What's Wrong With BP?
August 20th 2010 16:29
British Petroleum (BP) should be soaring now that U.S. Government officials say the oil that flowed from the Deepwater Horizon well has disappeared. They got off with a $20 billion slap on the wrist by the Obama regime, which is a lot of money to be sure, but aside from some oil drenched birds, fishing is back to normal and, we're told, it's okay to swim in the Gulf.
I just took a look at the chart and I don't like what I see. The stock fell from about $60 to $26.75 and rallied up to $41.59 when the well was plugged. With the good news about the oil disappearing, the stock couldn't even muster a 50% pullback to $43.36. Now it looks like it's rolling over for a test of those lows. Why?
Maybe, the answer lies in a article from July 1st at The Market Oracle: SULTANS OF SWAP: BP Collapse Potentially More Devastating than Lehman! The author quotes Jim Sinclair: " BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of.
The late Matt Simmons of "Peak Oil" fame thought BP would go bankrupt. Was he right? Are we entering the next chapter of deleverage, that of corporate bankruptcies?
I just took a look at the chart and I don't like what I see. The stock fell from about $60 to $26.75 and rallied up to $41.59 when the well was plugged. With the good news about the oil disappearing, the stock couldn't even muster a 50% pullback to $43.36. Now it looks like it's rolling over for a test of those lows. Why?
Maybe, the answer lies in a article from July 1st at The Market Oracle: SULTANS OF SWAP: BP Collapse Potentially More Devastating than Lehman! The author quotes Jim Sinclair: " BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of.
The late Matt Simmons of "Peak Oil" fame thought BP would go bankrupt. Was he right? Are we entering the next chapter of deleverage, that of corporate bankruptcies?
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