Saturday, January 20, 2007

Data Points

1/21/07 Data Points

Median weekly earnings of the nation’s 106.9 million full-time wage and
salary workers were $682 in the fourth quarter of 2006, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 3.5
percent higher than a year earlier, compared with a gain of 1.9 percent in
the Consumer Price Index for All Urban Consumers over the same period.
Women who usually worked full-time had median earnings of $609 per
week, or 81.3 percent of the $749 median for men. This ratio has
trended up gradually since the data were first collected in 1979; at
that time, it was 62.5 percent.

Randall Forsyth: "In a development that combines two historically important trends, Malaysia is becoming a center for Asian finance that conforms to Islamic laws that forbid the payment of interest. Not surprisingly, it has attracted the attention of Middle Eastern oil exporting nations."

On Tuesday, Bush delivers the annual State of the Union address. The chief focal point should be the state of the presidency. Bush is an embarrassment to the citizens of the U.S. and it is long overdue for Congress to topple this despot and his vice despot.

Swift Transportation Co., the third- largest U.S. trucking company by sales, accepted an offer of $2.4 billion in cash yesterday from Jerry Moyes, who founded the company with a single truck more than 40 years ago. A group led by Moyes will pay $31.55 a share for the shares it doesn't already own and will assume $332 million of debt.

Mike Burk: "Next week is the week following January options expiration during the 3rd year of the Presidential Cycle.
Next week has been a strong week. The OTC has been up 73% of the time since 1963 and the SPX has only been down once since 1953 (up 92% of the time). The 3rd year is stronger than the averages for all years which are also very positive. Over all years the OTC has been up 73% of the time and the SPX 69% of the time."

Bloomberg: "Money supply in India expanded at the fastest pace in more than eight years... The M3 measure of money supply increased 20.4 percent in the period from a year earlier..."

Doug Noland: "Regrettably, the Fed's asymmetric strategy with respect to ignoring asset Bubble while they are inflating and then reflating aggressively when they falter is tantamount to flagrant market manipulation.
A Hippocratic Oath is in order: First of all, Federal Reserve monetary policy must do no severe harm. To live up to such an oath, monetary policy would strive to avoid fostering Credit and speculative excess, while being prepared to take all necessary measures to ensure that protracted booms - with their deleterious effects on the financial and economic structure - not be tolerated. To minimize the risk of cumulative excesses and imbalances, the policy tool kit should avoid aggressive rate cuts, marketplace assurances and commitments to respond to faltering asset markets. Monetary policy should not be used to stimulate the economy or asset prices - it should not be "activist." Absolutely never should the Fed use the leveraged speculating community as a reflationary and liquidity-creating policy mechanism. And never should the Fed pre-commit to inflationary policies in the event of bursting speculative Bubbles. Drs. Bernanke and Mishkin's views on asset Bubbles and monetary policy are so dangerously ludicrous I find it difficult to believe they don't provoke heated debate, some consternation, and at least a little outrage."

"Assisted by our outside legal and financial advisors, we are carefully considering all alternatives for creating additional shareholder value," William Osborn, Tribune's lead independent director and chairman of the special committee, said in an e-mailed statement. "These alternatives include potential transactions involving third parties as well as actions the company may take alone."

Friday, January 19, 2007

Cross Currents

1/20/07 Cross Currents

With big drops in Apple, IBM, Symantec, and Motorola for example, and the increasing number of deaths in Iraq and Afghanistan, one would think the VIX would show some life. With twice as many bulls as bears, complacency rules.

Pulte Homes announced preliminary Q4 results late yesterday that were sharply lower than its previous guidance. Q4 EPS is now seen between -$0.05 to $0.05, from $0.30 to $0.70 previously. A poll by Thomson shows analysts had expected $0.37. Impairments and land-related charges are now estimated between $330 million to $350m, or $0.83 to $0.88/share, more than double prior guidance of $150m. Pulte Homes-Q4 home closings totaled 12,566, or a 20% decline year-over-year and new orders of 6,466 represent a 34% decline. Pulte's CEO commented, "... [we] continue(s) to navigate through a challenging operating environment, with demand for new homes during the fourth quarter still far below pre-2006 levels."

M/I Homes Inc. said it expects to book impairment charges between $65 million and $75 million for the fourth quarter, and anticipates writing off an additional $3 million in land-option deposits. The builder said it expects the charges will lower the company's fourth-quarter earnings by $2.80 to $3.50 a share. M/I Homes cut its full-year profit estimate to a range of $2.50 to $3 a share.

It will take many more months of economic data before the Federal Reserve could signal the 'all-clear' on inflation, said Jeffrey Lacker, the president of the Richmond Federal Reserve Bank.

ElkCorp. received a cash tender offer from an affiliate of Building Materials Corporation of America to purchase all the of the company's outstanding stock at $42 a share.

It's interesting that so many acquisitions are being met with multiple offers. Are stocks so undervalued in relation to their take out value or does cheap money rule the day? Maybe a combination of both.

Schlumberger Ltd. said fourth-quarter net income rose 71% to $1.13 billion, or 92 cents a share, from $661 million, or 54 cents a share, with revenue up 33% to $5.35 billion. Quarterly profit growth was driven by WesternGeco progress and its information solutions arm, the company said. It expects "significant" growth in 2007, particulary in the Eastern Hemisphere, the company said.

India's Tata Steel could raise its bid for Anglo-Dutch steel producer Corus Group, the Economic Times reported Friday.

The crude contract rolls over on Monday.

In an interview with Bloomberg, Jim Rogers, the author of ``Hot Commodities'' who predicted the start of the raw material rally in 1999, said the recent slide in oil is a ``correction'' before prices resume their march toward $100 a barrel.
``I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $100,'' Rogers said in a Tokyo interview. ``It will go over $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen.''
Rogers has said oil will keep rising because there hasn't been a major discovery for 30 years and economic growth in China and across Asia is driving demand higher.
``When you have big bull markets, 50 percent corrections, or retractions, are normal,'' he said in an interview yesterday. ``It has often happened throughout history in a bull market.''

Rigzone noted that last year Kazakhstan downgraded its long-term oil output forecast from 3 million to 2.6 million barrels a day by 2015 because of delays with development of Caspian Sea fields.
The start of production at the giant Kashagan oil field is not expected before 2009-2010 because of technological difficulties. The international consortium let by Italy's Eni SpA had originally planned to start production in 2005.
The Kashagan field in northern Caspian Sea, the world's last biggest oil discovery in the past 30 years, is expected to play a crucial role in filling a new pipeline completed in 2005 and designed to carry Kazakh oil to energy-hungry China.

Billionaires Ron Burkle and Eli Broad say their offer for the sagging media giant would give shareholders a private equity–style payout.

A fire sparked by a blast disrupted operations Thursday in several units at one of Kuwait's three oil refineries which produces 200,000 barrels per day (bpd), an oil official said.

A gauge of consumer sentiment improved in January to the highest level in three years, according to research at the University of Michigan on Friday, Reuters reported. The consumer sentiment index rose to 98.0 in January from 91.7 in December. The increase was well above the consensus forecast of Wall Street economists who had expected sentiment to rise to 92.0. The current conditions index rose to 112.5 in January from 108.1 in December. It's the highest since July 2005. The expectations index rose from 81.2 to 88.7, the highest since December 2004. Consumers' expectations about inflation over the next five years remained at 3%.

Parent company Royal Dutch Shell may boost a C$7.7 billion ($6.6 billion) offer to acquire its Canadian unit by at least 15 percent if it convinces minority shareholders to agree to the bid, the Globe and Mail said. Royal Dutch is promising to pay between C$46 and C$48 a share for Shell Canada stock if institutions agree to sell the shares, the Globe said.

China's stocks rose to a record, completing the biggest weekly jump in eight months.

The European Commission expects Europe's economy to ``remain strong'' in coming months and inflationary pressures to be eased by the drop in oil prices and the euro's strength, a confidential draft document shows.

Federal Reserve Governor Susan Bies said ``strong'' U.S. economic growth means there's a risk inflation may not slow as central bankers are forecasting.

Motorola Inc. CEO Ed Zander says the cell-phone maker will cut 3,500 jobs, saving about $400 million over two years.

With respect to Tribune Company, a possible scenario would be a tax-free exchange by the Chandlers and the purchase of the broadcasting unit by the Carlyle Group.

The number of rotary rigs drilling for oil and natural gas in North America rose by 48, or 2.1%, to 2,351, according to a weekly update by Baker Hughes Inc. on Friday.

Peter Grandich, editor of Grandich Publications -- had predicted that oil prices reached their top when they climbed to record highs last July. In the July 1 edition of his Grandich Letter, he wrote that starting in the autumn, "we can begin to see one of the sharpest falls in oil prices in several years -- back under $60 by spring of 2007." "This growling bear is about to grow horns and become a bull," said Grandich, who's now predicting that the oil market could see its 2007 low during the March quarter. "It's no longer prudent to be bearish," he says.

February gold closed at $636.40 an ounce Friday, up $8.30 for the session. March silver was up 23.5 cents to close at $12.92 an ounce. March copper climbed 2.5 cents Friday to close at $2.517 a pound.

Dow Chemical Co. shares jumped as much as 4% in trading Friday after the Financial Times said there had been talk Thursday that a consortium of private equity groups was working on a break-up bid for the world's largest chemical company.

Natural gas rose .592 to close at 6.920 and crude rallied about $1.50 to close at $51.99 a barrel.

Thursday, January 18, 2007

Changing Times

1/19/07 Changing Times

Apache Corp. agreed to acquire a controlling interest in 28 oil and gas fields in the Permian Basin of west Texas from Anadarko Petroleum Corp. for $1 billion. The fields are "a close fit" to Apache's current operations in the area, said G. Steven Farris, Apache's president and chief executive, in a statement.

Equity Office Properties Trust may accept a topping bid for the real estate investment trust from a consortium of investors including Vornado Realty Trust, which could put pressure on private-equity firm Blackstone Group to match the offer, Stifel Nicolas said Thursday. Vornado Realty Trust after Wednesday's closing bell said it has submitted a proposal with Starwood Capital and Walton Street to acquire Equity Office Properties Trust for $52 per share or unit -- a 2% premium to Wednesday's closing price. The bid is payable 60% in cash and 40% in Vornado shares.

Jobless claims in the latest week fell to an 11-month low.

Led by higher gasoline, clothing and tobacco prices, U.S. consumer prices rose a seasonally adjusted 0.5% in December, the first increase since August, the Labor Department reported Thursday. Excluding food and energy prices, the core CPI rose 0.2% in December, the biggest increase in three months. In 2006, the CPI rose 2.5% after a 3.4% gain in 2005. The core CPI rose 2.6% in 2006 after 2.2% in 2005. It was the highest core inflation since 2001's 2.7%.

The yen tumbled to a four-year low against the dollar, two-week low versus the euro and nine-year low against the British pound after the Bank of Japan voted to keep interest rates steady at 0.25% -- the lowest among major economies.

Housing starts rose 4.5% in December and permits rose 5.5%. The mild weather in December most probably was behind these gains.

The Chandler Trusts said they are offering $31.70 per share of Tribune Co. that they don't already own. The offer is comprised of $19.30 a share in cash, and the value of Tribune's broadcasting business which will be spun off, they said in a statement filed with the Securities and Exchange Commission. This offer expires Jan. 31. In addition, The Wall Street Journal reported Thursday morning that at least three groups submitted offers. It appears to me that the Chandler offer is the floor and that higher bids will be forthcoming.

J.P. Morgan downgraded Apple, Inc. to neutral from overweight, saying that while the company's first-quarter earnings exceeded expectations, Mac shipments of 1.6 million units missed its forecast of 1.9 million units. In addition, the broker warned that as the company enters the seasonally weaker period of the year, shipments of iPod digital music players may disappoint investors' heightened expectations. "We believe this risk is particularly pronounced given our concerns that some consumers may delay iPod purchases ahead of the iPhone launch," J.P. Morgan concluded.

The IEA is now forecasting 0.9% growth for 2006 and 1.6% growth for 2007. That's a downgrade of 120,000 barrels a day for 2006 and 160,000 barrels for 2007.

Real average weekly earnings fell by 0.1 percent from November to December
after seasonal adjustment, according to preliminary data released today by the
Bureau of Labor Statistics of the U.S. Department of Labor. This decrease
stemmed from a 0.5 percent increase in average hourly earnings combined with a
0.6 percent increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers. Average weekly hours were unchanged.
Average weekly earnings rose by 4.5 percent, seasonally adjusted, from
December 2005 to December 2006. After deflation by the CPI-W, average weekly
earnings increased by 2.1 percent.

Federal Reserve Chairman Ben Bernanke warned the U.S. Congress on
Thursday that failure to take fiscal action soon to deal with America's
aging population could lead to serious economic harm.

Abbott Laboratories is preparing to sell most of its health diagnostics business for $8 billion to General Electric Co., the world's biggest maker of medical imaging machines, people familiar with the matter said.
Abbott, the third-largest U.S. drugmaker, would retain the fast-growing diabetes monitoring and genetics testing parts of its diagnostics unit, a person said. Fairfield, Connecticut-based GE would get in-hospital and point-of-care tools, augmenting an expansion into biotechnology and in-body testing for early detection of disease.

The American Petroleum Institute reported a rise of 7.6 million barrels in crude supplies for the week ended Jan. 12. The Energy Department had reported a climb of 6.8 million. Motor gasoline supplies were up 3.3 million barrels, the API said, vs. the government's reported rise of 3.5 million. Distillate supplies rose 395,000 barrels, the API said, compared with the 900,000-barrel climb reported by the government. U.S. natural-gas supply was down 89 bln cubic feet, according to the Energy Dept. The sharp rise in crude etc led to a decline in the price per barrel to below $51.

Justice Litle: "In the short run, a market can do most anything - especially one dominated by speculators with a quarterly, or even monthly, time horizon. But in the long run, as Jesse Livermore noted, the best and truest allies will always be underlying conditions. You'll see all kinds of numbers fly around in the coming weeks and months, feet stampeding this way and that… but through it all, the long-term energy picture won't shift much.
We're dealing with sweeping sea change here, not ephemeral seasonal stuff.
That's why I'm not inclined to worry too much about this recent crude oil slide. There's never any money in running around like a chicken with your head cut off. Traders rely on speed and reflex, investors on patience and fortitude; to the best of my knowledge, nervous panic is no help to either discipline. If anything, the short-term roller coaster gives an edge to those with a taste for the long-term view."

Saudi Arabia plans to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand, the country's oil minister said Thursday. It plans to expand crude production capacity to 12.5 million barrels a day by 2009 from 9 million barrels now.

More on the Tribune Company, which will have a board meeting this weekend. the team of Eli Broad and Ronald W. Burkle made a $500 million offer to help refinance the company while becoming its largest shareholder.
The Broad and Burkle offer is essentially a recapitalization of the company. It would give a $27 dividend payment for each share, according to people involved in their bid. In exchange, they would receive 31 percent of the company, leaving the remaining 69 percent to the current shareholders.
The deal, financed by a $500 million cash infusion from Mr. Burkle and Mr. Broad and $11 billion in debt, effectively values the company at $34 a share.

Chris Puplava: "For 2006 the number of people aged 60 years or more is estimated at 688 million and is projected to increase by 190% to nearly 2 billion by 2050. This corresponds to one out of every nine persons aged 60 or over currently, and one out of five by 2050. This will be an historic event where by 2050, the population of older persons (>60) will be larger than the population of children (0-14) for the first time in human history!"

February gold fell $5.20 to end Thursday's session at $628.10 an ounce. March silver followed gold lower, to close at $12.685 an ounce, down 20.5 cents. March copper fell 7.75 cents, or 3%, to close at $2.492 a pound.

The Philly Fed index of manufacturing sentiment rose to 8.3 from negative 2.3 in December, the bank said. The new orders index rose to 1.3 in January from negative 0.9%, while the shipments index rose to 23.9 from 14.0. The prices paid index fell to 11.9, indicating reduced price pressures. Economists expected an increase to about 2.5.

The Bank of Canada estimated fourth-quarter growth at 1.5 percent, down sharply from its previous forecast of 2.8 percent. However, it sees Canada's economy rebounding to grow 2.4 percent in the first quarter and 2.6 percent in the second, compared with estimates of 2.4 percent and 2.5 percent respectively.
It pegged annual growth this year at 2.3 percent, down slightly from its October forecast of 2.5 percent but kept its 2008 forecast unchanged at 2.8 percent.

February crude fell $1.76, or 3.4%, to close at $50.48 a barrel. February natural gas closed up 9 cents at $6.324 per million British thermal units following a slightly smaller-than-expected decline in last week's U.S. natural-gas supplies.

Wednesday, January 17, 2007


1/18/07 Internals

The Producer Price Index for Finished Goods increased 0.9 percent in
December, seasonally adjusted, the Bureau of Labor Statistics of the U.S.
Department of Labor reported today. This rise followed a 2.0-percent
advance in November and a 1.6-percent decline in October. At the earlier
stages of processing, prices received by manufacturers of intermediate
goods moved up 0.5 percent in December after climbing 0.7 percent a month
earlier, and the crude goods index increased 2.9 percent following a 15.7-
percent gain in November.

U.S. industrial production rose by an overall 0.4% in December, as the high-technology and motor vehicle industries posted strong output for the month, the Federal Reserve said Wednesday. Output in November was revised to drop by 0.1%, down from the initial estimate of a 0.2% gain.

Monthly capital flows rose to $74.9 billion in November, compared to $60.4 billion in October, the Treasury said. It includes short-term securities like Treasury bills. Of the total amount, $65.8 billion was purchased by private investors, and $9.1 billion was purchased by official institutions. Net long-term capital inflows, meanwhile, fell to $68.4 billion in November from $85.3 billion in October.

Sandra Day O'Connor: "Statutes authorizing unreasonable searches were the core concern of the framers of the 4th Amendment."

General Motors Corp. said it sold 9.1 million cars and trucks worldwide in 2006, a drop of less than 1% from the 9.2 million vehicles it sold in 2005.

McDonald's Corp. said global same-store sales rose 7.2% in December, and fourth-quarter global same-store sales rose 6.3%.

Chain store sales for the week ended Jan. 13 rose 4.9% from the year-ago period, according to a survey released Wednesday by the International Council of Shopping Centers and UBS Securities LLC. This is the strongest gain since Sept. 16, 2006.

For the quarter ended Nov. 30, Lennar posted a loss of $195.6 million, or $1.24 a share, compared with net income of $581.2 million, or $3.54, in the year-earlier period. Revenue fell to $4.27 billion from $5.03 billion. Lennar said it will "continue to carefully match our starts to demand, and as a result we estimate deliveries will decline in excess of 20% in 2007" from 2006. Profitability will drop in the first half, but 'if the current environment of strong employment, low interest rates and a healthy economy continues, and the market for new homes demonstrates traditional seasonal improvement, we will meet or exceed our 2006 earnings of $3.69 per share."

Saudi Oil Minister Ali Naimi told reporters in India on Wednesday that the market is in a "very healthy" condition. Meanwhile, Boone Pickens said Saudi Arabia recently cut their production by 200,000 barrels, and that, in his view crude will average $70 a barrel this year.

Speaking of averages, unleaded gas averages $2.23 a gallon in the U.S. with Toledo at $1.87 and SF around $2.87. That's 180 degrees different from real estate prices in Toledo and SF.

With copper at $2.55 per pound, Dennis Gartman doesn't see copper dropping below $2 this year.

If both sides benefit, Toyota would consider a tie up with Ford.

USA Today reported that The Independent, a British newspaper, stated the Bush administration is heavily involved in writing a hydrocarbon law being considered by Iraq's parliament. The paper said it had obtained a draft of the law, which would allow Western oil companies contracts of up to 30 years to pump oil out of Iraq, and the profits would be tax free.

Intel is anticipating profit margins of about 50% in 2007.

The face of the Doomsday Clock will shift closer to midnight Wednesday, symbolizing the impending destruction of humanity in a "Second Nuclear Age."
Chicago's Bulletin of the Atomic Scientists, the group which has maintained the timepiece since 1947, is winding the minute hand closer to the grim hour for the first time since 2002, when it was frozen at seven minutes to midnight.
Now modern dangers such as global warming and the nuclear ambitions of Iran and North Korea are expected to inch the clock two minutes forward — to five minutes to midnight — though scientists have not confirmed the exact change.

India and Saudi Arabia today re-affirmed their mutual commitment to enhance cooperation in the oil and gas sector. In a meeting between Shri Murli Deora, Minister of Petroleum and Natural Gas and Mr. Engineer Ali bin Ibrahim Al-Naimi, Minister of Petroleum and Mineral Resources of Saudi Arabia here today, the two Ministers discussed investment opportunities for oil companies of the two countries in either Saudi Arabia or India. It was underlined that in view growing activities in the hydrocarbon sector, the oil companies of two countries would immensely benefit from criss-cross investment in areas of hydrocarbon sector. The Two Ministers reiterated the strategic partnership evolved during the visit of the King of Saudi Arabia in January 2006.

Saudi Arabia expressed deep concerns about whether the Shiite-led government in Baghdad had the capability and will to halt sectarian violence and protect Iraqi Sunnis.

Fighter jet parts and other sensitive U.S. military gear seized from front companies for Iran and brokers for China have been traced in criminal cases to a surprising source: the Pentagon.

The India-ASEAN free trade agreement is expected to be finalised mid 2007. This was stated by commerce minister Kamal Nath on the conclusion of talks with leaders of the ASEAN at the resort island Cebu in The Philipines.
The two sides have agreed to prepare a list of products that would not be exempt from tariff cuts till 2022. The traded value of these duty exempt products would not exceed 5 per cent of the total tradeable goods on which duties would be eliminated or reduced.
China signed an agreement on trade and services with ASEAN that will be effective from July, enabling greater flow of services such as telecom, banking and construction.

Mills agrees to be acquired by Brookfield Asset Management for $21 a share.

U.S. airlines employed 1.6% fewer workers in November 2006 than in the same month a year earlier, the Department of Transportation said Wednesday.

Ronald Reagan: "We've gone astray from first principles. We've lost sight of the rule that individual freedom and ingenuity are at the very core of everything that we've accomplished. Government's first duty is to protect the people, not run their lives."

Fannie Mae said existing-home sales to fall 8.1% in 2007 and new-home sales to fall 7.1% in 2007.

February crude rose $1.03 to close at $52.24 a barrel. February natural gas dropped 40.4 cents to close at $6.234 per million British thermal units.

U.S. economic growth is only expanding at a modest pace, but there is no sign of any cooling in the hot labor market, the Federal Reserve's latest survey of current economic conditions found. The Fed's "beige book" found that reports from its 12 districts "generally described labor market conditions are tightening and cited examples of some businesses having difficulty finding qualified workers." Overall, wage gains for workers has been "relatively moderate" but certain business lines are experiencing wage increases and are worried about rising benefit costs, the survey found.

February gold climbed $7.40, or 1.2%, to close at $633.30 an ounce Wednesday. March silver closed up 26.5 cents at $12.89 an ounce.

The 10-year benchmark Treasury note fell 6/32 to close at 98-27/32 with a yield of 4.787%, up from 4.752% at Tuesday's close. The 30-year yield rose to 4.87% and the 2-year is now at 4.90%. In sum, yields are beginning to approach 5% and the yield curve remains inverted.

The Bush administration, backing off a disputed policy for fighting the war on terrorism, agreed to let a secret court supervise an eavesdropping program that targets suspected al Qaeda members in the U.S.
Attorney General Alberto Gonzales announced the change in the program, until now conducted without court warrants, in a letter today to leaders of the Senate Judiciary Committee. The Foreign Intelligence Surveillance Court, which already handles secret wiretapping cases involving foreign agents, will now approve ``any electronic surveillance'' that was occurring under the domestic program, Gonzales said.

Tuesday, January 16, 2007


1/17/07 Outlook

Fixed-mortgage rates are expected to rise to about 6.5% by the end of 2007, and sales of both new and existing homes are expected to slide this year, the Mortgage Bankers Association said Tuesday. In an economic forecast, the trade group estimated declines in 2007 of 7% in existing-home sales and 8% in new-home sales.
But the group said sales of both types of home should bounce back by 3% in 2008 and by 1% in 2009. Total residential-mortgage production in 2007, meanwhile, will be $2.39 trillion, down 5% from 2006. Originations should fall 4% in 2008 and 6% in 2009, MBA said.

Talisman Energy said Tuesday its subsidiaries have agreed to sell its non-operated interests in the Brae assets in the U.K. North Sea to TAQA Bratani Ltd. for $550 million. The sale is expected to close later this year. TAQA is a subsidiary of the Abu Dhabi National Energy Co. Talisman's net production from the Brae assets for 2006 averaged 19,000 barrels of oil equivalent a day. Talisman's proved Brae reserves totalled 18.5 million boe, the Calgary, Alberta-based company said.

Wingstop announced 2006 year-end sales and growth figures. The chicken-wing-only chain's comp store sales increased 13.6 percent in 2006 with 14 consecutive quarters of comp store increases. Wingstop's system-wide sales increased 29.7 percent from $118.5 million in 2005 to $153.7 million in 2006. The company's new store openings
grew by 18 percent from 271 units that were opened by year end 2005 to 321
units opened by year end 2006. The rapidly-growing chain expects to open an
additional 70 stores in 2007.

Royal Dutch Shell evacuated staff from two oil installations in southern Nigeria and the military boosted troop levels in the volatile area Tuesday after community clashes left a dozen community chiefs dead, officials said.

Richard Daughty: "An estimated $300 billion of consumer spending has already disappeared in the United States, as that is roughly the reported drop in mortgage equity withdrawal lately. If you think that the American economy is so powerful and so dynamic that it can ignore a drop of $300 billion in final consumption, then I want to ask what kind of medicine your doctor has you on, because, brother, I need some of that kind of pharmaceutical "you'll believe any silly crap" horsepower right about now!"

February gold fell $1 to close at $625.90 an ounce Tuesday, while March silver ended the session at $12.625 an ounce, down 25.5 cents.

Feb. crude fell $1.78, or 3.4%, to end at $51.21/brl. Feb. natural gas gained 3.7 cents to end at $6.638/mln BTUs.

March corn closed up 6 1/2 cents, or 1.6%, at $4.03 a bushel in Chicago.

Three nights of freezing temperatures have destroyed up to three-quarters of California's $1 billion (€770 million) citrus crop, according to an estimate issued as forecasters warned the weather could continue.
Other crops, including avocados and strawberries, also have suffered damage, agricultural officials said Monday.
"This is one of those freezes that, unfortunately, we'll all remember," said A.G. Kawamura, secretary of the California Department of Food and Agriculture.

Bank of America Corp has begun a push to raise a regulatory cap that bars any US bank from an acquisition that would give it more than 10 percent of the nation's total bank deposits, The Wall Street Journal reported on Tuesday.

The Situation

1/16/07 The Situation

The Empire State Manufacturing index fell to 9.1 in January from a revised 22.2 in December. This is the lowest level since the summer of 2005. The drop was much greater than expected. Economists were expecting the index to slip to 20.0 from the initial estimate of 23.1 in December. The indexes for new orders, shipments and employment also fell sharply. The inventories index dropped to its lowest level in well over a year.

Insurance broker USI Holdings Corp. said Tuesday it agreed to be bought by Goldman Sachs & Co.'s private equity arm for $17 per share, representing a 9-percent premium over the stock's closing price Friday of $15.55. The offer is 21 percent higher than the stock's average price over the 30 days up to Oct. 24, when the company announced a private equity group indicated its willingness to buy.

Landry's Restaurants Inc. offered to acquire Smith & Wollensky Restaurant Group for $7.50 per share.

ElkCorp. disclosed an amendment to its previously disclosed merger agreement with private equity firm The Carlyle Group. The revised deal calls for Carlyle to commence a tender offer to acquire all outstanding ElkCorp common shares for $40.50 each in cash on or before Thursday, and represents an increase of $2.50 per share from the $38 offer called for in the parties' original Dec. 18 agreement. ElkCorp's board is recommending that shareholders tender their stock to the Carlyle offer and reject a $40 per share cash tender offer from Building Materials Corp. of America.

Home builder Centex Corp. expects to swing to a third-quarter loss from continuing operations of $2.00 per share, from a profit of $2.52 a share a year ago. The company said it will record land valuation adjustments of around $300 million due to the declining housing market. It has also decided not to exercise land option contracts on 37,000 lots, which will result in walk-away costs of around $150 million. Centex added it will increase its provision for taxes by around $60 million in connection with its previously disclosed ongoing federal tax audit. Excluding these costs, Centex said it expects adjusted earnings for the quarter to be 75 cents a share. Analysts polled by Thomson First Call were expecting earnings of 81 cents a share. For the quarter, Centex said home closings fell 12% to 8,360 and net orders fell 24% to 6,139.

Saudi Arabia's oil minister said "We took measures in October in Doha and measures in Abuja (in December) and I believe these measures are working well. Inventories in the fourth quarter have come down ... which puts the market closer to balance...There is no need to panic."

At a meeting this weekend between Hugo Chávez, Venezuela’s president, and Mahmoud Ahmadi-Nejad, president of Iran, Mr Chávez said: “We agreed this afternoon to increase our co-ordinated efforts in Opec and with the major oil producers outside Opec to safeguard the price of our main product.”

Outstanding euro-denominated debt accounts for 45 per cent of the global market, compared with 37 per cent for the dollar.

John Hussman: "Overvalued, overbought, and overbullish conditions have generally resulted in disappointing market returns, regardless of other features of market action. Yet the past several weeks have quietly added a new ingredient: Treasury bill yields are now higher than they were 6 months ago, and Treasury yields of all maturities have popped higher in recent weeks. While this might seem like a trivial and low-magnitude event, it actually contributes to a syndrome that has invariably been negative for near-term market outcomes (not to mention the negative long-term results that overvalued market conditions have historically produced).
We've got overvalued, overbought, overbullish conditions, coupled with upward pressure on yields. I'll just go ahead and give it a name: “Ovoboby.”

Sunday, January 14, 2007

China And Oil

1/15/07 China And Oil

China imported 145.18 million tons of crude oil in 2006, up 14.5 percent from a year ago, said the General Administration of Customs on Friday.
According to newly released customs statistics, China imported 36.38 million tons of refined oil in 2006, with a year-on-year growth of 15.7 percent.
China saw a sharp decline in crude oil exports in 2006, down 21.4 percent from 2005 to 6.34 million tons.
The exports of refined oil declined by 11.9 percent to 12.35 million tons last year.
China's net imports of crude oil in 2006 totaled 138.84 million tons, up 17 percent on the previous year and net imports of refined oil were up 38 percent to 24.03 million tons.
According to the data, China spent an additional 23.8 billion U.S. dollars on importing crude oil and oil products in 2006, up 41 percent from 2005.
"The rise in oil imports and decline in exports reflect the surge in China's oil consumption in 2006, driven by the booming economy," said Dong Xiucheng, Professor of the China University of Petroleum.
China's GDP continued to grow at around 10 percent last year.

China currently imports 48% of its crude oil. The IEA that said China would rely on imports for 80% of its oil and about 30% of its natural gas in 2030.

The central bank of Russia increased gold holdings by 2.2 percent to 394.1 metric tons in the third quarter. The share of currency deposits held in dollars by OPEC member-nations including Saudi Arabia fell to a two-year low of 65 percent in the second quarter. The dollar dropped 5 percent against an index of six major currencies in the past year.