Saudi Arabia touched off a fierce rally in oil names, while oil itself continued to have the icy hand of death caressing its forehead.

I’m not exactly sure why you would speculate that a country which has no national debt to speak of would be at risk of going bankrupt any time soon. Certainly, the perseverance of US oil drilling is a thorn in the side of the Saudi’s. But those of us here in the 9th Floor had already worked out that might be the case.

The Saudi target was either their other OPEC members or else they just wanted to hang up future well development. In either case, that mission seems accomplished, and what we are seeing – finally – in media is some resistance to the idea that oil prices should go any lower.

Sure we’re all manic depressive now, but these are good signs. Oil will be back to $80 just as soon as we figure out where to put it.

I know I’ve had been in a black mood all year; but not all is going wrong with Cain Hammond Thaler, have no fear of that.

OMAB continues to experience traffic growth of about 16% per year. It’s come down a little from earlier but that is still strong and the stock should continue to outperform.

TIS was a newer position which took a bit of a 30% spill when I bought it – oops – but I liked to the name so I held on. We’re back above $26, reaching for break even and the company just announced sales increased by 45%. Income per share is up 37.5% year over year and unless I’m misreading something, that is coming straight from product sales – no financial gimmicks to speak of. I need to dig in to the numbers a little deeper to be absolutely sure of that, but for the moment I’m pretty pleased.

TIS is one of those names no one has heard of with a really boring business that is going to make me a lot of money. They make toiletry paper products, something South America is going to be in high demand for as their banana republics keep folding.

And ALDW is playing the part of the faithful hedge, now up 32% since I bought it elevated by lower oil prices and stable gas prices at the pumps.

Saudi Announcement Met With Disdain

1,696 views

I was hopeful earlier this week that when Saudi Arabia announced they intended to start reining in their above average pumping activity with the sunset of summer, we might see some relative strength in the price of oil.

The market reaction has been to mostly shrug off the new and keep the price of crude oil sliding, so far. The oversupply of oil is a more pressing and immediate weight on the price per volume which is going to have to be alleviated before any pricing strength can take hold.

Despite the continued weakness in oil prices, oil stocks are staging a small relief rally into the weekend, although I cannot say if it will last much longer.

Outside of oil (which for obvious reasons is something of a point of focus for me), my other positions are doing alright. TIS, OMAB, and ALDW are all staging some strength which is taking some of the edge off.

Now, we are in the midst of one of the more beautiful summers we have had of late; turn your screen off and go outside.

‘Nice Reprieves’ Won’t Stop The Suffering

1,212 views

Here we are on a Tuesday, getting a day of comfortable green price action. It’s remnant of a time when every day stocks melted higher and bears were committing suicide by the hour.

But buddy, this isn’t going to cut it.

While I love finally seeing a little bit of upside I know in my heart that this is just the waft of fresh air that gets you to patiently wait in the smoke filled room while the fire starts to work through the next layer of the walls.

My recent patience with this day after day of unfolding tragedy may be the most unsubstantiated move I have made in more than seven years. I shouldn’t be this comfortable, but here I am anyway, watching the villain saw me to pieces whilst I sip from a small cup of tea.

Only work outside of the task of managing my wealth keeps me from fixating exclusively on this nightmare and probably suffering a massive nervous breakdown / stroke combo.

I want you to hear this, right now: the world isn’t changing that much.

Sure it’s an exciting time to be alive, but you think oil won’t be valuable in thirty years time? You need to open an organic chemistry book or three and get with the program. I have watched this happen enough times to know that the same scumbags who are preaching environmentalism and a return to the times of Friar Tuck from one hand are busy buying anything oil and coal related with the other. Just because you can’t see where or how doesn’t mean that they aren’t.

Venezuela is melting down completely now. There are reports on twitter of inflation rates that crest an annualized 800% – real inflation is more than 120% per year right now. That country is going down, and when it does I do believe the oil market might become a lot less oversupplied.

Or maybe it will be somebody else? Who knows…but so far the US domestics have been holding on like champs. I’m will not get shook out by the freaking Saudi’s, of all people.

I remain convinced that the US domestic boom in oil production remains the best place to hold money for 10 years or longer. Just so long as your positions don’t go out, watching them go down will just make the story better for the kids.

In The Funnel Again

2,014 views

Oh hurray, it looks like deflation is the path forward. All commodities are getting creamed, and no commodity is more commodity-y than oil.

I’m back to flat for the year and feeling as if my head is firmly placed in a vice.

If you had a puppy, I would kick it.

Big Europe Makes The Move…Hopelessly

945 views

This weekend, the Eggs Benedict Presidency himself, Mr. Francois Hollande, is calling for a new government to unite all of Europe. This is the last ditch effort of redlining welfare states to avoid change. If they can create a unified government, the Greeks, Spanish, Italians and French can have a fair shot of papering over their floundering social nets without being forced to undertake any meaningful reforms.

And they have no chance of pulling it off. The mood has decidedly swung against “Europe”. Plus Germany isn’t that stupid.

But it’s quite amazing that we’ve gotten to this point at all and it’s worth spending a few minutes talking about the progression itself. Because just fifty years ago, it would have been unthinkable for an elected leader of a European country to call for full integration of the continent.

It’s worth starting the narrative after the end of World War 2; mostly because so many people were dead at that point that it was essentially a complete reset of the culture anyway. History before World War 2 exists as a sort of odd, discolored picture in time…one who’s inhabitants are almost forgotten.

And as Europe began to pick up the pieces, ghastly images began to emerge of a culture that did unspeakable acts. The death and carnage was so pervasive that it had the almost singular effect of destroying one of the more popular scientism movements – eugenics – practically overnight. As word of the concentration camps that the Axis had erected spread, very uncomfortable associations between our own work with forced sterilizations and gene and culture control here at home began to creep up, and almost instantaneously no one had ever believed in eugenics (despite it being almost blasphemy to argue against it just years early). Michael Crichton had a very excellent speech on this subject and if you haven’t read it, I recommend it in its full form.

And a major knock off effect of this self reflection was a Europe which had become more afraid of its own citizens than ever. I recently read another article (I couldn’t track it down, leave a link if you know the one) that I feel convincingly argued that much of the current EU form was erected to overrule democracy in favor of technocratic decision making by an “enlightened” class. If you want an example of how this plays out, consider that in the UK upwards of half of all new laws originate from Brussels. Lawmaking of this variety clearly denies basic rights of representation; and indeed that is the whole point.

Per this argument, the EU’s terror of its own citizens – which is at the heart of the EU rule making process – is a cultural development in response to the acts of populist movements across Europe in the prior generation.

But this is something of a contradiction. It wasn’t exactly democratic actions that committed those atrocities. Certainly a very vocal and nationalist undercurrent of supporters set those things in motion. But talking to the survivors of those years, one fairly consistent theme is that the common citizens that formed the backbone of the democracies had almost no idea of what was going on.

Rather, it was the very same form of technocrats, withholding information and utilizing propaganda, that had carried out the worst human rights violations. A lack of information stifled the ability of democracy to react, until much later, after the veil of ignorance was lifted by warfare, and the sights and accounts were allowed to flow through the populace.

And so it is also worth considering that it would be exceedingly difficult for any atrocity on the scale of the early 20th century to happen again in our history, so long as the information sharing which is reshaping our society is allowed to spread unhindered. With so much access to free information, even unwilling participants accessory to such crimes would be able to anonymously spread the word.

Which leaves the EU in its current form of stifling, undemocratic processes. And one has to wonder, “what’s the point of this?”

The EU is predominantly about the euro, which is the second layer of trouble. The modern welfare state also evolved in response to the end of the World Wars; a period of time when starvation and economic poverty was running rampant across war torn nations and when modern political movements were asking how they could avoid letting events like that ever replay themselves. The proposed solution was to directly aid citizens, which would have the secondary effect of giving everyone an incentive not to participate in forms of political upheaval or risk losing those benefits.

But the heart of the welfare state is a type of nationalism; open borders and free moving populations make for trouble when trying to run national benefits.

Which makes it so odd that welfare states in the 90’s decided to adopt a common currency that they have no direct control over. The welfare state de facto playbook is to address any inevitable economic stagnation, recession or depression with new economic equilibrium, rather than economic reform. The entire point of practical political welfare is to entrench interests of a political majority and avoid challenges. The other guys get to deal with economic variability. See public sector labor unions for an idea of how that works.

By switching to the euro, perhaps unknowingly, the welfare state model sold out its most powerful tool to achieve that outcome. Modern problems are very much a product of adopting the euro. Pro-welfare commentators in the media take it a step further by pinning the fault of those problems on the euro as well. That belies a bias towards a welfare model of government. You could easily argue that the welfare model is itself the problem and that the euro was just a monumentally stupid strategic move on the part of the major players. In either case, the common currency without political union is causing fissures to form across Europe, for the better part of 5 years now. We’ve sort of beat this theme to death by now, so I’ll cut more commentary short here.

And so now, in 2015, we have the president of France actually considering a political union with old cultural enemies Germany and the UK, and Greece immediately trying to undo the effects of a referendum they themselves wanted to have. It’s almost preposterous, if not for the desire to preserve the welfare programs. That’s the only driving force holding this thing together at this point.

So on a warm weekend in July, Francois Hollande is making a last ditch and desperate appeal that amounts to selling out everything French about France, just to avoid the discomfort of some relatively modest cuts and the bravery required to trust his own citizens.

You have to wonder if even Friedman would have seen that coming.

In short order, as the euro collapses towards dollar parity, this call will be picked up by the globalists here in the US as well. It will be their one chance, for perhaps hundreds of years, to stitch the US into the European framework. God willing we crush them without much trouble when that happens.