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I Would Not Own Bank Stocks: Meredith Whitney
MEREDITH WHITNEY, BANKS, OPPENHEIMER, LENDING, ECONOMY, CREDIT, UNEMPLOYMENT
CNBC.com | 11 May 2009 | 06:06 PM ET
Banks are overvalued and the government enabled them to have better first quarter earnings than they should, well-known analyst Meredith Whitney told CNBC.
"At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."
Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
"This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible."
Whitney also said that consumer spending is still going to remain slow. "There's a massive retraction in consumer liquidity," said Whitney. "Credit contraction is happening at an accelerated pace. Consumer spending is going to be less than people expect going forward."
She cited Bank of America as an example of credit contraction. "They cut more than $200 billion in credit card lines in the first quarter of this year," said Whitney. "Consumers are not going to spend money."
Whitney also said that the rules of trading have changed because of the government's role. "For investors, you invest on what you know to be the rules of the game," said Whitney. "But with the government involved, no rules apply."
Whitney said the changing rules create a big problem for investors going forward. "The biggest danger here is having the retail investor shout out for a period of time because they don't know who to trust on market values."
© 2009 CNBC.com
URL: http://www.cnbc.com/id/30687770/
All PUTS mentioned yesterday did very well today..More downside awaits financials..FAZ is the way to go..
Posted by: STRONGUS Date: Sunday, May 10, 2009 9:15:23 PM
In reply to: jimmybob who wrote msg# 150884 Post # of 151469
Time to buy Puts : COF BAC XLF..Dow will end down tomorrow IMO -150 to -250..
Time to buy Puts : COF BAC XLF..Dow will end down tomorrow IMO -150 to -250..
This is what Jim Cramer wrote when Dow was trading at March lows...Just compare his prediction to what the stock prices are today Genius..
Cramer: Worst-Case Dow View
Jim Cramer
03/09/09 - 04:47 PM EDT
Editor's note: This article was originally published March 6.
Levels elude me. Levels like, "The Dow can trade to 6000." Or, "The Dow's headed to 5000" or "It can take out the 1991 lows." I don't know anything about those. I like stock-by-stock analysis, not top-down. I like individual stock valuation and individual stock levels, not top-down levels. That's how I think. I total them to see where they could go.
At the beginning of the year I did an analysis of where I thought the Dow could go. It was full of misplaced optimism about the Obama administration and the potential for a second half recovery.
(On Monday, the Dow closed at 6,547.05, down 79.89.)
I should have just called it the bull case, because we will have no second-half recovery, and the agenda of the Obama administration is ensuring that.
So, today, I calculated the bear case to see where we can go, case by case. Keep in mind that this analysis was done with an eye toward the continued wealth destruction, and it is not something that I expect will happen right now, all at once. We are due for the inevitable bounce, and I don't want to ignore it.
And with that note of caution, drum roll please: 5320. I simply can't get any lower no matter what I do. I just can't. So with that in mind, you can say that 15%, give or take a few percent, might actually be, are you ready, buyable if we get to 6000. Frankly, after this analysis, I am more sanguine, not less, because of how harsh and disaster-oriented this line-by-line calculation is.
No further ado, here's how we get to 5320, something that I simply can't believe will happen before the fated bear market rally spike.
Alcoa(AA Quote): Here's a stock that's become a mid-cap play at $4 that is losing money and has a terrible balance sheet. It is overvalued on earnings and undervalued as a public company, but there is no private equity for this one, and suitors have dried up since the mistaken Alcan acquisition. I think it could get cut in half to $2 and hang there if it keeps taking losses, which I expect it will.
American Express(AXP Quote) is a bank with bad loans. Banks get taken down by shorts to $2 when they don't have an earnings cushion and can't be taken over because no one has the capital to do so. Why would AXP be able to buck this trend, particularly when the shorts are pushing it down betting on ratings downgrades, no ability to roll over debt and a needed dividend elimination? Not taking it to $1, because I do not foresee government ownership. So $2 it is.
AT&T: A Dow favorite of mine that has not taken out its $20 low from October and has a safe, recently raised dividend. It should go back to that October level in a stressed situation where estimates might be too high. So, $20, where I want to make it clear that I want to buy it.
Bank of America(BAC Quote): What's more important than Tier 1 equity is how the common stock is doing, because the administration cannot seem to understand that bank stocks are easy prey for the shorts who know that as long as they drive the stocks down, it is game over for banks. That means BAC can trade to $1 like Citigroup. No reason why it couldn't.
Boeing's(BA Quote) balance sheet could be stressed mightily by the huge downturn in aerospace and a cut in defense spending for Boeing-like systems. That means the 5.6% dividend is questionable, and so is the low of $30. With big order cancellations, a place like Boeing begins to lose money, even though it is extremely profitable right now. The stock can drop 20% easily on that news. Make it $24.
Citigroup(C Quote) is a zombie, and zombies retain optionality, so there's a $1 target here, and it has been reached.
Caterpillar has a 7% yield and has traded as low as $21. I think that the dividend is in jeopardy so the stock is, too. If it reverts to its typical multiple -- right now it is at a premium -- and it cuts the dividend, then $15 seems right.
Chevron has bottomed in my opinion. But if oil goes back to $33, you are not going to see this stock hold its $55 low. If you give it the same valuation of ConocoPhillips(COP Quote) and the same dividend, you are going to see a $50 stock pretty fast.
Coca-Cola(KO Quote) could turn out to be a stock that Warren Buffett has to sell in order to fund his big bank bets. There's always a bid. The growth here is more purchased growth, meaning by buybacks, than it is organic. It is one of the weakest dollar plays out there in an environment that is seeing the dollar soar. It could cut estimates by 25%. That would put the stock in the mid-$20s, but the yield seems fairly safe, as KO just raised the dividend. Split the difference and call it $30.
Disney(DIS Quote) is difficult because it is expensive, and its theme park, DVDs and television divisions are challenged, not leaving much else. ESPN could easily switch to a loss if the big autos and some of the beers and the like cut back, and I think they will. The company is locked into some high-priced contracts. DIS has real problems in owned and operated. I think its theme parks will be too expensive to attend for many individuals. This DVD problem is in its infancy and will take away a steady stream of profit, as it has become simply a thing of the past that people are building DVD libraries, even for Disney's excellent titles. It is not a cheap stock, and it has no dividend support. It doesn't get cheap until $12 if the earnings estimates need to be cut to more realistic levels. I doubt it can go much lower because of its franchise value, but remember, that hasn't halted any company's slide yet.
DuPont(DD Quote) Dave Peltier has made it clear repeatedly in his excellent dividend analysis that this one is totally at risk. Why can't this go the way of Dow, maybe plus some ag that Dow doesn't have? Heavy into housing and auto. Drug business being shredded by patent problems. People expect DuPont to earn $2, I say it would be lucky to earn half of that, but let's just say three-quarters of that, and make it $1.50 with a 7 multiple, as it trades there now: $11, as there will be no dividend support.
ExxonMobil(XOM Quote) is rich vs. the other oils. It doesn't have great dividend support. However, it did trade to $56 in the October lows, so I have to believe it is realistic to see them again, and it would still not be cheap vs. the other oils. That's OK, much loved, I think it holds $56 because I am a bull on oil.
General Motors(GM Quote) common stock gets canceled in my estimation in a bankruptcy which we all seem to know is coming. Goose egg.
General Electric(GE Quote): We have seen what the shorts can do here, and we know that their easily reached goal in this environment is to make GE beg for government money, which is amazing, given that it has much lower leverage than traditional banks and is getting no credit whatsoever for some solid industrial businesses. Therefore it goes to $3, not $1 like Citigroup, in a bear case.
Hewlett-Packard(HPQ Quote): The company reiterated its numbers the other day. I have to tell you that I think this stock is just trading at too cheap levels, but if it trades at 7 times earnings with no dividend to speak of, why can't it trade at 6, as the estimates will come into doubt. $24? I think it works to there.
Home Depot(HD Quote): In a true endless decline in housing prices and a potential dividend cut, it is still hard for me to see this company much below its October low of $17. Not bad!
IBM(IBM Quote): stocks that report good numbers are still getting crushed. IBM traded to $69 back in November. No dividend protection. I think it could earn $8 and could sell at 10 times earnings, not much less, but a really terrible market could give it a further haircut. It wouldn't shock me to see this one back to $75.
Intel(INTC Quote) has terrible earnings prospects, and its end markets are a shambles. It has a good dividend, but I can't view it as safe in this environment. Semis are no longer growth companies, with the level of semi sales back to levels of 20 years ago. Cut its earnings by 10%, cut its multiple by 10%, presume dividend OK for now, $10.
Johnson & Johnson(JNJ Quote): Still a lot of Buffett stock that should come out, according to the analysis that Doug Kass is giving us. The average drug stock trades at about 6% yield, but this company has above-average characteristics. One times earnings can be a possibility here, though, and that means the stock should bottom at $40, where its yield will still be below average. Strong dollar makes earnings vulnerable, although I like the stock right here and don't believe the wheels are coming off the bus.
JPMorgan Chase(JPM Quote): All bank stocks get taken down to single digits. This one has a better franchise and will not need government shareholders, but at the same time, the shorts should be able to take it down to $4-$5 before Tim Geithner figures out a game plan. Let's err to the high side, given that it is a better-run bank, perhaps the best-run bank, in the country. I say $5.
Kraft(KFT Quote): This is the worst-run food company in the Dow. The second worst, Heinz, trades at 10 times earnings, and this one has a Buffett discount too, and I don't know about dividend coverage. Give it a Heinz multiple, and you get $18. Seems right.
3M(MMM Quote) has been crushed here, but in a worldwide recession it won't stop at $40, and the strong dollar is a huge headwind. Estimates are 10% too high in a best-case scenario, and that means, steady multiple, $35.
McDonald's(MCD Quote): A strong dollar could cut estimates, as could a decline in traffic in Europe, where MCD has a big franchise, Still, it's a solid company and a good bet, so I will call it no lower than $45, as dividend protection and great management could cushion any decline. I want to buy this one, too, when it gets to $50, as you have to start somewhere, and the idea of it going to $45 implies a garden-variety worldwide depression.
Merck(MRK Quote) has patent issues, and the new Supreme Court decision makes its products, particularly its vaccines, a free-fire zone. Also, this is the company that could be one of the most hurt by Obama's pitting of drug companies against each other to get a great price for the government. Chop a multiple point off it and cut earnings by a quarter, and let's call it $15.
Microsoft(MSFT Quote): Another one with the estimates too high and the dividend too low. $12-$13 gives it dividend parity to Intel, but it has a less cyclical earnings stream, so I don't think it has too much downside here. $13 is the high end -- let's take that.
Pfizer(PFE Quote): A disaster with a dividend that is too high once again and a merger that will put a lid on the stock for the foreseeable future. Don't forget huge, huge patent expiration problems and a government that's gunning for it. I think this one's going to $8 as the estimates and the dividend are too high, the latter even after the cut!
Procter & Gamble: Earnings estimates are too high, and dividend protection is slim, and the strong dollar will hurt here, hurt badly. At $36 it is more like Coca-Cola, a good compare, so I bet it gets there, and that's not nearly the haircut that it deserves in this environment. Still a PG premium.
United Technologies(UTX Quote): The dollar is killing this company, and we believe that there is a good chance of a 10% cut in estimates, or $31, which gives it about a 5% yield. I think it would be a stretch to go down there, given its steady businesses, but aerospace and elevators could hurt them.
Verizon's(VZ Quote) estimates are probably good, and the dividend is safe and should go higher this year, but at the same time it could return back to $23, the October low, in a hard selloff.
Wal-Mart(WMT Quote) just boosted the dividend, it delivered an excellent quarter, and I truly believe that we might have seen the low of the year at $46. We tend to revisit the lows in this market, although IBM reported better and it didn't. But 3 points isn't much of a decline, so I like it just to that level.
Remember, this is the bearish view, no worldwide pickup or continued decline, no kick-in of stimulus, no change in the Obama plan. That's how you get to these levels. Put simply, they are not unrealistic, although it is unlikely to think they all get to these lows at once, as they didn't in October or November. So consider this the worst case, and be ready if it happens.
Not looking good for the market tomorrow..This news doesn't sound encouraging..
http://uk.reuters.com/article/burningIssues/idUKTRE53T5KW20090430?pageNumber=3&virtualBrandChannel=0
Shame on Goldman..Goldman recommended a 'pair trade' a month ago..Any one who acted on their recommendation are totally screwed..MS went down big and AmEx went up big since their call..
BOSTON (MarketWatch) -- Goldman Sachs on Wednesday proposed a trading strategy designed to profit from a recovery in investment banking, while avoiding worsening conditions in consumer credit as the country braces for what figures to be a prolonged recession.
AXP) to sell from neutral. They recommended a "pair trade" in which investors go long Morgan Stanley and short-sell shares of American Express.
"Capital market activity is a relative bright spot in conversations, while consumer credit appears to be deteriorating by the day," analysts led by Richard Ramsden wrote in a research note Wednesday after meeting with the management teams of several banks
A big bang plan to clean up US banking system
By Krishna Guha in Washington
Published: January 30 2009 23:31 | Last updated: January 30 2009 23:31
The big bang announcement by US Treasury planned for next week is likely to have three key economic elements: moves to clean up the banking system, moves to restore the flow of credit in securitised financial markets, and moves to reduce home foreclosures.
The exact shape of the banking sector clean-up plan has still not been finalised. But it is likely to involve elements of both a “bad-bank” solution and insurance-style guarantees on pools of problem assets that remain on bank balance sheets.
Assuming this approach is approved, the bad bank would be capitalised with equity from the Treasury’s troubled asset relief programme (Tarp) and take on debt, possibly guaranteed by the Federal Deposit Insurance Corporation (FDIC), with some Washington insiders estimating it would have about $1,000bn purchasing power.
It would acquire securities that had already been heavily marked down by financial institutions, probably using a valuation model rather than an auction-based process to determine pricing.
The US authorities may also provide insurance-style guarantees on pools of problem assets that remain on bank balance sheets. This approach is seen by some as better suited to assets that have not yet been heavily written down and for loan portfolios that are in the early stages of deterioration. The bank clean-up is likely to be paired with a revamped recapitalisation scheme, involving a thorough overhaul of Tarp.
Additional restrictions on executive pay and excessive dividends are likely, in an effort to avoid leakage of public capital to employees and shareholders, as well as to shore up public support for the unpopular process.
Treasury is also likely to announce a separate battery of moves designed to revitalise the securitised markets for credit. This could involve a scaling up of an existing Treasury-Federal Reserve joint venture called the term asset-backed securities loan facility, which provides low cost loans for investors willing to buy new securitised consumer loans.
This approach may also be used to try to restore the flow of credit for commercial mortgage-backed securities, jumbo mortgage-backed securities and municipal bonds. It is possible that the Treasury could offer some credit guarantees in a further effort to boost credit flows, though some policymakers are hesitant.
The foreclosure relief element of the package is likely to commit tens of billions of dollars to support schemes that aim to lower monthly mortgage payments to no more than 38 per cent of income, though it will probably also include backing for loan principal reductions in cases where the mortgage is worth a lot more than the value of a home.
The 38 per cent limit has emerged as a rough consensus among policymakers, as the standard used by the FDIC, Fannie Mae and Freddie Mac, the Hope Now alliance of mortgage servicers and recently the Federal Reserve.
The Fed recently announced plans to support loan modifications to reduce monthly payments to no more than 38 per cent of income and to support principal writedowns for loans worth 125 per cent of the value of a home or more, for mortgages owned or part-owned by some of its special purpose vehicles. While this is a Fed-only programme, it provides some indication of where Treasury’s thinking may come out.
Obama economic officials see the backing for banks and credit markets on the one hand, and housing on the other, as part of a three-legged stool – the other being the fiscal stimulus plan before Congress.
Many economists support this approach, but some fear that it will result in the government spreading its efforts too thinly, particularly if insufficient money is ultimately available to fund bank recapitalisation.
Copyright The Financial Times Limited 2009
Amen to that. FAS is an excellent buy at this price to play the upside.
BCS : Great Risk/Reward play at 3 dollars. Mark this post
Thats where fair value comes into play
http://money.cnn.com/2000/04/17/investing/fairvalue/
This should do it CHINA cut retail prices of petrol and diesel by up to 17 per cent
CHINA cut retail prices of petrol and diesel by up to 17 per cent today.
Beijing also lowered wholesale prices for the commodities, the government and state press said, as world oil prices continue to fall.
The retail price of petrol was reduced by an average 0.91 yuan (18.9 cents) per litre, said the National Development and Reform Commission, the country's top economic planning agency.
Petrol in Beijing was cut by 14.6 per cent to 5.44 yuan per litre, according to today’s edition of Beijing News.
The diesel retail price in the capital was slashed by 1.08 yuan per litre, or nearly 17 per cent, to 5.4 yuan, the paper said.
Wang Chaocai of China’s finance ministry said: “The cut is the biggest in recent years, and it is in line with the current international oil price level.”
Analysts said the price cuts would boost China's slowing economy and help ease some social tensions highlighted by taxi-driver strikes that have occurred in several cities recently.
The Government reduced wholesale prices of petrol and diesel by 13-17 per cent, to 5580 yuan per tonne for petrol and 4970 yuan per tonne for diesel.
The cuts were made in order to bring the domestic prices more in line with global market costs, the commission said in its statement.
World crude prices are 70 per cent off record highs of $US147 dollars a barrel reached last July, as demand has dried up in recession-hit industrialised nations.
China, which kept domestic oil prices artificially low even as the cost of petrol rocketed, last adjusted fuel prices in June.
USO : Brazil Minister Says Oil Must Rise to $75 for Supply (Update2)
By Jeb Blount and Juan Pablo Spinetto
Dec. 19 (Bloomberg) -- Oil prices, which more than halved this year, must rebound to about $75 a barrel to maintain new investments in crude output and an adequate supply of energy to world markets, Brazil’s Energy Minister Edison Lobao said.
“Up to this point prices have been tolerated, but below where they are today the world runs the risk of undersupply,” Lobao said in an interview today in London. “We are of the conviction that $75 a barrel is very reasonable.”
Petroleo Brasileiro SA, Brazil’s state-controlled oil company, plans to invest an average of more than $22 billion a year through 2012 and has set $35 a barrel as a minimum price for development of new wells in its 2008-2012 investment plan.
Crude for January delivery fell 72 cents, or 2 percent, to $35.50 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Futures touched $33.44, the lowest since April 2004.
“These prices won’t bankrupt Petrobras, but they are not good,” Lobao said.
Petrobras and its partners will need about $600 billion over several decades to develop the entire so-called pre-salt areas offshore, according to UBS AG. The area includes Tupi, a 5 billion to 8 billion barrel field announced last year. Tupi is the largest discovery in the Americas since 1976.
The Tupi cluster, which includes other fields, may contain 80 billion barrels of oil, enough for more than 10 years of U.S. consumption, Brazil’s energy agency chief Haroldo Lima has said.
The $75 a barrel figure has also been suggested by Saudi Arabia during the London meetings between the Organization of Petroleum Exporting Countries and other large oil-producing nations, Lobao said.
Investment Plan
Petrobras’ board will consider a new 2009-2013 investment plan at meetings today, according to a statement on the company’s Web site. Brazil’s government expects the company to maintain its investment levels, Lobao said.
“We don’t have any plans to reduce our investments,” Lobao said. “On the contrary, we have plans to maintain them.”
Yesterday, Dilma Rousseff, Petrobras chairwoman and chief of staff to Brazilian president Luiz Inacio Lula da Silva, said Petrobras will invest 40 billion reais ($16.8 billion) on expansion next year, 20 percent less than this year’s estimate. Her forecast didn’t include the pre-salt developments.
Lobao said a review of rules governing Brazil’s unleased pre-salt fields will be delivered to Lula in early January.
Lula will consider options to maintain the current license auction system, create a new state oil company to manage Brazil’s ownership of unleased areas or a “mixed” system that may include auctions or production sharing contracts, Lobao said.
Petrobras preferred shares, the company’s most-traded class of stock, fell 1 percent to 23.26 reais at 12:53 p.m. in Sao Paulo.
To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.netJuan Pablo Spinetto in London at jspinetto@bloomberg.net
Last Updated: December 19, 2008 13:44 EST
Crude Oil Rises a Second Day on Planned OPEC Cut, U.S. Stimulus
By Gavin Evans
Dec. 22 (Bloomberg) -- Crude oil rose a second day in New York on speculation OPEC production cuts and economic stimulus plans will slow rising global stockpiles.
The Organization of Petroleum Exporting Countries is “determined” to stabilize oil markets, Saudi Oil Minister Ali al-Naimi said in Doha, Qatar, yesterday. U.S. President-elect Barack Obama is broadening a package of measures to create 3 million jobs in the U.S., the world’s largest economy, during the next two years, an aide said Dec. 20.
Crude oil for February delivery rose as much as 72 cents, or 1.7 percent, to $43.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $42.94 at 10:07 a.m. in Sydney.
The contract rose 69 cents, or 1.7 percent, to $42.36 on Dec. 19, its first gain in six days, and lost 14 percent last week. Oil, metal and equity prices rose that day after the U.S. agreed to extend $13.4 billion in emergency loans to keep General Motors Corp. and Chrysler LLC operating amid a slump in global demand.
Brent crude oil for February settlement was untraded on London’s ICE Futures Europe exchange today. It rose 1.5 percent to $44 on Dec. 19.
New York oil futures have fallen 71 percent from the record $147.27 a barrel reached on July 11. The January contract, which expired last week, plunged 6.5 percent to $33.87 a barrel on Dec. 19, the lowest settlement since Feb. 10, 2004. It dropped 27 percent last week as stockpiles at Cushing, Oklahoma, jumped to a 19-month high and investors quit the contract before the holiday break.
Hedge-fund managers and other large speculators last week increased their bets on rising oil prices to the most in seven months, according to U.S. Commodity Futures Trading Commission data.
Net-long positions, the difference between orders to buy and sell the commodity, increased more than fivefold to 64,120 contracts on Dec. 16, the commission said last week.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
Last Updated: December 21, 2008 18:22 EST
I am in HUN. Monday is likely to be another up day
USO hit 31$ pre-market. What a great opportunity here!!
HUN (2.96) - Heavy insider buying reported. Very good sign. I bought some today for a neat double (Give it a few months).
http://ir.huntsman.com/phoenix.zhtml?c=186725&p=irol-sec
Got out of that long time ago. Even SCA's ex-parent XL is sinking. I would rather bet on XL than SCA at this point. Even XL is risky but may still have some value in it.
Sold my calls today and waiting for reentry
What a bounce in Oil today Where is the ANALyst who called for $25..Oil went up for the exact reason I mentioned..Weak dollar..
Posted by: STRONGUS Date: Thursday, December 04, 2008 11:17:37 PM
In reply to: STRONGUS who wrote msg# 33061 Post # of 33214
It also amazes me that the talking heads on media are obsessed with the demand destruction. The supply is also going to come down because at 40$ oil, no one is going to make money. Also it is not always about supply vs demand. A weaker dollar means higher oil price. Fed may be forced to cut 50 basis points in the next meeting. Treasury is printing trillions of dollars and it is going to be prized in the dollar at some point. Oil at $40 is a good price to start building positions.
Energy Is Best 2009 Commodity, Barclays Survey Shows (Update1)
By Christopher Martin and Ron Day
Dec. 9 (Bloomberg) -- Energy products will be the best- performing commodities next year, according to a survey of investors by Barclays Capital.
About 39 percent of respondents tapped energy as the top performer, 28 percent predicted agriculture would be the best investment, 16 percent chose industrial metals and 12 percent selected precious metals, according to the survey of investors attending Barclays’ U.S. Commodities Investor Conference in New York yesterday. Just 5 percent selected livestock.
Oil in New York has declined 70 percent since reaching a record $147.27 a barrel on July 11 as a global economic slowdown reduced demand. Most of the 230 attendees forecast oil will average more than $75 a barrel over the next five years.
“There’s a high level of commitment to this asset class despite the high volatility,” Kevin Norrish, a Barclays analyst, said today on a conference call. “People are viewing current prices as a temporary phase.”
Last year, 45 percent of respondents expected agriculture to deliver the highest returns, 18 percent selected energy, 19 percent chose precious metals and only 8 percent selected industrial metals, Barclays said.
Only 38 percent of respondents expect oil will average more than $100 over the next five years, down from 54 percent in the previous survey. Oil will be in the $75 to $100 range, according to 43 percent, compared with 27 percent last year.
This was the fourth annual survey of Barclays commodity conference.
To contact the reporters on this story: Christopher Martin in New York at cmartin11@bloomberg.net; Ron Day in New York at rday1@bloomberg.net.
Last Updated: December 9, 2008 09:50 EST
Energy Is Best 2009 Commodity, Barclays Survey Shows (Update1)
By Christopher Martin and Ron Day
Dec. 9 (Bloomberg) -- Energy products will be the best- performing commodities next year, according to a survey of investors by Barclays Capital.
About 39 percent of respondents tapped energy as the top performer, 28 percent predicted agriculture would be the best investment, 16 percent chose industrial metals and 12 percent selected precious metals, according to the survey of investors attending Barclays’ U.S. Commodities Investor Conference in New York yesterday. Just 5 percent selected livestock.
Oil in New York has declined 70 percent since reaching a record $147.27 a barrel on July 11 as a global economic slowdown reduced demand. Most of the 230 attendees forecast oil will average more than $75 a barrel over the next five years.
“There’s a high level of commitment to this asset class despite the high volatility,” Kevin Norrish, a Barclays analyst, said today on a conference call. “People are viewing current prices as a temporary phase.”
Last year, 45 percent of respondents expected agriculture to deliver the highest returns, 18 percent selected energy, 19 percent chose precious metals and only 8 percent selected industrial metals, Barclays said.
Only 38 percent of respondents expect oil will average more than $100 over the next five years, down from 54 percent in the previous survey. Oil will be in the $75 to $100 range, according to 43 percent, compared with 27 percent last year.
This was the fourth annual survey of Barclays commodity conference.
To contact the reporters on this story: Christopher Martin in New York at cmartin11@bloomberg.net; Ron Day in New York at rday1@bloomberg.net.
Last Updated: December 9, 2008 09:50 EST
I am expecting the market to pullback a bit but Mr.Market always gets overbought/oversold more than most people think
USO calls did very well today
http://finance.yahoo.com/q/cq?d=v1&s=USOLH.X%20USOAO.X%20UBOAK.X
Posted by: STRONGUS Date: Sunday, December 07, 2008 9:20:19 PM
In reply to: STRONGUS who wrote msg# 40111 Post # of 40165 [Send a link via email]
USOLH.X USOAO.X UBOAK.X
No surprise there All the 'experts' are always wrong..LOL
Looks like the market wants to go up Question is whether it can build onto these gains or at least sustain them..
USOLH.X USOAO.X UBOAK.X
Even lebed is 'pumping' oil now LOL ERX is a 3x etf so there is more beta. I bought some USO calls last week.
OPEC President Khelil Warns of Substantial Output Cuts, AP Says
By Gavin Finch
Dec. 6 (Bloomberg) -- The Organization of Petroleum Exporting Countries President Chakib Khelil says financial markets should prepare for a surprise announcement on oil production cuts when the cartel meets later this month, the Associated Press reported, citing an interview.
Khelil said a consensus had formed among the 13-member group for a significant reduction in output, according to the AP. OPEC meets next in Oran, Algeria, on Dec. 17, AP said.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
Last Updated: December 6, 2008 08:56 EST
Oil Rises First Time in Seven Days as OPEC Signals Output Cut
By Gavin Evans
Dec. 8 (Bloomberg) -- Crude oil rose for the first time in seven days in New York after the Organization of Petroleum Exporting Countries’ president said there was consensus for a “significant” production cut when the group meets next week.
A “severe” cut may be needed to halt the decline in prices, group president Chakib Khelil told the Associated Press in a Dec. 6 interview. Slowing world economies will trim global demand growth to 0.2 percent next year, the International Energy Agency said Dec. 5.
Crude oil for January delivery rose as much as $1.33, or 3.3 percent, to $42.14 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $41.81 at 10:13 a.m. Sydney time.
Oil fell 25 percent last week, the biggest weekly decline since the Persian Gulf war of 1991, as recession deepened in the U.S., Europe and Japan. Prices dropped 6.5 percent on Dec. 5 after a report showed U.S. payrolls plunged by 533,000 last month, the largest decline in 34 years.
Brent crude oil for January settlement rose 90 cents, or 2.3 percent, to $40.64 a barrel on London’s ICE Futures Europe exchange today. The contract fell 6 percent to $39.74 on Dec. 5, the lowest settlement since Dec. 29, 2004.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
Last Updated: December 7, 2008 18:16 EST
OIL USO UCO DXO DIG ERX (Varying degrees of risk/reward with each of them
Looks like some kind of positive tone is building over the weekend but watch out for oil to skyrocket if Israel attacks Iran's nuclear sites next week..
I had both URE & PLD all day. Sold at the close..It is possible we see a gap up on Monday but I didn't want to count on it..
AP Interview: OPEC head predicts output cuts
By ALFRED de MONTESQUIOU – 2 hours ago
ALGIERS, Algeria (AP) — Oil markets should brace for a surprise decision on output cuts when OPEC meets Dec. 17, the cartel's president said Saturday, suggesting that reductions could be deeper than expected.
"A consensus has formed for a significant reduction of production levels" by the 14-member Organization of Petroleum Exporting Countries, OPEC President Chakib Khelil told The Associated Press.
The OPEC head would not discuss how deep the output cut would be, but said it could be "severe," and noted that some analysts are predicting cuts of as much as 2 million barrels per day.
An output decision that startles markets would help bolster plunging oil rates, Khelil said.
"The best way is to surprise them," he said. "I hope it (the decision) will,"
Oil prices settled at a four-year low on Friday of $40.81 a barrel. In July, prices peaked at record highs above $140 a barrel.
OPEC previously announced a 1.5 million barrel-a-day reduction in October, but the decision failed to halt the fall in prices. Markets have been expecting another cut at the Dec. 17 summit.
"The stronger the decision, the faster prices will pick up," Khelil said.
Khelil urged oil producers outside OPEC to help the cartel regulate prices, especially Russia, which has said it could sign a cooperation memorandum with the cartel in Oran.
"We hope that Russia will apply (quota decisions) ... as if it were an OPEC member," Khelil said.
He acknowledged the cartel has little control over prices at the moment because of the slumping world economy, which has considerably reduced demand for oil.
He pointed out that cartel nations only produce 40 percent of the world's oil. "The probability that we can adjust supply to demand is very weak," he said. "In an unstable system, you react by trial and error."
He said fixing oil output levels has become "a kafkaesque situation" since OPEC wants to maintain its revenue stream without worsening the recession in the U.S. or Europe.
"I really don't think OPEC wants to hurt the world economy," he said.
Oil prices that remain too low would start hurting wealthy oil producers, he warned, adding to the global recession. The International Monetary Fund and several stock markets have asked wealthy producers to reinvest some of the cash they piled up when oil was at over $100 per barrel.
If oil is sold at below production costs, oil-producing nations would have to end their investments abroad and could themselves enter a recession, Khelil warned. "We'd then see a debacle" worldwide, he said.
Oil stability is crucial to a country like Algeria, where oil and natural gas make up 97 percent of exports. Khelil said Algeria based its 2009 budget on oil at $37 per barrel, but would have to cut back on large infrastructure projects if the price goes lower.
However, he expected demand would rise by mid-2009. "It's certain we'll see prices rise by that point," he said.
A fair price for oil would be at "at least $70" per barrel, the OPEC chief said.
Too-low prices are not in the interest of oil-consuming countries either, he said, because they hinder investment and exploration for future production. He noted that several offshore drilling projects were already being postponed around the world.
"We'll need these projects to meet demand in two or three years," he said.
Cramer is such a joke. He called 2008 as year of the natural gas. We all know what happened to that call I use him as a contra indicator. Time to get into commodities (always average in)
I stopped listening to ANALysts..This is the same guy who said
a while ago. The deficit only went up big since then..
“Unless the Bush administration is capable of cutting the current account deficit in half, the dollar's decline is destined to continue.”
but now
"The greenback is expected to take the most-favored status among the major currencies as the global recession gathers strength," Woolfolk said.
USO UCO DXO DIG ERX (Varying degrees of risk/reward with each of them
It also amazes me that the talking heads on media are obsessed with the demand destruction. The supply is also going to come down because at 40$ oil, no one is going to make money. Also it is not always about supply vs demand. A weaker dollar means higher oil price. Fed may be forced to cut 50 basis points in the next meeting. Treasury is printing trillions of dollars and it is going to be prized in the dollar at some point. Oil at $40 is a good price to start building positions.
I think both oil & NG are closer to the bottom than most people think. I can't stop laughing whenever I see the ANALysts coming out with their dreaded forecasts..Goldman & ML were calling for 200$ & 150$ targets only a few months ago. Today the same analyst comes out with a 25$ target!!.I am buying commodities right now (starting to average in). I also like FCX (copper play) at this price..All analysts can read this post below and kiss my ... Oil is down more than 100 dollars since then..It topped at $147 and then the rest as they say is history
Posted by: STRONGUS Date: Sunday, May 25, 2008 6:02:33 PM
In reply to: coydog who wrote msg# 27639 Post # of 33061 [Send a link via email]
coy, It is the timing issue. I know oil is going lower eventually. The fear is whether it would hit $150 short term before going back down to $100. That is why I am averaging in on my DUG calls..I think we will see a mini correction to 115-120 dollar range before the next upward run..It may finally hit the magic number ($145-150) every one wants and crash down from there. The media is really feeding the frenzy again. When the entire market screams that the oil is going higher, it means the top is near
Mainly because the other currencies are even more weaker
I doubt it. It wasn't too long ago 'experts' were calling for $200 when it was trading at $147. They were wrong on the upside and they will be wrong again on the downside. I think Oil will double from this level within 3-6 months on a weaker dollar.