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Hands down the most interesting piece of research I’ve come across this morning is a Bear Stearns comment that management of Proctor & Gamble “is scouring the globe to find raw materials” in the wake of rising energy prices and the disruptive impact of Hurricane Katrina.

(While the Bear analyst is lowering P&G estimates all of a penny per share owing to said cost pressures, keep in mind this is a company with 2.5 billion shares outstanding.)

According to the report, P&G management—which I think anybody on Wall Street would rank up there with the best in the world—“has been working for quite a while at insuring an ability to use a variety of input costs [sic]. Nonetheless, we think that the recent announcements by chemical companies that they could be declaring force majeure on key inputs could limit supply and raise costs.”

Somebody ought to tell the bond market what one of the world’s biggest, and best, companies is seeing out in the real world.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

But while rebuilding hurricane-ravaged regions will eventually mean more orders, it’s also bringing more immediate supply glitches and rising prices, particularly for petroleum-based raw materials.

Certain manufacturers are building inventory of steel, plastic resins and cardboard boxes and such stockpiling could eventually lead to even higher prices in the near term. The result is an uneven picture, as certain manufacturers gear up to produce more, while also facing negative cost and supply-related fallout from the storm.

—Wall Street Journal, 9/12/05

The bond market’s immediate reaction to Hurricane Katrina was a big sigh of relief.

Not, however, because the human catastrophe of lives lost and homes destroyed might be less than feared—no, that’s not what the bond market worries about.

The big sigh of relief came because the only thing the bond market worries about, economic growth, suddenly looked imperiled by the massive structural damage to the country’s infrastructure.

Bonds soared on the short and long end as the bond market decided that by destroying great parts of the Gulf Coast, Katrina would, therefore, cause the Federal Reserve to ease up on its previously relentless program of 25-basis-points-a-meeting-until-it-hurts.

But the bond guys weren’t reading their history.

The Hurriance of ’38 decimated Long Island and hit a large part of New England with 121 mile an hour steady winds (gusts up to 180 MPH), killed 700 and left 60,000 homeless.

And the rebuilding effort from that hurricane helped start bringing New England out of the worst of the Great Depression (of course, when World War II came along, that recovery turned into a boom).

Katrina was bigger, and the rebuilding efforts will be enormous—already the Federal Budget Deficit is being revised upwards by one-third thanks to Katrina, and companies ranging from Masco to Massey Coal have discussed the highly inflationary impact of Katrina on their own operations.

If I were a bond guy, I’d read today’s Wall Street Journal very carefully before paying up for sub-4% 2 year notes.

And also dust off some history books.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

Edward S. Lampert, the billionaire who bought Kmart when it was in bankruptcy and then used it to buy Sears, Roebuck, put himself in charge of creative decision making on Thursday, taking a measure of personal responsibility for lifting two retailers out of a long sales slump.

A person familiar with Mr. Lampert’s thinking, who declined to be named because Sears keeps tight control of all disclosures about its business, said the financier believes there is a shortage of talented merchants in the industry. “This is a work in progress,” the person said. “It’s going to be a bumpy ride.” But he noted that Kmart’s sales have pulled out of a nosedive under Mr. Lampert and that both chains are also forsaking mere sales growth through discounting.—New York Times

It’s hard to choose where to begin here.

Let’s start with the obvious: Eddie Lampert is one of the all-time great hedge fund managers—in fact, as we have observed in prior discussions of Sears, one of the greatest investors of all time.

Then there’s the other obvious fact: Eddie Lampert has no apparent merchandising skills whatsoever.

And if you want to argue with me about that—well, I suggest you first get yourself to a “Sears Essentials” store and see for yourself how Eddie’s vision of combining the best of Sears’ merchandising with the best of the old K-Mart real estate locations is working out.

I’ve done it, and I can tell you that it’s about as effective as, say, combining US Trust and Charles Schwab.

For starters, the stores all carry bilingual signage—English and Spanish—in one of those corporate money-saving moves that looks good on paper but looks really dumb in a store in rural Putnam Connecticut, with an Hispanic population of zero.

For another, the Lands’ End merchandise is mixed in with all the other Sears apparel brands, further destroying whatever equity value the Lands’ End brand had after the last few years of intensive destruction by the old-line Sears “merchants.”

The list could go on—but suffice it to say that while the store looked clean, thanks to a fresh paint job; and cheery, thanks to new light-bulbs…it uses the same old K-Mart fixtures and the same old K-Mart layout and (I hate to say it because they are the sympton, not the problem) the same old K-Mart employees.

For comparison purposes, the TJ Maxx store right next door not only looked like a real store run by real merchants, but with only half the square footage of the “Sears Essentials” store it was doing more business.

Sears Holdings needs a lot of things—great merchants among them.

And there are plenty of great merchants around—but they work at Abercrombie or Penney or Nordstrom or Williams-Sonoma or Quiksilver…not at hedge funds.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

“There are going to be questions about what major oil companies are doing with all the resources they’re accumulating…they can’t escape that.”—U.S. Senator Pete Domenici, WSJ

Now the witch-hunt begins.

With gasoline prices rising (a minimum of 50c a gallon in my part of the country) in the seven days since Hurricane Katrina disrupted a tenth of the domestic refining capacity and much of the energy transportation infrastructure, politicians whose previous “fact-finding” missions to that hurricane-prone region of the country had no doubt been limited to touring the newest casino, are doing what they do best: they’re blaming somebody else.

The above-quoted Senator Domenici’s official web site, for the record, has a handy “On The Issues” segment devoted to four topics: Health Care, National Defense, Taxes/Economic Growth, and Water.

Energy—specifically why energy policy in this country has promoted truck traffic at the expense of railroad traffic and protected car companies from including SUVs in automobile mileage standards—is nowhere to be found in Senator Domenici’s Fab Four topics.

But now that gasoline prices are up in his district—a natural occurrence when 10% of refining capacity gets shut down for a week—Senator Domenici is all over this one.

As will be, I’m sure, my own Senior Senator, Chris Dodd—whose Kennedyesque Big Hair looks really terrific on TV when he starts working up his righteous indignation at whatever it is he wants to get on TV for.

Meanwhile, here at the local Starbucks they sell “Ethos” brand bottled water for $1.85 a bottle.

The bottle contains 1.5 pints of water from the Tomhicken Mountain Springs—which happens to be in Pennsylvania, near Pottsville. Cost: $1.23 a pint.

There are 8 pints in a gallon.

So the Starbucks customer is paying about $9.85 a gallon…for water that comes from a self-replenishing spring, gets put into bottles and shipped to the store as is.

Yet that same Starbucks customer is going to complain bitterly to Senators Dodd and Domenici that it now costs $3.25 for a gallon of gasoline that has been shipped via crude oil tanker from depleting oil fields in Saudi Arabia across 3,000 miles of ocean to an offshore tanker port, pumped through pipes to a refinery in the Gulf Coast, refined via an energy-intensive distillation process into a variety of fuels—jet fuel, diesel fuel, kerosene and even asphalt, not to mention three types of gasoline—and then shipped by pipeline to distribution terminals from whence it has been loaded into tank trucks and hauled up an Interstate Highway to a gas station for the Starbucks customer who is complaining about the High Cost of Gasoline to Senators Dodd and Domenici…

…and doesn’t think twice about paying $9.85 for a gallon of water.

Jeff Matthews
I Am Not Making This Up

The scene is a coffee shop in coastal Rhode Island, not too far from the University of Rhode Island.

The characters are two men: one, a pot-bellied, middle-aged, academic-looking man with reading glasses perched atop his head and a kind of retro, John Quincy Adams hair style—complete with mutton chop sideburns; the other is a young man in shorts, t-shirt and baseball cap, who uses the word “Dude” incessantly.

The actual unedited dialogue:

John Quincy: You watch Cramer?

Dude: No.

John Quincy: He’s on at night, on television. Stock market show.

Dude: What’s he saying?

John Quincy: Genentech. He thinks Genentech is for everyone.

Dude: Dude, you believe it?

John Quincy: Sure. Cramer was a hedge fund manager…

Dude: Hunh.

John Quincy: That’s like riding on top of a shark and surviving. He knows how they do it.

Dude (Nodding): Dude.

John Quincy: He’s very funny. He’s a nut. He’s VERY good.

***

Understanding fully that this post may become Exhibit A in whatever new Conspiracy Theory is being constructed by Patrick Byrne to attract attention away from his company’s poor financial performance, that last line sums up “Jim Cramer’s Mad Money” precisely, for me.

Jeff Matthews
I Am Not Making This Up

The first time I went to a fundraiser for the United Jewish Appeal, my WASP sensibilities were startled by the blunt, straightforward way the members made their pledges.

Instead of writing a figure down on a pledge-card in the quiet of their den, men stood right up at their dinner table in a ballroom filled with their peers and said, “I’m so-and-so and I’m pledging [insert large dollar figure here].”

The bigger the large-dollar-figure pledged, the bigger the applause from the crowd—which, in and of itself triggered ever-larger large-dollar-figures for the UJA coffers. I was both shocked and awed—it was the most effective way of raising money I’d ever seen, and I’d been involved in fundraising for my own church for years.

I looked at bringing that style to the fund-raising efforts of my church, which does things in the normal WASPY privacy-of-your-own-home way, but it never flew.

So I’m going to try it here.

Despite accusations by Business Week that this blog is “sarcastic” and “rambling,” and accusations by at least one apparently hallucination-prone CEO that this blog is much worse, today we have no sarcasm and no conspiracies to offer—just an effort to accomplish something more useful than Hamlet’s “Words, words, words.”

Last night, while looking up a song at Apple’s iTunes Music Store, the site offered the ability to donate to the Red Cross relief efforts on the Gulf Coast in the wake of Hurricane Katrina.

I gave $200 and I admit I gave it feeling guilty that I had not already done something. Then I read up on the relief efforts in general and the Red Cross in particular, as well as its efficiency rating at http://www.charitynavigator.org.

My own experience with certain charities and non-profits that my church has helped fund over the years is that some do spectacular good with very little money, and some do very little good with spectacular amounts of money. (Jim Rogers’ two “Investment Biker” books covering his round-the-world travels contain hair-raising insights on “relief effort” scams that make church groups here in America feel good yet do nothing for the third-world refugees they intend to aid.)

But the American Red Cross does good work—and millions of Americans urgently need that help right now.

So, for today at least, you’ll read no sarcasm here, no rambling, and nothing about the housing market or the Energy Crisis of 2005.

If you have time to read this blog, then you have time to go the Red Cross web site at http://www.redcross.org/ and click on the “Donate Now” button. It took me maybe two minutes to make another, more substantial, donation just before starting this piece.

An hour ago, that site had generated $27,684,625 through 191,682 individual donors. Moments ago the figures were $28,079,870 and 194,198, which work out to an average of $157 for each of the 2,516 donations that were made in the 45 minutes it took me to write this.

Let’s see if the good readers of this blog can help raise that average donation, right here and now.

And, like the stand-up guys at a UJA fund-raiser, let us know when you’ve done it.

Jeff Matthews
I Am Not Making This Up

Typically, car tanks are about one-quarter full. If buyers start keeping car tanks three-quarters full, the added demand would quickly drain the entire system of gasoline supplies.—Today’s WSJ

Shortly after I got my driver’s license—this is ancient history—an event occurred across the globe that severely altered world economies but made my own myopic world a little brighter.

This was the Arab Oil Embargo, which quickly triggered long lines at those gasoline stations fortunate enough to get their share of supply.

What made my own myopic world a little brighter was the fact that, being a teenager with a new driver’s license, and having the endless spare time that teenage boys seem to have, my job was to find the gas stations with the gasoline, and fill up the wagon or the sedan—whichever was running low.

That meant, ironically, lots of driving around after school, and, then, lots of time sitting in a car listening to WNEW-FM, the New York City radio station that used to play actual music based on the actual whim of the disk jockey [see previous discussions of the inevitability of satellite radio in earlier posts]—neither a bad thing from my teenage point of view.

Having a father who worked for a Big Oil Company—the target of choice for Politicians With No Good Ideas of Their Own as well as Angry Consumers Who Never Conserved in Their Lives—I understood that the problem with the Arab Oil Embargo was not so much the embargo itself, but the consumer reaction to that embargo.

Consumers, fearing a shortage, reacted by hoarding gasoline. That, in and of itself, created the shortage of gasoline that otherwise would have been no true shortage at all, as I heard night after night while my father hurled invectives at Geraldo Rivera, then a cub TV reporter, who would show film of oil tankers waiting off the New York Coast “for prices to go up.”

“They’re waiting to unload, you moron!” my father would yell at the TV. It did no good, of course—this was in the pre-blogging days, when the Mainstream Media could say pretty much whatever it wanted without being corrected.

In time, the hoarding mentality dissipated and supplies became plentiful as demand responded to higher prices by going down, and soon my temporary job disappeared, as did Geraldo’s.

Yet today’s Wall Street Journal coverage of the aftermath of Hurricane Katrina took me back to that summer, and, I think, offers a sobering analysis of the situation we face today, in light of the tragedy—both human and economic—left behind in her wake:

If the U.S. auto fleet of 220 million vehicles went up to three-quarters of a tank—or, say, 10 gallons more—it would be an additional 2.2 billion gallons of demand.

Any figure with a “billion” in it sounds large, and in comparison to available inventory of gasoline, 2.2 billion is very large…

Gasoline inventories were 195 million barrels on Aug. 19, and diesel an additional 77 million barrels, according to the latest government data, or a total of 8.19 billion gallons [of gasoline] and 3.23 billion gallons [of diesel], respectively.

Of the 8.19 billion gallons of gasoline in inventory, much of that is not available—being part of the normal stock throughout the supply chain—refinery holding tanks, pipelines, bulk plants, barges and service station tanks.

Consequently, should the American consumer decide to top off the old Hummer, the supply chain could get strained very quickly.

Let’s hope the oil industry gets those refineries back up and running quickly. I guarantee the so-called villains at Big Oil will do everything humanly possible to get it done.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

Teradyne upgraded to Neutral at BofA; tgt raised to $15.16 (16.62)

Thus reads a headline coming across my “Briefing.com” this morning.

“Briefing.com” is an excellent, subscription-based online service providing news behind stock movements, and during the pre-market hours it is chock-full of these types of upgrades and downgrades from Wall Street’s Finest.

What that headline means is this: the semiconductor equipment analyst at Bank of America has upgraded his rating on Teradyne, a solid, old-line company specializing in high-end test equipment, probably from “Sell” or “Underweight,” to “Neutral.”

Furthermore, the analyst has raised his target on the stock price to $15.16 a share, compared with last night’s closing price of $16.62.

For those of you rubbing your eyes at this, let me assure you of two things:

1. The “target price” is precisely $15.16. Not $15.15 or $15.14. It’s $15.16.

2. The “target price” on the stock is in fact 10% below last night’s closing price, and yet the stock is rated “Neutral.”

Now let me assure you that nobody I know pays any attention to either the price target or the “Neutral” rating. And, yet, they exist. So how could a Wall Street analyst come up with a “$15.16” price target, anyway?

Well, first the analyst finds some artificial multiple, such as the S&P price-to-earnings ratio or the average semiconductor price-to-book ratio or a peak-cycle-price-to-sales ratio.

Then his assistant plugs a bunch of numbers into their Teradyne model, runs them out five years, and starts multiplying earnings or book values or peak sales ratios times the various outcomes, and blends these into a meaningless “price target.”

As for why the analyst is “Neutral” towards a stock he expects will decline 10%, a quick look at the Teradyne chart reveals the stock is up about 50% from its May lows, and the analyst is probably getting tired of having a “Sell” or “Underweight” rating on a stock that keeps going up.

Merely by going to “Neutral” the analyst has reduced the number of hostile, “why are you so negative?” calls from any number of influential Teradyne shareholders—not only to himself and his assistant, but to his sales people, traders and investment bankers.

Plus, it is almost September, and in just a couple of weeks Bank of America will have its growth conference, and it will be much more comfortable for the analyst to introduce the company’s speakers at the conference if he is able to say “Teradyne is a Neutral-rated stock” as opposed to “Teradyne is a Sell-rated stock” in front of 500 clients who own Teradyne.

Don’t get me wrong: I am not being harsh or critical of the Bank of America analyst, whoever he is. Being an “analyst” on the sell-side is more of a marketing gig than a stock-picking gig, and has been since I was there in 1980. What I described here is simply how it really works, when you cut through all the spreadsheets and disclaimers.

But tomorrow we will look at a more egregious type of behavior from Wall Street’s Finest—the kind that results in a well-paid analyst being off by almost 100% on his “free cash flow” analysis of a money-losing company that has experienced a reduction in its cash balance, net of debt, from $170 million to almost zero in the space of nine months.

Analysts really do get paid for this kind of thing.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

Aug. 19—It’s a sign of the times: Jim Eggleston, owner of Sacramento’s biggest residential “For Sale” sign installer, predicts this will be his busiest week in 21 years in business. He’s had to hire an extra worker and buy a new delivery truck since his crew planted a one-day record of 225 signs on Monday.

Sacramento is not a household name on the East Coast.

Unlike San Francisco and San Jose, it has not had a song written for it—at least not that I’ve ever heard—and if it did, the song would probably have been a Johnny Cash/Folsom Prison Blues/“I shot a man’s leg off just because he was bothering me and now I hear the lonesome Sacramento whistle outside my prison window” type of thing.

And, in fact, Folsom Prison happens to be right outside Sacramento, about 20 miles east along Route 50.

Sacramento itself lies 90 miles east of San Francisco, in the agriculture-rich Central Valley of California, on the road to Lake Tahoe, Reno, Salt Lake City and beyond. It is, for some reason, the oldest incorporated city in the state of California, and the State Capital to boot.

“There are whole lot of houses going up for sale,” says Eggleston, who promises next-day installation when a real estate broker orders a new sign. “The number of ‘For Sale’ signs we’re removing keeps going down relative to the number we’re putting up.”

Sacramento is also the home of McClatchy Newspapers—publisher of the Sacramento Bee, the source of this article—and one of the fastest growing metropolitan regions in the nation.

And while Sacramento is not a Speculative Housing Bubble-type market of the Las Vegas/Phoenix stripe, it’s close—having appeared alongside the San Diego, Los Angeles, Riverside, San Francisco and San Jose “Metropolitan Statistical Areas” in a listing of least-affordable U.S. housing markets earlier this year.

If this Sacramento Bee article is accurate, however, that region may be getting a little more affordable in the near term:

His [Jim Eggleston, the ‘For Sale’ sign guy] experience is just one more signal that the Sacramento region’s housing market continues to cool off, as inventories rise, price reductions become rampant and homes stay on the market longer, particularly those in the $400,000-and-up price range.

In July, the monthly inventory of resale homes for sale in Sacramento, Placer, El Dorado and Yolo counties combined shot up to 7,263—the highest for any month since September 1998.

In other words, the number of Sacramento area homes for resale in July was the highest since September 1998, just before the Asian crisis hit the California economy.

And it appears that inventory actually increased in August:

As of Thursday morning [August 18], the inventory had risen another 26 percent to 9,141 homes, reports TrendGraphix, a local data firm affiliated with Lyon Real Estate of Sacramento.

“The inventory is ramping up and we’re now seeing a changing market—the bell has tolled,” said Michael Lyon, head of TrendGraphix and Lyon Real Estate.

Does Sacramento matter? Is it a canary in a coal mine? Is the Speculative Housing Bubble doomed to burst in a hail of fireworks?

Will angry ex-day-traders-turned-condo-flippers march on Washington to bemoan their top-ticking yet another market—The Million Angry-Ex-Day-Trader-Turned-Condo-Flipper March?

Beats me.

But I know this: human beings take comfort in the safety of numbers—and they are taking comfort, right now, in the safety of numbers of friends and family and neighbors and distant relations who are making money in the market…the housing market.

On Saturday night a proud father was regaling our table at dinner about his daughter who, to his amazement, had created a business fixing up and flipping houses out in Phoenix. “The first couple of houses, the banks needed our signature,” he said. “But now they don’t!”

Everyone at the table nodded in approval, and one lady said, “That’s the wonderful thing about children…they have no fear.”

Fifteen years ago, however, when the Resolution Trust Corporation was selling off bad real estate owned by failed savings and loans, there was plenty of fear. The average American considered buying real estate too risky. Proud fathers didn’t brag about their young daughters flipping houses—chances are Dad was already holding the bag on a condo he bought during the late-1980’s boom.

Besides, Dad couldn’t have gotten the financing anyway, given the state of the Savings and Loan industry.

But today there is no fear. Lots of headlines, lots of worried journalists and a few economists crying ‘wolf’—but among the young men and women taking out the interest-only mortgages, there is no fear.

And in at least one hot region of the country—Sacramento—inventory is rising and the market is “changing.” According to one real estate professional there, the bell has already tolled.

Too bad Johnny Cash is no longer around to write about it.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

With protests that virtually halted oil production in this country now quelled, Ecuador’s government took grim stock Tuesday of a week’s worth of damage that unsettled the oil markets, and began the demanding task of getting production levels back to normal.

The threat of more protests has only added to more uncertainty in this country, whose $30-billion-a-year economy depends on oil for 40 percent of export earnings and a third of tax revenue.

Oil companies have long complained about rampant corruption, the propensity of the Energy Ministry to alter contracts, and chronic political instability. Three presidents have been ousted in the last eight years.

“This is an extremely dysfunctional place,” an executive of a foreign company said.—New York Times, August 24.


So who cares about Ecuador?

It is, after all, only the fifth-largest oil producer in Latin America, behind Venezuela, Brazil, Argentina and Columbia.

Total production from pristine jungle lands occupied by natives who’ve been treated about as fairly as native Americans back in the 1800’s—while meaningful enough to Ecuador to cause government instability and political protests—amounts to all of half a million barrels a day.

That’s barely a drop in the 84 million barrel a day world oil habit.

And while Ecuador does send half its production to the refinery complexes of the United States, Ecuadorian light sweet crude amounts to only about 2% of our total crude oil imports.

The reason to care is that it’s not just inside Ecuador that this battle of “with, without” (to quote Pink Floyd) is taking place.

There’s Nigeria (10% of U.S. crude oil imports), which is run by a “former military ruler” who was about as “freely elected” as Saddam Hussein back in his glory days of winning 99.9% of the Iraqi vote; along with a whole lot of corrupt government officials each with their hand in the till.

There’s Iraq (5% of U.S. crude oil imports), where things aren’t exactly settled yet.

And then there’s Venezuela (11% of U.S. crude oil imports), which is run by a certifiable Castro-style socialist and a whole lot more corrupt government officials than even Nigeria can come up with.

In July, for example, Venezuela “tax auditors” raided Chevron offices in Maracaibo, seizing boxes of records “to build a case that Chevron and other energy companies owe Venezuela $3 billion in back taxes,” according to Bloomberg. “The raid is part of President Hugo Chavez’s push to squeeze more money out of foreign oil companies…”

Add them all up—Venezuela, Nigeria, Iraq and Ecuador—and you’ll find that more than 25% of daily U.S. oil imports come from countries which are, as the man said, “extremely disfunctional.”

And I’m not even counting Mexico (15% of U.S. crude oil imports), whose corruption and bureaucracy have stifled the state-run oil company’s exploration efforts to the point where Mexico is now an importer of natural gas from the United States.

For those of you not familiar with the history of U.S. energy relations with Mexico and our dependence on that country’s rich offshore fields for our oil and gas needs…well, let’s just say that this development is about as shocking as if we learned that an OPEC member country (OPEC stands for “Organization of Petroleum Exporting Countries”) such as Indonesia had become a net importer of oil.

Oh, wait. I forgot. Indonesia has become a net importer of oil.

Instability adds up. Let’s hope the math doesn’t get out of hand.

Jeff Matthews
I Am Not Making This Up

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.