Have to brace for Russian nat gas cuts as we head into winter, says RBC ...

Commodity Price Slump;Biogen Idec;RBC Canadian Open

Oil production is running sky high.Chinese growth is less than optimal and the grain growing season has been ideal,pointed out Dennis Gartman,editor of The Gartman Letter.You have the makings of a protracted commodity downturn.The dollar is so strong,it's cast a pall on all commodities.Everything is under pressure because of the strong dollar.*
Michael Yee of RBC Capital Markets likes Biogen Idec stock.We're telling people to buy the dip,he said.The stock will go higher and we continue to be positive here.The data on their candidate Alzheimer's drug will be out two years from now.The drug will hit the market in 2018.It looks like a very good risk-reward to us.The Biogen data looks very positive.*
The RBC Canadian Open was held before large and supportive crowds at Glen Abbey Golf Club in Oakville,Ontario over the weekend.Jason Day of Australia won his fourth PGA title,with American Bubba Watson taking second and Canadian David Hearn coming in third on the leader board.Canada's Graham DeLaet had to withdraw from the tournament because of a thumb injury.*
Biogen Idec (BIIB)

Hedge Fund Founder Disses Pioneer Resources

David Einhorn,founder and president of the Greenlight Capital hedge fund,has bitterly criticised shale oil extractor Pioneer Resources.The fracking company loses about 12.00 for each barrel of oil equivalent production,by Mr.Einhorn's reckoning,and its cash flow generation is falling,even as it spends too much on such amenities as cars and buildings.He conducted a discounted cash flow analysis that revealed a negative value.Among other problems,Pioneer has not adjusted its resource estimates to account for lower oil and gas prices.
Mr.Einhorn is consequently shorting several shale oil companies such as Pioneer and Whiting Petroleum.He thinks Pioneer's stock will drop precipitously.*
Such companies get better at drilling wells,counters Leo Mariani of RBC Capital Markets.Over time,we expect materially better returns.I certainly don't believe you're seeing losses of that magnitude;you're seeing operating and personnel costs drop.Certainly we've seen more than 16 billion of equity raised.Pioneer is selling some assets from the Eagle Ford,Texas shale holdings.There certainly is no issue with the balance sheet of Pioneer.It's one of the strongest companies in the sector.
All shale is not created equal.There are haves and have-nots.He makes some valid points,but there's no doubt that the strongest plays can make good returns in certain parts of the country.Even if the stock were to tank,I don't see the company selling itself.I guess it's possible,but I don't think it's a certainty Pioneer would sell itself,Mr.Mariani concluded.*
Pioneer Resources Inc (PXD)

What Twitter's All About

We're all very proud of the company,said Twitter CEO Dick Costolo following the firm's public listing on the New York Stock Exchange Thursday morning.It's been our users who have gotten us to where we are today.We have a lot of work to do,and I'm anxious to get back to the office tonight and get started on that.All the capital raised today is going into the company.
It's all about making it very simple for new users to come to the platform.It's all about the very,very long-term business we're trying to build,growing the business for all the 2.4 billion connected people to all become users of the platform.
We made it clear that we had every intention to remain an independent company.We'll be making sure that we have people on the ground around the world driving unique regional content onto the platform.We have 94 of the Ad Age Top 100 already working with us this year.We are public;real time;coversational;and distributed.It's all about amplifying the characteristics that we already have,being the indispensible companion to the live experience.
These startups always evolve from those who were originally there.I don't have any time to think about what happened three years ago,Mr.Costolo declared.*
Twitter is very agressively priced at 40 times earnings;there will be better entry points later on,said Mark Mahaney,managing director at RBC Capital Markets.Amazon,Priceline,Netflix and Facebook are better buys right now.The Internet ecosystem generates a lot of wealth.If you pick the right 5-6 companies,that's how the individual trader can make money.
The stock closed at 44.90,down slightly from the 45.10 opening price.
Twitter(TWTR),Priceline(PCLN),Netflix(NTFX),Amazon(AMZN),Facebook(FB)

Asia This Day:Markets Fall on US Shutdown Worry

The MSCI Asia Pacific index fell 1.1% in early Monday trading on fears of a US Government shutdown at midnight because of the budget impasse in Washington.All 10 industry groups in the index retreated.*
Also looming in Washington is the conflict in Congress over raising the debt ceiling,which is necessary for the US Government to continue borrowing the money it needs to sustain itself.The decline in Asian stocks is really a matter of selling into the strength of the Asia Pacific index's 7% gain in September,in light of the impending double fiscal crisis in US Government finances.*
Both Hong Kong and mainland China markets will be closed Tuesday for a holiday,and mainland markets won't reopen till October 8.*
The HSBC-Markit Economics Performance Manufacturing Index for China came in at 50.2 in September versus 50.1 in August,missing the estimate.*
A comment by Gurbat on Bloomberg's website said the BSE Sensex is poised to increase its downward momentum.The only bright hope is the holiday season for the next six weeks.But given current dynamics the best you can hope for is a retest of highs this year.Added faintandfuzzy:Nice to see US politicians acting like children again...taking the rest of the world economy with them.*
About 19.6% of Hong Kong's citizens are now poor,a new report for the territory's Chief Executive said.Home prices there have doubled since 2009.A family of three has a median income of 23,100 Hong Kong/2979 US dollars per month,according to government figures.
Poverty affects Hong Kong's harmony and stability,thus affecting its long term competitiveness,Chief Executive Leung Chun-ying said Saturday.In 2012,the number of millionaires in Hong Kong rose 35.7%,to 114,000,a Cap Gemini-RBC report indicated.

Echoing Sentiments:This Recovery

Gross Domestic Product for Q2 came in at an anemic 2.4%,which was weaker than expected.Tom Porcelli of RBC Capital Markets says that,normally,recovery means 4-5% GDP growth.It seems like a pretty good environment for investors to continue their Treasury purchases.If you look at revenue increases,they are only at 9% year over year.The economy still remains very,very moribund.
This sentiment is echoed by Bill Dunkelberg,Chief Economist of the National Federation of Independent Business.The recovery this time has been led by rebuilding inventory,Mr.Dunkelberg observed.For the last two years,we got rid of everything we could trying to stay in business,and now that is being replaced.
Consumer sales aren't there,and profits are down.The consumer doesn't feel comfortable doing anything more than what is absolutely necessary,Bill Dunkelberg noted.
Reports released this morning showed a drop in both factory orders and pending home sales.Under such conditions,triple digit market gains may be unsustainable.
Royal Bank of Canada(RBC)

The Best Financials

Gerard Cassidy of RBC Capital Markets feels the financial recovery is gonna take awhile.There's gonna be a lot of fits and starts.The securitization market is still frozen.That's a critical part to getting consumers spending again.If you have to invest in financials,invest in a capital markets bank such as Goldman Sachs or Morgan Stanley,Mr.Cassidy advises.Such banks are less exposed to the consumer.Goldman Sachs reported earnings that were far better than expected yesterday,and is raising capital through a stock offering ,so it can pay back the money it received from the Troubled Asset Recovery Program.