Oil Superspike?

At least that seems that way according to Goldman Sachs.

Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a "super spike" in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

I would have to agree with Mr. Murti. I think demand will be crimped at prices that are higher then $120 and that would drop the price eventually. Once demand heads down then there will be an oversupply of the amount of oil needed. I still think oil will drop to an equilibrium level at about $100 or so once the high prices start to kill demand. I'm thinking that the supply estimate may be higher then normal tomorrow.

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Earth to Hillary: Windfall Profits Taxes are a Dumb Idea

I think the whole idea of a windfall profits tax is asinine.

The reality: It's not clear how much revenue either candidate's windfall profits tax would raise.

"It depends on how it is structured and what future oil prices are," said Gilbert Metcalf, an economics professor at Tufts University who specializes in taxation, energy and environmental economics. "For what it's worth, the previous windfall profits tax consistently raised less revenue than was predicted," he added.

I think Prof. Metcalf is 100% correct. If there was a windfall profit tax lets say on revenue over $100 billion dollars or other such nonsense. I would be willing to bet her a million dollars that Exxon or whatever company hits that magic number will make exactly $99 billion in revenue by any means necessary including pumping less oil or shuttering refineries. Of course that would make crude prices and gas prices even higher so they will have to keep cutting production to stay under that number.

A tax like this would penalize the company from doing the one thing that the company was built to do. Namely pumping oil and selling it for the highest price that they can. If she really wanted to create a sound policy then she should offer Exxon an incentive to pay a higher dividend. That anemic 1.8% yield is embarrassing for a company that raked in $116 billion last quarter. Of course the Dems won't get to rob Exxon so they can fund some pander bait like the gas tax holiday.

Also if Dems want to encourage a green industry then they should provide tax incentive for a company to put in solar panels to reduce their energy cots or simply invest in green initiatives. Obama's so-called Green Marshall Plan would be a springboard. They could shift the tax incentives that big oil receives (but add them back if oil drops to $20 a barrel again) to the solar, geothermal, fuel cell, biomass, etc. industries. Too bad that doesn't fit the wealth redistribution paradigm that the Dems are so short-sighted about.

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Is LDK Solar A Takeover Target by Siemens?

At least it might look that way if these rumors are true.

LDK Solar (LDK) is up 4.5% to $34.92 on speculation Siemens (SI) is preparing a bid for the company.

Siemens makes grid-compatible inverters under the SINVERT brand name so they are active in the solar space. These inverters change the DC power that a solar cell generates into the AC power that can be added to the power grid.

The only problem I have is that LDK makes solar wafers and not the finished products. From looking at Siemens portfolio of products (and there are a ton of them) I see that they are mostly finished machines like switches and motors and such. LDK, however, makes the ingots and wafers that solar cells are built out of. It would kind of be like GE buying a steel company in order to make turbines cheaper. It just doesn't make a whole lot of sense.

It would seem to me that Siemens should instead invest in a company more down the chain. For instance First Solar or SunPower actually make the solar panels themselves and not just the wafers. If Siemens bought one of these companies then they could build the solar cell and provide the inverter system all in one package.

They could create a so-called SINVERT All-In-One Solar Array System (SINVERTAIOSAS which sounds like a skin condition) built entirely by Siemens. I can see a European country sit down with Siemens and say "here's $10 billion we need some solar plants." Then Siemens could build the cells, plan the grid, and even build the power plant without having to go out of the company.

The better takeover target would probably be SunPower since that company's market cap is only $6.81 billion while First Solar is a whopping $21 billion. Siemens has $14.92 billion in cash so they could scoop SunPower pretty easily and move right into the space. IMO a SunPower acquisition would be a much better buy then a wafer maker like LDK.

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Yahoo Blows it and Rejects the MSFTs Sweetened Offer

It seems that Yahoo is too rich for MSFTs blood and the Redmond seems to have walked away from the deal.

"We were negotiating a way to find common ground and then on Saturday they chose to walk away," said the 39-year-old co-founder of the pioneering Internet company. "They started it and they walked away."

The reason why they walked away Mr. Yang is that you valued the company at $37 a share while MSFT was willing to pay $33 and that was only after you yanked them around. The company hasn't been worth $37 a share since January of 2006 when the company was still growing at 34% year to year.

The company is barely growing its EPS from one quarter to the next and is locked in 2nd place behind a giant rival. If the two companies joined up they may have been able to challenge Google. I think MSFT might scoop up Yahoo for a song a few years down the line if Yahoo doesn't do something drastic. It sure would suck if MSFT comes up with a $15 a share bid or something when the stock is in the high teens. Good thing I opted out of this entire mess.

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The Miley Cyrus Backlash, Teens Think She's Whore now?

It certainly seems that way to this group of New York teens interviewed by the New York Times.

It stung to hear the word; another version of it came up a moment later. Looking quickly at the image � Ms. Cyrus with her hair damp, her back bare, a sheet draped over her front � another Beacon sophomore looked not so much shocked as disturbed. �Is this who we�re supposed to be growing up to be?� asked the young woman. She wore sunglasses, a tight baby-T and short shorts over black leggings. �I don�t want to be that,� she said. �It�s sending a message that girls are supposed to be whores.�

In the strange world of teen girls it is okay to dress sexy but damp hair, bright red lipstick, a sheet, and a bare back is the implication that she just hooked up. It puts her in the same category as Britney Spears or Paris Hilton. Just another "celebrity whore" and not the wholesome girl from Hannah Montana.

I think the idea that what these girls are fighting back against is growing up too fast. There is just too much oversexualization in pop culture today and these girls seem to be sick of it. So when a wholesome girl with good values like Cyrus takes it off for Vanity Fair then no one is safe.

I think Annie Leibovitz has much to answer for in what could be a career destroying mess. She knew full well that a 15 year old girl could be coaxed to do almost anything by a famous photographer like herself. She made Cyrus feel comfortable and did something that a sleazy porno photographer would do. She said to Cyrus "now that your Dad left let's take a few art photos with your top off." I wonder if Leibovitz cued the cheesy saxophone music as well?
I guess the 15 year old girl part totally slipped Leibovitz's mind when she made Cyrus "whore it up" for her famous lens.

What was Leibovitz thinking? She knows that this girl is adored by teens and by subjecting a 15 year old girl to a sexually suggestive photo session could damage her career. In any case I hope Miley Cyrus recovers from this and Leibovitz doesn't get another chance to photograph underage girls with their tops off in the future. After all it isn't like she is Joe Francis or anything.

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It Seems Microsoft May Blink on Yahoo Deal and Offer $35 a share

It seems that way to "a person familiar with the matter."

The New York Times, citing unnamed sources, reported Microsoft boosted the offer by "by several dollars" per share, lending weight to the assertion by many market analysts that Microsoft can afford to pay up to $35 a share.

Representatives from Microsoft and Yahoo declined to comment on the negotiations. The talks were expected to continue into the weekend.

I guess the good trade was to be long Yahoo and short Microsoft after all. I was thinking of going long Yahoo to catch this deal but I was too afraid of Microsoft walking away from the thing all together. If MSFT did walk away then you would see Yahoo's shares drop back down to the teens. Now it looks like a $31 to $35 or so a share sweetened deal may be on the table. If Yahoo walks away from this offer, however, then I would be betting that Microsoft scuttles the whole thing and their share price should head back north of $30 again.

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Silver Star Winning Female Soldier Pulled from Combat

I guess you could say this is the ultimate insult to a woman who is a true hero.

Within a few days of her heroic acts, however, the Army pulled Brown out of the remote camp in Paktika province where she was serving with a cavalry unit -- because, her platoon commander said, Army restrictions on women in combat barred her from such missions.

Where is the feminist outrage that a woman who risked her lives for her fellow soldiers was pulled out of a place where she has the opportunity to save those soldiers lives. At least some women are questioning whether women should be kept out of combat at all. In any case I think Spc. Monica Brown should have a lot more right to being a celebrity then some freak like Tila Tequila. Let's hope the Monica Brown story will be made into a major motion picture.

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Miss Teen USA Contestant Has a Mind Melt

Now this has to be a really embarassing mind melt on national television.

Question: "Recent polls have shown a fifth of Americans can't locate
the U.S. on a world map. Why do you think this is?"

Lauren Caitlin Upton: "I personally believe... that U.S. Americans are
unable to do so... because... "Uh... some people out there in our nation don't
have maps...

"And... uh... I believe that our education, like such as in South
Africa and... uh... the Iraq, everywhere, like, such as..."And I believe that they should...
"Our education over here in the U.S. should help the U.S... uh..."Or,
should help South Africa and should help the Iraq and the Asian countries... "So we will be able to build up our future... for our [children]."

Miss Teen USA host Mario Lopez: "Thank you very much, South
Carolina."

I'm sure the education here in the U.S. should help the U.S. especially for the U.S. Americans. I wonder why she kept going to the South Africa well over and over though? Maybe she read (or was told) something about South Africa having either junk schools or schools as good as the U.S. Now this is a classic freeze-up that will probably be talked about for years. It is cringe inducing and shows why people have such fear of public speaking as well.

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Bill Gross May Wan't Bush to Save Bill Gross

Hmm this is an interesting take on why PIMCO bond guru Bill Gross wants the government to come to the rescue of the mortgage markets.

I see the top bond guru in the world returned a three year average of
3.83% in his "Total Return" Fund. One could have parked money in a money market fund, CDs, a bank, or short term treasuries and done better than that. Digging deeper I see the top five holdings of the Total Return Fund are as
follows.
1) Fannie Mae (FNM)
2) Fannie Mae
3) Fannie Mae
4) Fannie Mae
5) Fannie Mae

So it would certainly be nice for Bill Gross if "W" was the "Decider" and opened up his wallet.

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J. Michels Uranium Index 8/24/07

+$1,640.00 +3.93%

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AT&T Looks Stupid On IPhone Bills

Now this is a boneheaded move by AT&T.

When Justine Ezarik, a video blogger in Pittsburgh, saw that a box from AT&T
had been delivered to her doorstep a couple of weeks ago, she thought that
perhaps she had been sent a complimentary accessory for her new iPhone. Instead, she found a 300-page, double-sided, excruciatingly well itemized bill.

This bill is itemized Kilobyte by Kilobyte. So this resulted in massive piles of paper that AT&T will have to eat the cost of shipping for. AT&T had to pay $7.10 just to get this bill to her.

Wasn't there someone in corporate that said "should we send out a 300 page bill in a box for $7.10 to this customer?" Wasn't there some VP that said lets send out summaries and keep the itemized bills online and we'll save a few bucks? A 300 page bill seems like something that would be red flagged for special handling in their automated billing system. There had to be someone at AT&T that called the shipping company and placed 300 pages worth of paper put into a box and sent it out. It was a failure of controls, fallbacks, and thought by upper management. It really speaks ill of AT&T since the rampup of the IPhone was a pretty long process and wasn't just a rush job on short time.

This kind of screwup also makes AT&T look even worse since this is a failure in handling perhaps one of their most lucrative exclusive contracts. It also makes Apple look like crap because they love to push how green their company is. Yeah, they are so green that tons of extra trees were cut down just so they can show page after page of 2KB for $0.00. I guess this is case in point of the danger of providing exclusive contracts.

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Iraqi National Intelligence Estimate Interesting

This article mostly focused on how the al-Maliki government is about to fail or is nearly failing. I think this part buried at the bottom is the most important part:

� Iraq's neighbors will continue to focus on improving their leverage
in Iraq, expecting the U.S. and its allies to leave. "Assistance to armed
groups, especially from Iran, exacerbates the violence inside Iraq," the report
said. Since January, there is mounting evidence of Iran's support for Shiite
militants, including highly lethal explosive devices.

� Syria has cracked down on al-Qaida networks inside its borders
because they threaten Damascus' security. However, Syria is increasing the range of groups it supports in Iraq to bolster its influence there. And it still
allows roughly 50 to 80 foreign fighters a month to travel into neighboring
Iraq.

� Saudi Arabia and other Sunni states have not supported the
al-Maliki government, but they haven't provided arms or other support to Sunni
fighters, choosing instead to stay on the sidelines.

So Iraq will be the next Arab land grab and influence rush when the Americans pull out? Iran has the most to gain by supporting Shiites and hopefully being able to create a client state out of Southern Iraq. A failed Iraqi state and Iranian influence might lead to a Saudi Arabia/Iran war sometime in the future depending on who holds what. You know which side the US is going to be on. I can see the Saudis beefing up their military in the next few years.

Also that part about Syria keeping Al-Quida out so that the terrorists can't destabilize their government may be in interesting gambit to play in the future. Maybe some behind the scenes reaching out by Europe could get Syria to back away from Iran and come into the anti-terror fold. The sooner we break up the pro-terror powers the better we can frame the War on Terror as Al-Quida against the Arab Leaders and not Al-Quida against the West.

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Is Having an Online Wife Adultery?

Some people are considering it anyway.

Confusing? It should be. Turns out that Ric and Sue's marriage is on
the rocks. She contends that he spends more time online in Second Life, a
virtual universe currently home to 30 million players, with his online wife. Sue
spends her days in front of the television, while Ric is in the other room
running a virtual night club and consorting with his online wife, sometimes for
as long as 14 hours at a time on weekends.

I wonder if having an online wife will actually be grounds for divorce in this case. I think that spending 14 hours on weekends on a game would be a better grounds in my opinion. This "gaming widow" effect will get worse the larger and more mainstream things like World of Warcraft and other MMOPRGs become.

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J. Michels Uranium Index 8/23/07

+$342.00 +0.83%

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GameStop's Outstanding Numbers

It looks like my love for Gamestop has translated into some big gains.

Shares of GameStop gained $4.74, or 10.9%, to $48.16, after the company
announced second-quarter earnings that grew 581.3%, to $21.8 million, or 14
cents per share, from $3.2 million, or 2 cents per share, a year ago. Analysts
polled by Thomson Financial expected earnings per share of 9 cents for the
period ending August 4.

The stock was up from $38.98 when I started to take a look at it to $47.45 today. A nice 20% paper gain in 5 days. The stock still seems pretty well poised for more gains in the next few quarters due to that lineup of cool new games I talked about. The stock is priced to perfection at a 44 PE though This tidbit could be a key to further margin expansion as well:

Used video game sales continued to be incredibly lucrative for GameStop.
Like other game retailers, GameStop allows customers to trade in old games at a
steep discount for new games. GameStop then marks up the trade-ins and sells
them at a handsome margin.

GameStop earned $173.2 million on used game sales at a gross profit percent of 48.5%. That towered over the gross profit percentage earned by new game hardware and software sales, which were 7.3% and 20.3%, respectively.

I think GameStop should try to expand its Used Game reach by starting an online market to buy and sell used games. They could start an Ebay store or even do something with their website where you will be able to buy used and sell used games online. The buyer will then pay a shipping cost or pick it up at one of their stores for free. The seller, on the other hand, would drop off the game at a nearby GameStop (where they might buy some additional product) then their account will be credited.

Of course they won't offer any first run games for sale for a certain period of time to prevent the used market from eroding their current game market. I think this move would expand their reach and allow them to corner the market in used games. This segment really doesn't have any credible competitors that could challenge GameStop once they got rolling. I don't see Best Buy stocking rows of used games and buying games from the gamer in need of cash.

I have to say that any business where you can charge like $10-$15 for a used game and turn around and sell that same game for $25-$30 is great for gamers and GameStop alike. The gamer gets games at a discount and an outlet in which to get rid of games that they have already passed. While GameStop gets to pocket the spread. It is a win-win

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