Special Report – Wall Street Underground

By Nick Guarino | August 2, 2016

Oil is drowning BUT this trade could save you!

Just this year the first oil trade, profits taken in February, should have made you a 500% return.
The second oil trade we are now in should be making you a 100% return so far. And that trade ain’t over yet.
BUT this other very special oil related trade that is setting up now should make you a 1000% return… At least.

Hi, remember me? I am the guy that has been screaming about this oil wipe out. We have had quite a run. And the good news is that oil has started to crash again.

The first drop took crude oil from $115 a barrel to $26. And as you know we took profits at crude oil $26. You could have lots of profits if you made the trade from start to finish.

Then we held back and when oil got to $45 a barrel we started operations again. And when oil peaked at damn near $55 we added more positions. Now oil is at $40 and we are dancing a jig.

Even though we have doubled our money in this second oil trade of the year, it’s not time to take profits yet. Yes, I know those wall street assholes would be breaking out the champagne if they could ever get a 100% return. But as you know we swing for the bleachers looking for 1000% return or more.

In the present oil trade, after a lot of swinging back and forth, I am looking to take profits in the $15 to $20 area. And with the vast oversupply in crude oil I know we will get there.

But that is not why I am writing you. You know the trades and you know the profits we have made in oil.

What you need to understand is another even bigger trade that has been cooking for a while is about to explode and I believe could make another killing.

Despite the spin of desperate oil companies they are stone cold broke

Oil is still in vast over supply and getting worse by the day. Production of oil and diesel fuel and gasoline are far, far outstripping demand.

OEPC has decided to not defend price and instead maintain its market share. Oil is pouring in from Russia which is desperate for cash. Iran with sanctions lifted has added 3 million barrels a day to global supply. Iraq which is in a civil war is desperate for cash. The Sunnis are in a pitch battle against the Shiites.

Crude oil and petroleum products inventories remain at record highs around the world

Saudi Arabia still accounts for a third of global oil output and is unwilling to restrain production. The biggest recent production increases in the OPEC cartel have come from Iran, which is taking advantage of the lifting of international sanctions.

And now Canadian output, which was briefly curtailed by recent wild fires, is coming back on the market.

United States refiners, meanwhile, bought so much oil in recent months that they now have record stockpiles of gasoline and diesel. That has led to the lowest summer gasoline prices in more than a decade. But it also has obliged refiners to cut fuel production, thus further cutting demand for crude.

And it’s not just oil prices wiping out. Oil companies are on life support. Soon the plug will be pulled. It’s worth a fortune to you if you understand what to do and have the patience to wait them out.

The Proof is in the pudding. Or in this case the hundreds of billions in losses

We just got the latest oil companies earnings reports. It ain’t pretty. I’ll let you read for yourself the sorry ass results:

Royal Dutch Shell: Second quarter 2016 CCS earnings attributable to shareholders were $0.2 billion compared with $3.4 billion for the same quarter a year ago. Shell’s second-quarter earnings on a current cost of supplies (CCS) basis attributable to shareholders (excluding identified items) was $1 billion, down from $3.8 billion in the same period last year, a 72 percent fall. Net profits fell 93% to $239 million

Exxon: The world’s largest publicly traded oil producer, shocked Wall Street as its quarterly profit missed expectations. Its profit from producing oil and gas fell 85 percent to $294 million. Net income fell to GROSS $1.7 billion. Get this, they paid out in dividends $3.1 billion. How long do you think they can do this shit for. They are bribing their share holders. It should be illegal for companies to pay dividends above NET earnings… Soon this dividend craziness will end. This year Exxon Mobil lost its AAA credit rating, and was forced to stop buying back shares to conserve cash. Their day will come and it will be ugly as their stock value crashes.

Chevron: Joined the wipe out fun, they lost $1.47 billion in the quarter, compared with a net profit of $571 million in the year-ago period. Revenues were $29.3 billion, down about 27 percent from $40.4 billion in the second quarter of 2015.

Total: Said second-quarter adjusted net income was down 30 percent year-on-year to $2.2 billion.

BP: Reported a $2.25 billion loss, its third straight. BP reported a more than 70 percent fall in quarterly profits. Well below analysts’ estimates.

Phillips 66: Reported a $499 million profit for the quarter, half of what it reported in the same period in 2015.

ConocoPhillips: Reported a second-quarter 2016 net loss of $1.1 billion. The loss is six-times greater than what the company posted for the same time period in 2015, much more than what industry analysts expected. ConocoPhillips produced less oil too for this quarter at approximately 1.5 million barrels per day — 49,000 less barrels per day than a year ago. ConocoPhillips chairman/CEO Ryan Lance said oil production estimates were better than the company’s own forecast for the quarter.

Anadarko Petroleum: One of the country’s largest independent oil exploration and production companies, posted a $700 million loss in the second quarter. Revenue fell to $1.9 billion from $2.6 billion in the same period a year earlier, a dip of 27 percent.

Statoil: Also reported worse-than-expected second-quarter results.. Statoil’s adjusted operating profit fell almost 70 percent to $913 million in the second quarter from $2.9 billion a year ago. Statoil is slashing jobs, projects and investments to cope with a 60-percent drop in the price of crude since mid-2014. In February, it pledged to increase cost-cutting by 50 percent to $2.5 billion on an annual basis from this year and axe up to 19 percent of its workforce compared with the height of the crude price boom.

Total: Said second-quarter adjusted net income was down 30 percent year-on-year to $2.2 billion. Second-quarter revenues for Total fell 17 percent year-on-year to $37.2 billion. All five of the MAJOR oil companies have seen their debt soar as they continue to burn though cash at an extraordinary rate. Since last year, they have failed to generate enough cash to pay dividends, buy back shares of their stock and invest in new production. That shortfall is on a pace to exceed $90 billion by the end of the year.

So how do they do this magic of keeping their stock price high? By:

Borrowing a hundred billion dollars to buy back shares and pay dividends

This wont last much longer and that is why our oil related trade is the next one to boom. Oil companies, as oil collapsed, used their cash to buy back shares of stocks and pay a very high dividend. In essence they were manipulating their stock price by buying back shares. That was not enough so to get share holders to stay in they pay exuberant dividends. The dividends the major oil companies are first off ridiculous and second not sustainable. Look at the list below:

- ExxonMobil has a dividend yield of 3.7%

- Chevron has a dividend yield of 5.0%

- Eni SpA has a dividend yield of 6.3%

- Total SA has a dividend yield of 6.0%

- Royal Dutch Shell has a dividend yield of 7.7%

- BP has a dividend yield of 7.8%

So how are they paying these massive dividends when they aren’t making any money? Certainly not from profits. Why they are borrowing their asses off. The oil majors — ExxonMobil, Royal Dutch Shell, Chevron, Total SA, BP, and Eni — have issued $37 billion in new bonds so far in 2016: Double the amount issued in 2014, and nearly as much as was issued in all of 2015. And they ain’t done borrowing yet. See the chart below of what they have borrowed to pay dividends last year and so far this year:

It is projected that the oil majors — ExxonMobil, Royal Dutch Shell, Chevron, Total SA, BP, and Eni – will borrow 100 billion dollars this year.

But there is an itsy bitsy problem. To maintain their operations and service all this debt they need $80 a barrel oil NOW.

It’s not just me saying this, Arthur Berman of Oilprice.com said:

“Data suggests that oil producers need prices in the $70-80 range to survive. That is unlikely in the next year or so. Without more timely price relief, the future looks grim for an industry on life support.”

Oil anywhere near $70 to $80 is not going to happen in this lifetime.

So that means that they will soon run out of borrowing ability. And they will be forced to stop buying back shares of stock. In fact as Forbes reported: “Exxon Mobil announced a halt to share buybacks. The company purchased $4 billion of its own shares in 2015, and has averaged about $20 billion a year in buybacks over the past decade, according to Reuters. The peak buyback year was 2008, when oil prices hit a record high and Exxon bought in $35 billion worth… Amid this oil industry depression Exxon just wants to conserve cash — it also expects to reduce capital spending by $8 billion this year.”

And this is just the tip of the iceberg. Bottom line is the oil majors are running out of money for share price buy back and soon they will be forced to cut their dividend. And do you know what that means?

Oil company shares of stocks are about to crash

And that means two things

1. You must make this special trade

2. If you make this trade you could make millions

Here it is, the insiders deal. What most people fail to understand is the fact that billion dollar oil companies can last a while longer after oil prices crash. Here is the order of events.

First: Oil prices crash and all recovery attempts fail. No one is prepared to cut production. All attempts to bring the price back up fails miserably as you are seeing.

Second: Oil companies borrow their asses off hoping the market recovers in time to save their share price. They run out of money and borrowing ability.

Third: The oil share prices of oil companies crash. Hopefully you’re ready and making a killing.

Wanna make a killing when the oil company’s share prices wipe out? Make the trade

It sounds simplistic and it is. The greatest trades always are that way. I am telling you, in my mind without a doubt oil company shares of stocks are about to wipe out.

You need to make the trade and wait them out. As you are seeing they are already in trouble, their bag of tricks is about to run out.

If you are in this trade I believe your patience will soon be rewarded.

If you’re not in this trade what the hell are you waiting for?

In Closing: the time is coming. And you need to be in touch.

Thank you,

Nick Guarino

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