Bull Pen - June 2006

[Griffin]

We'll I was getting all primed to make a comment this morning, and then the opportunity vanished in a panicked phone call. Therefore, I did not get the chance to make a decision and am still sitting in the G. I did take a peek at the board moves and it looks like some hedged bets were made.

I can't help shake the feeling that if the fed does pause, it's only because the acknowledge in their cryptic way, that they have gone to far and they are concerned about a recession. This thought has been crawling through my mind all weekend. I am more concerned with a slow bleed like the days following May's FOMC meeting then of a bounce.

There's more to this BP story then is being acknowledge. The Alaskan pipeline leaks, has leaked for decades and will always leak, if this is routine maintenance and repairs, then why the hype. To quote Bill and Ted's excellent adventure: "strange things are afoot at the circle K".

 

[sugarandspice]

That is true about the pipeline. It leaks in many places all the time and it is accepted. Nothing is done about it. The leaks may fall under some set standard that does not trigger action but this one is getting undeserved attention unless there is more.

 

[Griffin]

Nothing is done about it.

I disagree with this part of your statement. The pipeline is well managed. I have some familiarity with the state of the Alaska environmental regulatory community, and while it is overall oil friendly, it is only that way because the oil industry goes to great lengths to not embarass them. The Exxon Valdez incident caused a paradigm shift in that community.

But still, I smell a rat......no mouse......no moose :nuts:

 

[Griffin]

The pro's are still mixed on the rate hike issue. If the fed pauses, will it give the market enough boost to cause a breakout above the current channels? It may look that way right off the bat, but quick reversals have been the norm rather then the exception lately.

Despite the news of late, I am optimistic about the intermediate future. Ultimately, the Israel conflict is going to put a lot of pressure on Iran. I personally believe that this situation is going to result in division within the Arab world rather than unity and I still have confidence in the mission in Iraq. I have to believe the people of the Arab world are becoming more exposed to the fundamental conflicts with Islam and the rest of the world. I don't expect the core belief system to change, but political solutions will become the desired end state.

I have to admit that I have some concerns about the market getting away from me, but that fear really is not well founded. On the short term, I expect a retest of the lows in the near future, because weak economic data is only positive if it gets the Fed to stop hiking, once that happens, it simply becomes weak economic data. Go figure

Since I missed the jump yesterday, I am going to wait until tomorrow to make a decision about my next move (or not).

 

[Griffin]

I see some folks starting to jump in and I have to admit I am a bit tempted myself. But if everyone is expecting a short rally....then everyone is going to sell the first opportunity they get. This may be a real short rally.

The major indexs are back to fighting the early July's resistance levels. If they were at last Wednesday and Thursday's levels I might bite.

 

[Dave M]

A Warrior Must Have Patience

So said Don Juan. Doing nothing allows time for the right path to reveal itself. And there's Meyer's Law: The hardest thing to do is also the right thing to do. Both apply today.

Dave

 

[Griffin]

Back to the BP thing. Now they are talking about replacing 73% of the pipeline. I don't know the numbers, but I got to believe the replacement costs plus the cost of shutting down the pipeline for several months as opposed to building an alternate pipeline and using the existing pipeline until the alternate is built has got to be close to a break even point.

This says several things, either they could not get the permitting for an alternate pipeline (tried and failed) and knew the current pipeline was in bad shape, internally it was downplayed because of concerns for a big bottom line or they didn't know the pipeline was in bad shape. Anyway you shake it, it seems they had a near miss of a castrophic rupture.

While this is indicitive of some mismangement issues (I blame it on the bean counters), I believe BP will be vindicated of any criminal negligance. However the environmentalists are going to flock to this like seagulls on french fries at the beach.

Drilling the Alaskan oil fields just took another large step out of reach of GWB.

 

[Griffin]

I see some folks starting to jump in and I have to admit I am a bit tempted myself. But if everyone is expecting a short rally....then everyone is going to sell the first opportunity they get. This may be a real short rally.

I am going to have to come up with a whole new definition of "short".......

 

[Griffin]

At this point, it is fairly reasonable to conclude that tomorrow is going to start off down. Usually the F-Fund takes a beating when the stock market, is taking a beating, initially. To a certain extent, the rate hike pause has been mostly priced into the bond market, but there is plenty of room for growth.

The plan is to move to the F tomorrow or the next day, and wait for a retest of the lows. I am skeptical about the obvious bottom holding. The market is now faced with the reality of a possible recession.

I forget where I read it but an inverted yield curve typically takes 3-5 quarters to kick in (the clock started in December). So were now going into the dead middle of that timeframe. That "more then 3 years since a 10% pullback" in the S&P is still out there and so is the dreaded 4 year curse.

The bull meter is set to low.

 

[Griffin]

Joe Lieberman is looking like he is going to loose the democratic primary and run as an independant. Awhile ago I mentioned that I am a conservative without a party. I personally would like to see McCain and Lieberman run together on an independant ticket for the presidency in 08

A bit far-fetched, but it looks like half of it could come true

 

[robo]

At this point, it is fairly reasonable to conclude that tomorrow is going to start off down. Usually the F-Fund takes a beating when the stock market, is taking a beating, initially. To a certain extent, the rate hike pause has been mostly priced into the bond market, but there is plenty of room for growth.

The plan is to move to the F tomorrow or the next day, and wait for a retest of the lows. I am skeptical about the obvious bottom holding. The market is now faced with the reality of a possible recession.

I forget where I read it but an inverted yield curve typically takes 3-5

quarters to kick in (the clock started in December). So were now going into the dead middle of that timeframe. That "more then 3 years since a 10% pullback" in the S&P is still out there and so is the dreaded 4 year curse.

The bull meter is set to low.

I'm still bullish, but It just seems things are starting to look like there is more risk in holding equities between now and the election than the potential gain is worth. I guess, as always, it boils down to your risk level... I'm on the conservative side... Hoping for a rally for those that are long. Henry and a couple of the other folks I get still think a rally is doable into September, but I think time is running out...

"Seeeee you, in Sep-tem-berrrrrrrr""" See youuu, when the low is in....

I think that was a song!!!


5 TA's staying in cash
2 Shorting
Others 25% to 100% long

I'm in the G Fund for now... Made a trade today in my Brokerage account, but got stopped out...
My stop was to tight..

I'll watch the Bulls and Bears battle it out the rest of the week... Lets see what the Big Money does the rest of the week.... Is it safe to say the Fed is done rallies are over... I'll be watching the dollar now very close! Is it headed down?

 

[robo]

Joe Lieberman is looking like he is going to loose the democratic primary and run as an independant. Awhile ago I mentioned that I am a conservative without a party. I personally would like to see McCain and Lieberman run together on an independant ticket for the presidency in 08

A bit far-fetched, but it looks like half of it could come true

In my opinion Lieberman will win as an Independent. Over 40% of the voters in Connecticut are independents.. ( Go Figure ) I think he takes it!!!

 

[James48843]

...either they could not get the permitting for an alternate pipeline (tried and failed) and knew the current pipeline was in bad shape, internally it was downplayed because of concerns for a big bottom line or they didn't know the pipeline was in bad shape. Anyway you shake it, it seems they had a near miss of a castrophic rupture.

I read some stuff this morning on that. Seems they haven't been doing internal inspections since 1991- relying instead on ultrasonic inspections from the outside. However, after a major rupture last fall, they decided to start dioing some internal checking again, using a device that goes inside the pipe, and deytermines the wall thickness. Most recently, another, much smaller, leak sprang up. And when they tested in the area of THAT leak, they found a massive amount of corrosion they weren't expecting. Their guidelines say when the wall thickness is reduced to 70%, they have to begin regular checks,. and when it reaches 75% corrosion, they have to begin replacing. They are not allowed to continue pumping over 75% corrosion. The checks they did showed, in the last month or so, some places with wall corrosion over 85% gone from the original thickness.

Dang. The gambled on having an ultrasonic test give them enough warning to be able to replace beofre they had to shut things down, and instead, ended up with miles and miles that need replacement, in condition so bad they have to shut the whole thing down.

Could be MONTHS before they are able to get sufficient new pipe manufactured, on the ground in Alaska, and then installed. And they have to get MOST of it installed before they can turn anything back on.

I see BIG BUCKS for gasoline- especially on the west coast, soon.

Can you say five bucks a gallon?

 

[Spaf]

Ya say no internal inspections since 1991!.... Oh! .....That kinds of sounds Wilfull!

BP (Boo-boo Petroleum) Link >> http://usresponse.bp.com/go/site/1249/...:notrust:

Note >> http://usresponse.bp.com/posted/1249/PBU_OTL_Diagram.127640.pdf ....

 

[Spaf]

Why is the oil field / petroleum industry so un-govermental-regulated? When it is such a specialized industry, and controls such a big aspect in the economy and day to day living of the average american?....

 

[Griffin]

Can you say five bucks a gallon?

I can say it, but I can't pay it

I see a bright future for used car salesmen selling econo-boxes.

 

[Griffin]

Why is the oil field / petroleum industry so un-govermental-regulated? When it is such a specialized industry, and controls such a big aspect in the economy and day to day living of the average american?....

The golden rule - he who has the gold makes the rules

 

[Griffin]

I am going to have to come up with a whole new definition of "short".......

Stocks ready to cheer Cisco:

http://money.cnn.com/2006/08/09/markets/stockswatch/index.htm

This could be a short rally.....the new short. :nuts:

If the economy goes beyond a slowdown, and slips into recession, the world goes with us.....and the world has no room to drop their rates to stimulate the economy.

Until I am convinced otherwise, I'm staying stingy while the market rides the top of this channel.

 

[nnuut]

I read some stuff this morning on that. Seems they haven't been doing internal inspections since 1991- relying instead on ultrasonic inspections from the outside. However, after a major rupture last fall, they decided to start dioing some internal checking again, using a device that goes inside the pipe, and deytermines the wall thickness. Most recently, another, much smaller, leak sprang up. And when they tested in the area of THAT leak, they found a massive amount of corrosion they weren't expecting. Their guidelines say when the wall thickness is reduced to 70%, they have to begin regular checks,. and when it reaches 75% corrosion, they have to begin replacing. They are not allowed to continue pumping over 75% corrosion. The checks they did showed, in the last month or so, some places with wall corrosion over 85% gone from the original thickness.

Dang. The gambled on having an ultrasonic test give them enough warning to be able to replace beofre they had to shut things down, and instead, ended up with miles and miles that need replacement, in condition so bad they have to shut the whole thing down.

Could be MONTHS before they are able to get sufficient new pipe manufactured, on the ground in Alaska, and then installed. And they have to get MOST of it installed before they can turn anything back on.

I see BIG BUCKS for gasoline- especially on the west coast, soon.

Can you say five bucks a gallon?

I am in the business of Nondestrutive Testing. If they couldn't find 70% wall thinning with Ultrasonic Testing (UT) they were performing the inspection incorrectly. UT will find much less severe corrosion than 70%, depending on the thickness of the pipe. They just putoff the shutdown because of cost and waited toooooo long. :nuts:

 

[Griffin]

I am in the business of Nondestrutive Testing. If they couldn't find 70% wall thinning with Ultrasonic Testing (UT) they were performing the inspection incorrectly. UT will find much less severe corrosion than 70%, depending on the thickness of the pipe. They just putoff the shutdown because of cost and waited toooooo long. :nuts:

Nnutt,

I heard on the radio that the problem was identified in 2004. In my mind that throws the fault onto the bean counters. Unfortunately, by the time all is said and done, a bunch of hard working engineers and technicians are going to get their careers smoked, and some accountants are going to get a pay raise.

With, Israel starting an in-depth offensive into Lebanon tomorrow, the chances that Iran will invoke the oil weapon are going way up.

This could be the one-two punch that knocks the oil market to the mat. Let's just hope Saudi Arabia can make good on it's promises to pump all we want.