The Insider Report

Much has been made about buy and hold passive investing outperforming active managers.  A lot of the argument revolves around lower tax rates on capital gains.  Taxes are never good and all things being equal a lower tax rate is always better but MOST investors overestimate the benefits. The fact is that a manager would only have to earn 2% more on their returns at a 35% tax bracket to outperform someone paying the lowest tax rate at 15%.  If an active manager can’t outperform the market by 2% or more, they should seriously look for other employment.  Since 2001 … Read more

                          — Three major Shiite militia groups pulled out of the fight for Tikrit on Thursday, immediately depriving the Iraqi government of thousands of their fighters on the groundeven as American warplanes readied for an expected second day of airstrikes against the Islamic State there.The militia groups, some of which until recently had Iranian advisers with them, pulled out of the Tikrit fight in protest of the American military airstrikes, which began late Wednesday night, insisting that the Americans were not needed to defeat the extremists in Tikrit.Together … Read more

Jorge Montepeque, the global director of market reporting at Platts, echoed this sentiment at a London conference on Monday. The price at which US shale plays are profitable are a “moving target” as technological advances improve the longevity of wells and lower prices drive down costs. “The whole pricing structure is coming down . . .[there is a] need to have a rethink.” via IEA says scope of US shale output fall to be limited – FT.com.

Over the long run, big stock indexes finish up or down more than 1% on one-third of all trading days. Last year, it happened on just 14%, and on fewer than 10% in 2013. Recent market swings are a sign that things are getting back to normal. via Oil’s Rebound Lifts U.S. Stocks, but More Obstacles Lurk — Abreast of the Market – WSJ.

Jeff Woodbury, Exxon’s vice-president of investor relations, said on a call with analysts that the group was “alert” to possible bolt-on acquisitions and other investments that could strengthen its long-term production potential. via Exxon eyes deals after oil price falls – FT.com.

“The single best opportunity to invest is distressed debt in energy,” David M. Rubenstein, co-founder of the Carlyle Group, said in January at the World Economic Forum in Davos, Switzerland. Mr. Rubenstein added that one promising strategy might be to “buy the debt at a discount and take control of these companies.” The Blackstone Group and Apollo Global Management say that they are raising billions of dollars to invest in energy assets. via Slump in Oil Prices Brings Pressure, and Investment Opportunity – NYTimes.com.

REUTERS — 8:33 AM ET 02/02/15WASHINGTON, Feb 2 (Reuters) – U.S. consumer spending recorded its biggest decline since late 2009 in December, with households appearing to save the extra cash from cheaper gasoline, which could support future consumption.The Commerce Department said on Monday consumer spending dropped 0.3 percent after a downwardly revised 0.5 percent increase in November. It was the largest drop since September 2009.Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, falling 0.2 percent in December after a previously reported 0.6 percent increase.When adjusted for inflation, consumer spending dipped 0.1 percent, … Read more

Smith & Nephew Surges as Stryker Said to Plan Offer … www.bloomberg.com/…/stryker-said-to-plan-takeover-bi… Bloomberg L.P. Dec 24, 2014 – Smith & Nephew Plc rose in London trading after people familiar … The bid is still being finalized and the timing could change, said the people. That’s the headline last month.  Since then SNN has pulled back to a level that represents some opportunity.  Yesterday at the JP Morgan Healthcare Conference, Styrker management said little to change the dialogue, making me think a deal is more likely than not and at a higher price than projected because its taking a long, long time. ” In terms of M&A, management … Read more

Maria Bartiromo for USA TODAY Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He … Read more

This is a very encouraging report for oil bulls.  I think once you get the big earnings revisions coming this quarter, the group could be selectively bought. The market might be discounting this event already but its impossible to know for sure. Many major oil companies may not make any money at all for some time, explaining how a basked of 10 investment grade oil and gas companies credit default swaps tripled in the last 3 months. By Jane Xie SINGAPORE, Jan 9 (Reuters) – For the first time since 2009, a contract to buy crude oil or any sort … Read more

Bank Analyst Explains How We Should Think About Wall Street’s Exposure To The Oil Crash Today the financial sector particularly big banks was hit hard. In fact it was the worst performing sector, even worse than oil and gas.  You hear a lot of talk about how crude oil production will continue to climb in the first half of 2015 because so many companies have hedged their exposure to falling prices.  It’s starting to remind me of the black swan events of 2008.  Just who are the counter parties to these loans.  We started calling around to some of the … Read more

I’m more worried about the surging dollar than the crumbling price of oil for U.S. multinationals. The Dow industrials tumbled more than 300 points Monday, kicking off the new year on a sour note as a renewed slide in oil prices sent energy shares sharply lower.The Dow Jones Industrial Average sank 331.34 points, or 1.9%, to 17501.65, the biggest one-day loss for the blue chips since early October.The S&P 500 index shed 37.62 points, or 1.8%, to 2020.58, also its worst showing in three months. via U.S. Stocks Tumble Along With Oil Prices – WSJ.

SEC Plans to Fix Flaw in Electronic Distribution System – WSJ.

CBO report says consumers would benefit from repeal of crude oil export ban December 10, 2014 George Baker, executive director of the Producers for American Crude Oil Exports (PACE) coalition, has commented in response to a new report by the non-partisan Congressional Budget Office (CBO), which concludes that American consumers would benefit from repeal of the crude oil export ban. “The Congressional Budget Office now joins a long list of independent and government analysts who have concluded that repealing the crude oil export ban will benefit American consumers by lowering gasoline prices,” Baker said. “This conclusion, also drawn by, among others, … Read more

The stock market had its worst week since 2011 finally waking up to the broader implications of the sudden and unprecedented crash of crude oil, a commodity that is essential to the functioning of the modern world. In spite of what some are attributing to a global slowdown, the main reason crude plummeted was a good old fashioned price war.  Wait a minute that was last week’s headline.  Today the news is the Dow had its best two day gain in 3 years.  As of today, the market is almost unchanged for the month. It is a tale. Told by an idiot, full … Read more