Saturday, January 27, 2007

Economic Realities

1/27/07 Economic Realities

New-home sales rose 4.8 percent in December to an annual pace of 1.12 million units. The median sales price rose to $235,000 in December from $232,200 in November, as builders cut the number of homes on the market to avoid inventory buildups.
Over the full year 2006, new-home sales dropped 17.3 percent from 2005, the steepest fall in 16 years and the first year-over-year decline after a five-year rally.

Orders for U.S.-made durable goods rose 3.1 percent in December. While much of the gain came from strong demand for Boeing jetliners, other components like machinery and primary metals also posted sharp hikes.
Even excluding volatile transportation orders, which are heavily skewed by aircraft, durable goods orders rose 2.3 percent in December following two monthly declines -- a much stronger performance than Wall Street analysts expected.

In 2006, new durable goods orders rose 7 percent from 2005, marking the third straight annual gain. Shipments for the full year increased 5.6 percent, also the third straight gain.

For the week, gold gained 1.7% to $646.20 and silver 3.9% to $13.44. Copper rallied 4%. March crude gained $2.13 to $55.53. February Gasoline recovered 5.9%, and February Natural Gas gained 4.8%.

Bloomberg : “Surging demand for derivatives is making financial markets more vulnerable to any slowdown in the global economy, said economists and executives at the World Economic Forum. ‘You can easily get liquidity from the market every second for anything,’ said Bank of China Vice President Zhu Min at a panel discussion on the global economy in Davos, Switzerland. ‘We really don’t know what the risks are.’ The use of derivatives grew at the fastest pace in eight years during the first half of 2006 as a glut of cheap money allowed investors to bet more borrowed funds in financial markets.”

Data Quick: "Home-loan defaults in California rose to their highest level in eight years in the fourth quarter amid a slowdown in sales of houses and condominium that made it harder for owners to sell their homes and pay off mortgages. Banks and other lenders sent 37,273 default notices to California homeowners in the fourth quarter, more than double the 15,196 sent a year earlier and up by more than a third from the 27,218 sent in the previous three months."

Buyout firms announced a record $739 billion of leveraged buyouts last year, almost triple the 2005 total.

Doug Noland: "The increasing awareness by holders of inflating quantities of suspect (dollar) Credit instruments that they are being shortchanged should weigh on U.S. markets, and keep in mind that strong U.S. markets have provided major support for our faltering currency. And as the Bubble’s inequitable (re)distribution of wealth gains greater recognition, the strains between the “haves” and the “have nots” – between debtor and creditor – between the U.S. and its highly liquefied competitors for global resources - will surely intensify. The global grab for limited resources should be expected to at some point turn more hostile, providing greater incentive for the U.S. to inflate and for others to aggressively exchange dollar liquidity for more attractive stores of wealth/value."

European money supply growth is the fastest in 17 years. Liquidity liquidity liquidity.

Thursday, January 25, 2007

Moving Forward

1/26/07 Moving Forward

China's economy grew by 10.7 percent, moving China closer to overtaking Germany as the world's third-largest economy, according to figures issued by the government. It was the fastest growth since 1995, when the economy expanded by 10.9 percent.

Blackstone Group LP increased its offer for billionaire Sam Zell's Equity Office Properties Trust to $38.3 billion, exceeding a proposed bid from Vornado Realty Trust in the world's biggest leveraged buyout.
Blackstone's new offer is $54 a share in cash, 3.8 percent more than the $52-a-share cash and stock proposal from a group led by Vornado Realty Trust. It's also 11 percent more than Blackstone's earlier offer of $48.50 a share, Chicago-based Equity Office said today in a statement.

Cardinal Health Inc. will sell its contract manufacturing unit to Blackstone Group LP for about $3.3 billion in cash.

Ford Motor Co.'s fourth-quarter loss widened to $5.76 billion on plunging truck sales and production, pushing the 103-year-old U.S. automaker to its worst year ever.
The loss was $3.05 a share, compared with $74 million, or 4 cents, a year earlier, Ford said today. Excluding costs the second-biggest U.S. automaker considers one-time items, the loss was $2.08 billion, or $1.10 a share, wider than analysts' estimates.

The German government will next week raise its economic growth forecast for this year to just under 2 percent from 1.4 percent, a senior government official said today, speaking on condition of anonymity.

The number of Americans filing first-time claims for state unemployment benefits rose more than forecast last week from the lowest level in 11 months.
Initial jobless claims increased by 36,000 to 325,000 in the week ended Jan. 20, the Labor Department said today in Washington. The four-week moving average, a less volatile measure, rose to 309,250 from 307,750.

Sales of U.S. existing homes fell 0.8% in December to a seasonally adjusted annual rate of 6.22 million, a national real estate group reported Thursday. Sales in December were down 7.9% compared with December 2005. Inventories of unsold homes fell 7.9% to 3.51 million, representing a 6.8-month supply, the National Association of Realtors said in the report. The average median sales price was $222,000 in December, unchanged from December 2005.

Net income in the three months ended Dec. 31 for BJ Services rose to $207.1 million, or 70 cents per share, from $159.7 million, or 48 cents per share, in the year-ago period. Analysts polled by Thomson Financial looked for profit of 76 cents per share.
Revenue climbed 24 percent to $1.18 billion versus $956.2 million last year, but fell short of the Street forecast of $1.25 billion. Lower natural gas prices also slowed overall revenue growth and led to a decline in revenue at BJ's Canadian operations, where sales fell 8 percent from the same period in fiscal 2006. From my analysis, the Canadian operations account for about 15% of the company's revenues.
"The company's earnings for its first fiscal quarter were less than the earlier projected range mainly due to lower than forecast activity in North America caused by warmer than normal winter weather conditions and declining natural gas prices," Chairman and Chief Executive Bill Stewart said in a statement. For the second quarter, BJ Services expects profit to range from 73 cents to 75 cents per share, short of the 78 cents per share Wall Street analysts forecast, according to Thomson Financial. For the fiscal second quarter, the company projects Canadian operations will report revenue up 25 percent from the first quarter. Canadian consolidated revenue in the first quarter In that period, revenue fell 8 percent year-over-year as lower natural gas prices slowed demand for drilling. It should be noted that natural gas prices have recovered over the last three weeks as winter weather finally arrived. I believe Wall Street is missing the boat here and analysts are not keeping up on events. The stock dropped about $1.25 on the news. This is similar to the reaction to the Nabors quarterly report and then Nabors stock rose back to where it was prior to the release. It took a few days for that to take place. BJ Services is far and away the cheapest it has ever been on any evaluation metric. The prospects for the company are excellent and the icing on the cake is a possible takeover of the company.

Canadian energy stocks declined after earnings at Suncor Energy Inc. and Petro-Canada, two of Canada's biggest oil and gas companies, fell short of analyst estimates.

Treasury yields are on the rise with the 2-year at 4.97%, the 10-year at 4.87%, and the 30-year at 4.97%. In my view, rates are still a bargain. With our fiscal and trade deficits, these twin tower deficits should continue to encourage central bankers to trim their dollar holdings, thus pressuring rates.

The Energy Department said natural-gas inventories fell 179 billion cubic feet for the week ended Jan. 19. Total stocks now stand at 2.757 trillion cubic feet, up 251 billion cubic feet from the year-ago level, and 472 billion cubic feet above the five-year average, the government data said.

The money supply growth in Kuwait accelerated during the first 11 months of 2006 to an annualized 23 per cent compared with a growth of 12.3 per cent in 2005.
This was revealed in a report prepared by the National Bank of Kuwait outlining the performance of the Kuwait economy in 2006.

Wind power generation in the United States will grow 26 percent in 2007, after increasing by 27 percent in 2006, the American Wind Energy Association said on Tuesday.

February natural gas closed at $6.905 per million British thermal units Thursday, down 51.6 cents. March crude fell $1.14, or 2.1%, to close at $54.23 a barrel after briefly touching a fresh two-week high of $55.90 during the session.

February gold fell 10 cents to close at $648.10 an ounce Thursday. March silver continued higher, adding 21.7 cents to close at $13.49 an ounce. March copper rose 5.3 cents, or 2%, to end at $2.6545 a pound.

Bush plans to ask Congress for $7 billion to $8 billion in security and reconstruction aid for Afghanistan, White House Press Secretary Tony Snow said today.
Afghanistan has received a total of about $14 billion in U.S. aid since the 2001 U.S. invasion that ousted the radical Islamic Taliban militia, the State Department said. As I mentioned not so long ago, gains made over the last few years in Afghanistan are disappearing quickly.

Wednesday, January 24, 2007

Interest Rates And Inflation

1/25/07 Interest Rates And Inflation

Norway's central bank unexpectedly raised the benchmark deposit rate by a quarter point for a third consecutive month to 3.75 percent to cap inflation and prevent the economy overheating.

George Ure: "My friend Bart, over at out that the annual rate of change on his M3B (which has a 99.99%+ correlation to M3 - before the Fed banksters went and played "hide the sausage" with that statistic a year ago, shows that the broadest measure of inflation is now running 12% annualized."

"The Financial Times reports Rupert Murdoch’s News Corp has joined the Chandler family in its bid for Tribune Company, with an eye to taking a stake in New York’s Newsday newspaper. Newsday, which is based in Long Island, is one of Tribune’s largest newspapers, along with the Los Angeles Times and Chicago Tribune. The media group, which put itself up for sale in September, also includes 23 television stations and the Chicago Cubs baseball team. A person familiar with the situation said Mr Murdoch wanted to combine back office and operational functions at Newsday with those of the New York Post, the News Corp tabloid that has made big circulation gains in recent years but continues to rack up losses.

The WSJ reports that Goldman Sachs and Morgan Stanley are combining forces to crack a huge deal in the energy sector: a private-equity play for the oil-and-gas assets of Dominion Resources that could reach $15 billion.

Richard Daughty: "It's not for nothing that Thomas Jefferson said "I believe that banking institutions are more dangerous to our liberties than standing armies," and it is further not for nothing that he is being proved horribly, tragically correct."

The budget deficit for the current year will be $172 billion, according to new estimates by the Congressional Budget Office. Like all government statistics one needs to look further. In this case, the budget underestimates the cost of the Iraq war. Once another $100 billion is added to the tally for military operations in Iraq and Afghanistan, the budget deficit for the current year promises to at least match last year's $248 billion tally.

Unidentified assailants seized two foreign oil workers Tuesday in the latest kidnapping to hit restive southern Nigeria, police said.
The hostages included one American man, said Rivers State police spokeswoman Irejua Barasua. US Embassy officials were not immediately available for comment.
The other man was a Briton, said a colleague who asked not to be named because he was not authorized to speak to the media. The pair worked for a
Nigeria-registered oil services company, Pivot Engineering, he said.

Frank Barbera: "In reviewing several important Time Cycles, I note that Crude Oil has had a reasonably consistent 5.2 year cycle in place, the half cycle of which was due to bottom in 2006. I believe that cycle is bottoming now, a bit later than normal ,and will soon turn up producing a solid recovery in prices. The next major five year cycle low for Crude (the full cycle low) is due in late 2008 which should be the end of Cycle Wave 2 and the beginning of the Peak Oil surge to above $100."

Chris Mayer: "By some estimates, we'll need to produce about 136 million tons of grain in 2007 to prevent grain stocks from falling again (they fell in 2006). Yet annual increases in grain production have averaged only about 20 million tons since 2000. That gives you something of a snapshot of the hurdle in front of us.
"The investment conclusion from all this seems to be that we are in a long bull market for grains. Expect the prices of corn and wheat to keep rising. Expect the price of meat to rise. It also seems that fertilizer producers, such as Agrium, should continue to do well. Other ancillary ideas also come to mind - shippers of dry goods (i.e., grains) and manufacturers of farm equipment.
"The potential for another 1930s-style Dust Bowl only adds to the power and durability of these trends."

Rep. Ron Paul:"False trust placed in the dollar once was helpful to us, but panic and rejection of the dollar will develop into a real financial crisis. Then we will have no other option but to tighten our belts, go back to work, stop borrowing, start saving, and rebuild our industrial base, while adjusting to a lower standard of living for most Americans...Since 2001 the dollar has been devalued by 60%."

South Africa, the biggest corn producer in Africa, cut this season's corn-planting forecast by 3.1 percent from a Nov. 21 estimate after dry weather hampered sowing in the main corn regions.

The American Petroleum Institute reported a fall of 4.2 million barrels in distillate supplies for the week ended Jan. 19. The Energy Department had reported a rise of 700,000 barrels. Motor gasoline supplies were down 2 million barrels, the API said, contrary to the government's reported rise of 4 million. Crude supplies fell 832,000 barrels, the API said, but the government posted a 700,000-barrel climb.

The Oil Drum:"There is one other thing that I would like to note that may not get much attention. It is the line “I ask Congress to double the current capacity of the Strategic Petroleum Reserve.” Hmm, the drop in the price of oil must have grabbed someone’s attention.
Let’s see, if the size of the SPR is now authorized at one billion barrels and we are now going to double this, then the US will be on the market for a billion barrels of oil. Say we fill it over 5 years, then we would need to buy 200 million barrels a year or around 547,000 bd. Now, at a time when Cantarell may drop by 500,000 bd, that suggests that the US might be going to the rest of the world with an increased demand for 1 mbd before the end of the year. So I guess that even if the current prices have slowed demand, the powers that be will continue to up it."

The vast increase in the use of renewable and alternative fuels urged by President Bush could have the unintended effect of pushing up the cost of poultry and other foods of animal origin, according to the National Chicken Council.
This is because the most commonly used feedstock for renewable fuels is
corn, which is also the largest component of animal feed, NCC said. The
demand for corn from ethanol producers has already led to a doubling of the
price of corn, putting great pressure on the cost of producing chickens and
other food animals.
"We estimate that ethanol demand has already increased the price of
chicken by six cents per pound wholesale," said William P. Roenigk, senior
vice president and chief economist for NCC.

"In OPEC we have agreed to meet on March 15 and there is no action required before then," OPEC President Mohamed al-Hamli said today in an interview at the World Economic Forum in Davos, Switzerland. "At $55 WTI, there is no action required."
"The cuts we agreed to in Abuja we are implementing," he said, referring to a December accord in Abuja, Nigeria, for OPEC to lower supply by 500,000 barrels a day starting Feb. 1. That was on top of an earlier 1.2 million barrel a day cut agreed in October.

Kuwait's finance minister Bader al-Humaidhi said in Davos, Switzerland "The dollar fell a lot against the euro last year, but if we'd been linked to a basket we wouldn't have suffered."

Tuesday, January 23, 2007


1/24/07 Developments

The British pound hit a 14-year high against the dollar at $1.9857, compared to $1.9766 late Monday.

UBS has cut its forecast for light sweet crude oil for 2007 to $60 a barrel from $69 a barrel. "Although we expect fundamentals to drive the oil price up, current levels mean that the annual average will struggle to meet our old forecast," UBS said. We'll have to see how it all sorts out with crude currently at $53+.

Royal Dutch Shell has raised its offer for the minority shareholdings in its 78 per cent owned subsidiary Shell Canada. The new offer is C$45 a share, up from C$40 originally offered back in October last year. The new offer has been recommended by a special committee of independent directors of the Shell Canada board, appointed to advise on the bid.

In Southern Kentucky, Federal authorities began lowering the water level in Lake Cumberland yesterday, citing fears that a weakened Wolf Creek Dam could break, causing massive flooding and possibly deaths.
"A high level of risk does exist," Lt. Col. Steven J. Roemhildt, commander of the Nashville District of the Army Corps of Engineers, said in a statement.

The UAW are examining a plan that would shift to the union responsibility for billions of dollars in retiree health-care liabilities.

The US economy last year recorded its lowest rate of labor productivity growth in more than a decade, with growth in output per hour worked falling behind the EU and Japan. Research to be published on Tuesday by the Conference Board, the international business organization, shows that US labor productivity in the whole economy grew by 1.4 per cent in 2006 as slower economic growth was combined with a rapid rise in employment.

The U.S. index of leading economic indicators rose 0.3% in December, the fastest pace since September, the Conference Board said Tuesday. "The latest pointing to continued moderate growth or even a little acceleration," said Ken Goldstein, an economist for the research group. Six of the 10 indicators increased in December, starting with building permits, jobless claims and money supply. The biggest drags were interest rate spreads and consumer expectations. There were slight downward revisions for the past two months. The leading index was cut to flat in November, compared with 0.1% originally reported. The leading index was revised down in October to a 0.1% drop from the previous estimate of a 0.1% gain. The coincident index rose 0.2% in December and the lagging index rose 0.9%.

A few Bank of Japan policy makers said the central bank should raise interest rates in January should it become more confident about the economic outlook, according to minutes of the policy board's December meeting.

European Central Bank council member Mario Draghi said there are no signs of economic growth slowing and executive board member Lorenzo Bini Smaghi said further interest rate increases may be needed to guard against inflation in the euro region.

Singapore's inflation rate unexpectedly rose in December to a five-month high as increased housing and food prices offset a drop in transportation costs.

Devon Energy plans to divest all of its assets in West Africa. The assets include estimated proved reserves of approximately 90 million oil-equivalent barrels (Boe) at December 31, 2006.

Danny McNease, Rowan Chairman and Chief Executive Officer, commented, "The recent drop in oil and natural gas prices has extended the lull in Gulf of Mexico jack-up drilling activity and caused some day rate weakness for lower-end rigs, though we are still seeing solid demand for premium equipment worldwide. Our offshore fleet was approximately 81% utilized during the fourth quarter of 2006, as we lost 249 revenue-producing days during the period from rig relocations. By early April 2007, our current rig relocations should be complete "Preparing for and starting up overseas drilling assignments has also increased our drilling operations costs and expenses. These rigs had been running virtually full-time for about two years when they entered the shipyard, as have most of our other offshore rigs. Thus, more extensive maintenance has often been required than in previous periods. In addition, many consumable parts and supplies cost more today and are requiring longer lead times for delivery, especially in certain foreign areas. Thus, we are ordering more of such items, which we expense upon purchase, to ensure their availability and limit rig downtime. Further, our labor costs now include not only a significant increment for expatriates working abroad but also the cost of duplicative local personnel undergoing training. We are working to reduce the expatriate complement on our overseas rigs. Finally, returning to the Middle East market after a 25-year absence and then doubling the number of rigs operating there has required a significant expenditure for infrastructure. As a result of these and other factors, we expect that our drilling operations costs will be in the range of $146-148 million for the fourth quarter of 2006, or about 40% higher than the same period of 2005. Though certain cost pressures will remain with us in early 2007 and beyond, we expect that this trend in our overall drilling operating costs will begin to reverse in the second quarter of 2007."and our offshore fleet again fully utilized; however, we are pursuing additional long-term assignments overseas for many of our nine jack-ups that remain in the Gulf of Mexico."

Dan Denning: "The epic bull market in energy stocks is about to enter a second phase. As private equity funds battle the world's major oil companies for control for scarce energy assets, the prices of most oil stocks should move considerably higher, especially if crude oil itself, stages a modest rebound. It all adds up to a continuation of the epic bull market in energy stocks."

Blair Corp. has agreed to be acquired by Appleseed's Topco Inc., a portfolio company of Golden Gate Capital, for $42.50 a share, a 15% premium to the company's closing share price on Monday of $36.95. Under the terms of the merger, Warren, Pa.-based Blair, a marketer of women's and men's apparel and home products, may solicit additional proposals for 30 days, and the company said its board plans to do so.

"Given the shift to colder weather, escalating geopolitical tensions, and likely more OPEC compliance, the odds may be increasing for a rally above $55 rather than a break under $51," Michael Fitzpatrick, an analyst at Fimat USA, wrote in a note to clients. Meanwhile, militants took 26 hostages in Nigeria, threatening supplies from Africa's largest producer.

The February contract for gold futures on Tuesday marked its highest closing level since Dec. 5, up $11.80 at $645.90 an ounce. March silver rose 26 cents to end at $13.26 an ounce and March copper tacked on 5 cents to end the day at $2.5795 a pound.

March crude rallied $2.46, or 4.7%, to close at a two-week high of $55.04 a barrel. U.S. Energy Secretary Samuel Bodman announced that the government will boost the size of the nation's emergency oil reserve. It'll begin buying crude this Spring at a rate of about 100,000 barrels per day, according to Dow Jones Newswires. The acquisition is part of a new plan to double the capacity of the Strategic Petroleum Reserve to 1.5 billion by 2027, the report said.

Bank of England Governor Mervyn King, in his first comments since a surprise interest-rate increase this month, said inflation and economic growth may pick up more than the bank forecast.``The balance of risks to output growth and inflation has shifted towards the upside,'' King said today in a speech to the annual banquet of the Birmingham Chambers of Commerce in central England. ``The committee started to raise interest rates to deal with the changing balance of risks last August.''

ElkCorp says BMCA lifted buyout offer to $43.50 from $42. I clearly missed the upside potential here. Not one of my finest hours.

In yesterday's 13G filing on BJ Services, Barclay's Global Investors Japan Trust reported an ownership of about 30.5 million shares or 10.4% of the outstanding.

The benchmark 10-year Treasury note ended down 10/32 at 98 20/32; yielding 4.803%, up from 4.757% late Monday.

Natural gas ended at its highest level in over five weeks and rose 28 cents to $7.60 per million BTUs.

Government-owned holding company Dubai World says it plans to invest over $7.5 billion in setting up industrial parks in different parts of the world, including India. The company launched 'Economic Zones World', an enterprise aimed at consolidating its position in the development and management of economic zones and business hubs across the world. According to Sultan Ahmed Bin Sulayem, chairman, Dubai World, "Economic Zones World (EZW) has been created as a single commercial entity to look after Dubai World's worldwide operations of free zones, special economic zones and activity-specific business and industrial zones." "The company already has projects under discussion in India, Pakistan, Oman, South Korea and Morocco," said Salma Hareb, CEO, Economic Zones World.

Monday, January 22, 2007


1/23/07 Reality

John Williams' Shadow Government Statistics always does an excellent job of distinguishing bogus government numbers from the real deal. In John's latest report, he highlights the vast difference between the government's annual CPI estimate approximating 2.5% and alternate CPI measures with year-on-year change just below 6%.

On Sunday, the high temperature in Phoenix was 49 degrees. The high in Santa Fe was 32 degrees and the low was 14. Not surprisingly, the nation is getting a dose of weather reality, and, with it, the price of natural gas is on the rise.

Bruce Buchanan, a political scientist at the University of Texas in Austin, says Bush's effort to reverse the course of events in the war is ``his last chance to avoid the dustbin of history.''

Shares of CA Nacional Telefonos de Venezuela plunged 15 percent after President Hugo Chavez said the government won't pay investors the market value for their holdings as he moves to nationalize the nation's biggest phone company.

The U.S. will lose its place as the world's leading financial center in the next decade without legal and regulatory changes, a report commissioned by New York Mayor Michael Bloomberg and Senator Charles Schumer found.

The February crude contract went off the board after Monday's trading and the expiration helped to explain the volatility in the trading session.

Pfizer Inc. said Monday it plans to cut about 10,000 positions, or 10%, of its total worldwide workforce by the end of next year.

Hedge funds in the U.S. are the most leveraged since 1998, the year that Long-Term Capital Management collapsed, according to Bridgewater Associates Inc., a Westport, Connecticut-based fund manager.

U.K. house prices rose 0.5 percent for the month ended Jan. 13, and 13.5 percent in the year, according to Rightmove, the U.K.'s biggest property Web site. Chelsea home values rose 62 percent last year, the biggest annual gain for any London district since Rightmove started compiling its data in 2002.

February gold fell from a nearly three-week high of $640.20 to end the day at $634.10 an ounce, down $2.30. March silver held onto its gains to close up 8 cents at $13 an ounce. March copper rose 1.25 cents to close at $2.5295 a pound.

The U.S. military reported the deaths of two Marines, raising the two-day death toll to 27 in a particularly bloody weekend for American forces in Iraq.. It appears that we are witnessing a surge in the number of deaths in our fighting forces.

Mexico hiked its production of natural gas last year by 11 percent, setting a national record for that energy source, the state oil company Pemex said.
Mexico produced a daily average of 1.63 billion cubic meters of gas last year.

According to an AP-AOL News poll, only 44 percent think Bush is honest, down from 53 percent two years ago. It is amazing that 44% of Americans are brain dead.

American Express Chief Financial Officer Gary Crittenden said late Monday that the credit card giant faces near-term growth challenges and plans a more stringent approach to discretionary spending during the first half of 2007. The interest-rate environment will be more difficult in early 2007 as a number of hedges the company set up finished at the end of 2006, he explained during a conference call with analysts.

Natural gas for February delivery closed up 43.3 cents, or 6.3%, at $7.319 per million British thermal units on the New York Mercantile Exchange.

Texas Instruments will close a small digital chip fabrication plant in Dallas and eliminate 500 jobs over the coming year as part of a cost-cutting measure designed to save some $200 million annually.

Sunday, January 21, 2007


1/22/07 Surge

At least 19 American service members were killed in military operations Saturday in the deadliest day for U.S. forces in two years, including 12 who died in a helicopter crash and five slain in an attack by militia fighters in the holy city of Karbala, military officials said.
Saturday's toll was the third-highest of any single day since the war began in March 2003, eclipsed only by 37 U.S. deaths on Jan. 26, 2005, and 28 on the third day of the U.S. invasion. U.S. authorities also announced two American combat deaths from Friday.

NEWSWEEK POLL: Sixty-Eight Percent of Americans Oppose Bush's 'Surge'.
Approval for Bush's Handling of Iraq at Historic Low of 24 Percent.

Nouriel Roubini: "Gillian Tett, the sharp Financial Times editor that covers derivative instruments, structured finance and the explosion of credit in financial markets reports on a senior banker telling her how leverage ratios of 50 or more are currently easily reached in financial markets:
"He then relates the case of a typical hedge fund, two times levered. That looks modest until you realise it is partly backed by fund of funds' money (which is three times levered) and investing in deeply subordinated tranches of collateralised debt obligations, which are nine times levered. "Thus every €1m of CDO bonds [acquired] is effectively supported by less than €20,000 of end investors' capital - a 2% price decline in the CDO paper wipes out the capital supporting it. "

Here is an interesting article about PT-141 and Palatin from the UK Observer:

ElkCorp. said the Carlyle Group has lifted its tender offer to acquire the company to $42 per share in cash from a prior proposal of $40.50 per share.

John Hussman: "Given the very low level of labor compensation as a fraction of GDP, coupled with a relatively low unemployment rate, it's likely that we'll continue to observe upward pressure on unit labor costs. This is a threat to profit margins."