Daily Digest

Daily Digest 11/12 - Insider Selling Record, Energy Demand Jump by 2035, Who Pays for Toxic Spill?

Friday, November 12, 2010, 11:00 AM
  • The Dollar: Every Man For Himself
  • The Fed’s Got POMO Fever!
  • NFIB: Small Business Optimism Improves Slightly
  • Hayward Admits Banks Stopped Lending to BP
  • Insider Selling Hits Record $4.5B As Everyone Gets Out Of Market
  • Oil Rises to Two-Year High as Equities, Dollar Offset Supplies
  • Jump in Energy Demand Seen by 2035
  • An Arctic Oil Spill Could Linger for Years
  • Post Europe: Environmental Damage - Who Pays?

Crash Course DVDInsightful analysis on the Three E’s. Take home a Special Edition DVD today. (NTSC or PAL)


The Dollar: Every Man For Himself (joe)

On substance, the Fed recently stated in the Federal Open Market Committee (FOMC) Minutes that businesses were holding back investments because of fiscal and regulatory uncertainties. In the FOMC’s own analysis, the economic recovery should strengthen in 2011, even without additional stimulus. Additionally, commonly followed metrics used to measure the market’s inflation expectations are, and have been, approximately 2%. Even if inflation expectations were to drop lower, the lone dissenting voice on the Fed, Thomas Hoenig, rightfully argues a little deflation may not be any worse than a little inflation. In our view, printing upwards of US$600 billion in fresh money may be the wrong prescription for the current situation.

The Fed’s Got POMO Fever! (ilene)

Pretty much EVERY SINGLE DAY the market is open and twice on the 29th, the Fed will hand out Billions to "fix" the economy. Keep in mind they have no intention of stopping on the 9th, that’s just the end of month one! I know that we have all gotten comfortably numb with regards to large numbers but let’s consider for a moment how much money EACH $8Bn is as this is OUR money the Fed is spending: It’s enough to pay 5.33M $1,500 Mortgage Payments – enough to pay off every home in America each month!   It’s enough to buy out 40,000 $200,000 Mortgages EACH DAY. It’s enough to pay a full year’s $50,000 Salary for 160,000 workers – EACH DAY.  In a single month, the Fed could put 4.8M people back to work rather than flushing it back through the banks and Treasury in the hopes that a few jobs will trickle down to the people.

NFIB: Small Business Optimism Improves Slightly 

Optimism rose again in October, but the index remains stuck in the recession zone established over the past two years, not a good reading even with a 2.7 point improvement over September. This is still a recession level reading based on Index values since 1973. However, job creation plans did turn positive and job reductions ceased.

Hayward Admits Banks Stopped Lending to BP

It’s a preview of the BBC’s Money Programme special on BP’s ‘$30bn blowout,’ which is set for broadcast later this Tuesday. And it features the first official interview with Tony Hayward since his resignation as BP CEO back in July. Including this startling admission by Hayward: Prior to the meeting, the capital markets were effectively closed to BP. We were not able to borrow either short or medium-term debt at all.

Insider Selling Hits All Time Record Of $4.5 Billion In Prior Week As Everyone Is Getting Out Of Market (adam)

Insiders have officially marked the top of the stock market: last week's insider selling of all stocks (not just S&P) hit an all time record of $4.5 billion. This is the biggest weekly number ever recorded by tracking company InsiderScore.com: as Sentiment Trader highlights no other week before had more than $2 billion in net selling. Furthermore, selling in just S&P companies hit a whopping $2.8 billion: over 4 times more than the week prior! As such the ratio of insider selling to buying is now meaningless.


Oil Rises to Two-Year High as Equities, Dollar Offset Supplies 

“Financial factors like the euro-dollar and equities are driving the recovery, but sustained gains on the back of fundamentals are unlikely,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Inventories are plentiful, there are no serious supply disruptions and the dollar rebound is capping gains.” Crude for December delivery rose as much as 57 cents, or 0.7 percent, to $87.63 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest price since Oct. 9, 2008. It was at $87.41 as of 12:27 p.m. London time. The contract earlier fell to a low of $86.44. Brent crude for December gained 26 cents to $88.74 a barrel on the London-based ICE Futures exchange.

Jump in Energy Demand Seen by 2035 

The I.E.A. also said that the world energy outlook in 2035 hinged critically on government policies and how their actions affect technology, the price of energy services and consumer behavior. The I.E.A. said it based its outlook on governments sticking to their commitments to reduce greenhouse gas emissions and to phase out subsidies for fossil fuels. Oil is expected to remain the dominant fuel while demand for coal is expected to rise until about 2020, the agency said. Demand for natural gas is to “resume its long-term upward trajectory from 2010” after a drop in 2009 because of the recession, and would be especially strong from China and the Middle East, it said.


An Arctic Oil Spill Could Linger for Years

Pulling together a lot of the existing research on cleanup technologies and how well they might work under the kind of nightmare scenarios that are all too easy to imagine -- a spill underneath a solid sheet of pack ice, for example, or oil that attaches itself to drifting ice floes and travels hundreds of miles out to sea. Cleanup could be hampered by wintertime temperatures that drop on average to minus 49 degrees, fierce Arctic storms, endless darkness and fog that shrouds the region for more than half the days of the year, said the report, prepared by Nuka Research and Planning Group LLC, and Pearson Consulting LLC. BP's upcoming Liberty production unit, slated to pump oil from beneath the Beaufort Sea by means of long-range drilling tunnels reaching from near shore, has the potential for a blowout of 20,000 barrels a day -- the highest rate in the U.S. Arctic, the report said.

Post Europe: Environmental Damage - Who Pays?

In the aftermath of the MAL Alumina toxic spill in Hungary, it has become evident that the company was ill-prepared both financially and practically for an environmental incident. MAL had very low limits of third party liability insurance (under £120k), and it would appear that it had no environmental liability cover to help pay the costs associated with restoring the damaged environment to its previous state. MAL has had to be nationalised and the Hungarian taxpayer - and probably taxpayers across the European Union - will end up having to pay for the environmental remediation and recovery costs for years to come.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."


saxplayer00o1's picture
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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

"Nov. 12 (Bloomberg) -- Spain's efforts to cut the euro region's third-biggest deficit may not avert record borrowing costs, as investors speculating on a bailout for Ireland or Portugal trash the bonds of Europe's peripheral countries.

The extra yield investors demand to hold Spanish 10-year bonds over German bunds jumped as much as 34 basis points this week to 229, nearing June's euro-era record of 232 basis points. The risk premiums for Ireland and Portugal soared to record highs of 652 and 484 basis points, respectively."

"Nov. 12 (Bloomberg) -- California Governor Arnold Schwarzenegger, citing a $25.4 billion budget gap over the next 19 months, declared a fiscal emergency and called lawmakers to a special session next month to begin dealing with the problem.

Schwarzenegger, a Republican whose term ends in January, late yesterday ordered the session to start Dec. 6, the day newly elected legislators are sworn in. He wants to take steps to erase an officially estimated $6.1 billion gap that has already emerged in the budget enacted last month.

In addition to the gap forecast for the fiscal year through June, the nonpartisan Legislative Analyst’s Office yesterday projected a $19 billion gap in the following 12 months. By Jan. 10, Governor-elect Jerry Brown, a Democrat who will be sworn in Jan. 3, must propose a plan to erase the next year’s deficit."

"Yields on benchmark 10-year notes /quotes/comstock/31*!ust10y (UST10Y 2.70, +0.05, +1.96%) rose 5 basis points to 2.70%. A basis point is 0.01%."

"The Fed expects to buy $6 billion to $8 billion in debt maturing between 2014 and 2016. See the U.S. central bank’s buyback schedule."

"Also, the extra yield on Treasurys compared to German bunds “may provoke some interest,” they said. Germany’s 10-year bunds yield 2.49%."

"The U.S. Postal Service said its loss widened to a record $8.5 billion in the year ended Sept. 30, exceeding its forecast, as the volume of mail declined.

Revenue fell 1.5 percent to $67.1 billion for the year and mail volume dropped 3.5 percent, according to a presentation to the service’s board today at a meeting in Washington. The loss in the previous fiscal year was $3.8 billion, the service said.

The Postal Service, which forecast a $7 billion loss, said almost two thirds of the deficit, or $5.5 billion, covered health-benefit costs for future retirees. An additional $2.5 billion covered adjustments to workers’ compensation liabilities for interest rate changes. The loss for 2011 will be $6.4 billion, Chief Financial Officer Joseph Corbett said today.

“We expect to go through the year with sufficient cash to continue operations,” Corbett said. “However at the end of the year, we don’t expect to have sufficient cash to pay all of our obligations, primarily the $5.5 billion retiree health payment due at the end of the year.” "

"The risks stemming from the Federal Reserve’s efforts to stimulate the economy through bond purchases are “humongous” and the central bank doesn’t fully understand the potential effects, said Nassim Taleb, author of “The Black Swan.”

“These people do not understand risk,” Taleb said in an interview on Bloomberg Television’s “InsideTrack” program with Erik Schatzker. He compared U.S. central bank policy makers to the managers of Long-Term Capital Management LP, the hedge fund that failed in 1998. "

  • Other news, headlines and opinion:

Brazil Fin Min: World Could Be Moving Toward Multi-Reserve Currency System

'Currency War' Continues, Mantega Says as Summit Ends

Korea mulling various steps on capital flows

G20 concern over Irish debt as bond yields pass 9%

Cost To Insure China Sovereign Debt Falls, Rises For US

Nader seeks to delay GM stock debut

Feds have $65B pension funding shortfall: CD Howe (Canada)

Cost of insuring Dubai debt spikes to two-month high

Obama Says Fed Easing Wasn't Aimed at Affecting Dollar

European Leaders Try to Stem Bond Rout as G-20 Leaders Discuss Irish Debt

Ireland Default Predicted by Majority in Global Investor Poll

Swap Spreads Widen on Bets Fed Will Spur Inflation, Bianco's Simons Says

State budget gap hits $450 million (New Mexico)

Bulgarian Central Bank: Bankruptcy Fears Are Groundless

China Shares End Sharply Down On Monetary Tightening, EU Concerns

Super-sized pensions, and a doomsday scenario

Irish Banks' ECB Borrowings Rise to 130 Billion Euros

New Jersey Auditor Questions $27 Light Bulbs Billed Under Stimulus Program


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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

If you are looking for seeds for long term storage this is one of the best deals I have seen. These are open pollinated      non-GMO seeds already sealed in mylar pouches.



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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

Crude Oil Production Forecast to 2015 - November 10, 2010 

With fresh data out from EIA Washington just this afternoon, and, on the heels yesterday of IEA Paris’ long-overdue admission of Peak Oil, I thought I would release a crude oil forecast. This is a production chart that I’ve been working on over the past few weeks. I use rough estimates of future world GDP, the recent mix of primary energy use with special attention paid to coal vs oil use, and then finally decline rates in global oil production. Despite these efforts, any forecast of this nature is at best general in nature. That said, the trajectory here is worth paying attention to.

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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

Why worry about water? A quick global overview - The future security of freshwater resources around the world is of increasing concern. Due to our interlinked global economy, water scarcity in many parts of the world could harm the global economy in ways we had not thought of. Shortfalls in crop yields and more variable food prices could be an early impact. Our demand for water is closely linked to economic growth. As we grow wealthier, the more freshwater we require to supply cities, power plants, factories and the production high protein food such as dairy, meat and fish.  It is not just a question of more people requiring more water. Rather, it is a case of more wealthy societies demanding much more water. During the 20th century, while population grew by a factor of four, freshwater withdrawals grew by a factor of nine. If we take these past patterns and look forward, the outlook for 2030 is stark. Currently about 70% of the world's freshwater withdrawals are for agriculture, 16% are for energy and industry and 14% are for domestic purposes. Recent work suggests that unless we change our historic approach to how we use water, we could face a 40% gap by 2030 between global demand and what can sustainably be supplied.

westpennpogo's picture
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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

     I work at a steel-making plant producing oil country tubular goods (octg).  I started in 1986.  Then the production was 70% of the pipe went to oil drilling, 30% to natural gas predominately domestic.  Today that is just reversed.  This company is ostensibly building an entirely new plant just to produce pipe for gas drilling.  The new sizes they will be producing will be 2" - 6"outside diameter (od).   They want to market it to the gas drillers in the marcellus shale play in the Appalachian area.  That is a legitimate deal, nothing wrong with that, but they also want to be able to capitalize on the smaller pipe sizes used in nuclear power plants.  Nothing wrong with that either. Apparently they see an upcoming trend in this direction also.  This is just a perspective from my view for you.

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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

    I have a question for the more knowledgable than I in a subject.  I recently learned about Dtcc and Cede & Co.  Do I understand this info to be correct?  They are basically a clearinghouse company for stocks and bonds, 96 to 98% of all transactions go through them.  They have sales of over 1 Quadrillion $ per year.  This was to eliminate the slow process of real certificate transactions making it all electronic.  But to do this they actually own the stocks and bonds, and we the general public are beneficial owners.  Or am I entirely understanding it wrong?

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Quantitative Easing Explained (humour break)

junkyard71's picture
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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

west,  no you got it about right.   how deep do you want to go down the rabbit hole?  they also "settle" every trade every day via a net settlement system,  which matches stock with stock that doesn't exist.  sort of like fractional reserve banking.  ask overstock.com about their recent (ongoing) nightmare as "investors" sold short over 200% of their stock and held the price under $5  trying to kill the company so the "investors" could profit.  dtcc  what a con that one is. 

there are many billions of dollars sold short in the markets today that are clearly illegal positions.  yet the dtcc says all is well.  when shareholder votes are collected the clearing house simply tosses away all votes that come in after they reach the offical share count before forwarding the votes to the company.

the sec says play fair "or else" but so far some 10 years after the scam was created there has been no meaningful action.  

but never fear.  the current debt collapse dwarfs all that and makes it seem trival.  it'll all just disapear in the smoke cloud of our soon to be former society.


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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

group think explained. 

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Re: Daily Digest 11/12 - Insider Selling Record, Energy ...

Love this guys passion.

Is this the kiss of death for gold LOL??

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