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  • dubious
  • 16 Comments

  Oct 13 09:11 AM
  ..."Further the promise of more offshore drilling in the U.S. in the near future seems very real these days"...
  Sorry, not true. The Dems put so many restrictions in the bill it won't happen, and they will reverse themselves and put off shore off limits again after the elections.

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  • gebby
  • 167 Comments
  • My Website

  Oct 13 10:29 AM
  there will not be off shore drilling because it doesnt do anything to impact our energy requirements. dems want clean energy. our nations resources will be allocated there. when oil price rises again republicans will try to blame the dems for not drilling. the stage has been set for the next election in 2012. i own ldk and csiq, solar is a stong investment at current prices.

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  • David White
  • 427 Comments

  Oct 13 11:15 AM
  I expect they will get more serious about offshore drilling soon. One of the items that was not included in the bill was state sharingof royalties. I am sure a number of states that are in trouble, such as California might want to reconsider their stance on relatively distant offshore drilling for fiscal reasons. It would be good for the U.S. economy as a whole, but it would specifically be good for the California economy. It would also mean California would have less money going out of its economy to pay for foreign oil. Since California is a huge oil glutton, offshore oil drilling could do a lot to help the California economy. All of the money paid for foreign oil by California drivers is now flowing out of the California economy. At some point Californians will realize they need the money for schools, etc. Then all of the Congress people from California will start to vote for instead of against offshore drilling. Offshore drilling in the U.S. is definitely a developing story, even it Barak Obama gets elected. Any offshore drilling that can be down safely, with relatively little potential harm to the environment needs to be done as soon as possible. We simply cannot afford our current oil trade deficit. The people who think we can have their heads in the sand.
  
  I should note that I am also a fervent backer of alternative energies. We need them for the short term and for a longer term solution. But oil problems will not disappear anytime soon. Our economy is too fixed on it at this time. We need to address the issue of what it is costing us. Offshore drilling is one of the most sensible ways of doing this. Of course, if the leases are just sold to foreign oil companies, this will not help us very much. They might employ a few U.S. citizens, but we will still be adding to our trade deficit by buying this oil from them. If we really open up offshore drilling, it should be to help fix the U.S. trade deficit. The leases should go primarily to U.S. companies. There should perhaps even be penalties for selling the leases to foreign companies. Or perhaps there could be tax benefits only accrued if you are a U.S. company.

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  • jegan ;-)
  • 672 Comments

  Oct 13 02:17 PM
  With oil dropping, offshore driling (Drill! Drill! Drill! in Kudlow-speak) will fade from American's memories. Further, which companies seem to be inclined to drill? Companies like XOM and CHV are reducing their exploration and buying back shares.... CHK and similar NatGas plays are already reducing their future contracts. Fuhgedaboudit!
  
  Maersk Shipping has recently stated that they expect China to begin importing coal again this next quarter, but cautioned that it won't be on the same scale as the past. This makes sense as there is a global slowdown, steel production is in the toilet and the world is reducing their demand for consumer products. They still do need coal for energy, but it has been noted that they are buying cheap sulphur laden coal on the spot market in areas like Malaysia. (In fact, MIT just performed an independent report stating that Chinese poloution has more to do with the cheap quality of coal they buy and not the state of their power generation plants.) I'm not sure that buying the above listed coal companies would be the right choice... Anyone know any good Malaysian coal companies? At any rate, I'd be more inclined to buy BTU, RTP and BHP, all of which do sell to China... If that's your direction... As to POT and MOS... Mouth-watering prices... But the charts aren't saying anything useful either.. jegan ;-)

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  • Garry
  • 17 Comments

  Oct 13 10:24 PM
  I'll take a crack at GS. How can they have a buy out on the solar space, see the solar's take a 60% hit, be involved in the credit crunch responsible for much of the macro mess, and then change to a sell? Doesn't the sell make their previous "recommendation&q... look pretty bad? Aren't they admitting that their previous recommendation was exactly backwards? Why would anyone want to listen to them now? Aren't they supposed to put the macro environment together with the solar specifics and extrapolate into the future? Why is that guy still employed? How wrong to do you have to be before you're out on the curb? Aren't the stocks more compelling now at a 60% haircut than they were before they lost the 60%? And in the mean time, they've had blowout quarters.
  
  Seems to me he's got it exactly wrong again. Long term, some of the solars will not make it. As with many high growth young industries, new technologies, new competition and market proclivities will hurt some and benefit others. But the solar space seems promising, and many companies are nearly sold out for '09. Seems also that the demand for solar won't go away unless the right guys admits global warming is a hoax. I'm not looking for that to happen.

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  • gebby
  • 167 Comments
  • My Website

  Oct 14 08:30 AM
  david white, states will save and make more money deploying solar solutions then planning for a revenue stream from offshore oil royalties in the future. as a state administrator i would rather be dependent on a new dynamic high growth industry for tax receipts then the oil companies. besides, how do we combat global warming? it is broadly believed to be real and man-made.

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  • Blue collar guy
  • 41 Comments

  Oct 14 10:22 AM
  Anyone who thinks that relatively nearby drilling off shore (less than 50 miles) or in the Rocky Mtn. Range is going to miss the fat city boat, regardless of who wins the election. Contrary to the sentiments of the experts who regularly comment here, The Rocky Mtn. range and offshore drilling propositions will not go away so quickly this time around, regardless of the "experts" who have to have a building fall on them b4 seeing the light (oxymoron). Solar and all the "green" energy stuff will be worked on but not to the same extent as ....
  
  "DRILL HERE, DRILL NOW!" rules.

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  • oilsands
  • 34 Comments

  Oct 14 11:23 AM
  Re drilling: 1. foreign oil companies control where the very limited supply of skilled manpower and equipment gets used. 2. It takes many years for a land based well. From what I have read, offshore won't actually produce any oil for at least a decade, but that is optimistic. BP just spent 20 years and 6 Billion dollars to start one platform produing. We have no way so far to insure the oil comes to the USA even if it is drilled offshore. Some of our land based wells actually produce oil and gas for Canada. Where do you think all that oil in Alaska ends up? I am for sane drilling; we get royalties from two states. I am sorry to see the political frenzy over something that won't solve the problem when there are so many good options out there. If you take the money given to big oil in tax breaks and redirect it we could be energy independent from the middle east pronto. Mr. "head in the sands" (blue collar guy), do some research, please. The conversion from oil to other fuels will create jobs - jobs we need now. We are fortunate to have so much oil and gas and coal, but it is time to start using it prudently.

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  • oilsands
  • 34 Comments

  Oct 14 11:30 AM
  David White, sorry I forgot to say, thanks for a fine article. I like alternate energies, shipping, and agriculture. We also own some Canadian oil royalty stocks for income.
  
  

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  • TIRED
  • 33 Comments

  Oct 14 04:51 PM
  DEMOCRATS AND OBAMA ARE INDEED AGAINST OFF SHORE DRILL WE NEED TO DRILL DRILL DRILL WE DEPEND ON FOREIGN OIL VOTE REPUBICAN MCCAIN PALIN WE WILL BE MUCH BETTER OBAMA LIES DEMS WANT MORE TAXES DONT TRUST THE DEMS

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  • jbde
  • 27 Comments

  Oct 14 07:15 PM
  Hey David, since LDK and CSIQ are 2 of your disclosed holdings - perhaps you should know its silicon not silicone.
  
  " UMG polysilicone solar (a much cheaper alternative to multicrystalline solar). "
  
  UMG is simpy the purity of the raw product - whether mono- or multi- crystalline. It's less pure, thus cheaper, than solar grade silicon. Mono- or multi- depends on how the ingot is produced. Mono is produced by growing from a seed crystal, multi is produced by solidifying molten silicon.
  

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  • Evan Grey Owl
  • 25 Comments

  Oct 15 12:56 AM
  David,
  Have you any feeling for what justifies IPI's relatively high P/E vis-a-vis MOS, POT and others. Also, have you any thoughts about target prices for MOS,IPI,CSIQ. The potash stocks have been on my list many months. I have not understood the behavior of the market since early September, but have 3 theories relating to illegal manipulations. The mechanism is similar in each, just the actors and motives differ. If I'm right, there will be no floor and this terrifies me, frankly.

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  • User 252157
  • 1 Comment

  Oct 15 03:47 AM
  can anyone explain why the fertilizer stocks were way cheaper (1/3rd) in 2006 when we still had to eat...

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  • Utide
  • 267 Comments

  Oct 15 08:41 AM
  California is a mess right now. Now being ranked as one of the poorest State at the bottom. The name "Golden State" is long gone. Now being run by bunch of nuts who keep spending with empty IOU's and have to beg the fed for handouts. More tax, that's all they talk about.

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  • User 279905
  • 1 Comment

  Oct 15 10:49 AM
  Be very careful in the Dryship industry. Shipping rates are way down from when these stocks were at their peak. Global recession will reduce furthur demand and there is a glut of ships that were added and are just sitting unused. The DRYS owner plays by his own funny money rules so buyer beware. Better play is EXM.

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  • David White
  • 427 Comments

  Oct 15 11:19 AM
  User279905: The shipping play is more of a long term thing. The PE and FPE numbers are very low. In that sense it is unquestionably a good buy. However, the shipping rates could go lower as you suggest. Then shippers such as DSX with fixed contracts might be preferred. Still no one will be building new ships with the current downturn in shipping prices and the current credit crunch. Or at least they won't contract for any more. This means that there will be a period in the not too distant future when shipping is at a premium again. When the recession ends, shipping seems likely to go up dramatically. There will likely be to little of it. The day rates will only go down so far. A lot of stocks such as shipping have been oversold due to the recent mutual fund / hedge fund sell off. The multiples on shipping seem very attractive to me at the moment. My reasoning is probably dependent on a 1-2 year recession. If we have already been in one for much of this year, we may only have a year to go. In the case of a 5 year recession, the logic of this buy may not be so good.

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  • David White
  • 427 Comments

  Oct 15 11:36 AM
  I want to make it clear that I advocate solar much more than oil. I too see it as the wave of the future. However, it is important to realize that the infrastructure of the U.S. and other countries is geared toward oil (gasoline and heating oil). This will be very slow to change. This means we will continue to consume oil at alarmingly high rates. Since we import most of it, this will put an increasingly high burden on the U.S. economy as it gets more expensive over time. We have seen the initial "scare" blip up in oil prices. They are going down now with the recession. However, they will generally trend higher over time as China, India, and Russia use more oil. This conclusion seems inescapable. This means a huge hit to the U.S. trade deficit unless we do something about it now. Now is not the time to be lulled to sleep by falling oil prices. Now is the time to act to ensure that the U.S. economy is in a position to grow as we come out of the recession. The oil cost is like an anchor around the neck of the U.S. economy. All of that money flows out of the U.S. economy, keeping it from growing. I agree that people tend to ignore what is not their most immediate concern. I am hoping that the future president and the Congress will have seen that we cannot afford to do this. We need offshore drilling because there are big untapped reserves out there. We need some sort of package from Congress to stimulate U.S. oil companies to produce that oil (and other oil to which the own leases). There are two solutions which present themselves. First Congress could establish a national oil company much like FRE or PBR (Brazil). It would be much easier to encourage such a company to pursue U.S. strategic oil initiatives. The alternative is to come up with a package of incentives and penalties for U.S. companies to explore more with the goal of increasing oil production by U.S. companies over time. I want to make the point that it is important that they be U.S. companies. Then the money they generate in oil sales will tend to recirculate back into the U.S. economy to stimulate it. Foreign oil company production of the same assets may lower the overall price of oil slightly, but it will not address the issue of the oil trade deficit. The Congress has to address this issue. It has to do this soon. I hope they will not be lulled to sleep by falling oil prices. This is an economic disaster in the making for the U.S.

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  • David White
  • 427 Comments

  Oct 15 11:55 AM
  The market zoomed up off of the support in the $82 to $85 range in the SPY. Now it has given back a lot of its most recent gains to stand at $95 now. This seems so far like the normal behavior of the market. My thinking is that the immediate threats to the markets are being assuaged. There is a recession, but this is not new news. That should mean that the market will likely continue its rise off the relatively strong support at the $82 to $85 level. This still gives all of the earmarks of a typical market bounce. It seems this should proceed upward for the next month. We may get some bad earnings reports in Q3. However, those have been mostly expected, although perhaps they have not been estimated correctly. Q4 last year was the start of the downturn, especially in the financial industry. We should start to do better when comparisons start to be made to that quarter and future quarters. Since they were down quarters, it should be easier to break even or improve on the results. We could have already had our bottom, or we could have a some more to go. I didn't bring my crystal ball. There are a lot of complex factors involved. People like Jim Cramer, who make sweeping pronouncements of gloom, are not helping this situation. There can be no absolute clarity at this time. We have to wait to see how all of this plays out. If the most recent bottom is the market bottom (an almost 50% fall already from the top), the people who get in now will profit most. If it is only close to a bottom at 7700 on the DOW or 7200 on the DOW that some are predicting, the investors who get in now, may still do well over the long term. If the markets fall to the $42 to $45 level of support on the SPY, people getting back in now will likely sell out on the way down. For now it looks like the markets should swing temporarily upward. The support level in the $82 to $85 level should be a near term bottom at least. I generally see improving news. The banks are not all going to go bankrupt. A lot of the toxic mortgages are going to be bought up by the government. This is all good. The retail sales data has long been expected. This should not be surprising news. Short term at least, the market should zigzag its way upward. We will all have to monitor the news closely to see if it will continue upward beyond the short term.

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  • David White
  • 427 Comments

  Oct 15 12:20 PM
  jbde: Thanks for the silicon(e) correction. I should be more careful.
  
  I am aware that UMG is a less pure form of polysilicon. That's why it is cheaper. It is my understanding that the process is not quite as simple as you imply though. I believe a backbone of UMG grade polysilicon is used. Then a higher grade polysilicon is used on top of that to make these solar wafers. Since much less of the higher grade polysilicon is used, it is cheaper. I am not sure UMG solar wafers fall precisely into one of the other categories.

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  • David White
  • 427 Comments

  Oct 15 12:32 PM
  Other than the fact that the markets will realize the Q4 earnings comparisons are coming up soon (Q4 was the first big write off quarter), the VIX has also been abnormally high for an extended period of time now. As it falls, which it seems bound to do, the markets should go up. These two items along with the major support level bounce are my main reasons for predicting a near term rise. When the Q4 financial results are made available, the government seems to be virtually ensuring that the comparisons to last years financial sector Q4 will be favorable. When this happens, as I am tending to believe it now will, it seems likely it will mean relative growth in the financial sector. After the carnage of the last year. This will be encouraging to the markets. Perhaps all stocks will begin to look more appealing then, even in the face of the challenging business environment.

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  • David White
  • 427 Comments

  Oct 15 12:48 PM
  Sometimes it seems to me that the economy is certainly in trouble. At those times it seems that is a good reason for stock prices to go down. At other times it seems that the major market players know that the Q4 results are around the corner. It seems they want to take full advantage of the "panic" value of the current situation before the numbers, which are based on the trailing twelve months, start to be less distressing. Certainly a lot of the recent downward movement had more to do with wholesale liquidation of mutual fund and hedge fund positions as people were "scared" into redeeming their money from these funds. No doubt it is a combination of these two. I have noticed that a lot of the big doomsayers on SeekingAlpha do tend to brag in alternate articles about the puts and shorts they own. This would seem to go along with what they are saying, but it also would seem to give them a vested interest in making other people think the market should go down.

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  • anarchist
  • 110 Comments

  Oct 15 10:06 PM
  you guys are tilting at windmills. Did you not notice the market was off 700 points today and 900 points in after hours trading. All these wonderful buys you are talking about will go 'out' with the tide. This IS panic my friends. There might be a bottom feeding rally here someplace but with a recession in the future it's best to keep your powder until the air clears, the dividends are cut and you can see what is what. There is no credit for the shippers to ship and no one is going to buy what they might ship anyway including oil. In the next year or so Americana is going to be more interested in putting food on the table than buying tainted crap from China but the sucking sound of the market collapsing slowly or big time will take down the agriculture stocks with it. And then what? Stagflation? 10 or 15 years for the market to rebound is what history tells us-the is NOT a pullback in the market, this is a crash.

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  • Utide
  • 267 Comments

  Oct 16 02:13 AM
  On Nov. 4th Californians will have a chance to vote on an Energy Initiative,
  MEASURE 7, if passed, will require government owned utilities to generate 20 % of their electricity from renewable energy by 2010, to 40% by 2020, and 50% by 2025. This Measure is strongly supported by the Governor.
  Hope that all Californians will pay attention to this and vote YES.

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