America.....The coming collaspe of 09

[TRake]

Re: America.....The coming collaspe of 09

c1ue,

The price of electrical power is fairly simple. Prices are higher in the summer due to the fact that most air conditioning units are electrically driven. The price of electricity is lower in the winter than in the summer because most US heating is done with natural gas and only a little is done with electricity. In the spring and fall the price of electricity is lowest of all because in most areas heating and cooling is not required.

For our industrials, prices are negotiated for a certain time period and I am unsure what that time period is. I can say that the prices do not change over the course of a year, but they are based on the cost of power at the time. It is known to anyone who buys electricity in mass quantities that it is cheaper during the winter.

I know that the facilities were not shut down per say, but fear among newer union employees was initiated by MT due to a message sent out that anyone with under 3 years of employment may be layed off on 1/25 or 1/26 of 2009.

I have also heard rumors that BP is looking for a buyer for its refining, much like XOM sold its refining division. I have nothing to base this on other than statement from an employee.

TRake

[TRake]

Re: America.....The coming collaspe of 09

What I mean: Q4 will be terrible mainly for MT and X due to little or no production. This will cause an initial price drop. If the analysts forecast a continuation of this lack of production I am almost positive that they are wrong simply due to the consumption of electricity at these plants for Q1 2009. This would lead to an earnings beat and a short term price increase.

TRake

[TRake]

Re: America.....The coming collaspe of 09

c1ue,

Thinking about this some more......I worked at a company called Jupiter Aluminum which is an aluminum recycler that makes aluminum coil and supplies Home Depot, state governments for license plates and other large companies. Their main competitor is AA, but Jupiter is private. They shut down their plant for 1 month this winter. I left their company 2 years ago because I ran numbers for them and I saw bad things ahead. I know that the owner is sitting on about 50 to 100 million pounds of aluminum of which the value has been cut in half. I don't think Jupiter will exist in a few years, or they will be bought. The next owner in line is a doctor of Psychology.

Please look at my recent posts about "Can Science Help Solve the Economic Crisis?"........mainly the one about my thoughts and conclusions.

TRake

[c1ue]

Re: America.....The coming collaspe of 09

T,

Thanks for your on-the-ground report.

It does appear likely that the shutdowns were more a short term corporate financial maneuver, as opposed to the ramp up being anticipatory towards Obama stimulus orders or some such.

As for your previous aluminum experience: it all depends on how much was paid for that stockpile. Aluminum being extremely energy intensive, it will be interesting to see who got hurt by overproduction during the period of both energy and commodity price spikes - which didn't quite coincide.

Certainly for anything so capital intensive and cyclical like an aluminum smelter, there are good hard reasons why either extremely professional management is needed or be owned by a the most deep pocketed of organizations - government.

[phirang]

Re: America.....The coming collaspe of 09

I dunno... I think the trade was to go long X this fall and short earlier in Jan at the height of the Obongo rally.

The more elucidation that is done on the stimulus, the worse, imho: mostly tax cuts and handouts to prevent rioting.

[TRake]

Re: America.....The coming collaspe of 09

That may be true.....
I guess I should clarify that I only trade options and futures. I only look at one day, maybe two day trades. I seek out quick hits when I know what is coming. I placed a small bet for today that worked and now I wish I would have bet it all, just for a day. I went with MSFT puts and GOOG calls. This was simply based on the fact that MSFT is terrible and Gates doesn't care any more, and that retailers wanted to sell as much as possible this holiday season and Google advertising would not decrease. I made very little on the GOOG side, but plenty on the MSFT side.

TRake

[c1ue]

Re: America.....The coming collaspe of 09

TRake:

Never underestimate the power of Google's monkeying with their engine.

For me it is already quite clear that Google is going the way of Ebay: taking such advantage of their clients and patrons that alternatives will be found.