Wednesday, September 10, 2008

Just stupid selling on Foster Wheeler

The selling is so intense that the market has just lost their heads. People are shorting stocks because they are going down, and the bulls aren't buying stocks because they are going down.

It's like a bad relationship! But this time the bulls are so beaten, that they just let the bears overwhelm them. And no one wants to own any paper.

And why should they? Look at the dump that the preferreds got in the GSE takeover. With prodding from attorney generals, the auction rate preferreds gave you back 100 cents on the dollar, but you get just north of a nickel and a smirk from Paulson after the Fed encouraged people to buy GSE paper? Unless you're a bank that needs capital-then talk to "us" and we'll work something out! Throw in Lehman, and pyscholgy was just broken today, tossed out along with every commodity stock across the board.

But some of these stocks you just have to buy like FWLT at 33. $8 billion backlog, and $7 a share cash net of debt, with $4 earnings. What do these sellers think-that these stocks can disappear overnight? That they are stuffed with Level 3 assets? That they have black box accounting?

It's just dumb selling. Yesterday, Obama spoke to a crowd of 325 people, while McCain/Palin spoke to around 6,000. Obama, sounding a bit desperate said about McCain that, "You can't just reinvent yourself. The American people aren't stupid." It shows that there is just dumb selling in politics and in stocks.


bob said...

I’m shocked, just shocked to read this.

Study links oil prices to investor speculation

By H. JOSEF HEBERT – 5 hours ago

WASHINGTON (AP) — Speculation by large investors — and not supply and demand for oil — were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.

The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.

Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at about $102 a barrel Wednesday on the New York Mercantile Exchange.

"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."

Masters said its analysis shows investors "began a massive stampede for the exits" on July 15 and that this caused the price decline.

"These large financial players have become the primary source of the dramatic and damaging volatility seen in oil prices," concluded the report.

The report was released Wednesday by House and Senate sponsors of bills to put additional curbs on oil market speculation and comes in advance of a report on oil market speculation expected possibly this week by the Commodities Futures Trading Commission. The commission regulates commodity markets.

Sen. Maria Cantwell, D-Wash., a sponsor of an anti-speculation bill, said the Masters report challenges CFTC claims to date that supply and demand forces — and not excessive speculation — has driven up oil prices.

"This analysis illustrates that when oil speculators poured large amounts of speculative money into oil markets, prices skyrocketed just as they were hoping ... And when the speculative money got pulled out, prices tumbled," she said.

Sen. Byron Dorgan, D-N.D., said he wants to know "how oil speculators were able to drive prices up and down while the CFTC was asleep at the switch."

An interagency task force, led by the CFTC, concluded in an interim report last July that "fundamental supply and demand factors" influence the oil markets and that the data "does not support the proposition that speculative activity has systematically driven changes in oil prices."

Senate critics of the regulatory agency charged that report was based in flawed evidence.

"The CFTC has its head in the sand," said Rep. Bart Stupak, D-Mich., chairman of the House Energy and Commerce investigations subcommittee.

Stupak said the Masters report shows that that oil prices soared when speculators poured money into future markets even as the federal Energy Information Administration was forecasting supply would exceed demand.

Congress for months has been considering various measures aimed at curbing oil market speculation, but those efforts have been thwarted amid disputes over other energy issues from taxing oil companies to new offshore drilling.

Legislation before the Senate would put limits on the amount of oil certain traders, interested only in speculation, would be allowed to purchase in futures markets and give new authorities and staff to the CFTC to regulate oil markets.

Palmoni said...

Thanks! I love your sarcasm!

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