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The Big Lie Part 3: Stuck in Purgatory
The 500lb Gorilla in the Room
The Big Lie: Intro
The Saga Continues; Big Risks and Little Spare Capacity
They Say There Is A Lack In Demand

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The Big Lie Part 3: Stuck in Purgatory

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The Big Lie Part 3: Stuck in Purgatory
 
"We are going to kill the companies (Fannie Mae, Freddie Mac), drive a stake through their hearts, we’re going to salt the Earth, so they can never grow back.” This is what one judge reviewing the case in the D.C. Court of Appeals, had to say about what the U.S. Treasury’s intentions are with respect to Fannie Mae. This quote from Judge Ginsburg best suits the current situation of what is happening to Fannie Mae in conservatorship!

The 500lb Gorilla in the Room

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The Big Lie: The 500lb Gorilla in the Room


Fannie Mae is the 500 lb. gorilla in the mortgage business room.  For those unfamiliar, Fannie Mae also known as a GSE (Government Sponsored Enterprises) is a simple and straightforward insurance company. It is hands down one of the two largest financial institutions in the United States, with over $5 trillion in mortgages. No other major financial institution comes even slightly close to the scope and scale that Fannie Mae exerts in the secondary mortgage business.

The Big Lie: Intro

The Big Lie: Intro

Tell a lie so big and enough times and it will never be questioned as anything but the truth.  Well, not in this case. Here is a story we have all come to known and believe as being the root cause of the financial crisis.  That tall tale we all have been told is that Fannie Mae caused the financial crisis in 2008.  The slightest question to almost anyone as to what they know about the recession or Fannie Mae, and their response will most likely be that they caused the Great Recession.

The Saga Continues; Big Risks and Little Spare Capacity

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The Saga Continues: Big Risks and Little Spare Capacity  
 
In cases of emergencies, people have savings accounts to buffer the blow when something financially goes wrong. When there is a supply disruption in the oil industry, this savings account is called spare capacity. What is spare capacity and why is it important to the oil market? The EIA (Energy Information Administration) defines spare capacity as the volume of oil production that can be brought on within 30 days and sustained for at least 90 days.

They Say There Is A Lack In Demand

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The Saga Continues: They Say There Is a Lack in Demand...
 
The cure for low oil prices is low oil prices! Over the course of my investing in oil and oil related stocks, many analyst, economist, investors and strategist have preached that there is "lack" in demand for crude oil. However, I have found many others that dispute this claim along with data that suggests something completely different. So, right out of the gate is a quote from the International Energy Agency (IEA), "World oil demand is growing at its fastest pace in five years, thanks to rebounding economic growth and low prices.

Oil Saga- Where Did All The Rigs Go?

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The Saga Continues: Where Did All The Rigs Go?
 
Capital spending is in free fall, a decline curve that is never sleeping and now a complete collapse in the drilling rigs in the United States. So what do you need other than capital to make up for the loss in oil production? Drilling rigs of course. As I have mentioned in the previous assessments, the United States has over the course of five plus years, become the third largest oil producer in the World.

The Oil Saga- Running as Fast as You Can to Essentially Stay in Place

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The Saga Continues: Running As Fast As You Can To Essentially Stay in Place
 
The almighty natural depletion and decline curve. This is the dilemma oil exploration and production companies drilling wells and especially unconventional wells in the the United States have to deal with. It goes like this- every major oil field has a natural decline curve, where oil production decreases over a specific amount of time due to the nature of the reservoir and the materials drillers put into the well to extract the oil.

The Oil Saga- CapEx

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How long is oil going to trade at these depressed levels? This of course is the million dollar question that everyone right now wants to know. However, there are certain ingredients that go into creating the oil market balance or imbalance that might help answer this question. One of the first topics I want to discuss is capital expenditures, which are funds used by a companies to acquire or upgrade physical assets such as property, or equipment.

Oil Saga- Intro

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Oil... the black blood that runs through the veins of our modern global energy system. It's the dominant source of energy however, its future supply is uncertain. In the coming weeks, I plan to focus my weekly assessments to one particular subject that has no doubt become extremely interesting, nerve racking and nevertheless important to me, crude oil.  I will look at supply and demand and the problems that come with trying to explain how difficult it is to measure the two.

It's All Bad...No Wait, It's All Good

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It's all bad, no wait...its all good! This week was another example of how difficult it has been this year to trade in the equity markets. On Tuesday, we had a nice rally across the markets but come Wednesday and Thursday, we lose over 475 points on some negative ISM (Institute of Supply Management) numbers that showed a contraction in the manufacturing sector of the economy. However, come Friday and we rally 370 points on a positive employment report where some 211,000 jobs were created and the unemployment rate stood at 5%.