Bits and Pieces

We are certainly living in interesting times. Lots of little bits of news out there.

Take this one, for example: "Critics Blast Brandeis Plan to Close Rose Museum, Sell Artworks." The college wants to raise $300 million "to preserve the university's education mission."

And how 'bout this one to scare the pants off you: "Dryships Shares Sink on Breach of Debt Covenants." What is the plan to fix this? Sell the farm to raise equity. How much? Well, they want $500 million. With a market cap of $400 mil after todays 25% decline, this will be tough.

In oil news, Russia's defense of the Ruble has failed. Foreign reserves are now down to $386 billion from a peak of $650. Which all goes to show that if you just look at what's above the surface, you don't have a clue to wha't really going on. I like to look for the shadows, and then find out what's making them. I also try not to be fooled by mirages. Why is this oil news? Because OPEC can cut all they want, Russia is the swing producer. Even with the OPEC "cuts," there is more supply than people know what to do with. How do we know? Because when oil is pumped out of the ground, it is either used or stored. Oil in storage is soaring. Why? The producers are pumping more than is being used.

Shipper Nobu Su is offering 20 supertankers to oil speculators. Maybe this is why Frontline is not up. There are already 40 tankers (at least) storing oil. Tanker prices are low considering this, which tells me that global oil consumption is extremely weak. However, I think that Frontline will announce very nice earnings for the quarter, and possibly a hefty dividend. Expectations are for $1.05 in earnings.

With the 30-year Treasury at 3.42%, these are tempting. However, I'm cautious because of huge oncoming supply and falling foreign reserves. For example, where has Russia's $264 billion in 50/50 Euro/US dollar gone? No one has said anything about this. I need to do some research here, or at least keep my ear open for any good explanations of this. Maybe I'll ask my professors about the exact actions that central banks take to deplete foreign reserves in defense of their currencies.

The Fed was a complete nothing yesterday.

Spain's cost of borrowing hit 1.23% higher than Germany's, the highest since they joined the Euro. I just learned that getting out of the Euro is extremely hard. How do you change currencies and devalue at the same time? Who would accept the new currency? No, once you're in, you're in.