Involving: some insider trading investigations, an options trading graph, Obama déjà vu, and why the world isn’t going to run out of oil.

Good morning

The headlines:

  1. The FBI ketchup.

    Link: with insider trades.

    So the Heinz buy-out by the Buffett and his PE partner has attracted some federal attention. Presumably, this has something to do with the Goldman saga last time B-dawg announced a big purchase (can I get a “Rajaratnam”?).

    That – and someone got all excited about option trades on Heinz the day before. Something along the lines of: “let me just buy these 2,262 call options here that’ll give me the right to buy Heinz shares at $65 – and then tomorrow I can sell them when the share price hits $72.50 and make a profit of $1.7 million”.

    The definition of a sudden return in the stock price:

    And what that looks like if you bought call options with a $65 strike (and each option entitles you to buy 10 shares):

    Buy for a buck, sell for eight.

    Greed – it’s a powerful thing. Mainly because this a volume thing – if said investor had just bought a few options, that would have been fine. But buying as many as he/she did…

    Did he not think that it would all look a bit obvious?

  2. “Obama Pressures Congress for Deal to Avert Automatic Cuts”.

    Link: it’s like we’re stuck in a time warp. Do the locomotion.

    Well here’s a headline demonstrating that the more things change, the more things stay the same. It’s old. And it’s a cliché.

    Obama speaks:

    “These cuts are not smart, they are not fair, they will hurt our economy, they will add hundreds of thousands of Americans to the unemployment rolls. This is not an abstraction, people will lose their jobs.”

    Yes. We know. Except that they’re entirely smart if you’re a republican and you want to win in four years time.

    What incentive does Congress have to fix the situation apart from moral conscience? Human nature calls for a scape-goat, not a faceless morass of political manoeuvring. It will be all Obama’s fault if Congress obstructs him.

    It’s very concerning.

  3. “The Most Influential Climate Study”.

    Link: going to Beijing in a handbasket.

    There is a 6 page paper that tries to answer this question: “How long before it’s too late?”

    The answer sounds a lot like: “worst case scenario: 11 years”. And the worst case scenario assumes that we continue burning fossil fuels at the current rate.

    Because it’s not like our entire political mindset is around economic growth, is it? And it’s not like the world population is growing, is it? No – we’re all on track to stay exactly the way we are now.

    On the upside: it does mean that we won’t run out of oil or fossil fuels. Because by the time we could have reached that point, it’ll all have been too late.

That’s all for now.

Have a good day.