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Yikes! but Duh?: Citi Chairman Bischoff says House prices could fall for two years (Reuters)

The bounce by the financials from the depths of hell last week was definitely a sigh of relief. The “less abysmal” earnings from first Wells Fargo (WFC) [that stagecoach really can run!], JP Morgan (JPM), and US Bancorp (USB) told us the sweeping assumption that all banks are gonners was premature. Well, premature at least for now. Regardless of which side of the argument talking heads take on picking the bottom in financials, most (if not all) would agree that housing needs to bottom if the banks want to be out of the woods. When will housing bottom? Citigroup Chairman Win Bischoff offers his opinion in this Reuters report. Remember, however, Citigroup hasn’t exactly been on the right side of the trade on this whole housing crisis, as made evident by it’s shares dropping from the $50’s to being a teenager.

“LONDON (Reuters) – Citigroup chairman Win Bischoff has warned that house prices in Britain and the United States are likely to keep falling for another two years.

The chairman of one of the world’s most powerful banks told the BBC in an interview that he expects it will take two years for the markets to stabilise.

He also said he expected the credit crunch could continue through until 2009.

Bischoff told the BBC that there would be redundancies at the bank, which employs 12,000 people in Britain, and warned that some of them would be compulsory.

No further details were released of the interview which is due to be broadcast later on Saturday on the BBC News Channel (Reporting by Paul Majendie, Editing by Jon Boyle)”

Full Article: House prices could fall for two years

Suggested SuckingLess.com Research Resource:

Trading Brazil: Is the next teet to milk Brazil financials and NOT Commodities?

PBR and RIO have been Brazil’s stars in this latest Brazil run, dominating positions in the iShares Brazil ETF ticker EWZ. PBR and RIO’s stories are well known, and I actually think RIO looks done for now given the continual weakness in nickel prices. Could financials be the next leg up for Brazil’s markets?


“By Telma Marotto

July 11 (Bloomberg) — Swiss Reinsurance Co. and Munich Re, the world’s two largest reinsurance companies, are leading a rush to Brazil to capitalize on the biggest deregulation of a market since China opened up more than six years ago.

At least 13 companies have been authorized to operate since the government ended its 69-year monopoly in April, said Armando Vergilio dos Santos Junior, head of Brazil’s insurance regulator, who estimates the number will reach 40 by December. He expects reinsurance premiums to rise 40 percent to $3.5 billion this year and then double to $7 billion by 2011.”

Full Article: http://www.bloomberg.com/apps/news?pid=20601109&sid=aGQItoNVF_As&refer=home

Purchasing.com: Potash supply at risk, more price hikes expected

Purchasing.com: Potash Supply at risk, more price hikes-

“New concerns at major producer in Russia could push fertilizer prices up again
By Dave Hannon — Purchasing, 7/14/2008 9:33:00 AM

With demand booming and more supply expected to become restricted, potash prices are rising yet again.

In Russia, a vital rail line at one of the world’s largest potash mines could be closed soon, due to a rapidly expanding sinkhole, and put the mine down for at least several weeks until a new rail line is completed.”

full article:


Engineering/Tech Linkage: Boeing reduces Fuel and Carbon Emissions with Air Traffic Control management

Non-stock related. Just thought this was interesting. Too early in development and deployment to have any significant impact. Let’s just look at this as a thoughtful science experiment with good results.

SEATTLE, July 11, 2008 — Boeing [NYSE: BA] and partners in industry and government achieved significant reductions in fuel consumption and carbon dioxide emissions during a recent deployment of an innovative Air Traffic Management (ATM) concept called Tailored Arrivals.

From Dec. 4, 2007 to March 23, 2008, United Airlines, Air New Zealand and Japan Airlines completed 57 flights into San Francisco International Airport that utilized a continuous descent rather than a series of level segments as now required. The Tailored Arrivals approach reduced fuel consumption during descents by up to 39 percent, depending on airplane type, and total carbon emissions by more than 500,000 pounds.

“Concepts like Tailored Arrivals potentially can be deployed quickly and at relatively low cost because the technology is in place today,” said Kevin Brown, Boeing vice president and general manager of Air Traffic Management. “As more airlines and airports use it, we move closer toward realizing the benefits expected from the Next-Generation Air Transportation System (NextGen).”

>>Read full news release at Boeing: Boeing Tailored Arrivals ATM Concept Cuts Fuel, Emissions in Initial Deployment

**Disclosure: No positions in the stocks mentioned.**

Reuters: ANALYSIS-U.S. coal production unlikely to sate world demand

Same concerns all the major utilities spoke about at the Goldman Sachs Eighth Annual Power and Utility Conference on May 13-14, 2008. The long term problem of electrical power shortage due to shortage of coal and high quality coal is just rearing it’s ugly head. I’ll have to do a bit more research to see if coal miners like Peabody Energy (BTU) and Arch Coal (ACI) are the ideal plays in this situation. If they can’t open new mines and increase capacity, their long term (5 years or more) potential to benefit is still unclear to me. I’m not saying they won’t…they’re great companies and great companies find ways to profit, especially off of ginormous trends like this. Just got to do more research. Same with the mining equipment like Joy Global (JOYG) and Bucyrus (BUCY). One thing’s for sure though, electrical power use will only grow, so power plants will have to become more efficient. I’m thinking engineering and construction companies like McDermott (MDR), Fluor (FLR), Shaw Group (SGR), and Foster Wheeler (FWLT) will do well along with power plant components like Flowserve (FLS), SPX Corp (SPW), Woodward Governor (WGOV), and Thomas and Betts (TNB). Preliminary thoughts…more on this later…

RPT-ANALYSIS-U.S. coal production unlikely to sate world demand

“By Bruce Nichols

HOUSTON, June 16 (Reuters) – U.S. coal production has room to grow, but expansion is unlikely to meet surging world demand because miners fear a boom-bust cycle, key reserves are declining, and regulation has tightened.

Despite soaring prices, the U.S. Energy Information Administration has cut projections of U.S. output rather than raised them, and now foresees a total of 1.166 billion short tons by 2010, barely up from a record 1.163 billion in 2006.

That is not enough to overcome what some coal officials see as a shortage of 25 million to 35 million tons this year in the 6-billion-ton world market and a shortfall of perhaps 70 million tons next year.

Closing the gap with U.S. coal would require spending billions of dollars to expand mines, rails and ports, investment difficult to recover if — as has happened before — supply growth exceeds demand and prices fall…”

Full Article: http://uk.reuters.com/article/oilRpt/idUKN1637587220080616

**Disclosure: I own shares of MDR, FWLT, and SPW as of this post. **

Schwarzenegger proclaims that California is in a drought – LaTimes.com

Here’s just the latest incident of our under-invested aging infrastructure leading to a crisis. This won’t be pretty for those of us in California, but should be yet another boost to the opportunities in infrastructure construction and infrastructure components. Read the article first, trades/investment ideas to come later…

“SACRAMENTO — Gov. Arnold Schwarzenegger proclaimed a statewide drought Wednesday, warning that California’s water supply is falling dangerously low because of below-average rainfall and court-ordered water restrictions aimed at protecting fish.”

Full Article: Schwarzenegger proclaims that California is in a drought

Coal Continues to be Strong

While crude oil prices has been spasming (trying to find a direction) the last few days after hitting an all time high last week, coal continues to march ahead. globalCOAL’s NEWC weekly index reports coal trading at $138.35/tonne for the week of May 23 versus $134.85 the week before. The record high was $139.16 back on February 15th.

Problems on both the supply and demand sides continue to support higher coal prices:

  1. China continues to be forced to close power plants due to shortage of coal. Current coal supplies will only last for 3.1 days of power generation which is much lower than the 7 day minimum supply usually needed.
  2. Export train from Colombia’s Cerrejon mine was derailed on its way to Puerto Bolivar due to terrorist attacks.
  3. Bottlenecks at Australia’s Newcastle port has caused coal exports to decline by 18%. Furthermore, queue of coal ships waiting to carry the coal has increased, tying up coal ships for 13.5 days while waiting to load coal versus the 0.38 days average loading time for general cargo ships.

More Coal news at globalCOAL

These supply and demand problems should continue to act as a driver for coal and all of coal’s supporting infrastructure. Even as coal stocks are at or near all-time highs, coal miners like Arch Coal (ACI), Patriot Coal (PCX), and Peabody Energy (BTU) can still be bought on dips. Likewise, methods of transporting coal such as the rails, barges like Kirby (KEX), and dry shippers should still have momentum. Finally, coal mining equipment makers Joy Global (JOYG) and Bucyrus (BUCY) has products that are in high demand to continue to open new mines and bring out coal.

No need to chase these. This is just to highlight how real the problems with coal and power generation is. The bottlenecks at ports like Newcastle won’t be fixed overnight, or even over a year, as whole port cities might need to be constructed and railways built in order to get all the coal out. In China, even with the earthquake temporarily knocking out several provinces and thus their energy use, China is still 4 days short of coal. For a country that big, it will take a lot of coal just to bring coal supplies back to that 7 day minimum (not even a slight surplus for rainy days). Meanwhile, summer is approaching and U.S. utilities will be fighting the foreign buyers as U.S. utilities try to keep their requirements of coal from being exported.

**Disclosure: I own shares of PCX and BUCY as of this post**

SuckingLess.com: globalCOAL feature – Coal Prices & Data, News & Analysis, Trading system

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