We may have to keep a closer view on the oil market for investing purposes this next year if Don is right.......enjoy, Susan

Don Coxe 12/22/11 Conference Call

· Historic situation whereby pipeline is a matter of dispute between democratics and republicans. He feels we will need to discuss this as it will have significant implications for oil.

· There is a deep division between the two parties on energy policy. For investors it will be critical for us to analyze.

· Significant that in the spring the Chinese started selling treasuries big time. On the other hand, we have situation of debt deleveraging going on in banking system in Europe which is bullish for the dollar. Money is being taken out of Europe and being put into dollars. At the moment we have support for the dollar which then means this is generally negative for commodities.

· Oil story though is starting to take on a life of its own. When you think of the 3 crashes we have had in this decade….tech crash, bank crash, and Euro crash.

· Deciding now to prosecute Freddie and Fannie.

· Deep ideological view on the left is that if we spend a few more billions on green energy we will be free of oil. But this has left the US more vulnerable if something goes wrong on the energy front. We now have news of the Brazilian prosecution of Chevron which means that we now have more oil uncertainty. Nobody expected that if there was a small leak that people would be at such great risk from the Brazilian government. This means that folks will be more reluctant to invest significant dollars into offshore drilling. Brazil would really like to have the state in charge of all their oil development but they don’t have the wherewithal to do so.

· The really bad news is what’s happening in Iraq. Prime Minister is trying to prosecute the Vice President. Population is 65% Shiite and 30% Sunni. What we have now is a reopening of the Suni/Shite war that has been going on for centuries. They spend more time killing each other than anyone else. This is a problem as Iraq was projected to really contribute to our oil growth. This is definitely negative for energy policy. We have the potential for a really horrific situation developing in Iraq between Sunnis and Shittes which will give cover for Iraq to do what it wants to.

· IEA recently said that the world is now consuming more oil than it is producing. This means we have problems especially when we were counting on Iraq and Brazil.

· Obama’s supporters wanted to kill Keystone because they do not want the oilsands to be developed.

· The news is pretty bad which doesn’t help that we now have real divergence between American ideologies. First time Don can recall where the Administration has gone out and said “no, we don’t want more cheap & reliable oil from our allies because we want to rely on green energy.”

· When you look at the current oil curve we are on backwardation. Spot is $99.50 whereas a few years from now it is at $99.25. This means that investors are not currently assuming that the squeeze on oil will last. If it changes from backwardation to contago that has always been associated with big run up of oil stocks. We may be on the brink of a major change where investors may start to look at investing in oil stocks.

· The only good news is shale gas and there the democrats are also looking at this suspiciously.

· This oil story is for Don a really big story of what may change in 2012. The global economy is fragile enough that the last thing we need is a oil shock. Thinks Iran will be accelerating its bomb abilities and that may force someone’s hand like Israel or the US which will impact the oil market.

· You can’t have a lot of confidence that the bank stocks will begin their ascent.

· Discussed how even Jeremy Siegal is now espousing dividend stocks. Don has little respect for his investing acumen as he was instrumental in trying to get folks into the tech stocks right before they crashed. But this time Don says, with his emphasis on dividend stocks he has it right.

· The issues with pension funds will be another big story next year. Where do they go to finance their liabilities? Good mortgages are getting refinanced much lower thanks to Bernake’s push. When the Government Pension Fund has to come to Congress with their hands out that will get folks really concerned about their pension reliability.

· Question – How does the US housing market play into all of this? No question that if you can borrow money at 2.99% for 30 years, you can say you are borrowing almost for free. Said the prices are so low in Chicago where he lives, one has to think this might be a bargain time to buy.