This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Investment Options for 'Fiscal Cliff' Bears

Stocks in this article: BA NOC GD LMT HD GE XOM CVX BP DVN CHK EWC SU CVE IMO TRP KMI

I wouldn't be surprised if this makes Chesapeake Energy (CHK) worthless, as natural gas can't be exported as oil can. Gas is already selling at near its production costs.

Sell Canada: Falling oil prices benefit suppliers of lower cost reserves. So a U.S. recession is very, very bad for Canadian tar sands. I might even short the Canadian iShares ETF (EWC) as a speculation, given the leverage that economy has to the sands and the political turmoil that will result from falling demand for what it supplies. If we go over the cliff, and especially if oil prices decline as a result, we're taking Canada with us.

Mining.com wrote recently that tar sands producers were already getting the equivalent of just $45/barrel for their production . Britain's The Independent estimates it costs $80 to $100 a barrel to break even on tar sand production .

During the 2008 financial crisis, a lot of tar sands projects were shelved as global oil prices fell. This is starting to happen again. The profit squeeze is hitting companies like Suncor (SU), Cenovus (CVE) and Imperial Oil (IMO), and that reduction in supply is hurting the big pipeline companies, like TransCanada (TRP) and Kinder Morgan (KMI), both of which are already facing environmental delays in getting projects approved.

Buy Dollars: The "Fiscal Cliff" deal was always about deficit reduction. There's talk about the fight moving to the debt ceiling, if no comprehensive agreement is reached here, but the Constitution is pretty clear that the debts run up by Congress must be paid. If our government's books are coming closer to balance, by any means, this is good for the U.S. currency and for assets denominated in U.S. currency.

Most analysts have assumed that interest rates are heading up this year, as economic growth accelerates. But if government austerity turns growth negative, you're also going to get the old "flight to quality." If we do go over the cliff, in other words, bondholders may be in for a pleasant surprise.

Of course, I still expect that none of these things will happen. A deal will probably get done. This column will probably go into the "April Fool" category.

But in case I'm wrong, you're wrong and we're wrong, clip it and save.

At the time of publication, the author was long GE.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs