11/10/09 Unemployment
John Crudele: "My friend John Williams of Shadow Government Stats thinks the true unemployment rate would be 22.1 percent if everyone -- all discouraged former workers, encouraged, involuntary part-timers and the like -- were included."
Electronic Arts Inc. reported a wider quarterly loss on Monday and announced plans to lay off as many as 1,500 workers in an effort to reduce costs, as the video-game publisher tries to shift its focus away from retail-based game sales.
The layoffs amount to about 17% of the company's current workforce, with 900 positions being cut from the game development units. The company says the layoffs will help it save about $100 million a year in expenses
ICSC sees November sales could be up 5% to 8% against easy comparisons. In November 2008, sales tumbled by a historic 7.7%.
The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.
...The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008.
"Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty," the IEA said in its annual World Energy Outlook report.
Rep. Ron Paul: "If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government's reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won't come from higher taxes, it won't come from rationing of care, and it won't come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar's back.
Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness."
Charles Goyette: "Gold's recent advances signal that we are in a period of major transition now. The American dollar's role as the world's reserve currency is inherently unstable and the signs of a breakdown are all around. Just as the monetary authorities have been unable to reinflate the high-tech bubble or the real estate bubble, when the dollar bubble is finally burst, no other paper currency will be able to take its place."
Energy companies shut 29.6 percent of oil production and 27.5 percent of natural gas output by Monday in the Gulf of Mexico as Tropical Storm Ida spun through the region.Ida came ashore at Dauphin Island, Alabama, near Mobile Bay, Tuesday at 5:40 a.m. CST (1140 GMT).The Gulf is the source of 25 percent of U.S. domestically produced oil and 15 percent of natural gas. About 40 percent of U.S. refining capacity is located on the Gulf Coast.
CBS is reporting President Obama has decided to send 40,000 more troops to Afghanistan. The decision indicates one direction of the Obama administration's foreign policy - a large, long term force in Afghanistan. Former Soviet President Mikhail Gorbachev, drawing on his experience of military failure in Afghanistan in the 1980s, said the U.S. can’t win the conflict there and should begin pulling out its soldiers.
The UK government's credit rating is "absolutely" safe, despite a warning earlier from Fitch Ratings that Britain is the major economy most at risk of losing its AAA status, UK Trade Minister Mervyn Davies said Tuesday.
Home prices fell in the third quarter from year-ago levels in about 80 percent of U.S. metropolitan areas, the National Association of Realtors said Tuesday.
The industry trade group said median prices fell compared to a year earlier in 123 of 153 metro areas, while 30 areas saw prices rise.The national median price fell 11.2%.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index slipped to 47.9 in November from 48.7 in October. Had the figures been reversed and were higher, the main stream news would have made it a big headline.
Advanta Corp. files for bankruptcy, may turn over its banking unit to regulators.
ZeroHedge: "..S&P Price Oscillator Is Three Standard Deviations From Mean: 99% Outlier Market."
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
If Asia's loose monetary policy is left unaddressed it will ultimately blow a bubble of "mind-boggling size" that could become uncontrollable without fiscal tightening, Frederic Neumann, economist at HSBC, told CNBC Tuesday.
The housing market has improved slightly and prices are starting to stabilize, but we could see another downswing this winter, James Lockhart, vice chairman of WL Ross & Co. and former director of the Federal Housing Financial Agency, told CNBC Tuesday. “We are bouncing along the bottom in the housing market, but we’re not out of the woods yet,” he said. “I think we still have a ways to go.”
Copper stockpiles held in duty-free warehouses in China, the top user, may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year, according to Xi’an Maike Metal International Group.
The Dow Jones Industrial Average gained 20.03 points to 10,246.97. But the broad S&P 500 Index was less than 1 point lower at 1,093.01, while the Nasdaq Composite fell 2.98 points to end at 2,151.08.
Adobe Systems said Tuesday it is cutting 680 full-time jobs, or about 9 percent of its work force, to align costs with its fiscal 2010 budget.
The American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m. Energy producers in the U.S. idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said in a statement today. About 560,000 barrels of oil output and 1.9 billion cubic feet of daily gas production remain shut.
U.S. workers were reluctant to quit their jobs in September as businesses showed no signs of increased hiring, a government report showed Tuesday.
The job separations rate, a measure that covers all terminations of employment, stood at 3.3 percent in September, unchanged from the previous month, the Labor Department said in its monthly Job Openings and Labor Turnover Survey.
The quits rate, a subset of total separations and a barometer of how easy it is for workers to change jobs, remained unchanged in September at 1.4 percent, suggesting a lack of confidence in the economy jump-starting job growth.
Tuesday, November 10, 2009
Monday, November 09, 2009
Kraft and Cadbury
11/9/09 Kraft and Cadbury
Kraft Foods Inc. has made a 9.8 billion pound ($16.4 billion) cash-and-stock offer for British candy maker Cadbury PLC.
Monday's hostile offer values each Cadbury share at 717 pence, lower than Kraft's previous rebuffed approach of 745 pence.
Kraft says the price "represents a substantial premium to the unaffected share price of Cadbury," referring to a surge in the British company's stock since Kraft's previous bid was made public in September. Kraft Foods said the bid is priced 37% above Cadbury's close on July 3 and said no other potential offeror has publicly declared its interest in acquiring Cadbury.
Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying "Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."
The U.S.Dollar Index made a new 15-month low at 74.93. The standard of living for all Americans continues to decline-- year after year. Where is the outcry?
McDonald's Corp. said Monday that its October same-store sales rose 3.3%. Comparable sales, or constant-currency sales at restaurants in operation at least 13 months, were down 0.1% in the U.S., up 6.4% in Europe and climbed 4.7% in Asia, Middle East and Africa. Total systemwide sales rose 10.3% and were up 5.2% excluding the impact of currency translations, McDonald's said.
General Electric Co. and Comcast Corp have agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far, a source familiar with the matter said on Sunday.
The resolution of that issue brings the parties one step closer to an agreement, but French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, the source said.
The euro pushed back up above $1.50 Monday after finance ministers from the Group of 20 rich and developing countries steered clear from addressing the weakness of the U.S. currency against most of its competitors at a meeting over the weekend.
At the meeting in St. Andrews, Scotland, the finance ministers pledged to "continue to provide support for the economy until the recovery is assured" -- in effect telling the markets that borrowing costs will not be rising any time soon.
The thinly traded November gold contract rose $14.20, or 1.3%, to $1,109.30 an ounce, the highest level for a front-month gold contract.
Gold for December delivery, the most-active contract, climbed $13.50, or 1.2%, to $1,109.20 an ounce on the Comex division of the New York Mercantile Exchange, after hitting $1,111.70.
"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.
That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. In September, the National Association of Realtors reports that nearly 70 percent of all sales were on homes priced $250,000 or lower.
Home values are still worst in the local markets that saw the biggest housing boom and bust. These are in California, Florida, Arizona and Nevada.
John Hussman: "“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”
While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us."
Brad Setser: "In my view, it will be hard for the dollar to emerge as major funding currency."
“Bullion is likely to begin outperforming its producers”, the mining stocks, John Roque, managing director at WJB Capital Group, told Bloomberg. According to his technical analysis, “gold should do better than gold equities … it doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.”
Louis Uchitelle,
The New York Times
"A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation....The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country....American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
China will raise retail fuel prices later on Monday, an industry source familiar with the situation told Reuters, with gasoline and diesel likely to hit their highest prices ever following the widely expected rise.
The source did not elaborate or say how big the price rise would be, but industry website C1, which has correctly predicted price movements in the past, said the government would add 480 yuan ($70.32) per ton to the pump price of both diesel and gasoline.
Tom Burghardt: "As AT&T whistleblower Mark Klein revealed in a sworn affidavit that described how the company physically split and copied the traffic that flowed into its offices, NSA was virtually duplicating, sifting and storing the entire Internet. Klein wrote in his self-published book:
What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...
This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in the their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)
Klein's revelations were confirmed by former NSA analyst and whistleblower Russell Tice, who told MSNBC's Countdown with Keith Olbermann in January that the NSA "had access to all Americans' communications" and spied "24/7" on domestic political activist groups and "U.S. news organizations and reporters and journalists."
In demanding that the independent federal judiciary toss these cases, the Obama administration is asserting a broad interpretation of Executive Branch privileges that caused much outrage and hand-wringing by congressional Democrats--when they were out of power.
Under the "change" regime however, what were once viewed by Democrats and their supporters as prime examples of Bushist lawlessness and contempt for constitutional safeguards, are now deemed vital state secrets that "protect" the American people, even as the capitalist state wages an endless "War on Terror" to seize other people's resources for geostrategic advantage over the competition. As Glenn Greenwald wrote:
That was the principal authoritarian instrument used by Bush/Cheney to shield itself from judicial accountability, and it is now the instrument used by the Obama DOJ to do the same. Initially, consider this: if Obama's argument is true--that national security would be severely damaged from any disclosures about the government's surveillance activities, even when criminal--doesn't that mean that the Bush administration and its right-wing followers were correct all along when they insisted that The New York Times had damaged American national security by revealing the existence of the illegal NSA program? Isn't that the logical conclusion from Obama's claim that no court can adjudicate the legality of the program without making us Unsafe? (Glenn Greenwald, "Obama's latest use of 'secrecy' to shield presidential lawbreaking," Salon, Democrat or Republican, "liberal" or "conservative:" what matters most for all factions in Washington is the defense and preservation of the class privileges of the capitalist elite. Criminality on such a scale requires that the armed fist of the state is mobilized and ever-vigilant; ready at the nonce to crush anyone who would challenge the prerogatives of our masters."
Business Week: "While the Oracle-Sun merger still is likely to be O.K.'d in the end, the EU will probably ask Oracle's CEO to give up some control over MySQL, Sun's open-source software."
Pfizer Inc.will "significantly" reduce research and development at some of its sites and shut down six out its 20 sites. Pfizer said it will shut down its R&D operations at Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and at Gosport, Slough/Taplow in the United Kingdom. The company will also move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations. Pfizer said the moves will result in staff reductions, but it did not specify how many.
Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will eliminate as many as 2,500 jobs to reduce costs after losing subscribers to rivals.
Electronic Arts to cut 900 workers.
The Dow Jones Industrial Average rose 203.52 points, or 2%, to 10,226.64. The S&P 500 added 23.78 points, or 2.2%, to 1,093.08. The Nasdaq Composite rose 41.62 points, or 2%, to 2,154.06.
Kraft Foods Inc. has made a 9.8 billion pound ($16.4 billion) cash-and-stock offer for British candy maker Cadbury PLC.
Monday's hostile offer values each Cadbury share at 717 pence, lower than Kraft's previous rebuffed approach of 745 pence.
Kraft says the price "represents a substantial premium to the unaffected share price of Cadbury," referring to a surge in the British company's stock since Kraft's previous bid was made public in September. Kraft Foods said the bid is priced 37% above Cadbury's close on July 3 and said no other potential offeror has publicly declared its interest in acquiring Cadbury.
Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying "Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."
The U.S.Dollar Index made a new 15-month low at 74.93. The standard of living for all Americans continues to decline-- year after year. Where is the outcry?
McDonald's Corp. said Monday that its October same-store sales rose 3.3%. Comparable sales, or constant-currency sales at restaurants in operation at least 13 months, were down 0.1% in the U.S., up 6.4% in Europe and climbed 4.7% in Asia, Middle East and Africa. Total systemwide sales rose 10.3% and were up 5.2% excluding the impact of currency translations, McDonald's said.
General Electric Co. and Comcast Corp have agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far, a source familiar with the matter said on Sunday.
The resolution of that issue brings the parties one step closer to an agreement, but French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, the source said.
The euro pushed back up above $1.50 Monday after finance ministers from the Group of 20 rich and developing countries steered clear from addressing the weakness of the U.S. currency against most of its competitors at a meeting over the weekend.
At the meeting in St. Andrews, Scotland, the finance ministers pledged to "continue to provide support for the economy until the recovery is assured" -- in effect telling the markets that borrowing costs will not be rising any time soon.
The thinly traded November gold contract rose $14.20, or 1.3%, to $1,109.30 an ounce, the highest level for a front-month gold contract.
Gold for December delivery, the most-active contract, climbed $13.50, or 1.2%, to $1,109.20 an ounce on the Comex division of the New York Mercantile Exchange, after hitting $1,111.70.
"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.
That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. In September, the National Association of Realtors reports that nearly 70 percent of all sales were on homes priced $250,000 or lower.
Home values are still worst in the local markets that saw the biggest housing boom and bust. These are in California, Florida, Arizona and Nevada.
John Hussman: "“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”
While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us."
Brad Setser: "In my view, it will be hard for the dollar to emerge as major funding currency."
“Bullion is likely to begin outperforming its producers”, the mining stocks, John Roque, managing director at WJB Capital Group, told Bloomberg. According to his technical analysis, “gold should do better than gold equities … it doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.”
Louis Uchitelle,
The New York Times
"A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation....The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country....American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
China will raise retail fuel prices later on Monday, an industry source familiar with the situation told Reuters, with gasoline and diesel likely to hit their highest prices ever following the widely expected rise.
The source did not elaborate or say how big the price rise would be, but industry website C1, which has correctly predicted price movements in the past, said the government would add 480 yuan ($70.32) per ton to the pump price of both diesel and gasoline.
Tom Burghardt: "As AT&T whistleblower Mark Klein revealed in a sworn affidavit that described how the company physically split and copied the traffic that flowed into its offices, NSA was virtually duplicating, sifting and storing the entire Internet. Klein wrote in his self-published book:
What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...
This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in the their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)
Klein's revelations were confirmed by former NSA analyst and whistleblower Russell Tice, who told MSNBC's Countdown with Keith Olbermann in January that the NSA "had access to all Americans' communications" and spied "24/7" on domestic political activist groups and "U.S. news organizations and reporters and journalists."
In demanding that the independent federal judiciary toss these cases, the Obama administration is asserting a broad interpretation of Executive Branch privileges that caused much outrage and hand-wringing by congressional Democrats--when they were out of power.
Under the "change" regime however, what were once viewed by Democrats and their supporters as prime examples of Bushist lawlessness and contempt for constitutional safeguards, are now deemed vital state secrets that "protect" the American people, even as the capitalist state wages an endless "War on Terror" to seize other people's resources for geostrategic advantage over the competition. As Glenn Greenwald wrote:
That was the principal authoritarian instrument used by Bush/Cheney to shield itself from judicial accountability, and it is now the instrument used by the Obama DOJ to do the same. Initially, consider this: if Obama's argument is true--that national security would be severely damaged from any disclosures about the government's surveillance activities, even when criminal--doesn't that mean that the Bush administration and its right-wing followers were correct all along when they insisted that The New York Times had damaged American national security by revealing the existence of the illegal NSA program? Isn't that the logical conclusion from Obama's claim that no court can adjudicate the legality of the program without making us Unsafe? (Glenn Greenwald, "Obama's latest use of 'secrecy' to shield presidential lawbreaking," Salon, Democrat or Republican, "liberal" or "conservative:" what matters most for all factions in Washington is the defense and preservation of the class privileges of the capitalist elite. Criminality on such a scale requires that the armed fist of the state is mobilized and ever-vigilant; ready at the nonce to crush anyone who would challenge the prerogatives of our masters."
Business Week: "While the Oracle-Sun merger still is likely to be O.K.'d in the end, the EU will probably ask Oracle's CEO to give up some control over MySQL, Sun's open-source software."
Pfizer Inc.will "significantly" reduce research and development at some of its sites and shut down six out its 20 sites. Pfizer said it will shut down its R&D operations at Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and at Gosport, Slough/Taplow in the United Kingdom. The company will also move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations. Pfizer said the moves will result in staff reductions, but it did not specify how many.
Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will eliminate as many as 2,500 jobs to reduce costs after losing subscribers to rivals.
Electronic Arts to cut 900 workers.
The Dow Jones Industrial Average rose 203.52 points, or 2%, to 10,226.64. The S&P 500 added 23.78 points, or 2.2%, to 1,093.08. The Nasdaq Composite rose 41.62 points, or 2%, to 2,154.06.
Sunday, November 08, 2009
Rules of the Investing Road
11/8/09 Rules of the Investing Road
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
Rules of the Investing Road
11/8/09 Rules of the Investing Road
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
Saturday, November 07, 2009
Lessons Not Learned
11/7/09 Lessons Not Learned
UCBH Holdings Inc.’s United Commercial Bank, a San Francisco-based lender with $11.2 billion in assets, was seized by regulators, becoming the 120th U.S. bank to fail this year. The year-to-date 120 banks being reorganized has impacted 1,378 branches and since IndyMac last year, we're up to 3,985 branches impacted and 142 banks.
The Pelosi Healthcare Bill: Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years. According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.
Doug Noland: "Global yields are mismatched to the reflationary backdrop. This predicament implies ongoing market distortions, a rather extraordinary global mispricing of the cost of finance, along with all the myriad financial and economic costs associated with unrelenting “Monetary Disorder” (i.e. assets Bubbles, imbalances, mal- and over-investment, financial and economic fragilities, etc.)...The sources of acute systemic fragility are generally not easily or commonly recognized during periods of excess. The risks wrought from Fed-induced market distortions and mis-pricings during the Mortgage Finance Bubble were not apparent to most until it was much too late. The perception today is that our post-Bubble systemic backdrop is not vulnerable to either excesses or inflationary pressures. The bulls scoff at the notion that there are domestic risks associated with sticking with ultra-easy monetary policy (any one catch Paul McCulley’s CNBC interview late this afternoon?). The risks are there but not so visible....ultra-low interest-rates are being only further embedded into Credit and economic structures. The Fed has manipulated short-rates and market yields in the most extreme degree. This intervention has amounted to massive distortion throughout the markets, while this process has further spurred the Paradigm shift of power from the Core to the Periphery....Unless global reflationary forces dissipate, this implies a future adjustment period for U.S. interest-rate and risk asset markets. And when the Fed eventually loses command over market yields, the risks associated with today’s policy course will likely manifest into a very problematic financial and economic crisis. The Fed should neither peg interest rates nor telegraph the future course of interest rate manipulations – especially at near zero rates. And the Fed can today ignore global reflationary dynamics at our – and our currency’s - future peril. It’s amazing the lessons somehow not learned."
Fannie Mae to allow borrowers in foreclosure to lease back homes.
According to Bloomberg, “Stores, apartment buildings and warehouses in the U.S. will set new vacancy records before a recovery takes hold in the job and commercial property markets, according to a forecast by CB Richard Ellis… Vacancies at industrial properties will climb to almost 16% in 2011 and apartment vacancies will top out at 8.1% this quarter, CBRE chief economist Ray Torto said… The proportion of empty space at shopping centers and malls will increase to about 13% in 2010… U.S. commercial real estate prices have plunged almost 41% since October 2007, the Moody’s/REAL Commercial Property Price Indices show.”
George Ure: " The Dow hit an intraday high of 11,908.50 in first week of January way back in 2000, which using the Fed's own numbers means that to just break-even on a purchasing power basis, the Dow needs to be at 14,743.86 - but it gets even better! We are almost through with 2009 and throw in another 4% for inflation to ballpark it and the Dow would need to be north of 15,333."
We remain at record lows in weekly hours worked at 33.
Mark Spitznagel: "Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen..... In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming "A great crash is coming, and I don't want my name in any way connected with it."
We all know what happened next. Pretty much right out of Mises's script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed. The brittle tree snapped. Following Mises's logic, was this a failure of capitalism, or a failure of hubris?
Mises's solution follows logically from his warnings. You can't fix what's broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don't encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I'm going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher."
ZeroHedge: "A few weeks ago we speculated that the Federal Reserve's attempt to conduct a reverse repo test as part of a liquidity drainage failed. In a stunning piece of news, Zero Hedge friend Jim Bianco sent us the following. Little commentary is necessary: the banks are about to unleash the massive leverage ploy all over again, this time with the pretext that they are happy to soak up liquidity, yet in the same time, their stupidity and inability to gauge risk will blow up the financial system once again when Tier One ratios for dealers are allowed to go back to 100:1. Zero Hedge will forward this information to all of our correspondents in Washington as what the Primary Dealer community is doing is extortion, pure and simple, and it is likely to be endorsed by their cronies at the Federal Reserve (which, in turn, has already received a carte blanche to do so by its purported master, Goldman Sachs)."
“We will certainly have very bad payroll numbers in November and December,” said Harm Bandholz, an economist at UniCredit Global Research in New York, whose forecast for a 10.1 percent unemployment rate matched the highest among economists surveyed by Bloomberg. “We don’t foresee businesses going on a hiring spree anytime soon.”
The Natural Gas ETF (UNG) is trading below its 50-day moving average at -13%.
Sen. Tom Coburn, the Oklahoma Republican who developed a close friendship with President Obama when they served together in the Senate, is threatening to have the entire health care bill read on the Senate floor. Senior Senate Democratic aides had heard Coburn was considering having potentially thousands of pages read aloud in effort to stall passage. “If he did this it would be even outrageous for a guy who’s become known as Dr. No around here,” one of them told POLITICO.
The latest deals at Wal-Mart include an HP notebook computer for $298 (normally $448) and a Sharp 52-inch flat-panel television for $898 (normally $1,548).
"They put a stake in the ground and said, 'We will not be beat this holiday season,' " said Joe Feldman, a senior retail analyst at Telsey Advisory Group. "Without question, everyone has to look out for Wal-Mart."
Tim W. Wood: "Nothing has changed with regard to this being a larger degree bear market rally that should ultimately prove to separate Phase I from Phase II of a much longer-term secular bear market. The key to identifying the top of this bear market rally will come from the statistics that I’ve data-mined going back to 1896, which was the inception of the Industrial and Transportation averages. So I know what this top should look like, and between these statistics and the reading of the averages in accordance with orthodox Dow theory, I feel that I will be able to identify this bear market top. For now, the rally officially lives on. But the longer it lasts, the more people it will convince that it’s a new bull market and the more people will ultimately be hurt in the end as the Phase II rally begins. This is why the Phase II declines are the most devastating."
Since 1988, the American confectionery company Hershey has owned a US licence to make and sell Cadbury-branded products ranging from Dairy Milk bars to Fruit and Nut, Creme Eggs and Mini Eggs. And its concept is rather different from Cadbury's.
Greg Weldon: "Moreover, when we combine the monthly change in the number of Unemployed, with the number Not in the Labor Force, we might consider the result to be a proxy for the actual 'change' in the underlying labor market situation ... in which case, October's figure of 817,000 represents the fourth LARGEST yet, behind last month's (September's) second largest figure of 1,021,000 ... for a two-month combined figure of 1.838 million, in newly Unemployed, or no longer 'in' the Labor Force ...
"... the second LARGEST two-month total EVER posted, barely trailing the December-08/January-09 total 1.955 million."
Mike Burk: "The market is in the middle of an upswing that, by recent patterns, should last another week. We should see new highs in the Dow Jones Industrial Average unconfirmed by the breadth indicators and secondaries.
Zenyatta ran one of the greatest races in the history of horse racing and should win horse of the year. Next to Secretariat's win in the Belmont Stakes, this is the greatest horse race I have seen. She is the Rocky Marciano of horse racing.
UCBH Holdings Inc.’s United Commercial Bank, a San Francisco-based lender with $11.2 billion in assets, was seized by regulators, becoming the 120th U.S. bank to fail this year. The year-to-date 120 banks being reorganized has impacted 1,378 branches and since IndyMac last year, we're up to 3,985 branches impacted and 142 banks.
The Pelosi Healthcare Bill: Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years. According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.
Doug Noland: "Global yields are mismatched to the reflationary backdrop. This predicament implies ongoing market distortions, a rather extraordinary global mispricing of the cost of finance, along with all the myriad financial and economic costs associated with unrelenting “Monetary Disorder” (i.e. assets Bubbles, imbalances, mal- and over-investment, financial and economic fragilities, etc.)...The sources of acute systemic fragility are generally not easily or commonly recognized during periods of excess. The risks wrought from Fed-induced market distortions and mis-pricings during the Mortgage Finance Bubble were not apparent to most until it was much too late. The perception today is that our post-Bubble systemic backdrop is not vulnerable to either excesses or inflationary pressures. The bulls scoff at the notion that there are domestic risks associated with sticking with ultra-easy monetary policy (any one catch Paul McCulley’s CNBC interview late this afternoon?). The risks are there but not so visible....ultra-low interest-rates are being only further embedded into Credit and economic structures. The Fed has manipulated short-rates and market yields in the most extreme degree. This intervention has amounted to massive distortion throughout the markets, while this process has further spurred the Paradigm shift of power from the Core to the Periphery....Unless global reflationary forces dissipate, this implies a future adjustment period for U.S. interest-rate and risk asset markets. And when the Fed eventually loses command over market yields, the risks associated with today’s policy course will likely manifest into a very problematic financial and economic crisis. The Fed should neither peg interest rates nor telegraph the future course of interest rate manipulations – especially at near zero rates. And the Fed can today ignore global reflationary dynamics at our – and our currency’s - future peril. It’s amazing the lessons somehow not learned."
Fannie Mae to allow borrowers in foreclosure to lease back homes.
According to Bloomberg, “Stores, apartment buildings and warehouses in the U.S. will set new vacancy records before a recovery takes hold in the job and commercial property markets, according to a forecast by CB Richard Ellis… Vacancies at industrial properties will climb to almost 16% in 2011 and apartment vacancies will top out at 8.1% this quarter, CBRE chief economist Ray Torto said… The proportion of empty space at shopping centers and malls will increase to about 13% in 2010… U.S. commercial real estate prices have plunged almost 41% since October 2007, the Moody’s/REAL Commercial Property Price Indices show.”
George Ure: " The Dow hit an intraday high of 11,908.50 in first week of January way back in 2000, which using the Fed's own numbers means that to just break-even on a purchasing power basis, the Dow needs to be at 14,743.86 - but it gets even better! We are almost through with 2009 and throw in another 4% for inflation to ballpark it and the Dow would need to be north of 15,333."
We remain at record lows in weekly hours worked at 33.
Mark Spitznagel: "Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen..... In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming "A great crash is coming, and I don't want my name in any way connected with it."
We all know what happened next. Pretty much right out of Mises's script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed. The brittle tree snapped. Following Mises's logic, was this a failure of capitalism, or a failure of hubris?
Mises's solution follows logically from his warnings. You can't fix what's broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don't encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I'm going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher."
ZeroHedge: "A few weeks ago we speculated that the Federal Reserve's attempt to conduct a reverse repo test as part of a liquidity drainage failed. In a stunning piece of news, Zero Hedge friend Jim Bianco sent us the following. Little commentary is necessary: the banks are about to unleash the massive leverage ploy all over again, this time with the pretext that they are happy to soak up liquidity, yet in the same time, their stupidity and inability to gauge risk will blow up the financial system once again when Tier One ratios for dealers are allowed to go back to 100:1. Zero Hedge will forward this information to all of our correspondents in Washington as what the Primary Dealer community is doing is extortion, pure and simple, and it is likely to be endorsed by their cronies at the Federal Reserve (which, in turn, has already received a carte blanche to do so by its purported master, Goldman Sachs)."
“We will certainly have very bad payroll numbers in November and December,” said Harm Bandholz, an economist at UniCredit Global Research in New York, whose forecast for a 10.1 percent unemployment rate matched the highest among economists surveyed by Bloomberg. “We don’t foresee businesses going on a hiring spree anytime soon.”
The Natural Gas ETF (UNG) is trading below its 50-day moving average at -13%.
Sen. Tom Coburn, the Oklahoma Republican who developed a close friendship with President Obama when they served together in the Senate, is threatening to have the entire health care bill read on the Senate floor. Senior Senate Democratic aides had heard Coburn was considering having potentially thousands of pages read aloud in effort to stall passage. “If he did this it would be even outrageous for a guy who’s become known as Dr. No around here,” one of them told POLITICO.
The latest deals at Wal-Mart include an HP notebook computer for $298 (normally $448) and a Sharp 52-inch flat-panel television for $898 (normally $1,548).
"They put a stake in the ground and said, 'We will not be beat this holiday season,' " said Joe Feldman, a senior retail analyst at Telsey Advisory Group. "Without question, everyone has to look out for Wal-Mart."
Tim W. Wood: "Nothing has changed with regard to this being a larger degree bear market rally that should ultimately prove to separate Phase I from Phase II of a much longer-term secular bear market. The key to identifying the top of this bear market rally will come from the statistics that I’ve data-mined going back to 1896, which was the inception of the Industrial and Transportation averages. So I know what this top should look like, and between these statistics and the reading of the averages in accordance with orthodox Dow theory, I feel that I will be able to identify this bear market top. For now, the rally officially lives on. But the longer it lasts, the more people it will convince that it’s a new bull market and the more people will ultimately be hurt in the end as the Phase II rally begins. This is why the Phase II declines are the most devastating."
Since 1988, the American confectionery company Hershey has owned a US licence to make and sell Cadbury-branded products ranging from Dairy Milk bars to Fruit and Nut, Creme Eggs and Mini Eggs. And its concept is rather different from Cadbury's.
Greg Weldon: "Moreover, when we combine the monthly change in the number of Unemployed, with the number Not in the Labor Force, we might consider the result to be a proxy for the actual 'change' in the underlying labor market situation ... in which case, October's figure of 817,000 represents the fourth LARGEST yet, behind last month's (September's) second largest figure of 1,021,000 ... for a two-month combined figure of 1.838 million, in newly Unemployed, or no longer 'in' the Labor Force ...
"... the second LARGEST two-month total EVER posted, barely trailing the December-08/January-09 total 1.955 million."
Mike Burk: "The market is in the middle of an upswing that, by recent patterns, should last another week. We should see new highs in the Dow Jones Industrial Average unconfirmed by the breadth indicators and secondaries.
Zenyatta ran one of the greatest races in the history of horse racing and should win horse of the year. Next to Secretariat's win in the Belmont Stakes, this is the greatest horse race I have seen. She is the Rocky Marciano of horse racing.
Friday, November 06, 2009
Unemployment
11/6/09 Unemployment
The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday. Nonfarm payrolls dropped by 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. Economists surveyed by MarketWatch were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. The unemployment rate of 10.2% was the highest since April 1983. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.5%, the highest on record dating to 1995. In October, the number of unemployed persons increased by 558,000 to 15.7 million. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more. The employment-population ratio continued to decline in October, falling to 58.5 percent.
A wider measure of labor-market slack, which includes both the officially unemployed and people who want work but who have given up searching, hit a record high of 17.5 percent.
The Labor Department's survey of households showed a loss of 589,000 jobs last month, leading to the big jump in the unemployment rate.
The U.S. imposed duties of as much as 99 percent on steel pipe from China after American producers led by U.S. Steel Corp. complained that the imports were being dumped at below-market prices.
The duties on $2.6 billion in annual imports of the pipe, used in oil and gas wells, will be 36.5 percent for the 37 largest exporters, the Commerce Department said in a preliminary decision announced by e-mail today. Those tariffs will be on top of separate duties announced in September averaging 21 percent to counter subsidies to Chinese producers.
Wheat prices fell the most this week as demand for supplies from the U.S., the world’s largest exporter, slumped to a four-month low. Soybean prices had their biggest drop in almost five weeks and corn dropped on speculation that U.S. farmers will accelerate harvests delayed by excessive rainfall.
At its high point, the federal government was guaranteeing or insuring $4.3 trillion in face value of financial assets, according to a report released Friday by the Congressional Oversight Panel. "The Panel found that Treasury took an aggressive stance in protecting taxpayer interests, and the Panel did not identify any major flaws with their implementation of the guarantee programs. Even so, these programs carried significant risk. In many cases, the American taxpayer stood behind guarantees of high-risk assets held by potentially insolvent institutions," the report said.
Fannie Mae, the mortgage buyer seized by regulators, plans to tap emergency U.S. capital for a fourth time this year, bringing its draws of taxpayer money to $60 billion as the company sees no immediate end to its losses.
The U.S. economic recovery will probably “run out of gas” as it heads toward a “new normal” of lower long-term growth and higher unemployment than over the previous decade, Nobel laureate Edmund Phelps said.
The U.S. economy “is groggy, but it’s getting to its feet,” Phelps, who won the Nobel Prize in 2006, said in an interview with Bloomberg Television today in New York. “We’re already seeing a strong recovery, I just think that it’s going to run out of gas.”
In an unprecedented discounting move that could signal a price war that would benefit the major movie studios and cash-strapped consumers, Wal-Mart has slashed the price of a number of the upcoming DVDs of big-budget summer movies to $10 on its website.
Gold for November delivery gained 1% to $1,100 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a front-month contract. The more actively traded December contract rose to $1,101.90 an ounce.
Brazil's Petrobras has found natural gas in Peru's Amazon jungle and the discovery of about 1 trillion cubic feet could turn out to be much larger, Peruvian President Alan Garcia said on Thursday.
At least one store isn’t waiting until Black Friday to unleash its deals. Rather than leaking its ads early, Wal-Mart is starting its electronics sales early, plus offering $20 turkey dinners for eight.
Wal-Mart will begin the first of several one-week “electronics savings events” on Saturday, Nov. 7.
General Electric and Comcast are now expected to announce a deal over GE's NBC Universal unit on Nov. 16, not next week as originally thought, people familiar with the situation told CNBC.
Outstanding consumer debt fell at a 7.2% annual rate in September, the eighth consecutive decline, the Federal Reserve reported Friday. Consumer credit fell by $14.8 billion to $2.46 trillion in September, down 4.7% compared with a year ago. Outstanding credit can fall if consumers pay off balances, or if lenders write off bad loans. The decline in September was led by another huge drop in revolving debt, such as credit cards, which fell $9.9 billion to $889 billion, or a 13.3% annual rate. Nonrevolving debt -- such as auto loans, student loans and other personal loans -- fell $4.9 billion to $1.57 trillion, or a 3.7% annual rate.
The Dow Jones Industrial Average added 17.46 points, or 0.2%, to 10,023.42, with the blue chips up 3.2% for the week. The S&P 500 Index rose 2.67 points, or 0.3%, leaving it up 3.2% from the week-ago close. The Nasdaq Composite gained 7.12 points, or 0.3%, to 2,112.44, giving the technology-laden index a weekly rise of 3.3%.
United Security Bank of Sparta, Ga, became the 116th U.S. bank of the year to fail, according to the Federal Deposit Insurance Corp. on Friday. Ameris Bank of Moultrie, Ga. will purchase the bank's assets and assume all of the deposits at a 0.36% premium.
The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday. Nonfarm payrolls dropped by 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. Economists surveyed by MarketWatch were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. The unemployment rate of 10.2% was the highest since April 1983. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.5%, the highest on record dating to 1995. In October, the number of unemployed persons increased by 558,000 to 15.7 million. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more. The employment-population ratio continued to decline in October, falling to 58.5 percent.
A wider measure of labor-market slack, which includes both the officially unemployed and people who want work but who have given up searching, hit a record high of 17.5 percent.
The Labor Department's survey of households showed a loss of 589,000 jobs last month, leading to the big jump in the unemployment rate.
The U.S. imposed duties of as much as 99 percent on steel pipe from China after American producers led by U.S. Steel Corp. complained that the imports were being dumped at below-market prices.
The duties on $2.6 billion in annual imports of the pipe, used in oil and gas wells, will be 36.5 percent for the 37 largest exporters, the Commerce Department said in a preliminary decision announced by e-mail today. Those tariffs will be on top of separate duties announced in September averaging 21 percent to counter subsidies to Chinese producers.
Wheat prices fell the most this week as demand for supplies from the U.S., the world’s largest exporter, slumped to a four-month low. Soybean prices had their biggest drop in almost five weeks and corn dropped on speculation that U.S. farmers will accelerate harvests delayed by excessive rainfall.
At its high point, the federal government was guaranteeing or insuring $4.3 trillion in face value of financial assets, according to a report released Friday by the Congressional Oversight Panel. "The Panel found that Treasury took an aggressive stance in protecting taxpayer interests, and the Panel did not identify any major flaws with their implementation of the guarantee programs. Even so, these programs carried significant risk. In many cases, the American taxpayer stood behind guarantees of high-risk assets held by potentially insolvent institutions," the report said.
Fannie Mae, the mortgage buyer seized by regulators, plans to tap emergency U.S. capital for a fourth time this year, bringing its draws of taxpayer money to $60 billion as the company sees no immediate end to its losses.
The U.S. economic recovery will probably “run out of gas” as it heads toward a “new normal” of lower long-term growth and higher unemployment than over the previous decade, Nobel laureate Edmund Phelps said.
The U.S. economy “is groggy, but it’s getting to its feet,” Phelps, who won the Nobel Prize in 2006, said in an interview with Bloomberg Television today in New York. “We’re already seeing a strong recovery, I just think that it’s going to run out of gas.”
In an unprecedented discounting move that could signal a price war that would benefit the major movie studios and cash-strapped consumers, Wal-Mart has slashed the price of a number of the upcoming DVDs of big-budget summer movies to $10 on its website.
Gold for November delivery gained 1% to $1,100 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a front-month contract. The more actively traded December contract rose to $1,101.90 an ounce.
Brazil's Petrobras has found natural gas in Peru's Amazon jungle and the discovery of about 1 trillion cubic feet could turn out to be much larger, Peruvian President Alan Garcia said on Thursday.
At least one store isn’t waiting until Black Friday to unleash its deals. Rather than leaking its ads early, Wal-Mart is starting its electronics sales early, plus offering $20 turkey dinners for eight.
Wal-Mart will begin the first of several one-week “electronics savings events” on Saturday, Nov. 7.
General Electric and Comcast are now expected to announce a deal over GE's NBC Universal unit on Nov. 16, not next week as originally thought, people familiar with the situation told CNBC.
Outstanding consumer debt fell at a 7.2% annual rate in September, the eighth consecutive decline, the Federal Reserve reported Friday. Consumer credit fell by $14.8 billion to $2.46 trillion in September, down 4.7% compared with a year ago. Outstanding credit can fall if consumers pay off balances, or if lenders write off bad loans. The decline in September was led by another huge drop in revolving debt, such as credit cards, which fell $9.9 billion to $889 billion, or a 13.3% annual rate. Nonrevolving debt -- such as auto loans, student loans and other personal loans -- fell $4.9 billion to $1.57 trillion, or a 3.7% annual rate.
The Dow Jones Industrial Average added 17.46 points, or 0.2%, to 10,023.42, with the blue chips up 3.2% for the week. The S&P 500 Index rose 2.67 points, or 0.3%, leaving it up 3.2% from the week-ago close. The Nasdaq Composite gained 7.12 points, or 0.3%, to 2,112.44, giving the technology-laden index a weekly rise of 3.3%.
United Security Bank of Sparta, Ga, became the 116th U.S. bank of the year to fail, according to the Federal Deposit Insurance Corp. on Friday. Ameris Bank of Moultrie, Ga. will purchase the bank's assets and assume all of the deposits at a 0.36% premium.
Thursday, November 05, 2009
Pick-a-Pay
11/5/09 Pick-a-Pay
The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week ending Oct. 31, the lowest since January, the Labor Department reported Thursday. Initial jobless claims have been above 500,000 for 51 straight weeks. Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. Continuing state claims fell by 68,000 to a seasonally adjusted 5.75 million, the lowest since March. The number of people claiming benefits of any kind in the week ending Oct. 17 was 9.53 million, not seasonally adjusted, up 136,000 from 9.36 million in the previous week.
General Motors said it wanted to cut around 10,000 jobs at its European division Opel a day after the US car maker stunned the auto sector by scrapping plans to sell the German-based unit.
GM wants to slash costs by 30 percent at Opel, which would mean the elimination of about 10,000 jobs from a workforce of 55,000, GM vice president John Smith told European journalists during a telephone news conference.
U.S. companies increased their output in the third quarter even as they slashed working hours, driving productivity up at a 9.5% annual rate in the quarter, the Labor Department estimated Thursday. Unit labor costs -- a key measure of inflation -- dropped at a 5.2% annual rate in the quarter. The 9.5% increase in productivity in the third quarter was the highest in six years, and was better than the 7.3% expected by economists surveyed by MarketWatch. The decline in unit labor costs was also more than the 4.6% expected. In manufacturing, the gains were more impressive, with productivity surging at a record 13.6% annual rate. Unit labor costs in manufacturing fell 7.1%. Output increased 4.0 percent and hours worked decreased 5.0 percent in the third quarter of 2009. From the third quarter of 2008 to the third quarter of 2009, nonfarm business output fell 3.5 percent and hours worked fell faster, 7.5 percent, resulting in a productivity increase of 4.3 percent. The four-quarter decline in hours was the largest in the series, which begins in 1948!
Costco Wholesale Corp. reported that for October, comparable-store sales rose 5% while total sales rose 7% to $5.68 billion from $5.3 billion in the year-earlier month. A survey of analysts by Thomson Reuters produced a consensus estimate of same-store sales up 4.7% for the month. The same-store sales reflect increases of 2% in the U.S. and 17% internationally. Foreign currencies' strength against the U.S. dollar benefited October comparable sales, "in contrast to the previous 14 months, during which time" the impact had been negative, Costco said. Excluding the effect of forex and lower prices of gasoline, total company same-store sales rose 4%, reflecting rises of 3% in the U.S. and 7% internationally.
Abercrombie & Fitch said sales at stores open more that a year fell 15% in October. Gap Inc., the largest U.S. clothing chain, said its October same-store sales rose 4%. Macy's Inc.said Thursday that its October sales at stores open at least one year fell 0.8%. J.C. Penney Company said Thursday that its October sales at stores open at least one year fell 4.5%.
Agrium Inc raised its hostile takeover offer for rival CF Industries Holdings Inc. (CF) to $92.99 a share, based on the closing price of Agrium stock on Wednesday. Agrium raised the cash portion of the deal to $45 a share, up $5, or 13% from its earlier offer. "This offer provides a premium of over 67% to CF's closing price on Feb. 24, the day before Agrium announced its initial proposal, and about 84% to CF's 30-day volume weighted average price through that date," Agrium said. Shares of CF Industries closed at $86.39 on Wednesday.
The Bank of England said Thursday that the world economy has shown signs of recovery, with a number of emerging markets economies experiencing a strong rebound, but that financial conditions remain fragile.
The global speculative-grade default rate rose to 12.4 percent in October, the highest proportion of defaults since the Great Depression, according to Moody’s Investors Service.
The annual rate at which companies worldwide fail to meet their commitments may peak at 12.5 percent next month, Moody’s said in a report today. The New York-based firm revised its September figure to 12.3 percent, also higher than the 12.2 percent rate reached in 1991. The total number of defaults declined to eight in October, the lowest monthly count this year and down from 19 in September, Moody’s said.
Michael Pento: "The sad truth is that this recent market rally has been produced on the back of a weakening dollar and the slashing of corporate overhead. Cutting payrolls and research and product development projects are not a prescription for sustainable growth. As I like to say, you can't burn your furniture to keep your house warm forever. Eventually, top-line revenue growth must emerge or Wall Street's game of beat-the-expectations will be short lived.
It's also worth noting that a country cannot devalue itself to prosperity and that a bull market cannot survive an inflationary environment for long. In the short run, nominal gains in the averages can occur since everything priced in dollars tends to increase in value. However, the rally will be truncated unless the Fed provides consumers and corporations with a stable currency."
Rigzone: "In its third quarter report, Statoil confirmed that it has signed an agreement with China's CNOOC for a number of stakes in its Gulf of Mexico (GOM) leases. Significantly, the deal opens the U.S. Gulf of Mexico to Chinese oil companies for the first time.
In the farm-down agreement with the Norwegian oil firm, CNOOC will secure equity stakes in four GOM fields in exchange for bearing some of the fields' development costs."
Venezuelan Energy and Oil Minister Rafael Ramirez said on Tuesday that his country does not agree to increase the oil production of the Organization of Petroleum Exporting Countries (OPEC) despite a rise in world oil prices.
"We think that the market situation must be followed with caution and we should not rush to introduce not demanded volumes to the market," Ramirez told the press after attending the 3rd World Congress of Heavy Oil in Margarita Island, Venezuela.
Toyota Motor Corp. announced Thursday a surprise profit last quarter and trimmed its projected red ink for the year, underlining the gradual recovery under way for Japan's giant automakers.
The U.K.'s central bank increased its bond-buying program by $41.41 billion as it kept rates steady, while the ECB left its benchmark interest rate unchanged at 1.0%.
The US, European Union and Mexico have asked for a World Trade Organisation dispute panel to investigate Chinese restrictions on exports of specialised raw materials used in industry, the latest indication that the global slowdown is leading to greater international action against China’s trade policies.
The request to the WTO claims that China’s restraints on exports of bauxite, magnesium and other raw materials, which are used to make steel, aluminium and some chemicals, is driving up the price of those end products.
The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 30% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Thirty-nine percent (39%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -9 (see trends). Thirty-four percent (34%) say the U.S. is generally heading in the right direction.
If health care passes, 72% say it’s likely companies would drop insurance coverage for employees. Most also think that being pushed onto the government option would be bad for workers.
The Federal Reserve will continue to foster a U.S. dollar-funded carry trade with its near-zero interest rate policy, Mohamed El-Erian, chief executive of Pacific Investment Management Inc., said on Wednesday,
The so-called carry trade refers to borrowing at low short-term rates -- in this case, in the U.S. dollar -- to buy high-yielding, long-dated securities in other markets. The intention is to profit from the rate differential, although rising short-term rates make this strategy riskier and less profitable.
North America has 12 LNG terminals with a capacity of 145bcm a year and five more under construction, plus one being extended. This will bring its import capacity to 214bcm.
The United Nations says it is temporarily relocating more than half of its 1100 international staff members in Afghanistan because of security concerns.
Goldman Sachs: "Los Angeles and Seattle remained the weakest markets with rental rate declines of -11.5% and -8.5%, respectively."
"Credit performance for CMBS worsened at an accelerated pace this month versus the recent trend. Thirty-plus day delinquencies across the fixed rate universe increased by 41bp, to 5.50%, partly owing to the deterioration of loans that were current but transferred to the special servicer last month. This compares with the trailing three month average of 34bp. The trend of accelerating delinquencies is expected to continue throughout 2009 and early 2010, given the long lag times associated with commercial real estate." - Barclays
Diana Olick: " Pay option ARM's or Wells' particular version called "Pick-a-Pay."
Whatever you call them, these are the loans where you decide what you want to pay each month, and whatever is left over is tacked on to your principal.
Pay option ARMs are the new subprime, defaulting at high rates now thanks to adjustments as well as good ol' unemployment. According to its Q3 earnings report, Wells Fargo, the fourth largest U.S. bank by assets, has $79.2 billion in debt on these loans alone, down from $101 billion a year ago, in addition to other ARMs and fixed-rate loans and full-term loan modifications. Wells didn't make the Pick-a-Pay loans, they just inherited them when they bought Wachovia at the beginning of this year. Wachovia relished in selling these risky products in the most overheated housing markets. Suffice it to say, many many many of these borrowers are way way way underwater on their loans. Enter the interest-only product, which will allow borrowers to defer their balances from 6 to 10 years. This keeps the borrowers in their homes, paying a little every month. I called over to Wells Home Mortgage and spoke with CFO Franklin Codel. He told me that Wells has written down principal on the "vast majority of these loans." Yep, just given that debt away, written down so far the tune of $2 billion, or about $46,000 per modified loan. So far Wells has turned about 43,500 Pick-A-Pays into interest-only ARMs."
Working gas in storage was 3,788 Bcf as of Friday, October 30, 2009, according
to EIA estimates. This represents a net increase of 29 Bcf from the previous
week. Stocks were 379 Bcf higher than last year at this time and 414 Bcf above
the 5-year average of 3,374 Bcf. In the East Region, stocks were 123 Bcf above
the 5-year average following net injections of 27 Bcf. Stocks in the Producing
Region were 227 Bcf above the 5-year average of 962 Bcf after a net injection of
1 Bcf. Stocks in the West Region were 64 Bcf above the 5-year average after a
net addition of 1 Bcf. At 3,788 Bcf, total working gas is above the 5-year
historical range.
Health care data company IMS Health Inc. said Thursday it is being bought by investment funds TPG Capital and CPP Investment Board for $4 billion.
IMS shareholders are getting $22 per share under the deal, marking a 31 percent premium to the stock's closing price of $16.81 on Wednesday.
The Dow industrials added 203.82 points, or 2.1%, to end at 10,005.96. The S&P 500 Index rose 20.13 points, or 1.9%, to end at 1,066.63. The Nasdaq Composite climbed 49.80 points, or 2.4%, to 2,105.32.
The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week ending Oct. 31, the lowest since January, the Labor Department reported Thursday. Initial jobless claims have been above 500,000 for 51 straight weeks. Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. Continuing state claims fell by 68,000 to a seasonally adjusted 5.75 million, the lowest since March. The number of people claiming benefits of any kind in the week ending Oct. 17 was 9.53 million, not seasonally adjusted, up 136,000 from 9.36 million in the previous week.
General Motors said it wanted to cut around 10,000 jobs at its European division Opel a day after the US car maker stunned the auto sector by scrapping plans to sell the German-based unit.
GM wants to slash costs by 30 percent at Opel, which would mean the elimination of about 10,000 jobs from a workforce of 55,000, GM vice president John Smith told European journalists during a telephone news conference.
U.S. companies increased their output in the third quarter even as they slashed working hours, driving productivity up at a 9.5% annual rate in the quarter, the Labor Department estimated Thursday. Unit labor costs -- a key measure of inflation -- dropped at a 5.2% annual rate in the quarter. The 9.5% increase in productivity in the third quarter was the highest in six years, and was better than the 7.3% expected by economists surveyed by MarketWatch. The decline in unit labor costs was also more than the 4.6% expected. In manufacturing, the gains were more impressive, with productivity surging at a record 13.6% annual rate. Unit labor costs in manufacturing fell 7.1%. Output increased 4.0 percent and hours worked decreased 5.0 percent in the third quarter of 2009. From the third quarter of 2008 to the third quarter of 2009, nonfarm business output fell 3.5 percent and hours worked fell faster, 7.5 percent, resulting in a productivity increase of 4.3 percent. The four-quarter decline in hours was the largest in the series, which begins in 1948!
Costco Wholesale Corp. reported that for October, comparable-store sales rose 5% while total sales rose 7% to $5.68 billion from $5.3 billion in the year-earlier month. A survey of analysts by Thomson Reuters produced a consensus estimate of same-store sales up 4.7% for the month. The same-store sales reflect increases of 2% in the U.S. and 17% internationally. Foreign currencies' strength against the U.S. dollar benefited October comparable sales, "in contrast to the previous 14 months, during which time" the impact had been negative, Costco said. Excluding the effect of forex and lower prices of gasoline, total company same-store sales rose 4%, reflecting rises of 3% in the U.S. and 7% internationally.
Abercrombie & Fitch said sales at stores open more that a year fell 15% in October. Gap Inc., the largest U.S. clothing chain, said its October same-store sales rose 4%. Macy's Inc.said Thursday that its October sales at stores open at least one year fell 0.8%. J.C. Penney Company said Thursday that its October sales at stores open at least one year fell 4.5%.
Agrium Inc raised its hostile takeover offer for rival CF Industries Holdings Inc. (CF) to $92.99 a share, based on the closing price of Agrium stock on Wednesday. Agrium raised the cash portion of the deal to $45 a share, up $5, or 13% from its earlier offer. "This offer provides a premium of over 67% to CF's closing price on Feb. 24, the day before Agrium announced its initial proposal, and about 84% to CF's 30-day volume weighted average price through that date," Agrium said. Shares of CF Industries closed at $86.39 on Wednesday.
The Bank of England said Thursday that the world economy has shown signs of recovery, with a number of emerging markets economies experiencing a strong rebound, but that financial conditions remain fragile.
The global speculative-grade default rate rose to 12.4 percent in October, the highest proportion of defaults since the Great Depression, according to Moody’s Investors Service.
The annual rate at which companies worldwide fail to meet their commitments may peak at 12.5 percent next month, Moody’s said in a report today. The New York-based firm revised its September figure to 12.3 percent, also higher than the 12.2 percent rate reached in 1991. The total number of defaults declined to eight in October, the lowest monthly count this year and down from 19 in September, Moody’s said.
Michael Pento: "The sad truth is that this recent market rally has been produced on the back of a weakening dollar and the slashing of corporate overhead. Cutting payrolls and research and product development projects are not a prescription for sustainable growth. As I like to say, you can't burn your furniture to keep your house warm forever. Eventually, top-line revenue growth must emerge or Wall Street's game of beat-the-expectations will be short lived.
It's also worth noting that a country cannot devalue itself to prosperity and that a bull market cannot survive an inflationary environment for long. In the short run, nominal gains in the averages can occur since everything priced in dollars tends to increase in value. However, the rally will be truncated unless the Fed provides consumers and corporations with a stable currency."
Rigzone: "In its third quarter report, Statoil confirmed that it has signed an agreement with China's CNOOC for a number of stakes in its Gulf of Mexico (GOM) leases. Significantly, the deal opens the U.S. Gulf of Mexico to Chinese oil companies for the first time.
In the farm-down agreement with the Norwegian oil firm, CNOOC will secure equity stakes in four GOM fields in exchange for bearing some of the fields' development costs."
Venezuelan Energy and Oil Minister Rafael Ramirez said on Tuesday that his country does not agree to increase the oil production of the Organization of Petroleum Exporting Countries (OPEC) despite a rise in world oil prices.
"We think that the market situation must be followed with caution and we should not rush to introduce not demanded volumes to the market," Ramirez told the press after attending the 3rd World Congress of Heavy Oil in Margarita Island, Venezuela.
Toyota Motor Corp. announced Thursday a surprise profit last quarter and trimmed its projected red ink for the year, underlining the gradual recovery under way for Japan's giant automakers.
The U.K.'s central bank increased its bond-buying program by $41.41 billion as it kept rates steady, while the ECB left its benchmark interest rate unchanged at 1.0%.
The US, European Union and Mexico have asked for a World Trade Organisation dispute panel to investigate Chinese restrictions on exports of specialised raw materials used in industry, the latest indication that the global slowdown is leading to greater international action against China’s trade policies.
The request to the WTO claims that China’s restraints on exports of bauxite, magnesium and other raw materials, which are used to make steel, aluminium and some chemicals, is driving up the price of those end products.
The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 30% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Thirty-nine percent (39%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -9 (see trends). Thirty-four percent (34%) say the U.S. is generally heading in the right direction.
If health care passes, 72% say it’s likely companies would drop insurance coverage for employees. Most also think that being pushed onto the government option would be bad for workers.
The Federal Reserve will continue to foster a U.S. dollar-funded carry trade with its near-zero interest rate policy, Mohamed El-Erian, chief executive of Pacific Investment Management Inc., said on Wednesday,
The so-called carry trade refers to borrowing at low short-term rates -- in this case, in the U.S. dollar -- to buy high-yielding, long-dated securities in other markets. The intention is to profit from the rate differential, although rising short-term rates make this strategy riskier and less profitable.
North America has 12 LNG terminals with a capacity of 145bcm a year and five more under construction, plus one being extended. This will bring its import capacity to 214bcm.
The United Nations says it is temporarily relocating more than half of its 1100 international staff members in Afghanistan because of security concerns.
Goldman Sachs: "Los Angeles and Seattle remained the weakest markets with rental rate declines of -11.5% and -8.5%, respectively."
"Credit performance for CMBS worsened at an accelerated pace this month versus the recent trend. Thirty-plus day delinquencies across the fixed rate universe increased by 41bp, to 5.50%, partly owing to the deterioration of loans that were current but transferred to the special servicer last month. This compares with the trailing three month average of 34bp. The trend of accelerating delinquencies is expected to continue throughout 2009 and early 2010, given the long lag times associated with commercial real estate." - Barclays
Diana Olick: " Pay option ARM's or Wells' particular version called "Pick-a-Pay."
Whatever you call them, these are the loans where you decide what you want to pay each month, and whatever is left over is tacked on to your principal.
Pay option ARMs are the new subprime, defaulting at high rates now thanks to adjustments as well as good ol' unemployment. According to its Q3 earnings report, Wells Fargo, the fourth largest U.S. bank by assets, has $79.2 billion in debt on these loans alone, down from $101 billion a year ago, in addition to other ARMs and fixed-rate loans and full-term loan modifications. Wells didn't make the Pick-a-Pay loans, they just inherited them when they bought Wachovia at the beginning of this year. Wachovia relished in selling these risky products in the most overheated housing markets. Suffice it to say, many many many of these borrowers are way way way underwater on their loans. Enter the interest-only product, which will allow borrowers to defer their balances from 6 to 10 years. This keeps the borrowers in their homes, paying a little every month. I called over to Wells Home Mortgage and spoke with CFO Franklin Codel. He told me that Wells has written down principal on the "vast majority of these loans." Yep, just given that debt away, written down so far the tune of $2 billion, or about $46,000 per modified loan. So far Wells has turned about 43,500 Pick-A-Pays into interest-only ARMs."
Working gas in storage was 3,788 Bcf as of Friday, October 30, 2009, according
to EIA estimates. This represents a net increase of 29 Bcf from the previous
week. Stocks were 379 Bcf higher than last year at this time and 414 Bcf above
the 5-year average of 3,374 Bcf. In the East Region, stocks were 123 Bcf above
the 5-year average following net injections of 27 Bcf. Stocks in the Producing
Region were 227 Bcf above the 5-year average of 962 Bcf after a net injection of
1 Bcf. Stocks in the West Region were 64 Bcf above the 5-year average after a
net addition of 1 Bcf. At 3,788 Bcf, total working gas is above the 5-year
historical range.
Health care data company IMS Health Inc. said Thursday it is being bought by investment funds TPG Capital and CPP Investment Board for $4 billion.
IMS shareholders are getting $22 per share under the deal, marking a 31 percent premium to the stock's closing price of $16.81 on Wednesday.
The Dow industrials added 203.82 points, or 2.1%, to end at 10,005.96. The S&P 500 Index rose 20.13 points, or 1.9%, to end at 1,066.63. The Nasdaq Composite climbed 49.80 points, or 2.4%, to 2,105.32.
Wednesday, November 04, 2009
Less Employment
11/4/09 Less Employment
The dollar remained under pressure on Wednesday after ADP Employment Services said private employers cut 203,000 jobs in October, after a revised 227,000 in September that was fewer than initially reported. Last month's tally was close to what some analysts forecast. In September, a revised 227,000 jobs were lost compared with the 254,000 originally reported, ADP said. Goods-producing jobs fell by 117,000in October, including 65,000 in manufacturing and 51,000 in construction. Services-producing jobs fell by 86,000.
Job cut announcements by U.S. employers fell to 55,679 in October, 16% fewer than in September, according to outplacement firm Challenger, Gray & Christmas Inc. It was the third consecutive monthly decline.
"While there are still some trouble spots, the continued decline in job cutting activity across most industries is a positive sign that the economy is slowly improving," said John A. Challenger, chief executive of Challenger, Gray & Christmas, in a statement.
October's total was 51% lower than in October 2008, when nearly 113,000 layoffs were announced. But even though the pace is abating, almost 1.2 million planned layoffs have been announced so far this year -- 36% more than during the same period in 2008.
Challenger said the nation is only about 30,000 planned job cuts away from surpassing the total tally of 2008, which was 1,223,993.
Terra Industries Inc. said Wednesday that it has reviewed CF Industries Holdings Inc.'s latest proposal to acquire Terra for the equivalent of $24.50 in cash and 0.1034 of a share of CF common stock and found it inadequate and not in the best interests of Terra and its shareholders.
September producer prices in the 16-nation euro zone were down 7.7% from the same month last year, the statistics agency Eurostat reported Wednesday. Compared to August, prices fell 0.4%. Both figures were in line with expectations. The euro saw little reaction to the data and remains up 0.3% versus the U.S. dollar at $1.4754. The drop was driven in large part by declines in energy prices. Energy prices were down 17.6% compared to September last year and fell 1.9% from August, Eurostat said. Excluding energy and construction prices, PPI fell at a year-on-year rate of 4.3%, while posting no change from August.
Baker Hughes Inc.,the Houston energy-drilling giant, reported that third-quarter net income fell 87% on 26% lower revenue. Earnings were $55 million, or 18 cents a share, compared with $429 million, or $1.39, in the year-earlier quarter. The latest share figure includes 8 cents of restructuring costs and higher allowance for doubtful debt. Revenue fell to $2.23 billion from $3.01 billion.
Gold futures surged to a new record high on Wednesday, extending their recent strong gains. Gold for December delivery, the most actively traded contract, hit an intraday high of $1,093.70 an ounce in electronic trading on Globex, a new record high for the contract surpassing Tuesday's peak of $1,088.50 an ounce.
The real estate market for homes has deteriorated for years in north-central Ohio. But you'd never know it when dealing with the tax man.
Even as the average sales price of a home sold in the Sandusky area has fallen year after year, the Ohio Department of Taxation has kept up pressure on Erie County to keep home valuations steady, correspondence between a state official and Erie County auditor Tom Paul shows.
MLS sales listings compiled by the Firelands Association of Realtors, which includes Erie, Ottawa, Huron, Sandusky and Seneca counties, show the average sales price in its service area was $141,505 in 2005. The price has fallen every year since then. So far in 2009, the average sales price is $108,090.
Those sales figures do not include foreclosure sales, such as the sheriff sale auctions, said Ruth DeHenning, chief executive officer for the group.
"We have no way of tracking those sales," she said. "If it's not listed and sold by a realtor, we don't have the figures."
Although the values of homes sold in the area have fallen, valuations for real estate have remained essentially flat, and in some areas even risen.
Bloomberg: "Crude oil, which has risen 80 percent this year, is causing the U.S. dollar to weaken, driving metals and other commodities higher, according to Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc.
While oil has risen, the U.S. currency has weakened, leading to speculation that the dollar’s depreciation is driving investors to buy oil as an inflation hedge, thereby pushing up the price of crude.
“I would argue the other way,” Currie said in an interview yesterday in London. “I would argue that higher oil prices drive the dollar down and then the weaker dollar drives the metals and soft commodities up.”
...“Oil represents 40 to 50 percent of the U.S. current account deficit, so a higher oil price represents an outflow of dollars that pushes the currency lower,” Currie said in the interview, after attending a Chatham House conference on food security."
American homeownership, once considered a path to wealth, is now leading to disillusionment. Home prices in the last four years have been the most volatile on record, swinging from a gain of 12 percent in 2005 to an estimated 13 percent loss this year, according to the National Association of Realtors. Those gyrations have embittered many property owners and potential buyers, said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts.
“We always talk about homeownership as being the American dream, but during the last decade people forgot it’s shelter and started thinking of it as a fast way to make or lose money,” said Retsinas. “The quicker we move back to seeing real estate as a place to live, a place to put down roots, the quicker the housing recovery will strengthen.”
Goldman Sachs lost money on just one trading day in Q3, making money on all the other 64. As a reminder, even in Q2 Goldman lost money on two trading days.
Chinese CNOOC buys US oil assets for the first time.
Meredith Whitney: "normalized" earnings for banks is a fallacy, that it's more likely we will see protracted consumer deleveraging, fewer consumers who qualify for credit, and dramatic regulatory change, which will negatively impact earnings for a protracted period."
Walmart has stepped up efforts to mobilise local political support for new store openings in US cities and urban areas that were last month identified as a growth priority for the retailer by Mike Duke, its chief executive.
In addition to a renewed drive to open a second Supercenter store in Chicago, the retailer is also raising its political profile in Philadelphia and continuing to cultivate the ground for a potential move into New York City.
Transocean Ltd., the world's largest offshore oil driller, reported a smaller decline in third- quarter profit than analysts estimated as the company reduced costs in response to slumping demand for floating rigs.
Markets, be they stocks, emerging markets, or commodities, have rallied too far, too fast because the global economy will experience an anemic recovery and not the hoped-for V-shaped recovery, New York University economist Nouriel Roubini said on Wednesday. Speaking at a commodities conference at the New York Stock Exchange, Roubini said "the party" can continue for another six months thanks to the effect of easy monetary policies and stimulus programs. But he warned it would eventually end badly as much of the rise in asset prices since March is yet another bubble fueled by a wall of global liquidity.
The dollar remained lower versus major rivals on Wednesday after the Institute for Supply Management's index on the non-manufacturing sector unexpectedly fell to 50.6 in October, from 50.9 in September. Analysts surveyed by MarketWatch expected the gauge to rise to 51.5. The dollar index ($DXY), which tracks the U.S. currency against a trade-weighted basket of major rivals, traded recently at 75.861, down from 76.369 in North American trade late Tuesday.
The employment index fell to 41.1% from 44.3%.
Julio Quintana, TESCO's Chief Executive Officer, commented "The continued depressed drilling markets, particularly in North America, have reduced our revenue streams across all our business lines. However, our competitive positioning and balance sheet continue to improve. During the quarter, we generated positive cash flow and reduced our net debt outstanding to a net cash position of $11.9 million. We have taken measures to right size the Company to meet the current economic circumstances and market demands. In addition, we have reduced capital spending by 70% year over year. Longer term, we believe the fundamentals driving the growth of our global business remain intact, which we believe will give us the ability to maintain our core strengths and take advantage of opportunities as the market recovers."
German sportswear company Adidas AG said Wednesday its net income fell 30 percent in the third quarter as it saw sales decline, especially at its sport performance division.
Adidas, based in Herzogenaurach, said net income fell to euro213 million ($315 million) in the July-September period from euro302 million in the third quarter of 2008.
Revenue for the period fell 7 percent to euro2.9 billion from euro3.1 billion.
Adidas, which also owns the Reebok brand, said it expected sales to decline at a low to mid-single-digit rate in 2009, assuming unchanged currency values, due to weaker consumer confidence and rising unemployment in many major markets.
Crude inventories fell 4 million barrels in the week ended Oct. 30, and gasoline inventories decreased 300,000 barrels, the Energy Information Administration reported. Analysts surveyed by Platts had expected a modest gain in both fuels. The EIA also reported a 400,000 decline in distillate inventories, which include heating oil and diesel. Demand for gasoline rose 1.8% to 9 million barrels a day, EIA data showed. After the data, December crude futures rose 1.5% to $80.75 a barrel. Futures were up less than 1% before the data.
The U.S. and the global economy will experience massive deflationary forces through 2012, said Nouriel Roubini, economist at New York University, Wednesday. At a conference, Roubini said that although easy monetary policies have fueled another asset bubble, the deflationary forces coming from industrial overcapacity, falling labor costs and a still damaged financial system will prevail over the next two years. But inflation expectations could rise well before that, especially if global central banks take too long to remove their massive liquidity and other stimulus measures. Removing those measures too soon, however, would risk creating "a double dip" recession, Roubini said.
Randall W. Forsyth: "According to a Web site, www.mybudget360.com, the true misery index consists of five indicators: food stamps, bankruptcies, long-term unemployment, foreclosures and credit-card defaults.
For the first time, bankruptcy filings are on a pace to match divorce filings in 2009, the Web site asserted. Bankruptcies could top 1.4 million this year, the highest since 2005, when 2 million filed to beat a more stringent bankruptcy law. That would put bankruptcies back to the levels seen under the old law.
Meanwhile, 38 million people -- 11% of all Americans -- are receiving food stamps, half again as many as in mid-2006. A record 5 million-plus people have been out of work for 27 weeks or more, far above the previous post-World War II peak of less than 3 million in the 1980-81 double-dip recession. Meantime, record home foreclosures and credit-card delinquencies aren't news at this point. But the impact is a sharp, unprecedented contraction in consumer credit."
If the Fed is going to keep interest rates exceptionally low for a long period of time, then why is the yoeld on 10-year Treasury bonds rising. Today the rate, still historically low, is up to 3.55%. Interest-rate futures on Wednesday indicated traders expect the Federal Reserve to keep its target overnight borrowing cost for banks, known as the federal funds rate, at record lows at least until June, after central bank policy makers repeated they expect to keep interest rates low "for an extended period."
Crude for December delivery rose 0.7% to $80.13 a barrel on the New York Mercantile Exchange.
The U.S. Federal Reserve on Wednesday expressed growing confidence that an economic recovery was building, even though it stuck to its commitment to keep borrowing costs near zero for "an extended period."
Natural gas in U.S. storage for the week ended Oct. 23 stood at an all-time high of 3.759 trillion cubic feet - 11% higher than last year and 12.4% above the five-year average.
The U.S. Energy Information Administration is expected to report on Thursday that 31 billion cubic feet of gas were added to storage during week ended Oct. 30, according to the average prediction of 16 analysts and traders in a Dow Jones Newswires survey.
"The shift in weather patterns from colder than normal to warmer than normal should extend the injection season to the middle of November," Kent Bayazitoglu, director of market analytics for Houston-based Gelber & Associates, wrote in a note to clients.
Cisco Systems on Wednesday reported a fiscal first quarter profit of $1.8 billion, or 30 cents a share, compared with a profit of $2.2 billion, or 37 cents a share for the year-earlier period. Revenue was $9 billion, down from $10.3 billion for the same quarter last year. Adjusted income was 36 cents a share. Analysts had expected the San Jose, Calif.-based networking-gear maker to report earnings of 31 cents a share, on revenue of $8.75 billion, according to a consensus survey by FactSet Research.
After rising 140 points earlier, the Dow only closed up 30 points and the Nasdaq reversed to a small loss and the S&P ended almost unchanged.
The Senate voted overwhelmingly Wednesday night to approve legislation extending unemployment benefits and maintaining an $8,000 tax credit for first-time home buyers.
By a vote of 98-0, senators approved a bill that would extend jobless benefits in all states for 14 weeks and extend the $8,000 home-buyer credit through April 30, 2010.
The bill also gives workers in especially hard-hit states up to 20 weeks of extra unemployment benefits. Unemployed workers in states where the jobless rate is above 8.5% are eligible.
The dollar remained under pressure on Wednesday after ADP Employment Services said private employers cut 203,000 jobs in October, after a revised 227,000 in September that was fewer than initially reported. Last month's tally was close to what some analysts forecast. In September, a revised 227,000 jobs were lost compared with the 254,000 originally reported, ADP said. Goods-producing jobs fell by 117,000in October, including 65,000 in manufacturing and 51,000 in construction. Services-producing jobs fell by 86,000.
Job cut announcements by U.S. employers fell to 55,679 in October, 16% fewer than in September, according to outplacement firm Challenger, Gray & Christmas Inc. It was the third consecutive monthly decline.
"While there are still some trouble spots, the continued decline in job cutting activity across most industries is a positive sign that the economy is slowly improving," said John A. Challenger, chief executive of Challenger, Gray & Christmas, in a statement.
October's total was 51% lower than in October 2008, when nearly 113,000 layoffs were announced. But even though the pace is abating, almost 1.2 million planned layoffs have been announced so far this year -- 36% more than during the same period in 2008.
Challenger said the nation is only about 30,000 planned job cuts away from surpassing the total tally of 2008, which was 1,223,993.
Terra Industries Inc. said Wednesday that it has reviewed CF Industries Holdings Inc.'s latest proposal to acquire Terra for the equivalent of $24.50 in cash and 0.1034 of a share of CF common stock and found it inadequate and not in the best interests of Terra and its shareholders.
September producer prices in the 16-nation euro zone were down 7.7% from the same month last year, the statistics agency Eurostat reported Wednesday. Compared to August, prices fell 0.4%. Both figures were in line with expectations. The euro saw little reaction to the data and remains up 0.3% versus the U.S. dollar at $1.4754. The drop was driven in large part by declines in energy prices. Energy prices were down 17.6% compared to September last year and fell 1.9% from August, Eurostat said. Excluding energy and construction prices, PPI fell at a year-on-year rate of 4.3%, while posting no change from August.
Baker Hughes Inc.,the Houston energy-drilling giant, reported that third-quarter net income fell 87% on 26% lower revenue. Earnings were $55 million, or 18 cents a share, compared with $429 million, or $1.39, in the year-earlier quarter. The latest share figure includes 8 cents of restructuring costs and higher allowance for doubtful debt. Revenue fell to $2.23 billion from $3.01 billion.
Gold futures surged to a new record high on Wednesday, extending their recent strong gains. Gold for December delivery, the most actively traded contract, hit an intraday high of $1,093.70 an ounce in electronic trading on Globex, a new record high for the contract surpassing Tuesday's peak of $1,088.50 an ounce.
The real estate market for homes has deteriorated for years in north-central Ohio. But you'd never know it when dealing with the tax man.
Even as the average sales price of a home sold in the Sandusky area has fallen year after year, the Ohio Department of Taxation has kept up pressure on Erie County to keep home valuations steady, correspondence between a state official and Erie County auditor Tom Paul shows.
MLS sales listings compiled by the Firelands Association of Realtors, which includes Erie, Ottawa, Huron, Sandusky and Seneca counties, show the average sales price in its service area was $141,505 in 2005. The price has fallen every year since then. So far in 2009, the average sales price is $108,090.
Those sales figures do not include foreclosure sales, such as the sheriff sale auctions, said Ruth DeHenning, chief executive officer for the group.
"We have no way of tracking those sales," she said. "If it's not listed and sold by a realtor, we don't have the figures."
Although the values of homes sold in the area have fallen, valuations for real estate have remained essentially flat, and in some areas even risen.
Bloomberg: "Crude oil, which has risen 80 percent this year, is causing the U.S. dollar to weaken, driving metals and other commodities higher, according to Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc.
While oil has risen, the U.S. currency has weakened, leading to speculation that the dollar’s depreciation is driving investors to buy oil as an inflation hedge, thereby pushing up the price of crude.
“I would argue the other way,” Currie said in an interview yesterday in London. “I would argue that higher oil prices drive the dollar down and then the weaker dollar drives the metals and soft commodities up.”
...“Oil represents 40 to 50 percent of the U.S. current account deficit, so a higher oil price represents an outflow of dollars that pushes the currency lower,” Currie said in the interview, after attending a Chatham House conference on food security."
American homeownership, once considered a path to wealth, is now leading to disillusionment. Home prices in the last four years have been the most volatile on record, swinging from a gain of 12 percent in 2005 to an estimated 13 percent loss this year, according to the National Association of Realtors. Those gyrations have embittered many property owners and potential buyers, said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts.
“We always talk about homeownership as being the American dream, but during the last decade people forgot it’s shelter and started thinking of it as a fast way to make or lose money,” said Retsinas. “The quicker we move back to seeing real estate as a place to live, a place to put down roots, the quicker the housing recovery will strengthen.”
Goldman Sachs lost money on just one trading day in Q3, making money on all the other 64. As a reminder, even in Q2 Goldman lost money on two trading days.
Chinese CNOOC buys US oil assets for the first time.
Meredith Whitney: "normalized" earnings for banks is a fallacy, that it's more likely we will see protracted consumer deleveraging, fewer consumers who qualify for credit, and dramatic regulatory change, which will negatively impact earnings for a protracted period."
Walmart has stepped up efforts to mobilise local political support for new store openings in US cities and urban areas that were last month identified as a growth priority for the retailer by Mike Duke, its chief executive.
In addition to a renewed drive to open a second Supercenter store in Chicago, the retailer is also raising its political profile in Philadelphia and continuing to cultivate the ground for a potential move into New York City.
Transocean Ltd., the world's largest offshore oil driller, reported a smaller decline in third- quarter profit than analysts estimated as the company reduced costs in response to slumping demand for floating rigs.
Markets, be they stocks, emerging markets, or commodities, have rallied too far, too fast because the global economy will experience an anemic recovery and not the hoped-for V-shaped recovery, New York University economist Nouriel Roubini said on Wednesday. Speaking at a commodities conference at the New York Stock Exchange, Roubini said "the party" can continue for another six months thanks to the effect of easy monetary policies and stimulus programs. But he warned it would eventually end badly as much of the rise in asset prices since March is yet another bubble fueled by a wall of global liquidity.
The dollar remained lower versus major rivals on Wednesday after the Institute for Supply Management's index on the non-manufacturing sector unexpectedly fell to 50.6 in October, from 50.9 in September. Analysts surveyed by MarketWatch expected the gauge to rise to 51.5. The dollar index ($DXY), which tracks the U.S. currency against a trade-weighted basket of major rivals, traded recently at 75.861, down from 76.369 in North American trade late Tuesday.
The employment index fell to 41.1% from 44.3%.
Julio Quintana, TESCO's Chief Executive Officer, commented "The continued depressed drilling markets, particularly in North America, have reduced our revenue streams across all our business lines. However, our competitive positioning and balance sheet continue to improve. During the quarter, we generated positive cash flow and reduced our net debt outstanding to a net cash position of $11.9 million. We have taken measures to right size the Company to meet the current economic circumstances and market demands. In addition, we have reduced capital spending by 70% year over year. Longer term, we believe the fundamentals driving the growth of our global business remain intact, which we believe will give us the ability to maintain our core strengths and take advantage of opportunities as the market recovers."
German sportswear company Adidas AG said Wednesday its net income fell 30 percent in the third quarter as it saw sales decline, especially at its sport performance division.
Adidas, based in Herzogenaurach, said net income fell to euro213 million ($315 million) in the July-September period from euro302 million in the third quarter of 2008.
Revenue for the period fell 7 percent to euro2.9 billion from euro3.1 billion.
Adidas, which also owns the Reebok brand, said it expected sales to decline at a low to mid-single-digit rate in 2009, assuming unchanged currency values, due to weaker consumer confidence and rising unemployment in many major markets.
Crude inventories fell 4 million barrels in the week ended Oct. 30, and gasoline inventories decreased 300,000 barrels, the Energy Information Administration reported. Analysts surveyed by Platts had expected a modest gain in both fuels. The EIA also reported a 400,000 decline in distillate inventories, which include heating oil and diesel. Demand for gasoline rose 1.8% to 9 million barrels a day, EIA data showed. After the data, December crude futures rose 1.5% to $80.75 a barrel. Futures were up less than 1% before the data.
The U.S. and the global economy will experience massive deflationary forces through 2012, said Nouriel Roubini, economist at New York University, Wednesday. At a conference, Roubini said that although easy monetary policies have fueled another asset bubble, the deflationary forces coming from industrial overcapacity, falling labor costs and a still damaged financial system will prevail over the next two years. But inflation expectations could rise well before that, especially if global central banks take too long to remove their massive liquidity and other stimulus measures. Removing those measures too soon, however, would risk creating "a double dip" recession, Roubini said.
Randall W. Forsyth: "According to a Web site, www.mybudget360.com, the true misery index consists of five indicators: food stamps, bankruptcies, long-term unemployment, foreclosures and credit-card defaults.
For the first time, bankruptcy filings are on a pace to match divorce filings in 2009, the Web site asserted. Bankruptcies could top 1.4 million this year, the highest since 2005, when 2 million filed to beat a more stringent bankruptcy law. That would put bankruptcies back to the levels seen under the old law.
Meanwhile, 38 million people -- 11% of all Americans -- are receiving food stamps, half again as many as in mid-2006. A record 5 million-plus people have been out of work for 27 weeks or more, far above the previous post-World War II peak of less than 3 million in the 1980-81 double-dip recession. Meantime, record home foreclosures and credit-card delinquencies aren't news at this point. But the impact is a sharp, unprecedented contraction in consumer credit."
If the Fed is going to keep interest rates exceptionally low for a long period of time, then why is the yoeld on 10-year Treasury bonds rising. Today the rate, still historically low, is up to 3.55%. Interest-rate futures on Wednesday indicated traders expect the Federal Reserve to keep its target overnight borrowing cost for banks, known as the federal funds rate, at record lows at least until June, after central bank policy makers repeated they expect to keep interest rates low "for an extended period."
Crude for December delivery rose 0.7% to $80.13 a barrel on the New York Mercantile Exchange.
The U.S. Federal Reserve on Wednesday expressed growing confidence that an economic recovery was building, even though it stuck to its commitment to keep borrowing costs near zero for "an extended period."
Natural gas in U.S. storage for the week ended Oct. 23 stood at an all-time high of 3.759 trillion cubic feet - 11% higher than last year and 12.4% above the five-year average.
The U.S. Energy Information Administration is expected to report on Thursday that 31 billion cubic feet of gas were added to storage during week ended Oct. 30, according to the average prediction of 16 analysts and traders in a Dow Jones Newswires survey.
"The shift in weather patterns from colder than normal to warmer than normal should extend the injection season to the middle of November," Kent Bayazitoglu, director of market analytics for Houston-based Gelber & Associates, wrote in a note to clients.
Cisco Systems on Wednesday reported a fiscal first quarter profit of $1.8 billion, or 30 cents a share, compared with a profit of $2.2 billion, or 37 cents a share for the year-earlier period. Revenue was $9 billion, down from $10.3 billion for the same quarter last year. Adjusted income was 36 cents a share. Analysts had expected the San Jose, Calif.-based networking-gear maker to report earnings of 31 cents a share, on revenue of $8.75 billion, according to a consensus survey by FactSet Research.
After rising 140 points earlier, the Dow only closed up 30 points and the Nasdaq reversed to a small loss and the S&P ended almost unchanged.
The Senate voted overwhelmingly Wednesday night to approve legislation extending unemployment benefits and maintaining an $8,000 tax credit for first-time home buyers.
By a vote of 98-0, senators approved a bill that would extend jobless benefits in all states for 14 weeks and extend the $8,000 home-buyer credit through April 30, 2010.
The bill also gives workers in especially hard-hit states up to 20 weeks of extra unemployment benefits. Unemployed workers in states where the jobless rate is above 8.5% are eligible.
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