Wednesday, April 29, 2009

Oil Prices and Shell Profits

We have "bloated surpluses" of oil and consumption is way down this year in the U.S. from a year ago. OPEC has already cut oil production this year and there is no reason to believe it is going up anytime soon.

Royal Dutch Shell reported a 58 percent drop in Q1 profits compared to last year. This is similar to the 62 percent drop at BP and the 80 percent drop by ConocoPhillips.

Boy, I'll say one thing - it sure is a good thing that McCain/Palin didn't win. Their whole "Drill Baby Drill" energy plan looks pretty silly now (I commented on this months ago before the election).

Even if we allowed drilling anywhere, anytime in the U.S., oil companies are not going to waste their declining profits on building new rigs to flood the already oversaturated market with more oil. All that would do is reduce their profits even further.

Couple of Economic Notes

Wall Street appears to be relieved that the GDP decline is not worsening. The market is up about 160 points at mid-day, so traders appear to be pleased with the GDP news.

As part of the stimulus package, social security beneficiaries are getting a one time $250 cash payment. Fifty million beneficiaries are going to get the money in May. There will be a temporary increase in spending that we can expect to happen as a result of this. We are talking about $12.5 billion in stimulus money that will mostly be spent in May and June. This should provide a nice spark to the economy. To be sure, $12.5 billion is not a whole lot relative to a $12 trillion economy, but it is a spark.

Keep the Pressure on Hannity

Keith Olbermann has called out Hannity for saying that he doesn't believe waterboarding is torture and that he would be willing to go through it for charity (proceeds would go to families of soldiers). It is now being picked up by other news sources so the story is growing.

I still doubt Hannity is going to walk the walk. All he does is talk the talk.

GDP in First Quarter

Initial government stats show that GDP sank to a 6.1 percent annual rate of decline. It is bad, but this is not really surprising because the economy is still in the dumps. But, it is good that it has not worsened from the 6.3 percent decline in the fourth quarter of 2008. in the first quarter.

Frankly, it is another sign that the economy is moderating. As stimulus money makes its way into the economy in the next 2 quarters we should see improvement. I'd like to see GDP growing by the end of the fourth quarter. If fourth quarter GDP increases by .5-1.0 percent, that will be a remarkable turnaround and it will be further evidence that Obama's economic policies are working.

Tuesday, April 28, 2009

Keith Olbermann Finds Man To Waterboard Sean Hannity for Charity

Hannity isn't going to let himself be waterboarded - he is a wuss and he is all talk and no substance.

Keith will donate $1000 per second that Hannity can put up with it.

I like Keith's guest in the video, the guy is a former U.S. Army interrogator who is willing to waterboard Hannity. He says he is willing to bet that he can get Hannity to say, "Countdown with Keith Olbermann is his favorite show."

Monday, April 27, 2009

Bears Draft

Obviously the big move was getting Cutler, and to a lesser extent Orlando Pace. I am not that familiar with the players that they did select in the draft, but in reading about the guys I think the Bears did a pretty good job. They basically went with athletes with size and speed for the most part and many of the guys come from bigger name programs.

I think they will get some contributions at receiver and in their defensive tackle rotation. I also think a few of the guys will make their presence felt on special teams. I'd be surprised if there were any Pro Bowl players in the group, but I like the overall draft.

Friday, April 24, 2009

Colbert on a Republican Congressman

Here is another example of Republican nonsense.

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Illegitimate Grandson of an Alligator
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Why the Republican Party is Doomed

Instead of taking on serious issues, the Republican Party is making up issues and then working to "solve" them.

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Sh#t That's Never Gonna Happen - Global Currency
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8131

Wall Street is staging another rally today. With 3 hours left in the trading day, we are at 8100. To keep th 6-week bull run going we have to clear 8131. I like the action today and think traders want to keep things rolling. Psychologically it will further build confidence if we can clear 8131.

The stabilizing economy is one of the main reasons Obama still has sky-high approval ratings.

It is also why more and more people in the country are believing we are now on the right track. Less than 10 percent of the nation felt we were on the right track before the election. It has been steadily rising since Obama won and then took office.

The people who are funny are the ones who still refuse to see that Obama is delivering on change, things are improving, and that the majority of American people approve.

Olbermann Bets Hannity $1,000 Per Second Of Waterboarding

Come on Hannity, put show us how tough you are. I doubt you will actually allow yourself to be tortured. He is an idiot.

Keith Olbermann Interviews Abu Ghraib Former Commander

Now that all of the secret nonsensical memos justifying torture are coming out, all the Bushies are defending torture and saying it was good policy. But where were these "heroes" when the pictures of torture came out at Abu Ghraib? They allowed grunts to go to jail and called them a "few bad apples." Some of these low-level soldiers are still in jail, and it turns out that they were just following policy directives from the highest levels of the Bush Administration. Pathetic.

Wednesday, April 22, 2009

Choppy Trading Day

After the poor start on Monday, yesterday was a nice uptick. Today has seen the market fluctuate more broadly. This type of trading is what we will have to get used to over the next 3 months. The earnings season is upon us and plenty of firms have had poor numbers. There have been some positive surprises but the wild differences across the broader economy will continue to plague trading.

A month ago, I predicted the Dow would hit 8500 by April 23. We have had a nice 700 point runup, but unless things really heat up over the next three hours and tomorrow, looks like I will come up a bit short.

That said, I like the action we are seeing on the markets from a technical standpoint. After the bloody day on Monday, the market recovered on Tuesday. If things were more unstable and there was more pessimism we would have seen a multi-day selloff. We don't have that - instead, traders are coming back in on downturns. That is a good sign that we are stabilizing.

NFL Draft Thoughts

We are just days away from the 2009 NFL Draft. The Chicago Bears have addressed their primary needs at offensive line and QB through trade and free agency. They don't have a first round pick - which is fine given that they have botched their first round pick as often as they hit on it over the last decade.

They could go a lot of directions with their picks - I say just take the best available and focus on speed. They could use a big, fast wide receiver, a fast free safety, depth at D-line and linebacker, O-line, another running back, you name it. I don't think they have any specific major needs to address with the draft, they just need to focus on picking up quality team guys who can make them better all around.

I'm really looking forward to how the first round shakes out. In particular, it will be interesting to see where Sanchez goes. People are talking about him going #4 to Seattle. Personally, I think that is just a smokescreen. The Seahawks have a good team and a solid QB who still has gas in the tank. They will pick a player who can help right away or they are posturing so they can move down in the draft (I believe this to be the case). For example, they want Washington to trade away JC, the #13 pick this year and a 2nd or third round pick next year to move up. Danny Boy might just be stupid enough to do it.

It should be interesting.

Tuesday, April 21, 2009

Economy Thoughts

I believe we are seeing real signs of stabilization in the economy. The financial sector is calming down, real estate prices are no longer in complete free fall in most markets, there are mixed results during the current earnings season, etc. On the GDP side, we will continue to see contraction for the second quarter and likely the third quarter, but we will see improvement to where the third quarter may end up about flat. I expect that by the fourth quarter we will see 1% to 1.5% growth in GDP.

Unemployment will continue to rise throughout this year. It is a lagging economic indicator and employers are not going to go on major hiring binges until they are sure the economy is improved. I would be surprised if the national unemployment rate did not hit 10% by the end of the year. Then it will moderate next year and fall back to about 7%-8% by the start of the fourth quarter.

What I would like to see now is for the government to allow some more of the failing banks and financial institutions to fail. The market will show who the weak competitors are and for those that are too weak - let them fail and regulators can roll up their good assets into more stable banks.

There is a good piece about the overbearing, oligarchical control Wall Street has on our economy. I agree whole-heartedly. In the end, strong regulatory control to prevent the boom and bust cycles is necessary to effectively manage the economy.

Friday, April 17, 2009

6 Weeks In a Row

The bull market continues - today makes six weeks in a row that the Dow finished higher than the previous week's close.

President Obama's economic policies are working but more impressively, he has raised "The Dead."

8083

That is the number to beat to extend the Dow's bull run to a sixth week. With a couple of hours to go on a choppy day it is hard to tell if we will beat the closing number for last week.

In another good sign, consumer confidence is rising again and is the highest it has been since September when the crisis really started to bubble up.

Thursday, April 16, 2009

Economic Notes

Yesterday the Fed released it's "Beige Book" assessment about the overall health of the economy. It looks like things are stabilizing.

It looks like we are in the midst of a nice afternoon rally on Wall Street yet again. We are up over 100 points with about 45 minutes to go. That is a great sign given that General Growth filed for bankruptcy. The firm is the largest mall operator and their $27 billion filing is the largest commercial real estate bankruptcy in history. The market seems to have shrugged off that news, which is another sign that hope and optimism are returning to Wall Street and the broader economy.

We are a week from April 23, and the Dow is at 8138. With the announcment of the Obama/Geither toxic assets auction plan last month, I made a prediction that by April 23 the Dow would be at 8500. We are closing in, but may be losing steam on the bull market run.

Cavuto and Faux News Making Up Sacramento Tea Bag Numbers

Wednesday, April 15, 2009

"Tea Parties"

Just as I thought, they have amounted to very little. The DC and Baltimore protests have been a joke. A couple of hundred people in DC and Baltimore - what a joke.

Give me 2 hours and I could bring together more people than the nonsense in DC.

The worst part is all they did in DC was mill around, barely chant, and then throw some tea bags on the White House lawn. Littering is a crime.

Tuesday, April 14, 2009

Chicago Bears Schedule

I love the way the Bears schedule is set. It looks like they get at least 6 national games (5 primetime and the week 2 4:00 pm start against the Steelers). I could imagine the Bears-Ravens game near the end of the year becoming a flex game on NBC.

It looks favorable on paper for much of the year. We'll see.

Monday, April 13, 2009

SORE LOSER!!!

Al Franken won the most votes in his Minnesota Senate race against Republican incubent Norm Coleman. So what is Coleman doing? Suing. He just cannot accept that he is the loser so he is wasting millions of Minnesota taxpayers' money fighting on.

In the end, all that he will accomplish is he will keep Franken from taking his seat a few weeks longer, he will alienate Minnesota voters, waste millions of public dollars, and make people see him for what he is - a SORE LOSER.

I Bought a Cutler Jersey . . .

for my daughter. She had outgrown the Grossman jersey and I needed to get her a new one. Cutler is the now the guy.

Frankly, I think the key to success for the Bears will be whether they can play good team D again. The last two years have been disappointing. Injuries have taken a toll on the D the last two years, but Bob Babich's coaching has been suspect. Lovie is taking over the D this year. I am sure that he will get a lot of input from new D-line coach Rod Marinelli. If they can get their D straightened out, the Bears will challenge for the NFC crown. If they don't and they fail, I expect that Lovie will be out.

I love Lovie and think he is a good coach, but patience is not a virtue in the NFL and Shannahan and Cowher are sitting out there. I would not be surprised if they got a call if Lovie cannot right the ship this year and make the playoffs.

Friday, April 10, 2009

Tea Party protestors believe Obama not US-born

Here is an example of the ignorant fringe folks who will turn off moderate folks.

The thing I love about this "grassroots" effort is that there are literally dozens of people protesting. Consider that there were 1.5 million people at Obama's inauguration and that he had more than 14 million donors and volunteers to his campaign. That is a "grassroots" effort.


To anyone who thinks Obama has hidden his birth certificate, just click here. That is just nonsense.

"Tea Party" Protests

With the economy starting to stabilize and the real hope of economic growth later this year, and the 5 week bull run on Wall Street, there is clear and growing evidence that Obama's economic policies are starting to work. With stimulus money hitting the streets in coming months, things should really pick up.

That said, there is a small movement of people who are hosting "tea parties" to protest government spending. Let me say that I encourage any citizen to stand up and protest if they feel they must, but most of the people that are on the youtube videos seem like complete dolts. Most of these demonstrations are made up of a few dozen to a few hundred angry folks.

Next week, April 15, is the national tea party protest day. There will be hundreds of protests across the country. No doubt there will be a couple of larger events (perhaps in the thousands), but I don't see any evidence of any widespread movement. There will be some fiscal conservatives who hold principled views, but I suspect most of the protests will bring out the crazies. We will all be treated to plenty of examples of the right wing fringe nuts who think Obama is not American, or he is a Muslim, or he is a socialist, or whatever. There will be a lot of angry screaming that should be entertaining. We'll see how inane some of these people really are.

In the end, these protests won't be the kind of thing that will spur moderate folks to re-join the Republican Party. I suspect they will be hate-filled shouting deonstrations that scare normal people away and remind us all of why the Republican Party is where it is.

Thursday, April 09, 2009

5-Week Run On Wall Street

Just as I predicted again, this week was a choppy week and we ended up a little up for the week. That makes it five weeks in a row of gains on Wall Street.

The great part is that we are really poised for a huge bust-out in the banking sector in coming weeks. The toxic asset plan was a real winner and in coming weeks we will see growing confidence in the banking sector. Obama's plans are working as advertised and we are all benefitting.

Tuesday, April 07, 2009

The President's Overseas Trip

Excellent first overseas trip. There is a renewed sense of cooperation with many of our allies. The speech in Turkey yesterday was an important one - it sent a message to the Muslim world and the moderate Islamic believers that they can work with us.

The willingness to listen and not dictate policies was very pragmatic and it is clear that the world's leaders were more positive about our new President than they had been about our last President.

It is so nice to have a President that can communicate with our allies and speak in a way that people understand. That is why his approval ratings remain very high and there is growing optimism in an economic recovery.

Monday, April 06, 2009

Interesting SI Insider Story of Cutler Trade

Peter King wrote a pretty interesting piece about the trade. I like Orton, but his completion percentage has never been good even though the Bears have run a pretty conservative passing attack that relies on short passes. Apparently, the Broncos liked Orton better than JC which is why the trade went through with the Bears.

I hope Orton has a big year, and I hope that Cutler has an even bigger year. As I consider the trade, I think this may be one that works out for both teams. The Broncos get a bunch of picks that can help them rebuild their awful D. The Bears get their franchise QB.

On an unrelated note - Todd Marinovich is back in jail. It is sad how far he has fallen. Here is the original 1988 SI story about the guy when he was in high school.

Economic Drift

Today's market action has been a sort of aimless negative drift. There aren't any big government reports or actions that are on the slate for the week. After 4 weeks of a rallying market, this will be a very interesting week to watch.

I think there is upward momentum and the money on the sidelines is itching to get back in. With the first quarter now in the books and earning season getting into swing, if there are a few firms that surprise to the upside it will really move the market up. People want to see that the economy is at bottom and that things are improving. My guess is that first quarter earnings will be weak and second quarter earnings will be slightly improved. That will signal that we may have hit bottom.

The stimulus money and economic growth will start to show up in the third and fourth quarters and the market will stage a major rally by year end.

As for this week, my prediction is that it will be a choppy week - up and down - that will end about where we started at 8000 on the Dow.

Friday, April 03, 2009

Closing Bell on Wall Street

Another big week on Wall Street. Just as I predicted for the day, it was a pretty flat day. Most of the day the Dow stayed between plus and minus 50 point - exactly as I said before the open this morning - and it is nice to see a plus day (39 points up on the day).

The Dow and NASDAQ are both up more than 20 percent over the last four weeks. In fact, it has been the best 4 week rise (percentage wise) on Wall Street since 1938 over any 4 week period.

The Dow closed up over 8000. Great week again and the trend seems to be very good - even in the face of some very bad news. From a strictly technical standpoint that is great.

Cutler Thoughts

I've had some time to digest the trade and read/hear what various reactions are. Most of the fans in Chicago love it. Most analysts think the Bears got the better of the deal. Some have reservations about Cutler's maturity level. Some think the Bears gave up too much.

I like Orton and think he is a solid NFL QB, but I think the deal makes sense for the Bears. Part of the reason I say this is because they have upgraded the offensive line quite a bit through free agency and the return of a healthy Chris Williams, so that is not really a need area to address in the draft.

The main thing is that they have excited the fans and the city with a young, strong-armed QB who grew up a Bears fan. Like him or not, he has the arm strength to make deep throws and to throw into the swirling winds of Soldier Field. I think the team also sends a message that they expect to win now. Had they drafted a QB, it would have been a work in progress.

In the end, the real cost of the deal is a first round pick next year. Orton and this year's first round pick wash out with Cutler. The Bears give up one of their third round picks this year, but they still have a third round pick and they get a fifth round pick this year - that comes up a wash. Then they give up next year's first round pick. If the Bears make the playoffs, that will be a high pick anyway. So, from a risk standpoint, it is manageable risk and it is a worthwhile gamble.

It seems to me the Bears now have a very good chance of making the playoffs and can use the draft to pick up some defensive talent and perhaps a wide receiver. They should be better, but they don't play football on paper, so we will see how Cutler meshes with the team.

Unemployment, Budget, and Economy

The labor stats came out this morning and unemployment rose to 8.5 percent. Almost 700,000 more jobs were lost. This is not surprising given where the country is and the still falling GDP. Economists have been predicting that job losses will continue most of this year, the hope is that the President's stimulus plan will start to kick in, the new toxic assets plan helps the financial sector, and the economy stabilizes.

That said, the President's budget passed through the House and Senate. They are slightly different so the two Houses of Congress will come together to put together a single budget that will pass and get to the President's desk. I cannot believe how short sighted many Republicans have been about the need for stimulus and increased government spending. Without the extra government spending, instead of 9-10 percent unemployment this year, we would be talking about 14-16 percent unemployment. The fact is that the private sector is contracting and there has been a lack of confidence that has required the government to step in. But just watch, many Republicans (in the dozens) will vote for the President's budget when the final bill comes up for vote.

The unemployment number was bad, but the market is not likely to be spooked by that number. The TARP monies that were paid back were a good sign. We are up a little over 200 points for the week on the Dow again (4th week in a row we are up). I think we will have a flat day. Some profit taking, some buyers. I think we will be plus or minus 50 points for the day in the end. Anything better than a 100 point loss for the day would be great given the unemployment figures and the bad news about GM this week.

Thursday, April 02, 2009

Good Financial News Again

So the market was up 216 points - great day as I expected when the mark-to-market rule was suspended.

However, 5 banks that got TARP money paid back the government $353M plus $5.4M. This news came after the market closed but it should be good for the opening bell tomorrow. It is a sign that banks are making some progress.

On top of that, these banks can buy back the warrants that the government holds. Basically this is equity that the government can exercise. So the government will get more money back. And for all the "Obama is a Socialist" folks out there - wrong again. The government is not going to exercise the warrants and take ownership. The plan is to either have the banks buy them back or sell them to private investors.

Bears Get Cutler and Pace

The Bears made two significant moves that will make them the favorites to win the NFC North and challenge for another NFC Championship and a shot at the Super Bowl.

Jay Cutler takes his arm and ego to Chicago. He is a 25-year old franchise QB and if his apparent fragile super-ego can deal with the Chicago fans this could be a great trade. It is expensive - Orton, two first round picks (this year and next year) and a 3rd rounder this year (the Bears got a compensatory pick so they still have a third round pick). But, if the guy plays at a high level it will be easily worth it. I have my concerns about his ego, but for the Bears it is a good gamble.

The Bears also got Orlando Pace to sign a 3-year contract. If he is even reasonable, he will be a better left tackle than anyone they have had for the last decade.

The offense will have an all new line. Pace will play left tackle, Chris Williams who was their first round pick last year will play right tackle. Omiyale who they signed from Carolina will play guard, and Kruetz will play center. I'm not sure if the Bears will keep Garza at guard or move Shaffer (who they signed from Cleveland), that we will have to see. What I can say is after a couple of horrible years at line, the Bears should be vastly improved.

The Bears need to sign a guy like Holt and draft another receiver. But their offense should be far more potent this year.

Championship!

Great Day on the Market Again

As I predicted just two days ago, once the "Mark to Market" rule was relaxed we would see a 300 point day on the Dow. The only thing I am surprised about was that it happened so fast. There have been rumblings about this for some time, I thought it was going to be announced next week, but it was announced today and we are looking at a major rally.

This is just another great move by the Obama Administration to address short-term concerns and problems in the financial sector as it tries to find its footing. All of those "Obama is a Socialist" people don't know what they are talking about. This is exactly what the private sector and Wall Street have wanted (needed) to help them through the current turmoil.

In coming months, we are going to see the stimulus dollars kick in and create construction jobs. It is also going to help re-build American infrastructure which will be a visible sign of good government and a great use of American dollars. I predict that a good number of Republicans in the House are going to abandon the horribly bad Republican economic blueprint (I hesitate to call it an actual plan because it is so sparse on details) and vote for the President's budget. There are enough smart ones to recognize that Obama's plans make better sense, and are working, and they won't want to get caught with their pants down looking like idiots.

Wednesday, April 01, 2009

April (Republican) Fools Day!

The market closed up 150 points which is another great sign in the face of how the week started and the really bad news about GM this week. It tells me that even in the face of bad news the market wants to rally. We've had three plus weeks in a row and March was the first positive month in about a year.

It seems fitting that on April Fools Day the House Republicans laid out their ridiculously bad alternative spending plan. They want to freeze government spending, add tax cuts, and still project out $500B annual deficits for as far as the eye can see.

These idiots don't even understand what Reagan did. Reagan recognized that the economic malaise of the 1970s required strong government deficit spending to shock the system. He spent heavily on defense spending, turned the $1 trillion national debt into a $3 trillion national debt, but created an economic boom. There are clear times to spend - and this is one of them. The private sector is bleeding jobs and unemployment is rising - private capital expenditures are down. This is the time for government to step in and spend.