Hope and Change for the American Farmer

The administration's hope and change for the American farmer.

This just about completes the effort to destroy capitalism in America. I can't think of many industries the administration hasn't touched, from tourism ("no more conventions in Las Vegas") to oil (moratorium on drilling in the gulf) to health care (tax-payer funded procedures that the administration had said were off-limits) and more taxes, regulations and rules for everyone.  So it goes.

Update: I posted the above on July 14. This morning, at 2:00 a.m., July 16, 2010, I stumbled across this fascinating article in the American Thinker.

XTO Reports a Nice Well in Mondak Oil Field

18572, 1,175, XTO, Mondak Federal 14X-11, Mondak

For Investors: Economic Indicators -- A Recession? What Recession?

For being in the middle of a recession with folks talking about a double dip, it sure is interesting to note a few things.

1.  Rail shipments rose 11.8% in June.

2. The Port of Los Angeles had the busiest June ever -- in the history of the port -- last month.

3. Corporate earnings: As reported earlier, Intel, Yum Brands, CSX had blow-out earnings in the second quarter. The earnings season has just started and I have not seen one story where a company or a CEO warns that expectations may have to be lowered. Not one story.

But lots of other stories. Earnings (StreetInsider.com).

2nd Quarter, 2010, Earnings, Selected

• Intel: best quarter in a decade; blows away estimates
• CSX: income up 22%; beats street's consensus
• Yum: beats estimates; revises up 3rd quarter
• GE: ends slump; 16% profit growth
• Citi: misses analysts' expectations; loan losses pared
• Bank of America: beat expectations; income up 15%
• AMD: income up 40%; comfortably beats; 3rd qtr to be higher
• Mattel: income more than doubles; $50 million vs $20 million year ago 
• Gannett (USA Today, others): income almost triples; shares plunge in price 
• Halliburton: profits soar 83%; beat expectations
• Hasbro: profits up 11%; beat expectations
• IBM: earnings up; beat expectations; sales disappoint (yeah, it's a recession, remember?)
• TI: earnings triple (per share); sales rise over 40%; in-line with expectations; shares tumble (scary, huh?)
• AAPL: blows past expectations; after-hours, shares pop significantly; they will be talking about this for days; Steve Jobs has to be one happy man -- good for him 
• Morgan Stanley: profit jumps; easily beats expectations 
• Wells Fargo: profits up 12% 
• US Bancorp: profits quadruple -- yes, quadruple; blows away expectations
• Juniper Networks: profits, sales surge
• Starbucks: profits surge 37%; all those unemployed with extended benefits have time for coffee? Starbucks once thought dead as an investment; stimulus dollars must be working
• Netflix: profits surge 34%; blows past estimates; more customers than ever; all those unemployed with extended benefits have time for movies for first time in life; what recession?
• Eli Lilly: profits jump 16%
• Medco: profits up 14% on new business
• Roche: half-year profits up 37%
• T: Stodgy ATT beats expectations; profit climbs 25%; very, very impressive
• CAT: Earnings up 91%; heavy equipment for mining, infrastructure and energy
• UPS: posts higher quarterly profits (do not confuse with USPS which is losing money and going to raise rates. Again.)
• American Express: Profits triple.
• Ford: huge profit; beats expectations, earns 68 cents/share vs loss of 21 cents/share last year
• Verizon: beats expectations
• McDonalds: beats expectations
• Schlumberger: profits jump 33% on robust drilling
• Enbridge Partners: profits beat by 14 cents; huge
• Lockheed: earnings up 12%; ups guidance
• Norfolk Southern: earnings surge 59%
• ConocoPhilips: earnings more than doubles
• XOM: a blowout quarter; earnings more than double
• Colgate-Palmolive: earnings up 7%
• Chevron: income triples; easily beating forecasts
• HSBC: profits more than double; profits "soar"
• Coach: profits soar; up 34% -- yes, a consumers product company
• CBS: beats consensus; earnings up 11%
• Priceline: earnings up 13%
• Devon Energy: earnings up 125%
• News Corp (Murdoch): surpasses consensus
• Allstate: blows away earnings consensus, 81 cents vs 69 cents
  

Having said that, it's not rosy out there. Consumer prices have dipped for the third consecutive month. Some consider that a "bargain" for consumers, but stagflation/deflation is a real concern by some. For me, it makes my high dividend / high distribution shares look all that much better.  With consumer prices dipping, it is surprising how well the 2nd quarter earnings numbers have stood up and many companies are revising upward their 3rd quarter estimates. On a day that the market sells off by more than 1 percent, AAPL rebounds a bit.

Note: it is expected that the administration's moratorium on drilling will damper the prospects of companies like Halliburton in the 3rd quarter.

Update: LA Port Strike Ended -- But There's More: Record Port Traffic

The folks at the Los Angeles port who went on strike because their $96,000 salary and benefits package was not enough -- remember, these were "clerks" who simply wrote down what was coming into the port -- have ended their strike. The arbitrator said the clerks were not acting in good faith, calling the strike illegal, and thus other unions did not join in.

There's probably more to the story, but that's a nice myth.

Anyway, today the LA Times is reporting outstanding news for the port:

The port traffic at Los Angeles and Long Beach (neighbors) had its busiest June ever for cargo, surpassing the number of containers moved during the height of the global economic boom in 2006, and the neighboring Port of Long Beach also showed a strong increase in imports.

At the Port of Los Angeles in June, imports increased by 32% from a year earlier.  Exports were up 13%.

At the Port of Long Beach, imports jumped 27% and exports rose a meager 2% in June

For the first time since the worldwide recession, jobs were so plentiful on the docks last month that veteran union members had to be supplemented by hundreds of part-time workers.

The economic indicators continue to perplex but I think these are the tectonic shifts:

• American buying habits and interests have changed (houses are out/tech is in)
• China is on a roll

And clerks being paid $96,000 -- well over twice that of the average soldier in Afghanistan/Iraq -- are learning that maybe that's quite enough.

New Operator Targeting the Lodgepole In/Around Dickinson

Oil for America, LLC, is listed as the operator for a new permit issued near Dickinson, Stark County.

The Zastoupil 22-1, NESE 22-139N-97W, is a wildcat, file #19258.  According to the press release, this consortium has identified 18 Lodgepole prospects.  There is no "H" in the designation and Lodgepole wells in the past have been vertical wells.

There have been some notable vertical Lodgepole wells:

• The Laurine Engel 1, Patterson Lake field, 61k in first five months of operation
• The Dinsdale 2-4, completed in 1996; 4.6 million barrels as of October, 2009, Dickinson area

Armstrong has additional interests in the Lodgepole; most recently, Armstrong and the Lodgepole show up in the July, 2010, NDIC dockets.

Dickinson is in southwestern North Dakota, USA.

Update, October 13, 2010: these are the three permits Oil for America, LLC, has in the Bakken. They are all in Stark County. All three are wildcats.

• 19258, Zastoupil 22-1, NESE 22-139N-97W
• 19272, Wolf 29-1, SWSE 29-139-95W
• 19601, Wieglenda 23-1, NESE 23-139N-94W

[Update: I've placed these and additional "Oil for America" permits/wells on my watch list.]

Idle Chatter: Investing

This posting has nothing to do with the Bakken (except perhaps the blurb on EEP, indirectly). These are some data points I noted after reading today (July 13, 2010) that Intel had its best quarter in 42 years, during one of the worst recessions in history, and when the possibility of a double-dip recession has some folks talking, and yet, reaction to INTC's news was fairly quiet based on share price action. That prompted me to look at a couple of other publicly traded companies

American Hospitality Trust (AHT): I used to own this for the dividend; I got in at about $6. A couple of years ago, AHT tanked, dropping to 95 cents/share. One year ago, one could buy shares in AHT for $3.00. Today, trending upward, it's high for the day was $8.

Intel (INTC): This looks a lot like what I'm seeing in the Bakken -- boredom. Nothing impresses the investor any more, it seems. Intel just announced its best quarter in 42 years and yet it hardly moved, in the big scheme of things. It has a p/e of 19. It has a dividend of 3%. It can be had for less than it's 52-week high; it is in a trading range but is still $3 less than it's recent high, and well below its all-time high of around $75.

EEP: I trade in and out of this one for the dividend. I do not look for price appreciation. It pays 7% or greater, depending when one bought in. It is in a trading range but is trending up and selling for $54 today. Three months ago, one could buy shares for $47. EEP increased its distribution in May, 2010, and will payout again in early August, I believe. Others agree: EEP is a very interesting play. Even during the worse of the natural gas recession (back in 2008), EEP did not miss a dividend payment.

NLY: I trade in and out of this one for the dividend. I do not look for price appreciation. It pays 15% or thereabouts. It is also in a trading range but at $18 today, one could have gotten in at about $16 three months ago. It recently raised its dividend by 5% which will be paid at the end of July. In after-hours trading, it dropped 3% today (and will probably drop more tomorrow) after announcing dilution of its per share value by offering to sell an addition 60 million shares of common stock, and will sell an additional 9 million if oversubscribed. That probably explains why it raised its dividend a bit; to keep investors from getting too upset when the new public offering was announced. NLY has 560 million shares outstanding. The big question is why NLY felt the need to raise more cash?  Problems or opportunities? I have no idea. The message boards suggest opportunities. If the public offering is oversubscribed at $17.75, it will speak volumes.