Exxon

You know someone is losing (a lot of) money when the heavy artillery of the rumormill department goes into overdrive. According to the Sunday Times, the Obama administration has given its blessing to Exxon and Chevron to consider takeover bids of the troubled major unimpeded. Because obviously any deal in the current environment must first and foremost get the Obama stamp of approval or else the Steve Rattners of the world will be sic-ed on your sorry derriere, and before you know it your equity will be trading above your vendor payables in right of guarantee. It is refreshing to know that the other majors can somehow handicap the outcome of the tens if not hundreds of billions in liabilities that will tie down BP in random lawsuits for decades, and that will make WR Grace et al seem like a PG-13 dress rehearsal for Scores when Lindsay Lohan is in town.

The drilling lobby's case to overturn the Obama moratorium on deepwater drilling just got materially weaker, as it has been revealed that Judge Martin Feldman, who had previously overturned Ken Salazar's ban calling it "capricious", sold shares of Exxon stock hours before he issued his ruling. Even though the disposed stock value is not too material, at under $15,000, and it is unclear whether the judge made a profit on the transaction, it will be more difficult for the lobby to defend their decision before the Fifth Circuit where the Obama administration has appealed Judge Feldman's ruling. Furthermore, the question of why Feldman did not recuse himself from the case will now become quite prominent. Unlike Hank Paulson, we doubt he got an ethics waiver from the US Treasury.

A basic property of religion is that the believer takes a leap of faith: to believe without expecting proof. Often you find this characteristic of religion in other, more unexpected places–like the stock market.

It takes a while for a company to develop a “religious” following: Only a few high-quality, well-respected companies with long track records ever become worshipped by millions of investors. The stock has to make a lot of shareholders happy for a long period of time to form this psychological link.

XOM is the world's best investor in the energy business, and has a multi-decade track record and the returns on capital to prove it. This is undeniable. But, Exxon looks out 20 years when evaluating acquisitions and investments. Natural gas investors should not look too much into this bet, because Exxon's time horizon is longer than most of our careers, and perhaps lives, will be.

Natural gas has become an almost forgotten commodity with poor market fundamentals keeping a lid on the price. But the fuel is not forgotten by Exxon Mobil (XOM). Exxon just announced this morning that it will buy XTO Energy (XTO) in an all-stock deal worth $31 billion as the oil giant moved aggressively towards the abundant unconventional natural gas source at home.

And Northern Trust thought it had problems when Barney Frank went postal for the company's House Of Blues romp.