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140 comments on DrumBeat: April 30, 2007

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wstephens on April 30, 2007 - 12:27pm Permalink | Subthread | Parent | Comments top

A orderly declining dollar could keep exports rising and jobs OK, and therefore housing from actually "collapsing". Pimco's Bill Gross calculated that the Fed would need to lower mortgage rates by only 1.2% to re-balance the housing market. So housing "bears" may continue to be frustrated.

This seems sort-of like the Westexas/RR debate -- the bears may be right, but for the wrong reason. :-)

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BrianT on April 30, 2007 - 1:09pm Permalink | Subthread | Parent | Comments top

W: How is your orderly declining US dollar going to affect US gasoline prices?

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wstephens on April 30, 2007 - 1:46pm Permalink | Subthread | Parent | Comments top

Gas prices will soar based on supply/demand, currency translation will probably have little effect (personally, I think the dollar is going to rise anyway relative to assets).

I'm just saying that the conventional wisdom over the past couple of years was that the housing bub was going to kill the economy. This started with "The Economist" a while back. After being wrong for a long time about that, now (most?) bears, I believe, have shifted to the "liquidity driving the market higher" argument -- which I feel is a "capitulation" at what is now probably a market top.

Anyway, the "earnings trends" quote above clearly flies in the face of the liquidity argument. Is "private equity" going to buy every non-energy non-financial public asset in order to "re-structure" the bottom line with debt? I hardly think so.

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BrianT on April 30, 2007 - 2:46pm Permalink | Subthread | Parent | Comments top

W: Can't agree with you on the US dollar, but you might be right re the housing bubble.Few have commented on the effect of dramatically increased immigration to the USA in the next 10-15 years. This will provide a prop to housing, while somewhat countering the boomer retirement bulge. The added benefit for the investor-controlled political system is dramatically lower real wages.

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xburb on April 30, 2007 - 11:06pm Permalink | Subthread | Parent | Comments top

OK now we're loggin'

Gas prices will soar based on supply/demand,

It's a shooting gallery. The US economy is lined up in the crosshairs with several shooters waiting their turn. If US consumers change their habits markedly the companies dependent on that income sector suffer . Hence their employees/economy/housing market and so on. Look at the story on Ford and GM this month. I believe the April sales numbers were termed 'awful'. They need to adapt yesterday.

High gasoline price is the bullet today. Score one hit to the automakers. The refinery bottleneck is taking the pressure off WTI (and the world market) for now. When the refiners improve ultilization then
The tale of Two Crudes
comes back into play. Crude price becomes the bullet. World crude market comes home to America again. Inflation of everything crude is made into. Since the US imports and uses the product high on the per capita list it's currency will have to take a hit. Rinse, repeat and wait for demand destruction. Great.

How hard will America fight to keep things just like they are today? Will the paradigm ever shift in time? Asked another way, how important are those snicker doodles, mutiple daily trips to the mini-mart, and that high speed en masse migration to and from the entertainment event. How much will we be willing to pay of our blood and treasure before we change? B/C however much that is, that is exactly what Peak Oil will extract from us.

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wstephens on May 1, 2007 - 11:37am Permalink | Subthread | Parent | Comments top

I predict (1) the biggest ugliest recession in several generations due to various factors mentioned, (2) followed by a ramp up in solar projects and battery powered vehicles that will essentially fix our energy situation forever. There is some additional risk on the downside, if politicians behave badly, or if the public panics in some unpredictable way.

The battery technology for the cars will be ready (A123 and Altairnano) in a couple of years. Folks are overly-pessimistic about replacing our "oil-consuming capital stock" (i.e. Hirsch Report).

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AlanfromBigEasy on May 1, 2007 - 10:49pm Permalink | Subthread | Parent | Comments top

Altairnano is a fraud and VERY bad joke. Expect zero from them. Not enough time to go into the details.

A123 is for real, but it is a MAJOR step from handtools to EVs !

I prefer EVs that can operate indefinitely WITHOUT ANY BATTERIES AT ALL, and are much more mechanically efficient that GMs Volt for example.

http://upload.wikimedia.org/wikipedia/commons/a/a5/CarrolltonStreetcarAp...

Best Hopes,

Alan

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wstephens on May 2, 2007 - 3:15pm Permalink | Subthread | Parent | Comments top

What makes you say fraud?

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AlanfromBigEasy on May 2, 2007 - 4:05pm Permalink | Subthread | Parent | Comments top

Several things. They have changed their name multiple times (gold mining a few times), and they still list their industry as "Drug - Other" in Yahoo financial listing.

Endless money pit for decades.

No real products shipped (some joint PR with other fraud companies), no serious partnerships with real companies (A123 has these).

Etc.

Alan

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wstephens on May 2, 2007 - 4:35pm Permalink | Subthread | Parent | Comments top

Couple of points:

* According to investor relations only 1 person from the "old days" is still connected with the company. The company has completely changed from the old mining technology days. I've read every 10-K going back to 1997 to understand Altair's story, and it actually makes sense. The key event was when Altair bought the original nano technology patents from BHP Billiton, and subsequently hired away 18 employees (including PhDs) from BHP's research facility in Reno in 2000.

* Altairnano has partnerships with Alcoa's AFL division, Sherwin Wllliams, AES Corp ($14B utility company, which has a small equity interest in Altairnano, and one of their VPs in on Altairnano's board of directors).

* Altair's CEO, Dr. Gotcher, worked for Avery Dennison and led Avery's teams that created and commercialized the Duracell On-Cell tester battery label.

* Although Altair has only shipped 10 battery packs to Phoenix for their electric truck. Altair plans to ship 200 of them in 2007.

* Yahoo's profile information is extremely misleading. One of Altair's applicatons for their nano Titanium dioxide is medical.

(I do own shares)

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AlanfromBigEasy on May 2, 2007 - 8:51pm Permalink | Subthread | Parent | Comments top

Their PR releases are quite misleading (all I have investigated), I REALLY question their technology and what I have seen of partnerships (Sherwin Williams was interested in super small white paint particles, not batteries) pales in comparision to A123.

I do not like the company as an investment and I discount every (misleading) PR release.

I have written the company off as being of any interest. A long history of fraud and fleecing investors under 8 different names.

I would NEVER plan for the future based on promises from them.

Best Hopes for Reality Based Planning,

Alan

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wstephens on May 2, 2007 - 10:14pm Permalink | Subthread | Parent | Comments top

So far everything that I've investigated has turned out legit. Altairnano is trying to make progress in 4 divisions, each of which involves their nano Ti technology. This makes following the PRs perhaps difficult, but not misleading. I counted 9 analysts on the last conference call (including Cowen & Co., W R Hambrecht, Thomas Weisel, Merriman, LPL Financial, etc). I don't think that they'd waste their time on a fraud.

That old stuff about different names, mining interests, and mining technology was divested and eliminated years ago.

The battery specs are for 30% lower energy density than conventional Li Ion at room temperature, but in all other respects is far superior. In my opinion, it's superior to A123.

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AlanfromBigEasy on May 2, 2007 - 11:45pm Permalink | Subthread | Parent | Comments top

*IF* you believe their specs.

I do not.

You apparently do,

Best Hopes that I am wrong,

Alan

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westexas on April 30, 2007 - 1:31pm Permalink | Subthread | Parent | Comments top

This seems sort-of like the Westexas/RR debate -- the bears may be right, but for the wrong reason. :-)

I was probably too optimistic regarding remaining Saudi reserves. I argued that Saudi Arabia, in 2006, was at the same stage of depletion that Texas started declining. It now looks like Saudi Arabia, in 2006, was more depleted than Texas was when it started declining, which suggests that the Saudi decline rate will be sharper than the Texas decline rate, which of course will have a highly detrimental effect on net oil exports.

As gasoline and overall energy prices increase, the decline in the market value of outlying suburban areas will accelerate. I would think that areas dependent on discretionary spending will suffer even more, e.g., in the county where Las Vegas is located, one out of every thirty homes is now in foreclosure proceedings.

From the Texas/Lower 48 article we did on year ago: http://static.flickr.com/55/145186318_27a012448e_o.png

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EngineerAU on April 30, 2007 - 2:01pm Permalink | Subthread | Parent | Comments top

A friend went off to Vegas last week with her boyfriend. I joked about her coming back married, which she insisted would not happen. Well, I got an email this morning that they're moving to Vegas and have found a huge house (five bedrooms but they have no kids) to live in and they're going to get married. Even before "haha, I told you that you'd get married in Vegas" popped in my head, the thought "OMG, I can't think of a worse place to move to now, you're going to get screwed (and I'm not talking about in the Honeymoon Suite)" jumped through my head like a frog on a hot plate.

The attraction of Vegas as a place to live full time for those not directly connected with the gambling industry is just beyond me.

Though I have to wonder, when things start to get bad, will Vegas, being built on discretionary income, fold or will people flock there in even greater numbers out of desperation to win big and for some escapism.

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jokuhl on April 30, 2007 - 2:33pm Permalink | Subthread | Parent | Comments top

I worked in LV last summer, and when we'd drive past the Strip from a distance, it just looked like a (once and future) ghost-town to me. Packed full of people, construction cranes everywhere. I had talked to an electrician who was working on a new billion-dollar hotel.. all I could see was one of those Hollywood Western Towns, all paper-thin Facades, inches away from blowing over with the next good gust.

Job paid great, and bought me a chunk of PV panels and support Hdw. Looks like I'm not on poker this summer.. darn, I could use a few more panels.

Bob

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ericy on April 30, 2007 - 2:54pm Permalink | Subthread | Parent | Comments top

Escapism takes many forms though. A nature walk through the woods could be viewed as escapism too.

I agree about Vegas though. What do these two do for a living anyways?

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EngineerAU on April 30, 2007 - 4:04pm Permalink | Subthread | Parent | Comments top

She is a client representative for a pet supply company. It involves lots of travel so she might end up keeping the same job despite moving across the country. Vegas likely has nearly as good domestic air connections as Atlanta does.

I don't know what he does for a living but I know he is big into gambling on just about anything. She believes that he is good at it and his winnings exceed his loses. I suspect his winnings only exceed the loses she knows about but who knows, there are some people who are able to get ahead in gambling but they're an extreme minority. I suspect they only are able to do it because they're going up against people who don't know better rather than casinos. The local poker tournament or sports betting is very different that the big guys who have all the numbers hashed out by actuaries and statisticians. If he is moving there thinking of Vegas as the gambler's paradise, they're probably going to be in a heap of trouble quickly.

It is just such a strange thing to do but she also recently bought a large SUV so it's not like trying to explain why this is a bad idea would do any good.

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wstephens on April 30, 2007 - 2:18pm Permalink | Subthread | Parent | Comments top

Your debate with RR is probably the #1 TOD classic. I believe that you will be proven right (after the necessary caveats regarding non-geological restrictions on output and shifts in oil field technology producing one-time gains). Peak Oil timing, like market timing, is very hard to do.

I expect to be amazed at how "generic" suburbia will adjust to gas prices. There is simply so much wasted driving out there. I agree that "discretionary dependent" suburbia will be the canary in the coalmine. Nevada may, though, benefit from gov't mega $$$ poured into CSP solar, PV solar, holy-cow solar, and anything-else-we-can-think-of solar projects. Of course the public or politicians may panic in some unpredictable way anyway.

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jokuhl on April 30, 2007 - 2:44pm Permalink | Subthread | Parent | Comments top

WT;
The typical CERA line about improved recovery techniques seems to me that we've simply engineered better gangplanks on which to perch out on the 'Overshoot' of the curve and marvel at how far down we don't think we are going to fall..

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140 comments on DrumBeat: April 30, 2007

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