EXCESSES LEAD TO OPPORTUNITIES

A boom in anything--bond, home, oil prices--creates excesses.

Yesterday, we mentioned how many big Wall Street firms were just now releasing their most bearish reports on energy at a time when the hay is already in the barn. In short, they didn't see it coming.

Now as is Wall Street's frequent want, there rolling out the damage control to their reputations.

First come the excesses, then the inevitable cuts. It's a market way of doing things that reflects human behavior so long as one can keep the bureaucrats and politicians at bay.

Here's a headline from today's Financial Times, "Total to slash capital spend by 10% under new chief."

Total, the French  oil-and-gas giant plans to reduce group-wide capital spending by 10 percent this year and speed up billions pf dollars in asset disposals, under an accelerated cost-cutting plan led by new chief executive Patrick Pouyanne.

The move comes as thousand more job cuts were announced in the energy industry yesterday, with Baker Hughes, the oil field service provider being acquired by Halliburton in  a $26.8bndeal, saying that it would lay off 7,000 employees.

The executive also said it was considering a company-wide hiring freeze and it would cut its capital spending by $2-$3bn from 2014's total of $26bn. This is hardly the first of the big guys to take such a stand.

Earlier, ConocoPhillips, announced a 20 percent cut in capital spending for 2015 and BP, still struggling with its legal problems, already took a $1bn charge off to pay for job losses. At the same time rig count, a much followed industry indicator, recently fell for the sixth straight week.

According to a statement from Baker Hughes, "Oil drilling is falling faster in North America than the rest of the world," as the company warned of the beginning of "a downturn in the industry of the type seen once or twice every decade."

Some of the cuts, as in the case of Total, are to help maintain the group's dividend, a point their new leader noted was essential to retain investor confidence.

The other shoe from the lower energy prices is consolidation, something Total's new chief mentioned: "I  think you will see some impact on smaller players. I think it will be an opportunity for larger players maybe to have access to resources at a lower cost."