Category Archives: Egypt

Oil Hysteria - Over the past several weeks, investors witnessed the dramatic rise in the price of oil, which now sits above $100 a barrel. The unrest in Libya, which was influenced by the revolutions stemming from neighboring North African nations Egypt and Tunisia, have led some investors to believe that oil prices have the potential to hit $150/barrel. Some traders are even betting on oil prices rising to $200/barrel. If such a thing were to unfold, history tells us that we should be afraid. Shocks in oil prices have led to or were significant contributors to past US recessions, most notably in the mid-1970s, 1980, 1990, 2001, and 2008-2009. Should the turmoil in North Africa spread to countries in the Middle East, such as Saudi Arabia, which produced nearly 9.1 million barrels of oil a day in February, then such price rises and ensuing pandemonium may be quite likely.

Though such concernment is valid, I am here to write about why such occurrences are unlikely and possibly overblown. The increase in oil prices due to disquiet in Libya has already been priced in and the cut in supply from 1.4 million barrels of oil per day produced by the strife-ridden nation to a paltry 300,000 barrels of oil per day is sustainable due to an excess supply of nearly 4 million barrels per day produced by Saudi Arabia. Furthermore, the so-called Saudi ‘Day of Rage’ was exaggerated and demonstrated the robustness of the Saudi government against unrest and political outcry. Though the minority Shia population continues to be critical of the current regime, King Abdullah has offered concessions in an attempt to insulate the country from riots and revolutions. And so far, there have been no serious uprisings from the major oil exporter. Though there may be a slight slowdown in the US growth rate, any major downturn is improbable. The automotive sector and overall US consumer spending may be hindered from the current rise in oil prices, but we should continue to expect great earnings from corporations, positive economic numbers, and overall bullish sentiment.

Situation Wanted

30 year veteran in the field of dictatorship looking for new country to rule.  I am an out of box thinker, willing to stick to my convictions.  I was able to maintain (cold) peace with former enemy, despite its nearly universal disapproval amongst  my constituents.  Successfuly negoitiated annual stipend in the billion$$ from country of infidels.  Until recently, was able to control military forces using such tools as bribery & nepotism.

Salary Required:  None.  Most experts opine that my worth is over $40 billion.  Yeah, maybe after Switzerland freezes half my assets.

Send replies to:  [email protected].

Friday Market Expectations - Holding Short Position in the midst of Irrational Exuberance

Stock Market - I remain net short

My market position is short-term bear looking for a catalyst to pull the market in approximately 2-½ - 3 %. I continue to believe that the market is underestimating the geopolitical risk in the Middle East. It is a de javu moment to summer of 2007, when we had a precursor jolt to the market that led to a rapid new high and then an all out collapse. I am not proposing a crash, or a 10% correction. I am expecting the real buyer to step away after the fast money is done covering shorts and retail customer are finished buying, as they are always last into the pool. Things may seem peaceful this morning, but let us not forget that less than 24hrs ago, reporters were being beaten. The mood changes rapidly on the street. Obama is starting to be more outspoken, though no one can quite figure out what the White House means. I thought we would have a negative trend for the day yesterday, and for some period it felt like it would play out that way. Instead the market staged a strong reversal that felt a lot like short covering, there is a complete disconnect between the major indexes and 100s of names that are trading within outsized intraday ranges. Inflation is rapidly taking center stage. It is one of my major concerns. This is reminiscent of periods where I have seen Quant funds unwinding and taking big losses. This has also been a toppy indicator for the market. The most difficult thing to do these days as a short term bear is figure out ho to finance your shorts with a number of well picked longs, survive the day, and move on to the next day. The ability to stomach through the squeeze is essential to making the serious money on the shorts, As I believe profiting from the short side will occur from gap moves down, and if you are not prepositioned, you will not have the time to get a position established. With employment numbers coming out at 8:30, we will start to see the first indications of the day then. My feeling there is that unless that number is significantly above consensus, than it will be a sell on the news event. But again, if not today, we should break back below 1300 on the S&P cash soon. My portfolio can be found on the website by clicking on my trading desk and choosing the overnight portfolio icon. Thing are reaching a bit of an irrational point in the market. Most of my short is in the indexes, my Longs are specific deal oriented stock and beaten down names. This is an important day in my portfolio.

Thursday Market Expectations- People of Egypt, Hedge Fund Live Stands Behind You, Down with Mubarak

Mubarak is pissed off, F**k him

Yesterday was a bit more volatile then the indexes indicated with names like LVS , and AKAM, swinging 3 -5% high to low. This was common for many of the names I trade. The S&P traded in such a tight range that it sliced in half today’s pivot point range for the S&P, that I watch for determining overall market direction. A break below S4, which is 1255.75 on the futures, signals deterioration. I expect this to occur later in the day, but I would not be a buyer even if it appears that this level is holding. Initial jobless claims came out at 8:30, I am not that impressed. 415,000 is still moving in the right direction, but we will need that number to drop further if we are to take another leg up in the market, I do believe that we will see much better employment number as we get closer to the spring. On the Egyptian front, I am as excited by the movement toward real democracy as I am concerned that things will get worse before they get better. It will spread beyond the Egyptian borders. As European leaders spoke up demanding immediate regime change, our government remains strangely quiet. I am further embarrassed by my vote for Obama. He continues to show a lack of real leadership skills. It was easy for him to attack Wall Street but seems more difficult for him to take a stand against a totalitarian regime that often brutally oppresses its people. At least tell the world that turning off a countries Internet access in ludicrous. Or perhaps this is something Obama wants to reserve the right to do to us. Maybe he has a switch that just turns off Internet for Wall Street. Any way, back to my expectations for today. I expect a continuing negative trend, acceleration toward the end of the day. I expect a more substantial sell off tomorrow. Our firm is short 14 million in value against a long value of 6.8 million. Best to stay off the trading keys and more time on research and business today.