Oil is for winners.
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Joined Nov 10, 2007
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PZE, REXX
I’d wait and buy PZE after it corrects to $11.80.
Oil to $250 by this time next year…no problem
I’m SHORTING SSL tomorrow morning for a target drop to the 50D SMA. Good for $10.
Oil is going to pop. Now you have OPEC complaining about the price, and blaming it on the weak US dollar and speculators. They are starting to bang the drum that supply is fine and there is plenty to meet demand.
Oil at $250 in a year? I don’t buy that for 2 reasons.
1) Oil producers don’t want prices to get that high, that fast. That kind of price damages the economy in the short term and damages the value of the oil in the ground in the long term.
2) There aren’t enough dollars. A move from $135/bbl to $250 would increase the annual cost of imported petroleum by about $450 billion/yr. Add another $100-200 billion for the increased cost of imported products (and that guesstimate might be low, given that the annual cost of imported petroleum products alone would increase by about $35 million). The annual fuel cost per U.S. automobile would increase about $2600 per year from today’s level. Those are after tax (and after mortgage, food, etc.) dollars. Add in all the other costs that would be soaring – food, heat, electricity, and so on – and it becomes obvious that there would be massive amounts of demand destruction (both forced and voluntary) well before $250 oil.
ottnot,
Tomorrow I will explain in an article how this is possible. I do not disagree with your reasoning, but it would seem that the GS target is not that far off and will come sooner than they state.
They give up to 2 years for this price target I think to not freak people out if they gave that target with in 6 -12 months.
Trust me most will car pool in a toyota prius this time next year.
demand destruction will occur…the question is will demand destruction create deep recession or vice versa.
Oil companies are still sell. DUG looks good here.
You’re all morons.
Good night.
Fly – whatcha think, cover on this bit of most unfortunate hedge fund sleuthery news & put it back out next week?
HEARD ON THE STREET
A Shorter Slams Lehman
Hedge Player Finds
Worrying Factors;
Jitters Over Results
By PETER EAVIS and DAVID REILLY
May 23, 2008; Page C14
With Lehman Brothers Holdings’ second quarter set to close next week, the Wall Street firm can’t seem to put questions about its fiscal first quarter behind it.
Back in mid-March when the bank reported, Bear Stearns had collapsed the day before and Lehman was in the market’s cross hairs. Lehman posted a $489 million profit, calming investors. But ever since then, investors have questioned those numbers, asking whether the profit was due to some one-time, unrealized gains.
Those questions became more intense on Wednesday when David Einhorn, manager of hedge fund Greenlight Capital gave a critique of the earnings in a speech to a room packed with high-profile investors. Lehman’s shares fell 2.7% Thursday as word of Mr. Einhorn’s speech spread around Wall Street.
Mr. Einhorn, who is well respected for his detailed research, is short, or betting against, Lehman’s stock.
In his comments, Mr. Einhorn squared off in particular against Erin Callan, Lehman’s chief financial officer and the executive who has led the public charge against the firm’s critics. Mr. Einhorn met with Ms. Callan last week to discuss his research.
In a statement, a Lehman spokeswoman said: “We will not continue to refute Mr. Einhorn’s allegations and accusations. Mr. Einhorn cherry-picks certain specific items from our quarterly filing and takes them out of context and distorts them to relay a false impression of the firm’s financial condition which suits him because of his short position in our stock. He also makes allegations that have no basis in fact with the same hope of achieving personal gain.”
In attacking Lehman, Mr. Einhorn took issue with large, unrealized gains the firm booked in the first quarter from marking up equity positions that don’t trade in public markets. Like other brokers, Lehman has large amounts of illiquid assets that it values using management-driven financial models.
In the quarter, Lehman said it had a pretax gain of $695 million related to hard-to-value equities. In the previous four quarters, the average, unrealized gain from such holdings was $69 million.
The $695 million is a net number made up of roughly $1 billion of gross gains and offsetting losses, according to Lehman. The $1 billion included an unrealized gain from writing up the value of an equity investment in an Asian power company, which the firm declined to name.
In his speech, Mr. Einhorn said the company was India-based KSK Energy Ventures and that Lehman told him it booked a $400 million to $600 million gain on KSK in the first quarter. The manager said Ms. Callan told him Lehman marked up its holding because a new investor had taken a stake in KSK at a valuation above Lehman’s.
Ms. Callan said this other investment was part of a financing round in anticipation of an initial public offering, according to Mr. Einhorn. After Mr. Einhorn further questioned the valuation process, he says Lehman changed its story.
Lehman emailed him, he said, saying the firm had revalued its KSK stake based on an “expected” pre-IPO financing as well as other factors.
In his speech, Mr. Einhorn also questioned the values Lehman put on many other financial assets. In particular, he said Lehman hadn’t sufficiently written down $6.5 billion of complex debt securities called collateralized debt obligations, or CDOs.
He added that these holdings were only recently disclosed, even though other banks and Wall Street firms disclosed similar holdings months ago and took massive write-downs on them.
Mr. Einhorn noted that write-downs taken by Lehman in the first quarter on the $6.5 billion of CDOs were only about $200 million. Yet, in an April filing about the first quarter, Lehman disclosed that about 25% of the CDOs were rated BB+ or lower, which is a junk rating.
“I asked them how they could justify only a $200 million write-down on any $6.5 billion pool of CDOs that included $1.6 billion of below-investment-grade pieces,” he said. He added that Ms. Callan declined to explain the size of the write-down, but she added that “Lehman ‘would expect to recognize further losses’ in its second quarter.”
how was the party? sorry I missed it. Did you get the ethanol I sent over?
Alias: BPOE
If you can’t say it in 30 seconds take a test and score 100%. Don’t trade stocks!!!! I thought one of FLY’s rules was no long investing prediction jabber!!!
If we could make oil from ego … our country’s supply problems would be solved. That FLY (or is it Phly?) phucker would be one of many sources of endless supply.
Fly you still long laz?
a few article titles fm realmoolah this am
Mark Manning
The S&P Looks Ready to Test the Floor
Dicks Arms
Deteriorating Technicals Suggest More Downside
Rev Shark
All Signs Point to More Downside
X: read the chinese iron ore import stockpile story. Huge chunks of chinese ore imports this year are due to speculation, not physical demand. artificially drove up everything from ore to BDI to steel.
If there is one incident – Iranian boats shot at in Gulf – pipeline blowup in Iraq or Nigeria, etc., we will see $140s real quick. Only Saudis can increase here and they just promised 300,000 barrels per day and it was ignored.
300k a day ain’t shit.
Any of you phacks want to speculate on the price to cover the rest of my LEH short? Gunners did you close yours out?
Happy Birthday, Fly. Hope you have a great Memorial Day weekend with your family.
Happy Birthday Fly.
Scalping some SMH longs here and there. A few pennies here and there.
I closed mine out. i still have MER puts.
SRS broke out.
Happy Birthday Fly!!
Juice can you crunch the numbers on this for me?
Divorce math
Doing the math on the Paul McCartney-Heather Mills divorce. After 5 years of marriage, he paid her $49 million; plus, whatever he spent on her while married to her!
Assuming he banged her every night during their 5 year relationship (and having been married, we all know THAT doesn’t happen), it ends up costing him $26,849 per boinking, not counting attorney’s fees, court costs and the incidental costs of being married to her.
On the other hand, Elliot Spitzer’s call girl Kristen charges $4,000 an hour. And that’s Crazy, right?
But… get this!
Had Paul McCartney employed Kristen for 5 years, he would’ve paid $7.3 million for an hour of sex every night for 5 years (a savings of $41+million). PLUS!!!
Value-added benefits are:
A HOT 22 year old babe, no begging, no coaxing, never a headache, wide open menu, ability to put BOTH legs around you, no bitching and complaining or any ‘to do’ lists.
Best of all, she leaves when you’re done, and comes back the next day, ready for another round. All at 1/7th the cost, with no legal fees.* *
NOW, Is it just me, or is this the kind of math quiz they should be teaching in our schools?
had to take the profits. i took three steps of profit taking, which left me with nothing. short still looks good though
how do we know it is the fly’s birthday?
The other night he issued an invitation to his birthday party here (firearms not allowed) on Friday May 23rd. I’m here for the party of course.
Here’s the link to the invite:
http://www.ibankcoin.com/flyblog/index.php/2008/05/21/youre-cordially-invited-2/
Didn’t stop me. I am here in NYC with my firearm. I got passed TSA security. I won’t go to NYC unless I am armed.
Chips going positive shortly.
thanks boca. i read that post, but i didn’t notice it was the birthday bash headline. i thought he was just talking shit about willie randolph
I took The Fly’s time machine for a spin while he was putting his tan on. Seems as though The Fly’s top pick of the day will be FXP.
Ok Gunners I can’t take it any longer. Covered the rest for a 20% gain. It may go lower but I am happy with this. Should steel and materials turn lower I will become euphoric.
BTU moving off of intraday lows, after a few days of pulling back. Might be a good trade for those wanting to get some coal on a pullback.
nice trade Gap. maybe it will shoot back up a few points and we can reload.
THats some good number crunching KCBilly ! LOL!
I’ve met McCartney a few times on a bay around here where he would sail his sunfish. Always friendly & outgoing. oth, Heather always had her nose stuck up. Not looking back with hindsight but she always seemed a bit of a bitch.
Yeah that is what I am hoping for as well. Its getting pretty oversold now and I did not want to lose any gains.
I really wish steel would take a shit. I am short STLD.
BUD bought by InBev
LEH short a nice birthday present for Senor Tropicana.
Well done pig… well done.
-DT
Communist Extinct Reptile, you’ve been robbed!
By another communist, extinct reptile!
I shall put him on my blogroll immediately. Us Communist Dinosaurs need to stick together.
Thanks for the heads up, fascist.
-DT