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The Houson Chronicle’s Tom Fowler rounds some thoughts from the analysts and commentariat in regards to yesterday’s huge acquisition of XTO (XTO) by Exxon (XOM):

What does it mean for other E&P companies? Simmons & Co. asks:

“This transaction will likely set a bid under the E&P group today as the best capitalized and historically most conservative company moves decisively further into unconventional NAM natural gas. The transaction can’t help but imply a vote of confidence in both the potential resource size in shale gas and in the majors outlook for North American natural gas prices (XOM holding more exposure to swing Qatari LNG of any major). Companies that will likely garner immediate attention as take out candidates are CHK, EOG, SWN, RRC, APC, DVN, etc.”

What does it mean for services firms (drillers etc.)? they also ask:

“Negative, particularly if today’s transaction becomes a trend. Unlike JV’s, where the majors bring capital to continue development, an outright company-level acquisition of this magnitude is typically followed by slowed development in the midst of portfolio high grading; a negative for NAM drilling and service companies.”

Simmons also observes that XTO has hedged 53 percent of its 2010 production at $9.62/mcf. Exxon generally doesn’t use such hedges, so it will be interesting to see if they stick or are liquidated.

CreditSights notes the deal “removes one of the five largest independent North American E&Ps, leaving only four independents remaining who have the scale that would likely be attractive to the Integrateds/Super Majors – Anadarko (APC), Devon (DVN), EnCana (ECA), and Chesapeake (CHK).”

Tudor Pickering & Holt says the deal will “probably” kick off a major consolidation trend because “majors tend to be lemmings around trends like jvs/consolidation“. Their list of likely targets includes EOG, SWN, HK, ECA, DVN, CHK, APC.

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See Also:

• Exxon Finally Wakes Up To Reality (XOM, XTO)
• Exxon: Here’s Why We Love XTO (XOM, XTO)
• Exxon: Here’s Why We Just Spent $41 Billlion On Natural Gas (XOM, XTO, UNG)

True to its previous statements, Twitter is starting to roll out the professional features it’s been touting for a while now. At the moment, it’s just a small feature which enables businesses to have multiple contributors to the Twitter account. These will be able to do all the things the administrator of the account can, most importantly, they will be able to tweet from the account, but their own name will be added to the byline. What’s more, this is just an appetizer and Twitter is saying more business-related features are coming soon.

“As Twitter becomes more integral to businesses, they will need more business specific features from Twitter – both on the web and API. We have been working on some of these features and are ready to start a limited beta test of one that’s further along in development,” Twitter explained. “The feature we are beta testing is called ‘Contributors’ – it enables users to engage in more authentic conversations with businesses by allowing those organizations to manage multiple contributors to their account.”

Contributors is in beta for now and is the first feature geared towards businesses and professional accounts to be launched. If simple enough to use, Twitter account admins will be able to invite other Twitter users to… (read more)

When Jim Lahey’s recipe for no-knead bread first hit the New York Times, it sparked a massive bread-baking phenomenon. It was incredible to see so many people excited about bread and baking at home! Lahey has finally come out with an entire book to follow his original recipe. Think you’ve seen it all? Think again!

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Eco Factor: Zero-emission concept yacht gets powered by renewable sources of energy.

The Leviathan concept yacht is the work of industrial designer Adam Valmassoi, who believes that the sun and wind have the potential to green your next cruise. The ecofriendly self-sufficient yacht runs on two electric jet pump engines, which are powered by wind turbines and solar panels on board the yacht.

(more…)

The subject of sovereign defaults is definitely the theme of du jour.

It’s the question everyone will be obsessed with in 2010 — that, and the related theme, the breakup of the Euro.

Moody’s, via FT Alphaville, has created a new kind of “misery index” that merely adds a country’s fiscal deficit with its unemployment rate.

The top of the list reads like a who’s who of the names in the news these days: Spain, Latvia, Lithuania, Ireland, Greece, the UK, Iceland and the US.

Moody’s has also come up with another gloomy set of themes:

Theme 1 Aaa countries will probably not have the luxury of waiting for the recovery to be secured before announcing credible fiscal consolidation plans.

. . . A key concern is naturally an abrupt increase in real long-term interest rates after a long period of very low yields which has enhanced public debt affordability. We will address this risk in future publications and also discuss the unlikely risk of the dollar abruptly losing its predominant reserve currency status.

However, this type of risk is not certain. After all, Japan has now lived for many years with elevated public debt, deflationary pressures and very low interest rates. Also, large economies are hoping to durably influence long-term interest rates through skilful quantitative easing (QE).

But the risk is significant enough to focus governments’ minds. ―All this would require for the risks to materialise, is the combination of a global economy that is closer to (the new) economic potential, perhaps some ex ante change in the saving-investment balance at the world level (with China and surplus savers having to purchase fewer US bonds) and/or an inflation-led panic.

Therefore, it is very likely that most governments will not have the luxury to wait until 2012 to start cleaning up public finances. 2010 will probably see the inflexion point in highly accommodative policies. In the meantime, tactical changes in debt management strategies will help. The US Treasury is trying to re-profile the maturity of its debt in order to lengthen it with the aim of reducing its vulnerability to such a possible shock.

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Theme 2 The “growth versus adjustment” debate is artificial: advanced economies will need as much adjustment as necessary, and as much growth as possible.

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Theme 3 For countries operating at sharply lower output levels and with reduced growth potential, the debt equation will look increasingly complicated.

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Theme 4 Most governments cannot afford another financial crisis. Attempting to ring-fence balance sheets from contingent liabilities will keep policy makers busy.

To say that Aaa governments have lost altitude within the Aaa space simply means that their shock-absorption capacity – while still high enough to rule out any meaningful default risk – has been reduced.

In other words, many Aaa governments, starting with the UK and the US, cannot afford another financial crisis at current rating levels. This is another reason why the reform of the financial sector has taken on such importance.

But this is also true of lower-rated governments, and more generally reflects the explosion of the size of financial sectors over the past decade as compared to governments’ balance-sheets. The key factor in this context is support capacity.

As a result, we believe that these governments are going to try a different tactic and make the preservation of their balance sheets – and perhaps of their rating – a primary objective. This will entail, from time to time, initiatives to share the burden with bondholders. There have been some attempts at ring-fencing government balance sheets in 2009, with varying rates of success (e.g. in Iceland, Ukraine, Kazakhstan, Dubai, etc.). One could even argue that allowing Lehman Brothers to default was a way of drawing a line in the sand – although, as in many cases of ―ring-fencing, the outcome was disorderly.

We have analyzed the Dubai World precedent as an early example of an ―exit strategy by governments, and have reconsidered the comprehensiveness of protective policies. As a result, our bank and corporate credit risk analysis is increasingly taking this into consideration.

Read more at FT Alphaville >>

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See Also:

• The Ongoing Carnage In Ireland And Spain Shows What Life Is Like For Countries That Can’t Print Like Crazy
• The Euro Breakup Will Be THE Story Of 2010, As Analyst Expects Ireland And Greece To Leave The Union
• Abu Dhabi Bails Out Dubai!

Veronique and Thierry are French expats living in SoHo, Manhattan. Rather than following the ‘when in Rome’ protocol, they choose to cook and cook often in their relatively spacious, DIY kitchen.

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Walmart (WMT) and Amazon (AMZN) have been competing fiercely for online sales for years now.

Yet this Christmas, Walmart plans to hit Amazon especially hard in the online retailer’s achilles heel — delivery time.

WSJ: Customers who buy some of the more than 1.5 million products on Walmart.com can have them shipped free to a local Wal-Mart, where new service desks at the front of some stores make it easier for shoppers to retrieve their stuff. On the outskirts of Chicago, it is testing a radical new concept: a drive-through window, similar to those found at pharmacies and fast-food restaurants, where shoppers can pick up their Internet orders.

“There was a time when the online and offline businesses were viewed as being different,” said Walmart.com Chief Executive Raul Vazquez. “Now we are realizing that we actually have a physical advantage thanks to our thousands of stores, and we can use it to become No. 1 online.” Heading into Christmas, the company said 40% of its online orders are being delivered through stores.

Read more here.

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See Also:

• WalMart And Amazon Barely Making Money On Top 25 Best-Sellers
• Walmart Blows Away Estimates On Cost Cuts (WMT)
• Amazon/Walmart Price War Scorecard

(This guest post oiriginally appeared at the author’s blog)

We are just about finished wrapping up our series on 2010 outlooks.  In this article we’ll outline Bank of America Merrill Lynch.   Bank of America Merrill Lynch is very bullish heading into 2010 (an outlook similar to RBC).  They see many of the trends of 2009 continuing into 2010 and driving equity markets around the world higher by double digits (see JP Morgan’s bullish emerging market outlook here).   Ethan Harris, head of North American economics summarized the Merrill outlook:

“We believe the global economy will gather momentum in 2010.  We think that the unprecedented mix of near-zero interest rates and high budget deficits will engineer an economic recovery that is real and sustainable. We aren’t forecasting a swift return to robust growth. In fact, the recovery will likely lag behind those of previous recessions – but we believe that the world economy will perform far better than the economic consensus would indicate.”

This macro outlook is underpinned by a number of variables:

• Global growth will be 4.4%, Chinese growth will be 10.1% and U.S. growth will be 3.2% – all above 2010 consensus estimates.

• Inflation will remain benign.

• U.S. stocks will rise 15% led by strong growth in global cyclical sectors – tech, energy, industrials and materials.  Financials are also expected to perform well as the yield curve remains conducive to strong earnings.

• The MSCI All-Country World Index will rise 20 percent.

• Gold and oil will both continue to rally as strong demand from foreign investors remains the primary driver.  Gold will breach $1,500 and oil will surpass $100.

• Government bonds will perform poorly.

• The Dollar & Yen will rally against the Euro.

Merrill also notes 10 key investment themes for 2010.  From PR Newswire:

10 Investment Themes for 2010

• Government Balance Sheet Risk: The soaring U.S. budget deficit and a Chinese currency revaluation will drive 10-year U.S. Treasury yields above 4 percent by year-end 2010. Shorter-duration Treasuries and U.S. investment-grade corporate credit are less susceptible to such risks.

• Rising Taxation: The soaring U.S. budget deficit, looming U.S. healthcare reform and a likely second stimulus package will need to be funded through higher tax rates. Opportunities include essential purpose revenue and general obligation municipal bonds, and municipal bond exchange-traded funds.

• Alternative Dividend Yield Strategies: Dividend taxes are likely to rise in 2011, and as the prospect of higher taxes erodes the popularity of traditional dividend yield-oriented strategies, tax-advantaged or tax-deferred strategies will benefit.

• Financial Sector Rehabilitation: Steepening yield curves around the world, increased M&A activity and the still-underestimated normalized earnings power of financials should foster their returns surprise on the upside. Opportunities can be found in best-of-breed mega-cap global financials.

• Corporate Cash Flow Beneficiaries: High cash balances will translate into strategic M&A, a term describing non-speculative, non-private equity mergers. In addition, companies will increase capital spending and possibly dividends. We expect the beneficiaries of capital spending to include the industrial sector and temporary staffing companies as production expands.

• Rising Global Growth: The global policy stimulus seen in 2009 will continue to support global growth led by emerging markets, while in the U.S. an inventory restocking cycle and higher capex converge to push global growth well above 4 percent. Opportunities include best-of-breed mega-cap multinationals based in developed markets with a large presence in emerging markets.

• The Emerging Market Consumer: The emerging market consumer is at the beginning, not the end, of the credit cycle. Opportunities include emerging market currencies versus the U.S. dollar and, in equities, U.S. energy stocks, global energy majors and mega-cap multinationals.

• Commodity Price Inflation: Supply constraints are likely to resurface in the year ahead as commodity demand outpaces the productive capacity of current resources. Investment opportunities include long positions in gold and global energy stocks.

• Alternative Energy: Truly economical renewables may be years away, but investment in alternative energy is an important secular theme that will continue to gain ground. Alternative energy ETFs offer exposure to the burgeoning industry while providing important diversification across multiple technologies and business models. Old technology energy equities such as utilities will be a source of, not a beneficiary of, alternative energy investment.

• The Return of Active Management: Volatility has come down in 2009, especially since central banks began their critical quantitative easing in March. Lower volatility leads to lower correlation, resulting in greater differentiation in asset price performance. The trend favors active over passive management. Such a stock-picking environment should result in high-quality, best-of-breed stocks outperforming in 2010.

“Poor returns from the equities markets over the past decade, particularly from large cap equities, have created a pessimism bubble among investors,” said Bianco. “We believe the S&P 500 is now undervalued, which could create many investment opportunities in the year ahead. Given our expectations for global growth led by emerging economies, a slow but steady U.S. recovery, and healthy S&P 500 EPS growth, we think that the pessimism bubble will finally burst in 2010.”

Interesting outlook indeed.  A bursting in the pessimism bubble will likely mean a very real asset bubble  –  which should come as a surprise to Ben Bernanke and co.

Read more market commentary at the Pragmatic Capitalist >>

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See Also:

• Goldman Sachs Joins The First-Half-Up, Second-Half-Down Club
• RBC: Beware A Double Dip, And A Disorderly Collapse Of The US Dollar In The Second Half Of 2010
• JPMorgan: Emerging Markets Will Surge 30% In 2010

We’ve seen plenty of cases where courts have said that an individual has no expectation of privacy on emails sent from work, and therefore cannot protect those emails. However, in an interesting new ruling (found via the EFF), a court found that personal emails sent from work computers can still be considered privileged and confidential as an attorney-client communication.

Of course, there’s a bit more to this case that makes the facts a bit different and makes me wonder if it would apply in other circumstances. In this case, it dealt with a federal prosecutor who was fired, and is trying to claim that the firing was for his whistle-blowing. He was trying to access the emails of a US Attorney that he believes will reveal why he was fired. So it wasn’t a case of a company trying to review the email (which is normally the case in these types of lawsuits). And, as such, it makes sense. The attorney-client privilege should be seen as one that has an incredibly high barrier. Any weakening of that privilege — such as by saying that if you email your lawyer from work, it doesn’t exist — would be troubling. But what would be more interesting is what would happen in a lawsuit where it was the employer looking at the material. If a company has a regular program of recording and examining employee email (as many do), then how would the issue be resolved? It would seem that, in such circumstances, it would make a lot less sense to consider the content protected, since the employer is not asking for it, but already has access to it.

In related news, however, the Supreme Court will be hearing a case that looks at whether or not your text messages are private, even if sent from company mobile phones.

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Europe has opened flat, US futures are in the red, and Asian shares fell meaningfully on — surprise surprise — fears that the central government would act to cool the bubble.

Bloomberg: Asian stocks declined, led by Chinese developers, on speculation China will curb land speculation. Oil and copper rose, and the Australian dollar fell after the central bank damped expectations for higher loan rates.

The MSCI Asia Pacific Index fell 0.6 percent to 119.75 at 5 p.m. Tokyo time. The Dow Jones Euro Stoxx 50 rose 0.2 percent to 2,891.25 at 8 a.m. in London. U.S. stock futures were little changed. Oil snapped a nine-day losing streak, the longest in eight years, as prices below $70 a barrel triggered purchases that sent crude up 0.6 percent to $69.89 a barrel. Copper for delivery in three months in London rose 0.5 percent to $6,945 a metric ton. The Aussie fell 0.4 percent versus the dollar and declined against all 16 of its counterparts.

The Chinese government will target “excessive” property price increases in some cities, the state-owned Xinhua News Agency said. Separately, rising Chinese demand may boost metals prices next year, Roger Agnelli, the chief executive officer of Vale SA, the world’s largest iron ore producer, said yesterday.

Look back at everytime the Chinese stock market has fallen in the last year, and this is probably the reason, or some variation of this, and yet it never happens. That’s not saying it won’t, just that it typically doesn’t.

Join the conversation about this story »

See Also:

• Get Ready For Epic Stimulus Spending Out Of China In The Final Couple Weeks Of December
• The US-China Trade War Is Here
• China: No, Really, This Time We’re Going To Tighten Lending

It’s not just American banks that are being extremely cautious with their lending these days. In Europe, they aren’t lending either despite government support.

Bloomberg: For all the cash provided by the European Central Bank to ease the worst seizure in credit markets since World War II, financial institutions in the region are unwilling to lend, using the money instead to invest in the safest, most liquid government securities. Bond investors are offering money like never before as returns on corporate debt reach as much as 70 percent this year, according to Merrill Lynch & Co. indexes.

…

Banks are also cutting back on other types of corporate loans. In Europe, a net 8 percent of lenders reported a tightening of credit in the third quarter, compared with 21 percent in the previous three-month period, the ECB said in its Euro-Area Bank Lending Survey on Oct. 28. Commercial and industrial lending fell 18 percent in the U.S. to $1.35 trillion as of Dec. 2 from a record high a year ago, Fed data show.

After years of bad loans, and a recent financial crisis, this is good news. The goal of government support of the banks shouldn’t be for banks to simply lend. The goal is to promote stable banks, which lend intelligently once they have confidence in their own balance sheets. In Europe, as in the U.S., we haven’t reached this point yet. Which is fine.

Join the conversation about this story »

See Also:

• Even Without TARP, Banks Are Still Heavily Subsidized
• Bank Of America Has Really Fancy Confusing Elevators That Employees Don’t Know How To Operate (BAC)
• In Expanding SEC Probe of Bank of America, Lawyers Remain Focus

Eco Factor: Sustainable tower harvests solar and wind energy for power.

SOM has unveiled the design for the Digital Media City Landmark Tower, which when completed in 2014, will be the tallest tower in East Asia. The 640m tall tower is designed to be constructed in Seoul, Korea and be self-sufficient in terms of energy.

(more…)

With both Google and Facebook taking swipes at it and invading its home territory, even if with veiled intentions, it didn’t take long for Bit.ly, the biggest name in URL shorteners at the moment and undisputed market leader, to respond. Just as Facebook was revealed to be testing Fb.me and Google introduced Goo.gl, Bit.ly is stepping up the game with pro accounts offering what amounts to a whitelabel service, built on its infrastructure but with the customer’s own domain name.

“Today we’re pleased to announce a new service: bit.ly Pro. The Pro service provides custom short URLs powered by bit.ly. Publishers and bloggers will be able to use their own short domain names to point to pages on their sites,” Bit.ly announced. “Users and publishers benefit from the additional transparency that this private-label service provides. When you see a short URL like nyti.ms, you know the destination web site before clicking on the link. The service includes all the bit.ly features users and publishers have come to expect.”

What this means is that publishers, bloggers, companies or anyone interested in having its own short URL can still get access to all the tools Bit.ly provides like detailed analytics. For now, the Pro service is in beta and is only available to a few sele… (read more)

This superstition is one that seems to cause a lot of people to ‘knock on wood” or “touch wood” when they voice something good that they hope will happen in the future without really knowing why.  The general idea is to not “tempt fate”.

One possible origin of this superstition dates back to the Pagans who believed that trees were homes of the gods.  If someone wanted help or a favour they would tell their wish to a tree and then touch the bark.  This was the first “knock” and they would knock again to say thank you.  There are also some Christian references that indicate that knocking on wood has to do with the wood representing the cross or the rosary.

Another explanation could be British chasing games that date to the early 19th century where you would be safe from being ‘tagged’ if you touched wood.  “Tiggy-touch-wood” was a popular game and could account for the phrase “touch wood” being passed into every day language in the UK.

The URL shortener market just got a couple of big disruptions as possibly the two most powerful players in the web at the moment, Google and Facebook, have entered the market with their own URL shorteners. Facebook’s approach is a rather cautious one, its shortener kicks in automatically only on the mobile site and only for links to pages on Facebook. Google is also taking a smaller step at first and has introduced its URL shortening service Goo.gl for just two of its products, the Google Toolbar and FeedBurner.

“People share a lot of links online. This is particularly true as microblogging services such as Twitter have grown in popularity. If you’re not familiar with them, URL shorteners basically squeeze a long URL into fewer characters to make it easier to share with others. With character limits in tweets, status updates and other modes of short form publishing, a shorter URL leaves more room to say what’s on your mind — and that’s why people use them,” Muthu Muthusrinivasan, Ben D’Angelo and Devin Mullins, software engineers explain.

So, while people will be able to use Google’s URL shortener, it’s not a full-blown service and can only be accessed through the two products. However, this doesn’t discount opening it up to more products or even launching a dedicated service down the line… (read more)

Eco Factor: Sustainable architecture designed to be powered by renewable energy.

Children in Hørsholm, north of Copenhagen, will soon have the greenest childcare center in Denmark. The center, which is due to be completed by November 2010, will be energy-efficient and generate more energy that what it actually consumes using renewable sources of energy.

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Chicago’s new Dill Pickle Food Co-op has opened its doors in time for residents of the Logan Square neighborhood to stock up on plenty of local and organic food for the holidays. It’s a good thing too, because despite a wonderful (but seasonal) farmers’ market, grocery options in the neighborhood are somewhat limited.

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It’s been a great year for Twitter which means it’s been a great year for services built to cater to it, but the biggest being URL shorteners which, at one point, were popping up left and right. Things have quieted down a bit, after a few public failures, and Bit.ly settled into the role of undisputed market leader. The status quo wasn’t to last though, as the market got a great big shook up with the entrance of both Facebook and Google.

Facebook hasn’t made any official announcements, but shortened URLs coming from fb.me started showing up instead of the usual, very long Facebook links. For now, this is done automatically for all links sent through the mobile versions of the site. As Inside Facebook exemplifies, whereas a photo URL from Facebook would look something like http://m.facebook.com/photo.php?pid=35877484&id=1310743&l=a373e8038d the sale page can be accessed through http://fb.me/3Bkj7CW, obviously a huge improvement, especially useful on mobile devices with limited screen space.

Users can’t use the URL shortener by themselves and it can’t be used to shorten any other links than those leading to a Facebook page, at least for now. It only kicks in automatically when sharing a link on the mobile version. Interestingly though, it works Facebook pages or usernames as well, so a link like fb.me/google will lead… (read more)

“Milling with Quatron indexable inserts”

With the KOMET® Quatron hi.feed milling cutters, the KOMET GROUP® is replicating the success of its proven KOMET KUB Quatron® drills in a new range of milling cutters. For roughing operations, this tool variant enables machinists to use the quad-ratic indexable inserts for both drilling and plunge milling.

The most striking feature of these universal tools is the four-edged Quatron indexable insert. For years it has been the compelling solution for drilling operations, remarkable not only for the number of its cutting edges, but above all for its rapid removal of high chip volumes – prop-erties that are now replicated in the new KOMET® Quatron hi.feed milling cutters. In addition, the Quatron indexable inserts also have a radial cutting action, which affords a considerably higher degree of flexibility in plunge and pocket milling by comparison with two- or three-edged inserts.

Machinists who have to cut deep grooves or large cavities in their workpieces often opt for plunge milling due to the dimensions or cut-ting capacities of the tools or the performance of the spindle inside the machine. Rather than boring with the use of multiple boring tools, it is possible to achieve various diameters and complex contours in one roughing operation by milling with an axial and a horizontal feed. An-other plus point is that, in the KOMET® Quatron hi.feed , the very same indexable inserts can be used for drilling as well as milling. The proven BK8425 coating delivers exceptional tool life. The tough sub-strate enables universal use of these screwable milling cutters for steel, cast iron and stainless materials.

With its brands KOMET®, DIHART® and JEL®, the KOMET GROUP® is a leading global manufacturer of precision tools for bore machining, reaming and threading. The group has been at the forefront of innova-tion in the sector for over 90 years – a tradition that began with the early indexable insert borers and continues today with their mecha-tronic tool systems. The company currently employs more than 1,600 staff in its 20 subsidiaries and is represented in around 50 countries.