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Section: Mr. Smith goes to Wall St.



Go Fill Your Tanks, BP Shuts Down Prudhoe Bay Oil Facility

August 7, 2006

Mr. Smith goes to Wall Street

World oil powerhouse, British Petroleum, announced this morning that it is temporarily shutting down the second largest domestic oil producing region of the U.S. due to corroded pipeline sections. As many as 16 different serious spots of corroded pipe have been verified in the pipe running from Prudhoe Bay to Valdez. The extent of the repairs and the time they will take to complete has yet to be assessed by the company. Not surprisingly, oil futures have spiked dramatically today on this news to just under $77 per barrel. Unfortunately this price is a new record. I suggest filling up your tank today.

While this move by BP is environmentally and fiscally prudent; it will undoubtedly cause noticeable disruptions in the supply of oil to our addicted nation. Prudhoe Bay supplies roughly 400,000 barrels of oil per day to the domestic market which represents about 8% of our daily demand. On top of that, Hurricanes Katrina and Rita are still responsible for more than 1.1 million barrels of missing production out of the Gulf of Mexico region. I would expect prices at the pump to rise quickly in reaction to this latest news perhaps by as much a dime or more per gallon.

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Croton Centenarian Ed Rondthaler Featured in Genworth Financial Ad Campaign

July 27, 2006

Mr. Smith goes to Wall Street

The other night we took our kids for a routine eye check-up up in Yorktown. As I sat in the waiting room flipping through the August 2006 edition of Money magazine which featured their annual “Best Places to Live” piece; I came across a picture of Croton’s own Ed Rondthaler in a Genworth Financial special advertising insert. Boy was I surprised! The insert, which had his picture prominently displayed on its own page, talked about how Mr. Rondthaler has lived in his Sears Roebuck home (which were very popular in the older sections of Croton and Harmon in the early 1900s) here in Croton for many decades, walks a half mile daily, still drives his own car, and is very active in the community.

I did a little research when we got home and found out that Mr. Rondthaler is being featured along with several other centenarians from around the country in a current ad campaign highlighting the need for financial planning and financial products at every stage in life – even very old age. In fact, a media production crew was on location on Wednesday, July 25, 2006, in the area of Nordica Drive to film an upcoming TV commercial that will include Mr. Rondthaler.

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Real Time Business and Market News

July 13, 2006

Mr. Smith goes to Wall Street

All the up to the minute business and economic news you need to know.

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38 Million = 798 Million

May 27, 2006

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When I saw a story that AAA expects 37.6 million Americans to be traveling this Memorial Day weekend - which kicks off the summer driving season - I did some easy math to figure out why oil company investors like this news so much. The reason is that 38 million equals 798 million. AAA figures that these 38 million road warriors will be traveling at least 50 miles this weekend. I guess these “extra” drivers are in addition to all the usual gas consumption done during a holiday weekend.

For this exercise, I assume that those 38 million will actually drive 100 miles at a minimum when taking into account getting to and from their holiday hotspot and subsequent driving while there. Figuring that the average American car gets about 15 miles to the gallon and gasoline is about $3 per gallon nationally; this means that each of the 38 million will spend $21 just on gas. This equates to additional holiday sales of $798 Million for our nation’s oil companies (100 miles divided by 15 mpg = @ 7 gallons of gas at 3 bucks per gallon times 38,000,000). $798,000,000. ExxonMobil, the world’s largest integrated oil company; which has about 20% market share in the U.S. will take in about $160 million in additional fuel sales. Not bad at all for a weekend’s work.

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Is Eminent Domain Financially Feasible for Croton?

February 9, 2006

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At the last Village Board meeting, the main topic discussed was the proposal by the Board to enact eminent domain proceedings on the former Metro Enviro site down next to the rail yard (see: “Not So Imminent Eminent Domain in Croton”). The opposing attorneys and Croton resident Mr. Kauderer had some very valid points financially, legally, and procedurally.

Without getting into the nuances of the latter two I figured I would follow up on Mr. Kauderer’s analysis of what it could end up costing me and you (a.k.a. - THE TAXPAYERS of this village) and the potential future ramifications of those actions; should the board somehow decide this is the best alternative.

By looking at this transaction strictly from a credit analysis point of view it is very difficult at best to see how it could fly. To obtain financing to execute it, predominantly through debt, may not be possible. Here is why:

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The World Economic Forum

January 27, 2006

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The annual World Economic Forum is going on now through the weekend in the tiny ski village of Davos, Switzerland. The gathering draws some 2,300 of the world’s elite from 89 different countries. Included in this year’s festivities are heads of state, U.S. Congressmen and Senators, Cabinet Ministers, CEOs, religious leaders, social activists, and of course some over-exposed Hollywood types. The conference is a who’s who of the best and brightest in the world (plus some politicians!).

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Nearing the End?

December 14, 2005

The Federal Open Market Committee of the Federal Reserve raised the Federal Funds rate yesterday to 4.25%, the 13th consecutive increase in the current credit tightening cycle. The FOMC, however, changed some of the nuance language of their customary statement in a signal to the financial markets that its measured rate hikes of 25 bps per meeting for the past 18 or so months may be nearing an end. The Fed clearly left the incoming Fed Chairman, Ben Bernanke, some room to hike after the January ’06 meeting if inflationary pressures continue to build in the economy. The January FOMC meeting is retiring Chairman Alan Greenspan’s last.

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The Mother Lode

December 5, 2005

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The rally in the Gold market has certainly captured everyone’s attention on Wall Street and on Main Street…Finally!! Gold has been going bananas for the last 58 months, since it traded at $252 in Feb. 2001. That is a double and then some in the same 4+ years that the stock market has been steadily going nowhere. It is really only now that it has rallied almost 11% JUST since it’s November 04, 2005 closing low that the price move has caught people’s attention.

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Proposition What

November 7, 2005

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On tomorrow’s ballot statewide in New York are two not-well publicized Proposals cleverly titled: “Proposition 1” and “Proposition 2”. They have very little to do with each other; but separately and together they will definitely have a significant impact on our state’s economy for years to come.

As in every election, voters should educate themselves before going to the ballot box. These two items on tomorrow’s ballot have gotten little media attention but are definitely worth taking 10 minutes to check out.

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Meet New York Regional Rail Corporation

August 8, 2005

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Clearly, the hot button issue of the day in Croton has been the swirling, rapidly-developing saga of the Metro-Enviro site down by the Croton-Harmon rail yard and station. To be topical, I have done a brief analysis of NYRR and provided some information herein. I am not overtly stating my opinion of the company; but I will safely say it is too small and appears to have deteriorating operating conditions for me to invest in professionally.

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