Skip to main content

BP spill estimates upped (again) & a $20 billion escrow fund

As noted on Twitter this AM, government estimates on the BP oil spill have been raised again, with the Obama administration now claiming 60,000 barrels a day are flowing into the Gulf.

We've been following these estimates with interest, noting earlier this month that estimated spill numbers seem to be purposefully climbing higher towards Matt Simmons' earlier call of 120,000 barrels/day.

Simmons made his call on the BP spill's magnitude toward the end of May in this Financial Sense Newshour interview. That estimate seemed to echo a report from Purdue University engineering professor Steve Werely, and today Matt Simmons is on Bloomberg repeating the 120k barrels/day estimate, citing research from a report published on Sunday.

If you're curious about what the credit markets are saying about BP's future, here's a snapshot from Weekly TA on the CDS market's reading. WSJ reports that CDS on BP debt climbed to a record 625 basis points Wednesday, before settling back down to 565 basis points on news of a deal with the US government over its spill liability.

BP has agreed to fund a $20 billion escrow account to cover damages to those affected by the spill, though White House adviser David Axelrod claims there will be "no upward cap" on the fund or BP's liability.

The news for BP and our environment just keeps getting worse. If I were a BP shareholder (no position), I'd stop worrying about a return on capital and start worrying about a return of capital at this point.

Related articles and posts:

1. Gregor MacDonald and Howard Lindzon on BP fiasco - Stocktwits TV.

2. BP's deepwater oil spill - why flow rates are increasing - The Oil Drum.

3. Simmons & Co. cuts ties to outspoken founder - Reuters.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…