Yesterday, the US Commodities Futures Trading Commission (CFTC) announced that it had reached an agreement with the UK’s equivalent of the SEC and the ICE Futures Europe (NYSE:ICE) under which ICE would provide a daily report on large trader positions in the UK WTI crude oil contract. This report will include long-term contracts as well as the near-month contracts. ICE also agreed to notify the CFTC "when traders exceed position accountability levels, as established by US designated contract markets, for WTI crude oil contracts." In other words, ICE is going to start behaving more like NYMEX (NYSE:NMX).

The CFTC is also trying to increase transparency in the area of index trading, most of which is done by ETF’s. The commission wants to determine if index trading is "adversely impacting the price discovery process" and if additional regulation might be needed to improve transparency for these traders.

Why now? When ICE started trading WTI futures in 2006, the CFTC did nothing to establish any oversight on the trades, claiming it had no authority to review ICE trades. The answer to the question is two-fold. First, it just takes this long to reach agreement on anything. Second, and more important, the crude market is moving into contango, a market condition where future prices are higher than current prices. If the future price of crude is higher than the current price, the current (spot) price has to go up in order to shake loose the physical crude.

Index traders are often blamed for this state of affairs because they never intend to take delivery of the physical oil, instead either taking their profit or, more often, rolling over their contracts for an additional month. This does distort the market for physical oil, but by how much? That’s what the CFTC wants to find out.

One other thing worth noting in the CFTC press release. The commission admitted that it is conducting a "nationwide crude oil investigation into practices surrounding the purchase, transportation, storage, and trading of crude oil and related derivative contracts." It is highly unusual for the CFTC to admit that it is investigating anything. As we pointed out earlier today, if there are bad guys out there, they’re probably be heading for cover soon.

George Soros noted that speculation is driving up energy prices, and we also saw T. Boone Pickens call for $150 per barrel for oil by the end of this year.

Paul Ausick
May 30, 2008

The New York Mercantile Exchange, Inc., the subsidiary of NYMEX Holdings, Inc. (NYSE: NMX), also announced that it will introduce a U.S. Regional Greenhouse Gas Initiative carbon allowance futures contract in the third quarter of 2008 that will be traded on the CME Globex, under the CME Group, Inc. (NYSE: CME).  This is expected to be the first exchange-traded contract for compliance with a government cap-and-trade program in the U.S.

It also looks like the NASDAQ OMX Group Inc. (NASDAQ: NDAQ) intends to launch a new index family for carbon dioxide emissions certificates this summer in its efforts with Nord Pool, according to Dow Jones.  After looking at Nord Pool’s website this has only been available to private investors, so this could be a real game changer.

The Chicago Climate Exchange, part of Climate Exchange plc (CLE.L), has allowed people to trade carbon futures now for years. 

If you want to do some research on your own about what is coming down the pipe, here are just a few of the links we have followed from over the years:

• http://carbonfund.org/
• http://greenfutures.com/news/
• http://climateexchangeplc.com/
• http://www.carbonexpo.com/
• http://www.chicagoclimatex.com/

Carbon emission certificates are not without controversy.  While it does address the issues, many refer to it as a "pay to pollute."  That is an argument that will go on for years and we have no interest in getting in the middle of that.

It almost looks in a way like the U.S. may have joined the Kyoto Protocol, even if it isn’t official.

Jon C. Ogg
May 8, 2008

NYMEX shareholders will receive 0.1323 shares of CME Group Class A common stock and $36.00 in cash for each share of NYMEX common stock.  This equates to approximately 12.5 million shares and cash of $3.4 billion, and NYMEX will ultimately hold approximately 18.6% of the combined company.   This generates a purchase price of $100.30 before any dilution to CME shares.  NYMEX shares closed at $95.34 Friday, and the 52-week trading range is $86.61 to $148.00.

Shareholders of NYMEX can elect to receive either CME stock or cash for each share of NYMEX, although the cash and stock amounts will be determined by proration in the event that cash elections are either greater than or less than a mandatory cash component of approximately $3.4 billion.   CME may choose to increase the cash amount if NYMEX shareholders elect to receive more than $3.4 billion in cash, under certain circumstances.

The combined exchanges will now offer commodities and futures offerings in almost every major asset class and in cash, over-the-counter and regulated markets.  There were many out there that questioned whether or not the merger between the CME and the CBOT should have been allowed by regulators.  You can imagine the questions this brings up.

Jon C. Ogg
March 17, 2008

What we wanted to do was put this in perspective.  Frankly there are more risks here than reward if the current terms are accurate.  Merger speculation has been present on NYMEX at much higher prices before.  NMX closed at $96.29 yesterday, and its 52-week trading range is $86.61 to $148.00.  It has lost roughly one-quarter of its post-IPO value since coming public in late-2006.  CME stock closed at $516.44 (52-week range of $475.17 to $714.48), so the combined price before any dilution would generate a perceived NMX buyout price of $68.32 on the stock side and including the $36 cash offer would net out at $104.32.

The largest fear that merger speculators should have here is a regulatory blockage of a deal, and that is on top of the notion that this premium is essentially an "at the market" buyout at best.  Wall Street and Main Street already saw many wondering how the CME & CBOT merger was even allowed to go through, and the argument that a "clearing monopoly" now exists is not going to go away.  Even though this administration and lax regulatory environment has failed to block a single large merger over "anti-competitive pressure," it is impossible not to think this approval process could be tied up for long enough that a new administration might can the deal.

So who else is left that could actually do a deal?

The NYSE (NYSE: NYX) is already involved in acquiring the Amex, and with its recent share price weakness and a new CEO it would be very hard for the equity exchange giant to be able to jump the hurdle into the futures exchange.  The NASDAQ Stock Market, Inc. (NASDAQ: NDAQ) is just way to small to make a pursuit of this size.

InterContinental Exchange, Inc. (NYSE: ICE) has been left out in the wind as its attempt to buy the CBOT lost out to the CME.  "The ICE" and NYMEX are almost equally yoked as far as market caps, with the ICE being slightly higher as of Thursday.  A merger between those two would perhaps face much less scrutiny from any regulators.

While there is a chance that any first offer could be raised, it sure looks like there is a real chance that this could get blocked by regulators AND by shareholders.  If these "likely" terms are the real deal, we’d probably speculate elsewhere.

Jon C. Ogg
February 22, 2008

• ADC Telecom (NASDAQ: ADCT) and Arris (NASDAQ: ARRS) raised to Buy at UBS.
• Estee Lauder (NYSE: EL) raised to Buy at UBS.
• Flamel (NASDAQ: FLML) raised to But at Merriman Curhan Ford.
• Geron (NASDAQ: GERN) raised to Buy at UBS.
• Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) started as Market Perform at Morgan Keegan.
• McDonald’s (NYSE: MCD) downgraded to Peer Perform at Bear Stearns.
• Medarex (NASDAQ: MEDX) started as Buy at UBS.
• Novell (NASDAQ: NOVL) raised to Buy at Jefferies.
• NYMEX (NYSE: NMX) downgraded to Hold at Citigroup.
• Walt Disney (NYSE: DIS) downgraded to Sell at Citigroup.

Jon C. Ogg
January 29, 2008

• AMBAC Financial (ABK) was down big after it came clean and ran the gauntlet, but this one went from bad to worse by closing down a whopping 38% at $12.97.  Ouch!
• Akamai Tech (AKAM) closed down almost 4% at $25.88; prior 52-week range was $25.97 to $59.69….. so much for pushing out online video and media faster being a solid business.
• Citigroup (C) just cant catch a break with a new year low close of $26.24.  Maybe being a stronger manager might help Pandit.  Dear Vikram, Welcome to running a troubled public company.
• California Pizza Kitchen (CPKI) after its warnings closed down over 17% at $10.10; $12.20 to $25.23 prior range.
• eBay (EBAY) was a bit of a shock to see, although if you take the retail, tech, and internet angle it’s not a huge stretch.  The good news is that this was only intra-day with a low of $27.67 at the open.  It closed up 0.5% at $28.09 and the prior 52-week range was $27.85 to $40.73.
• F5 Networks (FFIV) took a downgrade to Hold from Buy at Jefferies; shares closed down 8% to $20.68; prior range $21.07 to $46.94.
• H B Fuller (FUL) manufactures and markets adhesives and specialty chemical products worldwide.  It fell 11.3% to $19.57; prior low $20.56; posted lower Q4 earnings
• NYMEX Holdings (NMX) closed down 7.5% at $103.98, 52-week range is $105 to $148; maybe that raised CEO bonus might not be the best idea.
• PMI Group (PMI) won’t find any sympathy anywhere, shares closed down 7.5% at $7.77.
• Quicksilver (ZQK) can’t be a big shock since it warned on earnings yesterday; -5.3% at $7.04.
• Scientific Games (SGMS) wasn’t just bad, it was a slaughter at -30% to $19.45; prior range $28.15 to $40.70.  It lost a contract and took a downgrade.
• Stereotaxis (STXS) received an additional approval from FDA but it warned on earnings in a significant manor that caused an investor and trader revolt in what was already down and out.  It fell down 22% to $8.84; prior range $9.66 to $16.88.
• Tetra Technologies (TTI) is a geographically diversified oil and gas services company that provides niche products and services focused on well completion and on late-life production enhancement and decommissioning.  Maybe that business isn’t great anymore?  It warned Monday about a shortfall and today was just as bad or worse. This one closed down 8% to $14.38, and its prior 52-week range was $14.38 to $30.20.
• Xerox (XRX) hit intra-day 52-week lows and if this isn’t an endorsement of a slowdown in the big business climate then what the hell is?  Shares hit a low of $13.59, but closed barely over the prior 52-week low at $13.88; 52-week range $13.84 to $20.18.
• Zebra Tech (ZBRA) can’t be too big of a shock with retail slowing and its bar code tech is retail dependent (sans-drugs); stock fell almost 3% to $30.17; prior range is $30.95 to $42.50.

Jon C. Ogg
January 16, 2008

• Agnico-Eagle Mines (AEM) raised to Buy at Merrill Lynch.
• Blue Nile (NILE) raised to Buy from Hold at Citigroup.
• BP plc (BP) downgraded to Neutral from Overweight at J.P.Morgan.
• Golden Telecom (GLDN) downgraded to Neutral from Overweight at J.P.Morgan.
• Maxim Integrated (MXIM) raised to Buy from Hold at Citigroup.
• NYMEX Holdings (NMX) raised to Buy from Hold at Deutsche Bank.
• Occidental Petroleum (OXY) raised to Overweight at Morgan Stanley.
• Quest Energy Partners (QELP) off quiet period: started in coverage as Outperform at FBR, as Outperform at RBC Capital Markets and as Outperform at Wachovia.
• Petro-Canada (PCZ) downgraded to Underweight at Morgan Stanley.
• BANC OF AMERICA neutral on many tech names: Brocade (BRCD), Seagate (STX) & Western Digital (WDC) both started as Neutral.  Riverbed Tech (RVBD) started as Neutral. Emulex (ELX) started as BUY.

Jon C. Ogg
December 19, 2007

Shares of First Solar (NASDAQ: FSLR) gave up 7% falling almost $20.00 per share on Monday.  The company announced today that John Gaffney will join the company as its Executive Vice President and General Counsel, effective January 15, 2008.  The market is more to blame than this, although some may consider this legal advisor more of an M&A advisor.

Capstone Turbine (NASDAQ:CPST) was down almost 6% late Monday at $1.44, although this one is still up from being included in our "10 Stocks Under $10" weekly newsletter.  The good news came last week, although the run in share prices looked a bit high.

ExxonMobil (NYSE:XOM) Research & Engineering Company (EMRE) announced today that its MTG technology for converting methanol to gasoline has been selected by DKRW Advanced Fuels (DKRW) as part of DKRW’s coal to liquids (CTL) project in Medicine Bow, WY. The approximate 15,000 barrel per calendar day unit will be based on commercially proven MTG technology which incorporates improvements since the technology was originally commercialized by ExxonMobil 20 years ago in New Zealand.

Altair Nanotechnologies Inc. (NASDAQ: ALTI) announced today that Dennis “Kilowatt” Berube has set the National Hot Rod Association’s world speed record for electric dragsters driving an electric vehicle powered by Altairnano battery packs with a a speed of 153.6 mph on Saturday, December 15, covering a quarter-mile in 8.10 seconds.

XSunX Inc. (OTC-BB: XSNX) has been rated Speculative Buy with a price target of $1.50 by Beacon Equity Research Analyst, Lisa Springer, CFA.  Beacon Equity Research was directly compensated a total of $15,000.00 directly from the company for enrollment of XSNX in its research program and other services.  This stock rose a whopping 63% today to $0.48 late Monday.

Ocean Power Technologies (NASDAQ: OPTT) saw shares rise 2% to $12.63 in late day trading after the company posted earnings.  Its revenues were up 204%, but only to $1.7 million and it posted a net loss of $1.9 million.

Ascent Solar Technologies, Inc. (NASDAQ:ASTI) saw its shares slide 17% late Monday to under $17.00 after it announced the successful and on-time delivery and installation of all equipment required to complete the integration of its 1.5MW production facility:

• Testing, integration and qualification of the new manufacturing line is set to begin in January 2008.
• Product qualification and certifications are planned to commence once the line completes integration and achieves initial operating capacities.

Amtech Systems (NASDAQ: ASYS) fell some 6% to under $12.00 late Monday after it announced receipt of $8.9 million in additional Solar orders.

Last week, Nymex Holdings Inc. (NYSE: NMX) and a group of Wall Street trading houses plan to launch an exchange for trading carbon emissions and other environmental products.  This is being dubbed the Green Exchange. 

Also last week were some favorable research calls from Wall Street analysts covering GREEN STREET (AMSC, CLNE, ESLR, FSLR, ITRI, SPWR)

Less than one week ago, oil magnate T. Boone Pickens was still calling for $100 oil and said high prices are going to be the new norm.

Jon C. Ogg
December 17, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

The option premium was not indicative of a super-premium expected, if it was even coming at all.  Recent June highs were in the $140.00+ range, and shares traded as high as $150.01 after opening at $120.00 back on the November 17, 2006 IPO date.  The market cap of NYMEX is almost $11.9 Billion, so not just anyone could be able to acquire this exchange.  Any deal would have to be a friendly merger as well.  There is a conundrum because even if we are skeptical, this one of the potential exchanges that could participate in the global exchange consolidation.  The question is what price an acquirer would pay.  Based on today’s options trading and prices, that premium does not look as though it is expected to be huge. 

This is a very abbreviated version of what we sent to free email subscribers during trading hours today.  We are currently reviewing several key corporate developments for subscribers of our Special Situation Investing Newsletter.  Trials are available and can be signed up for. We are currently reviewing some financial picks, we have a security play that has a transport angle under review, and we even have under a company in the death and elderly care under review.  Lastly, the NCR tax free spin-off of Teradata is also being reviewed for the paid newsletter.  Which of these will be the next newsletter? We’ll know any day now.

If you want to see samples of our work that we have now made available for public view, here are some resent examples of our subscriber-based Special Situation Investing Newsletter.  We called for a pullback in EMC shares right at the VMware IPO and compared it to other key spin-offs in recent history.   We also outlined for paid subscribers what was an industry sea change that was a essentially nothing short of a reverse merger in the stock photo industry that was creating a black hole scenario for Getty Images (GYI).  We gave the scenario where we called for Getty to fall from around $50.00 to under $40.00, and this panned out much faster than we initially would have expected.  The stock trade would have netted out a greater than 30% return on the recommendation, and the options trade alone would have been well over a 100% profit for readers that followed this advice.

Jon C. Ogg
September 10, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

TUESDAY, JULY 31, 2007
Alcan (AL)
American Capital Strategies (ACAS)
American Electric Power    (AEP)
Aon Corporation    (AOC)
Automatic Data Processing (ADP)
Aventine Renewable Energy (AVR)
Avon Products (AVP)
Buffalo Wild Wings, Inc. (BWLD)
CBS Corp. (CBS)
Chipotle Mexican Grill (CMG)
Coach, Inc. (COH)
Companhia Vale do Rio Doce-CVRD    (RIO)
Crown Castle International (CCI)   
CryoLife, Inc. (CRY)
Denny’s Corp. (DENN)
DreamWorks Animation SKG (DWA)
Encore Acquisition Company (EAC)
FEI Company (FEIC)
First Solar (FSLR)
Fresh Del Monte (FDP)
Gartner (IT)
General Cable Corp. (BGC)
General Motors (GM)
Headwaters Inc. (HW)   
IAC/Interactive (IACI)
ImClone Systems (IMCL)
IndyMac Bancorp    (IMB)
Liz Claiborne (LIZ)
Marathon Oil (MRO)
MetLife Inc. (MET)
NAVTEQ Corp. (NVT)
NCR Corp. (NCR)
Nicor Inc. (GAS)
Northwest Airlines (NWA)
NYMEX Holdings (NMX)
PMI Group (PMI)
RealNetworks (RNWK)
RenaissanceRe Holdings (RNR)
Ruth’s Chris Steak House (RUTH)
SiRF Tech (SIRF)   
Sirius Satellite Radio (SIRI)
St. Joe Company    (JOE)
Trimble Navigation (TRMB)
Tupperware Brands (TUP)
Turbochef (OVEN)
Under Armour (UA)
Valero Energy (VLO)
Vornado Realty Trust (VNO)
Waste Industries (WWIN)
Waste Management (WMI)
Watts Water Tech (WTS)
WebMD Health (WBMD)   
Whole Foods Market (WFMI)

We will be following up with many of these individually over the weekend and early in the week with full earnings previews.  Have a great weekend.

-The 24/7 Wall St., LLC team