2/2/08 Deals
Microsoft Corp. is making an unsolicited $44.6 billion offer for Yahoo Inc. In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer said the company will bid $31 per share, representing a 62 percent premium to Yahoo's closing stock price Thursday. Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 percent each cash and stock. Microsoft said it sees at least $1 billion cost savings generated by the merger, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. The software giant said it believes the takeover would receive regulatory clearance and close in the second half of 2008. MSN and Yahoo! together would have about 35% of the search market. Google has over 50%.
OPEC ministers decided to keep output at present levels at their meeting Friday out of fear that a softening global economy will translate into weakened demand. ``If prices continue to fall as we've seen in Venezuela until now, then we'd probably be prepared to propose a cut at the next OPEC meeting in March,'' Venezuelan Oil Minister Rafael Ramirez told reporters in Vienna yesterday.
Pioneer Drilling Co. will acquire Wedge Well Services, Wedge Wireline and Wedge Fishing and Rental Services from affiliates of Wedge Group Inc. for $303 million in cash. The Wedge Companies provide oil and gas well workover, wireline, and fishing and rental services for energy producers in the United States. Pioneer said that it expects the acquisition to be significantly accretive to 2008 earnings and cash flow per share.
Societe Generale rose 3.8% after BNP Paribas confirmed on Thursday it was mulling a bid and after reports that Credit Agricole could also be interested in buying the firm.
Chinalco and Alcoa said Friday that they've acquired a 12% stake in miner Rio Tinto. The stake was acquired by Shining Prospect, a Singapore-based entity that is wholly owned by Chinalco and into which Alcoa has committed $1.2 billion by way of convertible instruments. Chinalco and Alcoa said they do not currently intend to make an offer for Rio Tinto, but reserve the right to make an offer under certain circumstances. Investment bank Lehman Brothers said it bought the stake in Rio for Chinalco and Alcoa at 60 pounds a share, about 21 percent above Rio's closing price of 49.56 pounds on Thursday.
According to the WSJ, the next president, if he or she serves two terms, could find the U.S. government so deeply in hock that it would face losing its Triple-A credit rating, something that has never happened since Moody's Investors Service began grading U.S. securities in 1917.
John Ing: "America today absorbs about 75 percent of the world's surplus savings. However, a weakened Wall Street can no longer fix America's debt problem. America's trade deficit grew because its savings are less than investment. Between 1997 and 2007, the current deficit increased almost six times from an annual rate of 1.25 percent of GDP to 7 percent. The US needs over $2.5 billion a day of foreign capital to finance its growing deficits. Its consumers for example saw a dramatic jump in household debt to a record $2.5 trillion, which rises to $13.6 trillion if mortgages are added. And since 1995, mortgage debt as a percentage of disposable income increased from 56 percent in ten years to almost 100 percent. Credit card debt alone is almost $1 trillion. In November, consumer debt rose 7.5 percent led by credit card debt which rose 11.3 percent."
Google's CEO: “We are very, very pleased with our year and also with the quarter that just ended. We are optimistic about 2008,” he added.
From 2003 to 2006, the last year for which complete data are available, the world's oil production grew 6.25 percent, to reach 84.6 million barrels per day, according to the federal Energy Information Administration. But demand for oil grew faster, pushed by the growing economies of China and India. Worldwide demand rose 6.43 percent to 84.73 million barrels per day.
Zman: "The natural gas surplus is only a quarter of what it was this time last year given the help of a hot summer and now, a cold winter...The CPC has underestimated the cold of this winter for five of the last six weeks. Keep that up much longer and the old E&P complaint of , "oh, if only we could have a normal winter" may go by the wayside."
The Oil Drum: "Dr Jim Buckee has just retired as President and CEO of Talisman Energy, a major independent Canadian oil company with a market capitalisation of $25-billion. On the phone from Perth, Dr Buckee told me that 'peak oil' was now either here, or very close. JIM BUCKEE: It is the underlying decline of the world's major fields that is the dominant driving factor here. If you think that at the moment the world is consuming 30-plus billion barrels a year of oil and is finding seven or eight billion barrels a year. And this state of affairs has been going on now for 20 or more years. It's obviously unsustainable and the world is increasingly drawing on the bigger older fields. You couple that notion with the irreversibility of decline and you've got a very alarming picture."
Wireless equipment maker LM Ericsson AB reported a sharp drop in fourth-quarter net profits and said Friday it would lay off around 1,000 employees in Sweden because of costs cuts.
European Central Bank council member Nicholas Garganas said the bank won't be driven by investor expectations of an interest-rate cut as inflation remains ``a major concern.'' ``Our monetary policy is not led on what the markets expect,'' Garganas, who also heads the Greek central bank, said in an interview late yesterday in his office in Athens. ``I'm very concerned about the high inflation rate. Inflation risks remain on the upside.''
UBS AG, Europe's biggest bank by assets, increased its price forecasts for coal used in power plants in 2008 and 2009 as China's demand rises and rain disrupted supplies from Australia. The price of thermal contract coal will average $100 a metric ton this year, and $125 a ton in 2009, up from previous estimates of $90 and $110, UBS analysts led by Stephen Oldfield and Ghee Peh said in a report today.
According to AMG Data Services, "including ETF activity, Equity funds report net cash outflows totaling -$7.524 billion in the week ended 1/30/08 with Domestic funds reporting net outflows of -$6.315 billion and Non-domestic funds reporting net outflows of -$1.209 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$3.724 billion with Domestic funds reporting net outflows of -$2.485 billion and Non-domestic funds reporting net outflows totaling -$1.238 billion."
Rob Hanna: "To summarize the two main points tonight:
1) Don’t be too eager to short. It’s doesn’t have positive expected value just after a Follow Through Day.
2) Watch market action closely over the next week. It should give you a pretty good indication of the intermediate-term."
Exxon's fourth quarter earnings rose to $2.13 a share from $1.76 a share last year. Chevron Q4 earnings $2.32 per share vs $1.74.
Job growth contracted in January for the first time in more than four years, the Labor Department said Friday. Nonfarm payrolls fell by 17,000 in January much weaker than the 85,000 expected by economists surveyed by MarketWatch. The unemployment rate ticked lower to 4.9% in January from 5.0% in the previous month. The department revised December's new-job total up to 82,000 from 18,000.
U.S. Jan. average workweek falls to 33.7 hours vs 33.8 Dec. U.S. Jan. average hourly earnings up 0.2%, up 3.7 yr-on-yr and continues to lag inflation.
Beazer Homes USA Inc said on Friday it would cease some operations, including mortgage origination, causing unspecified charges. The company said besides mortgage origination, it would exit some homebuilding operations in North Carolina, Ohio, South Carolina and Kentucky. Beazer also said it would enter a new marketing services deal with mortgage lender Countrywide Financial Corp .
In early Friday trading, the dollar index dropped 0.3% to 74.985.
Crude oil for March delivery slumped $2.79 to $88.96 a barrel on the New York Mercantile Exchange. Gold for April delivery fell $14.50 to end at $913.50 an ounce on the New York Mercantile Exchange.
The ISM index rose to 50.7% from 48.4% in December, the ISM said.
U.S. consumer sentiment rose in January, according to the University of Michigan consumer sentiment survey released Friday by UMich and Reuters. The index rose to 78.4 in January from 75.5 in December. The current conditions index rose to 94.4 from 91.0, while the expectations index gained to 68.1 from 65.6.
On a year-over-year basis, spending on private home construction was down 20.4% in December.
Rep. Ron Paul: "The Constitution was written for one specific purpose and that was to restrain the government, not to restrain the people."
Friday, February 01, 2008
Thursday, January 31, 2008
The Day After
2/1/08 The Day After
Credit card services provider Alliance Data Systems Corp. on Wednesday forecast 2008 profit, above Wall Street expectations on growth in its Epsilon, Canadian loyalty and private label businesses.The company said it expects full-year cash earnings of $4.30 per share for 2008, up 15 percent from $3.75 per share in 2007.
Nouriel Roubini: "The reaction of the stock market to the unexpected 75bps cut by the Fed last week and its reaction today to the further 50bps cut clearly shows that markets and investors are now fully realizing that the US economy is suffering from serious credit, i.e. insolvency, problems, not just illiquidity ones; and that Fed monetary policy can partly tackle illiquidity problems but cannot resolve insolvency ones."
Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor's.
Profits fell at Japanese megabanks Mitsubishi UFJ Financial Group and Mizuho Financial Group in the nine months through December because of exposure to the U.S. subprime mortgage crisis.
A top agriculture official warned Thursday that snow battering central China has dealt an "extremely serious" blow to winter crops, raising the likelihood of future shortages driving already surging inflation.
One of this nation’s largest employers, the mining industry, virtually halted production for four days last week because Eskom, the dominant, government-controlled utility, could not guarantee enough power to ventilate and cool the deep underground shafts. Companies that mine gold and platinum restarted production only on Tuesday after emergency negotiations with Eskom, South Africa’s Chamber of Mines said. “The shutdown of the mining industry is an extraordinary, unprecedented event,” said Anton Eberhard, a business school professor at the University of Cape Town and an energy expert. “That’s a powerful message, massively damaging to South Africa’s reputation for new investment. Our country was built on the mines.”
For 2008, Raytheon anticipates earnings from continuing operations in the range of $3.65 to $3.80 a share. Analysts are looking for full-year earnings of $3.81 a share.
Amazon.com Inc.will buy Audible Inc. for $11.50 a share in a deal that values the provider of digital spoken word audio content at a 23% premium from its closing price of $9.33 a share in the previous session. The Seattle-based online retailer will commence a cash tender offer to purchase all of the outstanding shares of Audible.com and will assume the company's outstanding stock-based awards, for an aggregate transaction value of approximately $300 million.
Consumers in the 15 countries that share the euro became more pessimistic about the outlook for the economy and more fearful of losing their jobs at the start of 2008. That contributed to a sharp fall in consumer confidence in the euro zone, with sentiment also weakening among manufacturers, service providers, retailers and construction companies. The European Commission's January survey of sentiment in the euro zone, published Thursday, showed the headline measure of consumer confidence fell to -12 from -9 in December, a larger decline that the drop to -10 that was forecast by economists. The measure of industrial confidence fell to +1 from +2, in line with expectations, while the measure of confidence among service providers dropped to +12 from +14.
Inflation across the countries that make up the European single currency is expected to hit an annual rate of 3.2% in January, according to a preliminary estimate released by Eurostat Thursday.
Troubled bond insurer MBIA swung to a fourth-quarter loss of $2.3 billion, or $18.61 per share, on significantly wider spreads and ratings downgrades of securities backing collateralized debt obligations. It earned $181 million in the year-ago quarter. MBIA continues to believe that the balance of the mark-to-market losses are not predictive of future claims and, in the absence of further credit impairment, the cumulative marks should reverse over the remaining life of the insured credit derivatives. On an adjusted basis, its operating loss was $3.30 a share, against Thomson Financial-compiled analyst estimates of $2.97 a share loss. It has a commitment from Warburg Pincus to backstop a $500 million rights offering, and it is considering this and other steps to raise equity.
In his new budget, to be unveiled Monday, President Bush will call for large cuts in the growth of Medicare, far exceeding what he proposed last year, and he will again seek major savings in Medicaid, according to administration officials and budget documents. Over all, the 2009 budget is likely to be the first $3 trillion spending request by a president.
P&G said profit was $3.27 billion, or 98 cents a share, in the fiscal second quarter ended December 31, compared with $2.86 billion, or 84 cents a share, a year earlier.
Tata Chemicals Ltd. Thursday said it has signed a pact to buy U.S.-based chemical company General Chemical Industrial Products Inc. for $1.01 billion. The Indian maker of chemicals, fertilizers and food additives said General Chemical Industrial Products is a major soda ash producer in the U.S. with a capacity of 2.5 million metric tons a year. Soda ash or sodium carbonate is used in the manufacture of glass.
Qatar is reviewing its currency policy and could revalue or drop the dollar peg as the booming Gulf state struggles to tame inflation while the US reduces interest rates to head off a recession. Qatari officials on Wednesday said the gas-rich emirate was considering revaluing its currency or linking it to a trade-weighted basket of currencies as well as other policy proposals aimed at cooling rampant inflation of up to 15 per cent.
Excel Maritime Carriers said Tuesday it would acquire competitor Quintana Maritime in a deal it valued at nearly $2.45 billion that will create one of the world’s largest dry bulk companies by fleet and capacity.
Arthur J. Gallagher & Co.'s said today its fourth-quarter net income fell nearly 5 percent and that it is planning a restructuring that will cut 400 jobs.
Isuzu said Wednesday that it would stop selling passenger vehicles in the U.S., as sales declined to almost nothing in recent years.
A British supermarket chain plans to open at least 18 stores throughout the Bay Area next year, many in neighborhoods that other grocery stores have long avoided. Fresh & Easy Neighborhood Market, the aggressively expanding U.S. division of Tesco PLC, the world's third-largest retailer, plans to build smaller than typical outlets offering prepared meals, fresh produce and perishables in Antioch, Concord, San Jose, San Francisco, Hayward, Oakland, Oakley and elsewhere.
According to rigzone, Suncor Energy announced that its Board of Directors has given final approval to a $20.6 billion investment that is expected to boost crude oil production at the company's oil sands operation by 200,000 barrels per day.
Defaults on privately insured U.S. mortgages rose 37 percent in December from the same month a year earlier, an industry report today showed, as the U.S. housing slump deepened to the worst in a quarter century. The number of insured borrowers falling more than 60 days late on payments jumped to 64,384 last month from 46,921 in December 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The defaults represented a 5.5 percent increase from 61,033 in November.
Experts are predicting pump prices, which jumped by almost a dollar a gallon in each of the last two springs in many parts of the United States, will spike again this year as refiners and gas stations switch from winter- to summer-blended fuels. The increases, starting as early as February in southern California, could push the average national price to a record $3.50 a gallon or more by June.
Michelle Leder provided this info from the latest Lennar 10K: "The home-building industry is in the midst of a significant downturn. As a result, we have experienced a significant decline in demand for newly built homes in almost all of our markets. Homebuilders’ inventories of unsold new homes have increased as a result of increased cancellation rates on pending contracts as new home buyers sometimes find it more advantageous to forfeit a deposit than to complete the purchase of the home. In addition, an oversupply of alternatives to new homes, such as rental properties and used homes, has depressed prices and reduced margins. This combination of lower demand and higher inventories affects both the number of homes we can sell and the prices at which we can sell them. For example, in 2007 we experienced a significant decline in our sales results, significant reductions in our margins as a result of higher levels of sales incentives and price concessions, and a higher than normal cancellation rate. We have no basis for predicting how long demand and supply will remain out of balance in markets where we operate or whether, even if demand and supply come back in balance, sales volumes or pricing will return to prior levels."
Rob Hanna: "Emotion drives markets. Large gaps down in an already fearful environment can provide nice buying opportunities. While the win rate is only slightly better than a coin flip, the potential reward far outweighs the risk and provides a quantifiable edge. Agile traders could also improve their risk/reward by fine tuning their entries and exits intraday. Bear markets are driven by fear. Gaps are frequently fearful overreactions. Don’t ride along with the bear."
U.S. employment costs increased 0.8% in the fourth quarter, the same rate as in the previous three months, the Labor Department reported Thursday.
U.S. real consumer spending flattened out in December, further evidence that the economy was getting weaker as the fourth quarter sputtered to an end.
First-time claims for state unemployment benefits rocketed higher in the latest week, the Labor Department reported Thursday. The number of initial claims in the week ending Jan. 26 rose 69,000 to 375,000. It's the highest level since early October and the largest increase since September 2005. The jump was much larger than expected.
Wyeth expects 2008 earnings excluding items of $3.35 to $3.49 a share, down 1% to 5% from 2007. Wyeth projects revenue in 2008 comparable with 2007 revenue of $22.4 billion.
Tesoro Corp. lost $40 million, or 29 cents a share in the fourth quarter, compared to a gain of $158 million, or $1.14 per share, in the year-ago period. The San Antonio, Texas company cited weak profit margin in its refining business, higher operating expenses and poor marketing margins. Tesoro also cited an unplanned outage at a refinery's reformer unit, which impacted results by $30 million. Benchmark margins versus last year were lower by 23% on the West Coast, 36% in the Pacific Northwest, and 7% in the Midwest, the company said.
In early trading, gold futures rose to trade near $930 an ounce on Thursday, S&P 500 futures fell 16.5 points to 1,334.10, Nasdaq 100 futures dropped 23.25 points to 1,788.25 and Dow industrial futures dropped 140 points to 12,254.
The Chicago purchasing managers' index fell to 51.5% in January from 56.4% in December.
Peabody Energy Corp. on Thursday said net income fell 80% on a $175 million loss from discontinued operations, while the coal giant's operating income rose 5% as it boosted the tons it sold in the period. The company warned that flooding in Australia and other issues would impact its first-quarter profit.
The South African Reserve Bank kept its key repo rate unchanged at 11% on Thursday, saying that considerable risks to the inflation outlook remain.
Barack Obama raised $32 million in the single month of January, matching his best three-month period last year, aides said Thursday.
U.S. natural gas inventories lost 274 billion cubic feet to 2,262 billion cubic feet in the week ending Jan. 25, Energy Information Administration reported on Thursday. Analysts at Global Insight were expecting a drop of 260 billion cubic feet.
The dollar index, which tracks the performance of the greenback against six other major currencies, was at 75.271, down from 75.499 late Wednesday.
Deephaven Capital Management LLC is liquidating a hedge fund with $780 million in assets that tries to profit from mergers after U.S. takeovers dried up and returns were little changed last year.
Whirlpool Corp said on Thursday it planned to close two refrigerator plants and cut about 1,250 jobs in a restructuring expected to cost $15 million to $20 million. The plants to be closed were located in LaVergne, Tennessee, affecting about 500 jobs; and Reynosa, Mexico, where 750 jobs will be cut.
Oil producer and refiner Marathon Oil Corp. said sharply lower margins at its refineries made for a difficult fourth quarter, when project delays and higher costs contributed to a 38 percent drop in net income. Fourth-quarter earnings fell to $668 million, or 94 cents per share, from $1.08 billion, or $1.53 per share, in the prior-year period.
Google's fourth quarter, excluding special items, generated earnings per share of $4.43, falling short of analysts' average forecast of $4.47, according to Reuters Estimates. Revenue rose 51 percent to $4.827 billion. Analysts, on average, had predicted revenue of $4.83 billion, with estimates ranging from $4.67 billion to $5.10 billion. Google increased its workforce to 16,805 employees in the fourth quarter, up 5.6 percent from the previous period. The company's share of the U.S. Internet search market rose to 56.3 percent in December from 50.8 percent at the end of 2006, while Yahoo's share fell, according to Nielsen Online. Google accounted for 75 percent of U.S. search advertising in 2007, up from 60 percent in 2006, according to New York-based research firm EMarketer Inc. Google shares traded at $522.54 in extended trading, down from their Nasdaq close of $564.30.
The number of U.S. Internet queries dropped 3.9 percent last month, according to research firm ComScore Inc.
Motorola Inc. said late Thursday that it is considering spinning off its struggling mobile device business.
Intuitive Surgical Inc.'s fourth-quarter profit rose to $49.2 million, or $1.24 a share, compared with $23.6 million, or 64 cents a share, in the year-earlier period.
Standard & Poor's said late Thursday that it put MBIA Inc.ratings on CreditWatch with negative implications. That means the agency could downgrade MBIA's crucial AAA ratings within 90 days.
More than 5 million people will lose their jobs this year as the world economy slows, an official at the U.N. labor agency said Thursday
After being down 190 points early in the day, the Dow rose 207.53, or 1.67 percent, to 12,650.36. For the month, the Dow lost 4.63 percent -- its worst January since losing 4.84 percent at the start of 2000. January's pullback was the steepest seen in any month since December 2002. Broader stock indicators also jumped Thursday. The Standard & Poor's 500 index rose 22.74, or 1.68 percent, to 1,378.55, and the Nasdaq composite index rose 40.86, or 1.74 percent, to 2,389.86. The Russell 2000 index of smaller companies rose 17.81, or 2.56 percent, to 713.30. Light, sweet crude for March delivery fell 58 cents to settle at $91.75 a barrel on the New York Mercantile Exchange. Gold closed up slightly at just under $930 an ounce.
Dmitry Medvedev, Russia’s most likely next president, called on Russian business people on Thursday to copy China and go on a global buying spree of foreign companies to bolster the economy and cut dependence on technology from abroad. “This is a very important task. The majority of powerful countries are engaged in this. Many of them are very active, like China. And we should be active, too,” he told a conference for Russia’s most influential business lobby in the southern Russian city of Krasnodar
Moody's Investors Service said late Thursday that it may downgrade ratings of mortgage insurers.
Credit card services provider Alliance Data Systems Corp. on Wednesday forecast 2008 profit, above Wall Street expectations on growth in its Epsilon, Canadian loyalty and private label businesses.The company said it expects full-year cash earnings of $4.30 per share for 2008, up 15 percent from $3.75 per share in 2007.
Nouriel Roubini: "The reaction of the stock market to the unexpected 75bps cut by the Fed last week and its reaction today to the further 50bps cut clearly shows that markets and investors are now fully realizing that the US economy is suffering from serious credit, i.e. insolvency, problems, not just illiquidity ones; and that Fed monetary policy can partly tackle illiquidity problems but cannot resolve insolvency ones."
Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor's.
Profits fell at Japanese megabanks Mitsubishi UFJ Financial Group and Mizuho Financial Group in the nine months through December because of exposure to the U.S. subprime mortgage crisis.
A top agriculture official warned Thursday that snow battering central China has dealt an "extremely serious" blow to winter crops, raising the likelihood of future shortages driving already surging inflation.
One of this nation’s largest employers, the mining industry, virtually halted production for four days last week because Eskom, the dominant, government-controlled utility, could not guarantee enough power to ventilate and cool the deep underground shafts. Companies that mine gold and platinum restarted production only on Tuesday after emergency negotiations with Eskom, South Africa’s Chamber of Mines said. “The shutdown of the mining industry is an extraordinary, unprecedented event,” said Anton Eberhard, a business school professor at the University of Cape Town and an energy expert. “That’s a powerful message, massively damaging to South Africa’s reputation for new investment. Our country was built on the mines.”
For 2008, Raytheon anticipates earnings from continuing operations in the range of $3.65 to $3.80 a share. Analysts are looking for full-year earnings of $3.81 a share.
Amazon.com Inc.will buy Audible Inc. for $11.50 a share in a deal that values the provider of digital spoken word audio content at a 23% premium from its closing price of $9.33 a share in the previous session. The Seattle-based online retailer will commence a cash tender offer to purchase all of the outstanding shares of Audible.com and will assume the company's outstanding stock-based awards, for an aggregate transaction value of approximately $300 million.
Consumers in the 15 countries that share the euro became more pessimistic about the outlook for the economy and more fearful of losing their jobs at the start of 2008. That contributed to a sharp fall in consumer confidence in the euro zone, with sentiment also weakening among manufacturers, service providers, retailers and construction companies. The European Commission's January survey of sentiment in the euro zone, published Thursday, showed the headline measure of consumer confidence fell to -12 from -9 in December, a larger decline that the drop to -10 that was forecast by economists. The measure of industrial confidence fell to +1 from +2, in line with expectations, while the measure of confidence among service providers dropped to +12 from +14.
Inflation across the countries that make up the European single currency is expected to hit an annual rate of 3.2% in January, according to a preliminary estimate released by Eurostat Thursday.
Troubled bond insurer MBIA swung to a fourth-quarter loss of $2.3 billion, or $18.61 per share, on significantly wider spreads and ratings downgrades of securities backing collateralized debt obligations. It earned $181 million in the year-ago quarter. MBIA continues to believe that the balance of the mark-to-market losses are not predictive of future claims and, in the absence of further credit impairment, the cumulative marks should reverse over the remaining life of the insured credit derivatives. On an adjusted basis, its operating loss was $3.30 a share, against Thomson Financial-compiled analyst estimates of $2.97 a share loss. It has a commitment from Warburg Pincus to backstop a $500 million rights offering, and it is considering this and other steps to raise equity.
In his new budget, to be unveiled Monday, President Bush will call for large cuts in the growth of Medicare, far exceeding what he proposed last year, and he will again seek major savings in Medicaid, according to administration officials and budget documents. Over all, the 2009 budget is likely to be the first $3 trillion spending request by a president.
P&G said profit was $3.27 billion, or 98 cents a share, in the fiscal second quarter ended December 31, compared with $2.86 billion, or 84 cents a share, a year earlier.
Tata Chemicals Ltd. Thursday said it has signed a pact to buy U.S.-based chemical company General Chemical Industrial Products Inc. for $1.01 billion. The Indian maker of chemicals, fertilizers and food additives said General Chemical Industrial Products is a major soda ash producer in the U.S. with a capacity of 2.5 million metric tons a year. Soda ash or sodium carbonate is used in the manufacture of glass.
Qatar is reviewing its currency policy and could revalue or drop the dollar peg as the booming Gulf state struggles to tame inflation while the US reduces interest rates to head off a recession. Qatari officials on Wednesday said the gas-rich emirate was considering revaluing its currency or linking it to a trade-weighted basket of currencies as well as other policy proposals aimed at cooling rampant inflation of up to 15 per cent.
Excel Maritime Carriers said Tuesday it would acquire competitor Quintana Maritime in a deal it valued at nearly $2.45 billion that will create one of the world’s largest dry bulk companies by fleet and capacity.
Arthur J. Gallagher & Co.'s said today its fourth-quarter net income fell nearly 5 percent and that it is planning a restructuring that will cut 400 jobs.
Isuzu said Wednesday that it would stop selling passenger vehicles in the U.S., as sales declined to almost nothing in recent years.
A British supermarket chain plans to open at least 18 stores throughout the Bay Area next year, many in neighborhoods that other grocery stores have long avoided. Fresh & Easy Neighborhood Market, the aggressively expanding U.S. division of Tesco PLC, the world's third-largest retailer, plans to build smaller than typical outlets offering prepared meals, fresh produce and perishables in Antioch, Concord, San Jose, San Francisco, Hayward, Oakland, Oakley and elsewhere.
According to rigzone, Suncor Energy announced that its Board of Directors has given final approval to a $20.6 billion investment that is expected to boost crude oil production at the company's oil sands operation by 200,000 barrels per day.
Defaults on privately insured U.S. mortgages rose 37 percent in December from the same month a year earlier, an industry report today showed, as the U.S. housing slump deepened to the worst in a quarter century. The number of insured borrowers falling more than 60 days late on payments jumped to 64,384 last month from 46,921 in December 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The defaults represented a 5.5 percent increase from 61,033 in November.
Experts are predicting pump prices, which jumped by almost a dollar a gallon in each of the last two springs in many parts of the United States, will spike again this year as refiners and gas stations switch from winter- to summer-blended fuels. The increases, starting as early as February in southern California, could push the average national price to a record $3.50 a gallon or more by June.
Michelle Leder provided this info from the latest Lennar 10K: "The home-building industry is in the midst of a significant downturn. As a result, we have experienced a significant decline in demand for newly built homes in almost all of our markets. Homebuilders’ inventories of unsold new homes have increased as a result of increased cancellation rates on pending contracts as new home buyers sometimes find it more advantageous to forfeit a deposit than to complete the purchase of the home. In addition, an oversupply of alternatives to new homes, such as rental properties and used homes, has depressed prices and reduced margins. This combination of lower demand and higher inventories affects both the number of homes we can sell and the prices at which we can sell them. For example, in 2007 we experienced a significant decline in our sales results, significant reductions in our margins as a result of higher levels of sales incentives and price concessions, and a higher than normal cancellation rate. We have no basis for predicting how long demand and supply will remain out of balance in markets where we operate or whether, even if demand and supply come back in balance, sales volumes or pricing will return to prior levels."
Rob Hanna: "Emotion drives markets. Large gaps down in an already fearful environment can provide nice buying opportunities. While the win rate is only slightly better than a coin flip, the potential reward far outweighs the risk and provides a quantifiable edge. Agile traders could also improve their risk/reward by fine tuning their entries and exits intraday. Bear markets are driven by fear. Gaps are frequently fearful overreactions. Don’t ride along with the bear."
U.S. employment costs increased 0.8% in the fourth quarter, the same rate as in the previous three months, the Labor Department reported Thursday.
U.S. real consumer spending flattened out in December, further evidence that the economy was getting weaker as the fourth quarter sputtered to an end.
First-time claims for state unemployment benefits rocketed higher in the latest week, the Labor Department reported Thursday. The number of initial claims in the week ending Jan. 26 rose 69,000 to 375,000. It's the highest level since early October and the largest increase since September 2005. The jump was much larger than expected.
Wyeth expects 2008 earnings excluding items of $3.35 to $3.49 a share, down 1% to 5% from 2007. Wyeth projects revenue in 2008 comparable with 2007 revenue of $22.4 billion.
Tesoro Corp. lost $40 million, or 29 cents a share in the fourth quarter, compared to a gain of $158 million, or $1.14 per share, in the year-ago period. The San Antonio, Texas company cited weak profit margin in its refining business, higher operating expenses and poor marketing margins. Tesoro also cited an unplanned outage at a refinery's reformer unit, which impacted results by $30 million. Benchmark margins versus last year were lower by 23% on the West Coast, 36% in the Pacific Northwest, and 7% in the Midwest, the company said.
In early trading, gold futures rose to trade near $930 an ounce on Thursday, S&P 500 futures fell 16.5 points to 1,334.10, Nasdaq 100 futures dropped 23.25 points to 1,788.25 and Dow industrial futures dropped 140 points to 12,254.
The Chicago purchasing managers' index fell to 51.5% in January from 56.4% in December.
Peabody Energy Corp. on Thursday said net income fell 80% on a $175 million loss from discontinued operations, while the coal giant's operating income rose 5% as it boosted the tons it sold in the period. The company warned that flooding in Australia and other issues would impact its first-quarter profit.
The South African Reserve Bank kept its key repo rate unchanged at 11% on Thursday, saying that considerable risks to the inflation outlook remain.
Barack Obama raised $32 million in the single month of January, matching his best three-month period last year, aides said Thursday.
U.S. natural gas inventories lost 274 billion cubic feet to 2,262 billion cubic feet in the week ending Jan. 25, Energy Information Administration reported on Thursday. Analysts at Global Insight were expecting a drop of 260 billion cubic feet.
The dollar index, which tracks the performance of the greenback against six other major currencies, was at 75.271, down from 75.499 late Wednesday.
Deephaven Capital Management LLC is liquidating a hedge fund with $780 million in assets that tries to profit from mergers after U.S. takeovers dried up and returns were little changed last year.
Whirlpool Corp said on Thursday it planned to close two refrigerator plants and cut about 1,250 jobs in a restructuring expected to cost $15 million to $20 million. The plants to be closed were located in LaVergne, Tennessee, affecting about 500 jobs; and Reynosa, Mexico, where 750 jobs will be cut.
Oil producer and refiner Marathon Oil Corp. said sharply lower margins at its refineries made for a difficult fourth quarter, when project delays and higher costs contributed to a 38 percent drop in net income. Fourth-quarter earnings fell to $668 million, or 94 cents per share, from $1.08 billion, or $1.53 per share, in the prior-year period.
Google's fourth quarter, excluding special items, generated earnings per share of $4.43, falling short of analysts' average forecast of $4.47, according to Reuters Estimates. Revenue rose 51 percent to $4.827 billion. Analysts, on average, had predicted revenue of $4.83 billion, with estimates ranging from $4.67 billion to $5.10 billion. Google increased its workforce to 16,805 employees in the fourth quarter, up 5.6 percent from the previous period. The company's share of the U.S. Internet search market rose to 56.3 percent in December from 50.8 percent at the end of 2006, while Yahoo's share fell, according to Nielsen Online. Google accounted for 75 percent of U.S. search advertising in 2007, up from 60 percent in 2006, according to New York-based research firm EMarketer Inc. Google shares traded at $522.54 in extended trading, down from their Nasdaq close of $564.30.
The number of U.S. Internet queries dropped 3.9 percent last month, according to research firm ComScore Inc.
Motorola Inc. said late Thursday that it is considering spinning off its struggling mobile device business.
Intuitive Surgical Inc.'s fourth-quarter profit rose to $49.2 million, or $1.24 a share, compared with $23.6 million, or 64 cents a share, in the year-earlier period.
Standard & Poor's said late Thursday that it put MBIA Inc.ratings on CreditWatch with negative implications. That means the agency could downgrade MBIA's crucial AAA ratings within 90 days.
More than 5 million people will lose their jobs this year as the world economy slows, an official at the U.N. labor agency said Thursday
After being down 190 points early in the day, the Dow rose 207.53, or 1.67 percent, to 12,650.36. For the month, the Dow lost 4.63 percent -- its worst January since losing 4.84 percent at the start of 2000. January's pullback was the steepest seen in any month since December 2002. Broader stock indicators also jumped Thursday. The Standard & Poor's 500 index rose 22.74, or 1.68 percent, to 1,378.55, and the Nasdaq composite index rose 40.86, or 1.74 percent, to 2,389.86. The Russell 2000 index of smaller companies rose 17.81, or 2.56 percent, to 713.30. Light, sweet crude for March delivery fell 58 cents to settle at $91.75 a barrel on the New York Mercantile Exchange. Gold closed up slightly at just under $930 an ounce.
Dmitry Medvedev, Russia’s most likely next president, called on Russian business people on Thursday to copy China and go on a global buying spree of foreign companies to bolster the economy and cut dependence on technology from abroad. “This is a very important task. The majority of powerful countries are engaged in this. Many of them are very active, like China. And we should be active, too,” he told a conference for Russia’s most influential business lobby in the southern Russian city of Krasnodar
Moody's Investors Service said late Thursday that it may downgrade ratings of mortgage insurers.
Wednesday, January 30, 2008
The Fed
1/31/08 The Fed
The Hong Kong Monetary Authority Thursday announced a half-point cut in its key interest rate to 4.5%, matching a similar reduction overnight by the U.S. Federal Reserve.
Swiss banking group UBS will report a net loss of around 12.5 billion Swiss francs ($11.4 billion) for the fourth quarter, after higher-than-expected write-downs from its U.S. mortgage exposure. The group said write-downs in the quarter will total around $14 billion, with $12 billion coming from positions related to the U.S. subprime market and the rest from other holdings linked to U.S. residential mortgages.
Economic growth slowed to an annual rate of 0.6 percent in October through December, half the rate forecast, following a 4.9 percent pace the previous three months, the Commerce Department said today in Washington. Residential construction dropped by the most in 26 years. For all of 2007, gross domestic product grew 2.2%, the slowest growth since 2002. GDP increased 2.9% in 2006.
Companies in the U.S. private sector added 130,000 jobs in January, according to the ADP employment report released Wednesday. The report two days before the Labor Department reports on nonfarm payroll growth for January. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 155,000, well above the 70,000 jobs now expected by Wall Street economists.
Boeing raises 2008 EPS view to $5.70 to $5.85.
Kraft Foods Inc.'s fourth-quarter net income fell 6.3% to $585 million, or 38 cents a share, from $624 million, or 38 cents a share, a year earlier, due in part to high input costs. Excluding items, earnings fell 18% to $698 million, or 44 cents a share, from $842 million, or 51 cents a share, a year ago. Kraft expects 2008 earnings of at least $1.56 a share, and non-GAAP earnings of about $1.90 a share.
For 2008 Dominion Resources expects to report operating earnings of $3.05 a share to $3.15 a share and for 2009 it sees earnings in the range of $3.25 to $3.40 a share.
Given a reasonably stable global economy in 2008, Dover expects to grow earnings per share by 10% or more.
Greenspan sees at least a 50% chance of a U.S. recession, Reuters reported.
Baker Hughes reported a 23% profit rise in the fourth quarter to $400.5 million, or $1.26 a share, with revenue up 12% to $2.74 billion.
Approvals of mortgage loans in the United Kingdom slipped to 73,000 in December, falling from 81,000 in November and under performing the six-month rolling average of 100,000, the Bank of England reported Wednesday.
French bank BNP Paribas said Wednesday that it expects fourth quarter profit to fall around 42% to 1 billion euros in the face of a "deepening crisis" for the sector.
Rudy Giuliani will endorse Sen. John McCain as the Republican nominee for president on Wednesday, NBC News reported Tuesday night.
Japan's industrial production expanded a lower-than-expected 1.4% in December from the previous month, with manufacturers expecting their output to decline over the next two months, according to government data released Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 7.5 percent to 1,054.9 in the week ended January 25. It was last higher in late March 2004, the MBA said.
Eastman Kodak Co. earned $215 million, or 71 cents per share in the fourth quarter. This compares with $16 million, or 6 cents per share, in the same quarter a year earlier.
Merck posted a net loss of $1.63 billion, hit by charges related to its Vioxx settlement. Excluding items, earnings were 80 cents a share.
New York state regulators are rethinking a decade-old loophole that allows bond insurers to venture into derivatives.
Merrill lost 42 cents to $57.05 in Germany after Oppenheimer's Meredith Whitney downgraded the bank to ``underperform'' from ``perform.''
``We estimate that Merrill has the highest probability of further writedowns throughout 2008,'' Whitney wrote in a note to clients dated yesterday. ``Merrill could have an additional writedown of roughly $10 billion if the monolines were to be downgraded,'' she added.
According to the FT, the risk of bankruptcies among the big US homebuilders has risen sharply as the economy has weakened and an end to the housing slump remains distant. Credit default swaps on homebuilders, which act as insurance on corporate debt, suggest some of the biggest are at risk of failing to keep up debt payments. According to Byron Douglass, an analyst at Credit Derivatives Research, the most exposed are Standard Pacific, Hovnanian, Beazer and Meritage. All are among the top 15 publicly listed US homebuilders. Mr Douglass said bankruptcies were “highly likely” among top homebuilders. Homebuilding is viewed as the sector most threatened by the slowdown as housing has been the worst-hit part of the economy. On Tuesday Tousa, formerly called Technical Olympic, became the largest homebuilder so far to file for bankruptcy. At least 13 other homebuilders have gone bankrupt since June, according to Bloomberg data.
According to Dean Baker, the co-director of the Center for Economic and Policy Research, average house prices are falling nationwide at an annual rate of more than ten per cent, something not seen since before the Second World War. This means that American households are getting poorer at a rate of more than two trillion dollars a year. Frederic Mishkin, a governor at the Fed, suggests that, for every dollar the typical American family’s housing wealth drops in a year, that family may cut its spending by up to seven cents. Nationwide, that adds up to roughly a hundred and fifty-five billion dollars, which is bigger than President Bush’s stimulus package. And it doesn’t take into account plunging stock prices, collapsing confidence, and the belated imposition of tighter lending practices—all of which will further restrict economic activity.
The developers of the Towers of Channelside, a pair of 29-story luxury condominiums, filed for bankruptcy court protection Friday, stating that Wachovia Corp. cut off its credit. The developer has sold just 89 of the 257 units, according to documents filed in U.S. Bankruptcy Court in Tampa on Friday. Many of the contracts on units that have not closed fell through because buyers backed out, documents said.
Shares of Clear Channel fell $2.25, or 7.2 per cent, to $29.17. Each tick down in the share price represented a message from investors that the company was not worth the $39.20 per share that Thomas H Lee and Bain Capital have offered for the radio broadcaster and outdoor advertising company.
Robert Reich: "The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are in fact lower than they were then: the income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago. Yet for years now, America’s middle class has lived beyond its pay cheque. Middle-class lifestyles have flourished even though median wages have barely budged. That is ending and Americans are beginning to feel the consequences."
Yahoo to cut 1,000 jobs.
Confidence among local venture capitalists has plunged to its lowest level since 2004, according to a survey released Tuesday by the University of San Francisco.
It was reported that Rio Tinto Group’s advisers say BHP Billiton can afford to increase its takeover offer to as much as five shares for one.
The Oil Drum: "Latest Developments:
1) Plateau production - For the second consecutive month world production has increased significantly, confirming the end of the plateau that began in 2005. The IEA figures result in an average global production in 2007 up to December of 85.26 million b/d, more than the average 2006 production of 85.00 million b/d and the average 2005 production of 84.10 million b/d. The EIA in their International Petroleum Monthly puts the average global 2007 production up to October at 84.47 million b/d, slightly lower than the average 2006 production of 84.60 million b/d and the average 2005 production of 84.63 million b/d.
2) Total liquids - In December world production of total liquids increased by 450,000 barrels per day from October according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.00 million b/d, which is the all time maximum liquids production.
3) Conventional crude - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 714,000 b/d from September to October. Total production in October was estimated at 74.12 million b/d, which is 174,000 b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005."
According to Bloomberg, the cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may gain for a third day as refineries seek ships to load around mid-February, swinging vessel-supply in owners' favor. The number of very large crude carriers, or VLCCs, that are available for hire within the next 30 days diminished 14 percent to 84, according to reports from Paris-based shipbroker Barry Rogliano Salles. Refineries need to find tankers for about 50 remaining February cargoes, according to the broker's data.
Nouriel Roubini: "My view is that the recession will be protracted and painful as a shopped-out, saving-less and debt-burdened consumer is on the ropes and now faltering; while the financial system is on the verge of a systemic crisis that will cause a severe credit crunch...Indeed the delinquencies and losses in the financial system are spreading from subprime to near prime and prime mortgages; to credit cards and auto loans; to commercial real estate loans; to leveraged loans that financed reckless LBOs; to the losses of the monolines that are effectively bankrupt and at risk of spreading furher massive losses to money market funds and other financial institutions once they get properly downgraded; and soon enough to corporate defaults and junk bonds that will in turn trigger massive losses on credit default swaps; eventual losses in the financial system may add up to more than $1 trillion."
Cereal and snack maker Kellogg Co. said Wednesday its fourth-quarter profit dipped slightly due in part to higher energy and materials costs and more investment in advertising, but still matched Wall Street's expectations. For the quarter ended Dec. 29, the Battle Creek-based company earned $176 million, or 44 cents per share, compared with $182 million, or 45 cents per share, a year ago. Revenue rose 8 percent to $2.79 billion from $2.58 billion, benefiting partly from stronger net sales by the Kellogg International division.
Bill Bonner: "Yesterday, if you were to buy a 30-year Treasury bond you would have gotten a 4.28% yield. That yield is only a few basis points from the current U.S. consumer price inflation level, as announced by the government's own number torturers. Assuming the number is more-or-less honest, and assuming things don't change, this means that a person who buys a long Treasury bond gives up money now for the right to receive zero return over the next 30 years. Of course, things do change. But the changes that are most likely are those that make this investment even worse. The inflation rate is likely to go up. At 10% inflation, the investor loses 5.72% per year. If the dollar falls against other major currencies, he is out even more."
John Edwards dropping out of presidential race.
The U.S. dollar index is trading at 75.569.
Merrill Lynch & Co., the world's largest brokerage, plans to exit the business of underwriting collateralized debt obligations and other structured credit products after the securities led to a record loss. ``We are not going to be in the CDO and structured-credit types of businesses,'' new Chief Executive Officer John Thain said.
Microsoft Corp. will become the new provider of paid search and contextual advertising links on sites run by The Wall Street Journal.
Altria sees post-spinoff annual dividend of $1.16 and set March 28 as the date for its planned spinoff of Philip Morris International.
Crude inventories rose by 3.6 million barrels to 293 million barrels in the week ending Jan. 25, Energy Information Administration reported on Wednesday. Gasoline supplies rose by 3.6 million barrels in the latest week, while distillate stocks fell by 1.5 million barrels, EIA reported.
Centex reported its fiscal third-quarter loss widened to $975.2 million as the company was hurt by the housing bust and impairment and tax-related charges.
Alliance Data suing Blackstone over stalled merger. The lawsuit, filed in the Delaware Court of Chancery, seeks specific performance to compel Blackstone to comply with its obligations under the merger agreement, including its covenants to use reasonable best efforts to obtain required regulatory approvals and to consummate the merger, and such other relief as the Chancery Court may deem just and proper.
Microsoft Corp. today began the global launch of Microsoft Dynamics CRM 4.0 by announcing the availability of the first eight languages, including English, Spanish, simplified Chinese and French. As part of its commitment to a rapid global rollout, Microsoft is kicking off a 12-week global launch tour today to give organizations worldwide the opportunity to experience Microsoft Dynamics CRM for themselves
Pulte Home's fourth-quarter loss widened to $874.7 million, or $3.46 a share, from $8.41 million, or 3 cents a share, due to the continued weakening of existing home sales.
Standard & Poor's said late Wednesday that it downgraded more mortgage-related securities because delinquencies and foreclosures continue to increase on the underlying home loans. S&P said it downgraded or put on CreditWatch negative 6,389 classes from U.S. subprime residential mortgage-backed securities (RMBS) transactions. They were rated between January 2006 and June 2007. The securities were worth $270.1 billion, which is almost half the original value of U.S. subprime RMBS rated by S&P during 2006 and the first half of 2007. S&P also warned it may downgrade 1,953 ratings from 572 global collateralized debt obligations that are backed by asset-backed securities and other CDOs. That's more than a third of all such CDOs rated by S&P.
Starbucks reported its quarterly profit rose slightly from a year ago as the coffee-shop chain seeks to restructure its operations to improve growth. Starbucks also said it will close 100 under performing U.S stores and expects "low double-digit" earnings-per-share growth in 2008.
Fitch Ratings said on Wednesday that it cut the AAA ratings of Financial Guaranty Insurance Company (FGIC) to AA because the bond insurer doesn't have enough capital to keep its top rating. Fitch warned it may cut FGIC's ratings further in future.
After the half point interest rate cut by the Fed, equities took off on strong triple digit gains and then came back to reality as the Dow Jones Industrial Average declined 37.5 points to 12,442.8. The S&P 500 shed 6.51 points to 1,355.79, while the Nasdaq Composite dropped 9.06 points to 2,349.00.
Amazon.com saw its earnings more than double in the fourth quarter thanks to strong holiday sales. For the quarter ended Dec. 31, Amazon reported earnings of $207 million, or 48 cents a share, compared to earnings of $98 million, or 23 cents a share, for the same period the previous year. Revenue grew 42% to $5.67 billion. For the first quarter, the company said it expects revenue to come in between $3.95 billion and $4.15 billion - ahead of the $3.92 billion predicted by analysts.
Ambac Financial and MBIA Inc. will lose more money than they're currently predicting from guarantees they sold on complex mortgage-related securities, according to Bill Ackman, a longtime critic of the bond insurance industry who is betting against the two companies. Ambac and MBIA shares fell almost 20% in afternoon trading on Wednesday.
Gold for April delivery soared as high as $941.70 an ounce in electronic trading on the New York Mercantile Exchange, hitting a new record high. The contract was last up $8.80 at $939.60 an ounce. Crude for March delivery ended the volatile session up 69 cents, or 0.8%, at $92.33 a barrel on the New York Mercantile Exchange. The U.S. dollar index is flirting with a new low.
The Hong Kong Monetary Authority Thursday announced a half-point cut in its key interest rate to 4.5%, matching a similar reduction overnight by the U.S. Federal Reserve.
Swiss banking group UBS will report a net loss of around 12.5 billion Swiss francs ($11.4 billion) for the fourth quarter, after higher-than-expected write-downs from its U.S. mortgage exposure. The group said write-downs in the quarter will total around $14 billion, with $12 billion coming from positions related to the U.S. subprime market and the rest from other holdings linked to U.S. residential mortgages.
Economic growth slowed to an annual rate of 0.6 percent in October through December, half the rate forecast, following a 4.9 percent pace the previous three months, the Commerce Department said today in Washington. Residential construction dropped by the most in 26 years. For all of 2007, gross domestic product grew 2.2%, the slowest growth since 2002. GDP increased 2.9% in 2006.
Companies in the U.S. private sector added 130,000 jobs in January, according to the ADP employment report released Wednesday. The report two days before the Labor Department reports on nonfarm payroll growth for January. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 155,000, well above the 70,000 jobs now expected by Wall Street economists.
Boeing raises 2008 EPS view to $5.70 to $5.85.
Kraft Foods Inc.'s fourth-quarter net income fell 6.3% to $585 million, or 38 cents a share, from $624 million, or 38 cents a share, a year earlier, due in part to high input costs. Excluding items, earnings fell 18% to $698 million, or 44 cents a share, from $842 million, or 51 cents a share, a year ago. Kraft expects 2008 earnings of at least $1.56 a share, and non-GAAP earnings of about $1.90 a share.
For 2008 Dominion Resources expects to report operating earnings of $3.05 a share to $3.15 a share and for 2009 it sees earnings in the range of $3.25 to $3.40 a share.
Given a reasonably stable global economy in 2008, Dover expects to grow earnings per share by 10% or more.
Greenspan sees at least a 50% chance of a U.S. recession, Reuters reported.
Baker Hughes reported a 23% profit rise in the fourth quarter to $400.5 million, or $1.26 a share, with revenue up 12% to $2.74 billion.
Approvals of mortgage loans in the United Kingdom slipped to 73,000 in December, falling from 81,000 in November and under performing the six-month rolling average of 100,000, the Bank of England reported Wednesday.
French bank BNP Paribas said Wednesday that it expects fourth quarter profit to fall around 42% to 1 billion euros in the face of a "deepening crisis" for the sector.
Rudy Giuliani will endorse Sen. John McCain as the Republican nominee for president on Wednesday, NBC News reported Tuesday night.
Japan's industrial production expanded a lower-than-expected 1.4% in December from the previous month, with manufacturers expecting their output to decline over the next two months, according to government data released Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 7.5 percent to 1,054.9 in the week ended January 25. It was last higher in late March 2004, the MBA said.
Eastman Kodak Co. earned $215 million, or 71 cents per share in the fourth quarter. This compares with $16 million, or 6 cents per share, in the same quarter a year earlier.
Merck posted a net loss of $1.63 billion, hit by charges related to its Vioxx settlement. Excluding items, earnings were 80 cents a share.
New York state regulators are rethinking a decade-old loophole that allows bond insurers to venture into derivatives.
Merrill lost 42 cents to $57.05 in Germany after Oppenheimer's Meredith Whitney downgraded the bank to ``underperform'' from ``perform.''
``We estimate that Merrill has the highest probability of further writedowns throughout 2008,'' Whitney wrote in a note to clients dated yesterday. ``Merrill could have an additional writedown of roughly $10 billion if the monolines were to be downgraded,'' she added.
According to the FT, the risk of bankruptcies among the big US homebuilders has risen sharply as the economy has weakened and an end to the housing slump remains distant. Credit default swaps on homebuilders, which act as insurance on corporate debt, suggest some of the biggest are at risk of failing to keep up debt payments. According to Byron Douglass, an analyst at Credit Derivatives Research, the most exposed are Standard Pacific, Hovnanian, Beazer and Meritage. All are among the top 15 publicly listed US homebuilders. Mr Douglass said bankruptcies were “highly likely” among top homebuilders. Homebuilding is viewed as the sector most threatened by the slowdown as housing has been the worst-hit part of the economy. On Tuesday Tousa, formerly called Technical Olympic, became the largest homebuilder so far to file for bankruptcy. At least 13 other homebuilders have gone bankrupt since June, according to Bloomberg data.
According to Dean Baker, the co-director of the Center for Economic and Policy Research, average house prices are falling nationwide at an annual rate of more than ten per cent, something not seen since before the Second World War. This means that American households are getting poorer at a rate of more than two trillion dollars a year. Frederic Mishkin, a governor at the Fed, suggests that, for every dollar the typical American family’s housing wealth drops in a year, that family may cut its spending by up to seven cents. Nationwide, that adds up to roughly a hundred and fifty-five billion dollars, which is bigger than President Bush’s stimulus package. And it doesn’t take into account plunging stock prices, collapsing confidence, and the belated imposition of tighter lending practices—all of which will further restrict economic activity.
The developers of the Towers of Channelside, a pair of 29-story luxury condominiums, filed for bankruptcy court protection Friday, stating that Wachovia Corp. cut off its credit. The developer has sold just 89 of the 257 units, according to documents filed in U.S. Bankruptcy Court in Tampa on Friday. Many of the contracts on units that have not closed fell through because buyers backed out, documents said.
Shares of Clear Channel fell $2.25, or 7.2 per cent, to $29.17. Each tick down in the share price represented a message from investors that the company was not worth the $39.20 per share that Thomas H Lee and Bain Capital have offered for the radio broadcaster and outdoor advertising company.
Robert Reich: "The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are in fact lower than they were then: the income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago. Yet for years now, America’s middle class has lived beyond its pay cheque. Middle-class lifestyles have flourished even though median wages have barely budged. That is ending and Americans are beginning to feel the consequences."
Yahoo to cut 1,000 jobs.
Confidence among local venture capitalists has plunged to its lowest level since 2004, according to a survey released Tuesday by the University of San Francisco.
It was reported that Rio Tinto Group’s advisers say BHP Billiton can afford to increase its takeover offer to as much as five shares for one.
The Oil Drum: "Latest Developments:
1) Plateau production - For the second consecutive month world production has increased significantly, confirming the end of the plateau that began in 2005. The IEA figures result in an average global production in 2007 up to December of 85.26 million b/d, more than the average 2006 production of 85.00 million b/d and the average 2005 production of 84.10 million b/d. The EIA in their International Petroleum Monthly puts the average global 2007 production up to October at 84.47 million b/d, slightly lower than the average 2006 production of 84.60 million b/d and the average 2005 production of 84.63 million b/d.
2) Total liquids - In December world production of total liquids increased by 450,000 barrels per day from October according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.00 million b/d, which is the all time maximum liquids production.
3) Conventional crude - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 714,000 b/d from September to October. Total production in October was estimated at 74.12 million b/d, which is 174,000 b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005."
According to Bloomberg, the cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may gain for a third day as refineries seek ships to load around mid-February, swinging vessel-supply in owners' favor. The number of very large crude carriers, or VLCCs, that are available for hire within the next 30 days diminished 14 percent to 84, according to reports from Paris-based shipbroker Barry Rogliano Salles. Refineries need to find tankers for about 50 remaining February cargoes, according to the broker's data.
Nouriel Roubini: "My view is that the recession will be protracted and painful as a shopped-out, saving-less and debt-burdened consumer is on the ropes and now faltering; while the financial system is on the verge of a systemic crisis that will cause a severe credit crunch...Indeed the delinquencies and losses in the financial system are spreading from subprime to near prime and prime mortgages; to credit cards and auto loans; to commercial real estate loans; to leveraged loans that financed reckless LBOs; to the losses of the monolines that are effectively bankrupt and at risk of spreading furher massive losses to money market funds and other financial institutions once they get properly downgraded; and soon enough to corporate defaults and junk bonds that will in turn trigger massive losses on credit default swaps; eventual losses in the financial system may add up to more than $1 trillion."
Cereal and snack maker Kellogg Co. said Wednesday its fourth-quarter profit dipped slightly due in part to higher energy and materials costs and more investment in advertising, but still matched Wall Street's expectations. For the quarter ended Dec. 29, the Battle Creek-based company earned $176 million, or 44 cents per share, compared with $182 million, or 45 cents per share, a year ago. Revenue rose 8 percent to $2.79 billion from $2.58 billion, benefiting partly from stronger net sales by the Kellogg International division.
Bill Bonner: "Yesterday, if you were to buy a 30-year Treasury bond you would have gotten a 4.28% yield. That yield is only a few basis points from the current U.S. consumer price inflation level, as announced by the government's own number torturers. Assuming the number is more-or-less honest, and assuming things don't change, this means that a person who buys a long Treasury bond gives up money now for the right to receive zero return over the next 30 years. Of course, things do change. But the changes that are most likely are those that make this investment even worse. The inflation rate is likely to go up. At 10% inflation, the investor loses 5.72% per year. If the dollar falls against other major currencies, he is out even more."
John Edwards dropping out of presidential race.
The U.S. dollar index is trading at 75.569.
Merrill Lynch & Co., the world's largest brokerage, plans to exit the business of underwriting collateralized debt obligations and other structured credit products after the securities led to a record loss. ``We are not going to be in the CDO and structured-credit types of businesses,'' new Chief Executive Officer John Thain said.
Microsoft Corp. will become the new provider of paid search and contextual advertising links on sites run by The Wall Street Journal.
Altria sees post-spinoff annual dividend of $1.16 and set March 28 as the date for its planned spinoff of Philip Morris International.
Crude inventories rose by 3.6 million barrels to 293 million barrels in the week ending Jan. 25, Energy Information Administration reported on Wednesday. Gasoline supplies rose by 3.6 million barrels in the latest week, while distillate stocks fell by 1.5 million barrels, EIA reported.
Centex reported its fiscal third-quarter loss widened to $975.2 million as the company was hurt by the housing bust and impairment and tax-related charges.
Alliance Data suing Blackstone over stalled merger. The lawsuit, filed in the Delaware Court of Chancery, seeks specific performance to compel Blackstone to comply with its obligations under the merger agreement, including its covenants to use reasonable best efforts to obtain required regulatory approvals and to consummate the merger, and such other relief as the Chancery Court may deem just and proper.
Microsoft Corp. today began the global launch of Microsoft Dynamics CRM 4.0 by announcing the availability of the first eight languages, including English, Spanish, simplified Chinese and French. As part of its commitment to a rapid global rollout, Microsoft is kicking off a 12-week global launch tour today to give organizations worldwide the opportunity to experience Microsoft Dynamics CRM for themselves
Pulte Home's fourth-quarter loss widened to $874.7 million, or $3.46 a share, from $8.41 million, or 3 cents a share, due to the continued weakening of existing home sales.
Standard & Poor's said late Wednesday that it downgraded more mortgage-related securities because delinquencies and foreclosures continue to increase on the underlying home loans. S&P said it downgraded or put on CreditWatch negative 6,389 classes from U.S. subprime residential mortgage-backed securities (RMBS) transactions. They were rated between January 2006 and June 2007. The securities were worth $270.1 billion, which is almost half the original value of U.S. subprime RMBS rated by S&P during 2006 and the first half of 2007. S&P also warned it may downgrade 1,953 ratings from 572 global collateralized debt obligations that are backed by asset-backed securities and other CDOs. That's more than a third of all such CDOs rated by S&P.
Starbucks reported its quarterly profit rose slightly from a year ago as the coffee-shop chain seeks to restructure its operations to improve growth. Starbucks also said it will close 100 under performing U.S stores and expects "low double-digit" earnings-per-share growth in 2008.
Fitch Ratings said on Wednesday that it cut the AAA ratings of Financial Guaranty Insurance Company (FGIC) to AA because the bond insurer doesn't have enough capital to keep its top rating. Fitch warned it may cut FGIC's ratings further in future.
After the half point interest rate cut by the Fed, equities took off on strong triple digit gains and then came back to reality as the Dow Jones Industrial Average declined 37.5 points to 12,442.8. The S&P 500 shed 6.51 points to 1,355.79, while the Nasdaq Composite dropped 9.06 points to 2,349.00.
Amazon.com saw its earnings more than double in the fourth quarter thanks to strong holiday sales. For the quarter ended Dec. 31, Amazon reported earnings of $207 million, or 48 cents a share, compared to earnings of $98 million, or 23 cents a share, for the same period the previous year. Revenue grew 42% to $5.67 billion. For the first quarter, the company said it expects revenue to come in between $3.95 billion and $4.15 billion - ahead of the $3.92 billion predicted by analysts.
Ambac Financial and MBIA Inc. will lose more money than they're currently predicting from guarantees they sold on complex mortgage-related securities, according to Bill Ackman, a longtime critic of the bond insurance industry who is betting against the two companies. Ambac and MBIA shares fell almost 20% in afternoon trading on Wednesday.
Gold for April delivery soared as high as $941.70 an ounce in electronic trading on the New York Mercantile Exchange, hitting a new record high. The contract was last up $8.80 at $939.60 an ounce. Crude for March delivery ended the volatile session up 69 cents, or 0.8%, at $92.33 a barrel on the New York Mercantile Exchange. The U.S. dollar index is flirting with a new low.
Tuesday, January 29, 2008
Prelude To The Fed Meeting
1/30/08 Prelude To The Fed Meeting
Lexmark reports fourth-quarter revenue of $1.31 billion, GAAP EPS of $1.04, including $0.25 for restructuring-related activities. Lexmark reports full-year revenue of $4.97 billion, GAAP EPS of $3.14, including $0.36 for restructuring-related activities. Business market segment revenue was a record $800 million in the fourth quarter, a record $3.00 billion for full year 2007. Company generates cash of $212 million during fourth quarter, $564 million in 2007.
U.K. retailers saw slight growth in sales during the first half of January, according to the Confederation of British Industry's January distributive trades survey released Tuesday. Thirty-nine percent of respondents said year-on-year sales volumes rose in the first half of the month, while 34% said they were down -- making for a balance of +4%, the lowest reading since November 2006.
Walt Disney & Co. was downgraded to sell from hold by Citigroup, which cited concerns over theme parks.
France's consumer confidence indicator fell four points to -34 in January after recording a decline in each component of the survey, reported INSEE, the French statistical agency, on Tuesday.
Foreclosure filings soared 75% in 2007 from a year earlier as credit trouble and falling home values fell on homeowners, a foreclosure-listing service said. There were 2.2 million foreclosure filings last year. More than 1% of all U.S. households were in some stage of foreclosure during the year, up from 0.58% in 2006, RealtyTrac said.
Antal Fekete: "Eighty years ago the credit of the United States was rock-solid. Today it is moth-eaten; the promises of the federal government are hardly worth the paper on which they are printed, in view of its repeated defaults and its embracing of the unconstitutional regime of the irredeemable dollar. Worse still, the credit of other countries is no better, given the fact that it is not backed by anything more solid than the credit of the United States. Eighty years ago American institutes of higher learning offered the very best available by way of economic and banking knowledge. Today they are a sorry shadow of their former self. They are subject to bribe and blackmail. They are stooges of the banks. There is a gigantic cover-up and distortion of truth, as a consequence of our way of financing advanced studies through grants from the banks, including the twelve Federal Reserve banks, with a hidden agenda to perpetuate the regime of the irredeemable dollar. If academia is the tamed lion of the banks, then financial journalism is their lapdog. Eighty years ago one was afraid that moral standards may crack in consequence of questionable banking practices. Today we know that they have. The Bank of United States closed its doors for good on December 11, 1930. But it did not even have off-balance liabilities! Nor did it have nina mortgages! (nina = no income, no assets). It is interesting to watch the Fed trying to meet the present crisis in the same way as it was in 1930: by administering liberal doses of cheap money. In 1930 the Fed made the crisis worse and it prepared the ground for the Great Depression. Cheap money in 1930 certainly did not stop the decline in the stock market."
Ruefully, one can say of the Fed the same what was once famously said of the Bourbons after the restoration of the monarchy in France: "they've learned nothing and forgotten nothing."
Last year, 25 private-equity deals worth $84.2 billion were withdrawn, Dealogic says. That's up from 16 busted deals worth $42.5 billion in 2006.
Rep. Ron Paul: "What we desperately need right now is real deep significant tax cuts that are enabled by big spending cuts and reduction of government waste that is so rampant. Unfortunately, too many in Washington still believe we can spend our way into prosperity, which does not work and never has."
The Office of the Comptroller of the Currency told Blackstone that to secure approval for its acquisition of ADS, it would have to provide open-ended guarantees of capital and liquidity for its target as the debt on the financial services firm soars from less than $1bn to $6bn.
2008 is currently the worst start ever for the S&P 500.
Having spent additional time reading the merger documents and the recent press releases, my gut tells me Blackstone and Alliance Data will make peace at a lower price. My guess would be about $73.
"It's pretty clear that as valuations have come back and the private equity players have left the playing field, there are a lot more attractive opportunities out there, and it's something we're taking a look at right now," Dave Lesar, the chief executive officer of Halliburton, told analysts on the company's earnings conference call on Monday.
The Oil Drum: "A wealth of data on the Saudi Arabian water situation can be found in the paper by Walid A. Abderrahman (2001) "Water Demand Management in Saudi Arabia". From this paper, we learn that water production in Saudi Arabia has reached a peak in the early 1990s, at more than 30 billion cubic meters per year, and declined afterwards. Today, it is at around 15 billion cubic meters, less than half than the peak value. We also learn that most of this water, 90% at the peak, came from non renewable aquifers...there is no doubt that depletion of the Saudi aquifers is real. It would make no sense for a government to implement a policy that amounts to the destruction of the local agriculture if the aquifers were still able to produce has they had been producing so far. It seems that the depletion of the aquifers has left Saudi Arabia with few options other than transforming oil into food. Selling oil and using the profits for importing food is the only possibility in the short term. In the future, however, it may be possible to replace aquifers with water from desalination."
According to rigzone, Ecuador President Rafael Correa told oil companies operating in Ecuador they had three choices: sign agreements with the State for services, cough up 99% of surplus income from commercialization of oil, or end all operations in Ecuador.
Valero Energy Corp. reported fourth-quarter earnings of $567 million Tuesday, about half the profits earned during the same period last year, as margins were squeezed by higher crude prices. The earnings amounted to $1.04 per share, compared with $1.11 billion, or $1.85 per share, it made the last three months of 2006. For the year, Valero earned $5.23 billion in 2007, compared to $5.46 billion in the previous year.
Countrywide Financial Corp CFC said on Tuesday that it took a $704 million charge to cover its costs for home equity lines of credit it has extended but may not be repaid for.
Orders for U.S.-made durable goods surged in December, jumping 5.2% on higher demand for airplanes, communications equipment, and defense capital goods, the Commerce Department reported Tuesday.The report received a boost from the defense sector. Core durable-goods orders rose 4.4%, the biggest gain since March. Shipments fell 0.1% in December, but were up 0.4% excluding transportation goods. Inventories rose 1.1%. Defense new orders for capital goods in December increased $5.2 billion or 80.6 percent to $11.6 billion.
Wal-Mart Stores Inc.is lowering prices by 10 to 30% on thousands of items to help shoppers save money against a backdrop of economic uncertainties. The world's largest retailer also said it's also offering no interest for 18 months on purchases of $250 or more with a Wal-Mart credit card. .
Rob Hanna: "Oversold conditions are being worked off in most of the outstanding studies. Even with less than ideal entries, profits should be available. Profit taking seems prudent. While certain studies like Reversal Bars and Nasdaq/Russell indicate more upside is likely to come, they also indicate extremely high volatility is likely. Wednesday will almost certainly see volatility with the Fed decision due. There is nothing wrong with letting some profits ride, but I’d suggest traders consider taking at least a portion of their holdings off the table now to protect gains. Preserve capital and wait for a better edge."
Oilfield services provider Smith International Inc. said Tuesday that fourth-quarter earnings jumped 17 percent, but fell short of Wall Street forecasts as a flat U.S. drilling market hurt margins. Fourth-quarter earnings rose to $167 million, or 83 cents per share, from $143 million, or 71 cents per share, a year ago. Quarterly revenue jumped 15 percent to $2.3 billion, from $2 billion in the fourth quarter of fiscal year 2006.
Home prices in 10 U.S. cities have fallen a record 8.4% in the 12 months ending in November, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. The 20-city price index has fallen a record 7.7% in the past year.
eBay will cut insertion fees by 25%-50% and will balance the move by raising the final value fees when an item is sold. The company also said it is raising the minimum standards for sellers in an effort to increase overall customer satisfaction.
The preliminary January consumer confidence index fell to 87.9 from a revised reading of 90.6 in December. The initial estimate for December was 88.6.
EMC Corp.'s fourth-quarter profit jumped 35 percent, beating Wall Street expectations, but the data storage vendor's results were overshadowed by disappointment over a technology firm in which EMC owns a majority stake. EMC's shares fell more than 8 percent in morning trading after software maker VMware Inc. reported disappointing revenue results after markets closed Monday.
Natixis Bleichroeder Inc. analyst Roger D. Read on Tuesday said Valero's recurring earnings amounted to 87 cents a share excluding a tax benefit and other items. The figure is a "clear beat" of the forecast of 59 cents a share. The earnings performance, "was derived mainly from better-than-expected operating performance in the refining segment - driven mostly by the mid-continent and somewhat by the Gulf Coast," Read said. "While the fourth-quarter operating environment was the most difficult of 2007, results benefitted from wide sour crude discounts and regional diversification."
With a somewhat subdued outlook for 2008, Yahoo shares sold down to $18.50 in the after hours trading.
Federal investigators have opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the subprime mortgage crisis, The Wall Street Journal reported on its Web site Tuesday. None of the 14 companies were named in the report.
Gold for February delivery ended down $2 at $925.10 an ounce on the New York Mercantile Exchange.
Democratic congressman James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure committee, pledged to slow or stop a possible merger between Delta Air Lines Inc. and either Northwest Airlines Corp. or United Airlines, owned by UAL Corp.,The Wall Street Journal reported Tuesday on its Web site. Oberstar said he will pressure the Justice Department and the Transportation Department to probe the deals on antitrust grounds, as well as hold hearings, the newspaper reported.
Lexmark reports fourth-quarter revenue of $1.31 billion, GAAP EPS of $1.04, including $0.25 for restructuring-related activities. Lexmark reports full-year revenue of $4.97 billion, GAAP EPS of $3.14, including $0.36 for restructuring-related activities. Business market segment revenue was a record $800 million in the fourth quarter, a record $3.00 billion for full year 2007. Company generates cash of $212 million during fourth quarter, $564 million in 2007.
U.K. retailers saw slight growth in sales during the first half of January, according to the Confederation of British Industry's January distributive trades survey released Tuesday. Thirty-nine percent of respondents said year-on-year sales volumes rose in the first half of the month, while 34% said they were down -- making for a balance of +4%, the lowest reading since November 2006.
Walt Disney & Co. was downgraded to sell from hold by Citigroup, which cited concerns over theme parks.
France's consumer confidence indicator fell four points to -34 in January after recording a decline in each component of the survey, reported INSEE, the French statistical agency, on Tuesday.
Foreclosure filings soared 75% in 2007 from a year earlier as credit trouble and falling home values fell on homeowners, a foreclosure-listing service said. There were 2.2 million foreclosure filings last year. More than 1% of all U.S. households were in some stage of foreclosure during the year, up from 0.58% in 2006, RealtyTrac said.
Antal Fekete: "Eighty years ago the credit of the United States was rock-solid. Today it is moth-eaten; the promises of the federal government are hardly worth the paper on which they are printed, in view of its repeated defaults and its embracing of the unconstitutional regime of the irredeemable dollar. Worse still, the credit of other countries is no better, given the fact that it is not backed by anything more solid than the credit of the United States. Eighty years ago American institutes of higher learning offered the very best available by way of economic and banking knowledge. Today they are a sorry shadow of their former self. They are subject to bribe and blackmail. They are stooges of the banks. There is a gigantic cover-up and distortion of truth, as a consequence of our way of financing advanced studies through grants from the banks, including the twelve Federal Reserve banks, with a hidden agenda to perpetuate the regime of the irredeemable dollar. If academia is the tamed lion of the banks, then financial journalism is their lapdog. Eighty years ago one was afraid that moral standards may crack in consequence of questionable banking practices. Today we know that they have. The Bank of United States closed its doors for good on December 11, 1930. But it did not even have off-balance liabilities! Nor did it have nina mortgages! (nina = no income, no assets). It is interesting to watch the Fed trying to meet the present crisis in the same way as it was in 1930: by administering liberal doses of cheap money. In 1930 the Fed made the crisis worse and it prepared the ground for the Great Depression. Cheap money in 1930 certainly did not stop the decline in the stock market."
Ruefully, one can say of the Fed the same what was once famously said of the Bourbons after the restoration of the monarchy in France: "they've learned nothing and forgotten nothing."
Last year, 25 private-equity deals worth $84.2 billion were withdrawn, Dealogic says. That's up from 16 busted deals worth $42.5 billion in 2006.
Rep. Ron Paul: "What we desperately need right now is real deep significant tax cuts that are enabled by big spending cuts and reduction of government waste that is so rampant. Unfortunately, too many in Washington still believe we can spend our way into prosperity, which does not work and never has."
The Office of the Comptroller of the Currency told Blackstone that to secure approval for its acquisition of ADS, it would have to provide open-ended guarantees of capital and liquidity for its target as the debt on the financial services firm soars from less than $1bn to $6bn.
2008 is currently the worst start ever for the S&P 500.
Having spent additional time reading the merger documents and the recent press releases, my gut tells me Blackstone and Alliance Data will make peace at a lower price. My guess would be about $73.
"It's pretty clear that as valuations have come back and the private equity players have left the playing field, there are a lot more attractive opportunities out there, and it's something we're taking a look at right now," Dave Lesar, the chief executive officer of Halliburton, told analysts on the company's earnings conference call on Monday.
The Oil Drum: "A wealth of data on the Saudi Arabian water situation can be found in the paper by Walid A. Abderrahman (2001) "Water Demand Management in Saudi Arabia". From this paper, we learn that water production in Saudi Arabia has reached a peak in the early 1990s, at more than 30 billion cubic meters per year, and declined afterwards. Today, it is at around 15 billion cubic meters, less than half than the peak value. We also learn that most of this water, 90% at the peak, came from non renewable aquifers...there is no doubt that depletion of the Saudi aquifers is real. It would make no sense for a government to implement a policy that amounts to the destruction of the local agriculture if the aquifers were still able to produce has they had been producing so far. It seems that the depletion of the aquifers has left Saudi Arabia with few options other than transforming oil into food. Selling oil and using the profits for importing food is the only possibility in the short term. In the future, however, it may be possible to replace aquifers with water from desalination."
According to rigzone, Ecuador President Rafael Correa told oil companies operating in Ecuador they had three choices: sign agreements with the State for services, cough up 99% of surplus income from commercialization of oil, or end all operations in Ecuador.
Valero Energy Corp. reported fourth-quarter earnings of $567 million Tuesday, about half the profits earned during the same period last year, as margins were squeezed by higher crude prices. The earnings amounted to $1.04 per share, compared with $1.11 billion, or $1.85 per share, it made the last three months of 2006. For the year, Valero earned $5.23 billion in 2007, compared to $5.46 billion in the previous year.
Countrywide Financial Corp CFC said on Tuesday that it took a $704 million charge to cover its costs for home equity lines of credit it has extended but may not be repaid for.
Orders for U.S.-made durable goods surged in December, jumping 5.2% on higher demand for airplanes, communications equipment, and defense capital goods, the Commerce Department reported Tuesday.The report received a boost from the defense sector. Core durable-goods orders rose 4.4%, the biggest gain since March. Shipments fell 0.1% in December, but were up 0.4% excluding transportation goods. Inventories rose 1.1%. Defense new orders for capital goods in December increased $5.2 billion or 80.6 percent to $11.6 billion.
Wal-Mart Stores Inc.is lowering prices by 10 to 30% on thousands of items to help shoppers save money against a backdrop of economic uncertainties. The world's largest retailer also said it's also offering no interest for 18 months on purchases of $250 or more with a Wal-Mart credit card. .
Rob Hanna: "Oversold conditions are being worked off in most of the outstanding studies. Even with less than ideal entries, profits should be available. Profit taking seems prudent. While certain studies like Reversal Bars and Nasdaq/Russell indicate more upside is likely to come, they also indicate extremely high volatility is likely. Wednesday will almost certainly see volatility with the Fed decision due. There is nothing wrong with letting some profits ride, but I’d suggest traders consider taking at least a portion of their holdings off the table now to protect gains. Preserve capital and wait for a better edge."
Oilfield services provider Smith International Inc. said Tuesday that fourth-quarter earnings jumped 17 percent, but fell short of Wall Street forecasts as a flat U.S. drilling market hurt margins. Fourth-quarter earnings rose to $167 million, or 83 cents per share, from $143 million, or 71 cents per share, a year ago. Quarterly revenue jumped 15 percent to $2.3 billion, from $2 billion in the fourth quarter of fiscal year 2006.
Home prices in 10 U.S. cities have fallen a record 8.4% in the 12 months ending in November, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. The 20-city price index has fallen a record 7.7% in the past year.
eBay will cut insertion fees by 25%-50% and will balance the move by raising the final value fees when an item is sold. The company also said it is raising the minimum standards for sellers in an effort to increase overall customer satisfaction.
The preliminary January consumer confidence index fell to 87.9 from a revised reading of 90.6 in December. The initial estimate for December was 88.6.
EMC Corp.'s fourth-quarter profit jumped 35 percent, beating Wall Street expectations, but the data storage vendor's results were overshadowed by disappointment over a technology firm in which EMC owns a majority stake. EMC's shares fell more than 8 percent in morning trading after software maker VMware Inc. reported disappointing revenue results after markets closed Monday.
Natixis Bleichroeder Inc. analyst Roger D. Read on Tuesday said Valero's recurring earnings amounted to 87 cents a share excluding a tax benefit and other items. The figure is a "clear beat" of the forecast of 59 cents a share. The earnings performance, "was derived mainly from better-than-expected operating performance in the refining segment - driven mostly by the mid-continent and somewhat by the Gulf Coast," Read said. "While the fourth-quarter operating environment was the most difficult of 2007, results benefitted from wide sour crude discounts and regional diversification."
With a somewhat subdued outlook for 2008, Yahoo shares sold down to $18.50 in the after hours trading.
Federal investigators have opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the subprime mortgage crisis, The Wall Street Journal reported on its Web site Tuesday. None of the 14 companies were named in the report.
Gold for February delivery ended down $2 at $925.10 an ounce on the New York Mercantile Exchange.
Democratic congressman James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure committee, pledged to slow or stop a possible merger between Delta Air Lines Inc. and either Northwest Airlines Corp. or United Airlines, owned by UAL Corp.,The Wall Street Journal reported Tuesday on its Web site. Oberstar said he will pressure the Justice Department and the Transportation Department to probe the deals on antitrust grounds, as well as hold hearings, the newspaper reported.
Monday, January 28, 2008
More Problems
1/29/08 More Problems
Wall Street looked to open lower Monday following heavy selloffs on Asian and European exchanges. The global equities selloffs were linked to concerns that there may be more massive write-downs by global banks for subprime loan losses and worries that the Federal Reserve may not cut interest rates as much as investors would like when it ends a two-day meeting on Wednesday. Shares in Shanghai were down by 7.2 per cent, while Tokyo and Hong Kong fell about 4 per cent.
Alliance Data Systems Corp said its $6.76 billion buyout by private equity firm Blackstone Group LP is in jeopardy. In a statement, Alliance Data said the buyer advised in a notice after the market closed on January 25 that it does not expect to win regulatory approval from the U.S. Office of the Comptroller of the Currency for the merger. It also said Blackstone has said it is unwilling to satisfy requirements that the OCC has set. Alliance Data said it believes Blackstone has the ability to close, and strongly disagrees with Blackstone's assertions related to the OCC. It also said Blackstone's notice did not assert any breach of the merger agreement by Alliance Data. Alliance Data said its board of directors and a special committee are evaluating possible courses of action.
In early Monday trading, March crude oil futures were off $1.40 to $89.31. Gold for February delivery gained $7.30 at $918 an ounce on the New York Mercantile Exchange.
Black & Decker said it recognizes that the U.S. economy is slowing and said it doesn't expect a housing recovery in 2008. It sees organic sales declining at a low single-digit rate in 2008 and forecast earnings in the range of $5.40 to $5.90 a share.
Sears Holdings said its president and chief executive, Aylwin B. Lewis, will step down on Feb. 2.
Verizon Communications said on Monday its quarterly profit rose and its wireless customer additions were ahead of analyst estimates. Its profit rose to $1.07 billion, or 37 cents a share, from $1.03 billion, or 35 cents a share, in the year-ago quarter. Revenue rose to $23.8 billion from $22.6 billion.
China's heaviest snowstorms in five decades crushed homes, grounded flights, disrupted electricity and left hundreds of thousands of travelers stranded, a week before millions take to the roads for Lunar New Year holidays.
As many as 5 percent of China's coal-fired power plants, which generate 78 percent of electricity, were shut because snow hampered coal shipments, the National Development and Reform Commission said today. Zhuzhou Smelter Group Co., China's largest zinc refiner, said shortages forced it to cut production.
Mike Burk: "In the past week new lows dried up on both the NYSE and OTC this implies downside risk will be limited for the next several weeks...The persistence of high levels of downside volume suggest another down move is likely, however, it should be limited because new lows have all but disappeared. I expect the major indices to be higher on Friday February 1 than they were on Friday January 25."
McDonald's said fourth-quarter net income was $1.27 billion, or $1.06 a share, compared with $1.24 billion, or $1.00 a share, a year earlier.
Halliburton Co. said Monday its fourth-quarter profit rose almost 5 percent from a year ago, helped by growing business in the Eastern Hemisphere, where the company is placing greater resources. Halliburton said price erosion in its U.S. well cracking business should stabilize some time in the second half of the year, although the oil services giant may see some additional pricing deterioration of about 2% in the early part of 2008.
John Hussman: "Short-term market movements are demonstrating a form of chaotic instability that has generally indicated growing contagion rather than independence among investors. The most important difference between current market conditions and prior crash events is the behavior of interest rates. For example, rates were rising persistently before both 1929 and 1987. The clear downtrend of interest rates may turn out to be a saving grace here, given that the market's most spectacular losses featured hostile rate trends. Still, the best interest rate action has been in Treasuries, while credit spreads have been pushing to new highs, so the favorable trends in Treasury yields are partly a symptom of growing default risks in other areas. My continued concern is that numerous market plunges have been indifferent to both interest rate trends and even valuations, with the main warning flag being deterioration in the quality of market internals, as we observe at present. Both in the U.S. and internationally, “singular events” tend to occur well after internal market action has turned unfavorable, and prices are well off their highs. Though I don't want to put too much emphasis on intra-day behavior, if you examine tick data before major declines both in the U.S. and elsewhere, you'll generally see price movements become chaotic at increasingly short intervals even before the event itself. One way to describe it without mathematics is to spin a quarter on the table and watch (and listen to it) closely - you'll observe a similar dynamic at the abrupt point that the coin moves from an even spin to an irregular one, and again just before it stops. If you imagine a pen drawing out its movements, you would see it tracing out faster and faster circles as it moves from stability to instability. We've been open to a fast clearing rally, which we observed as a 7% surge from intra-day low on Tuesday to intra-day high on Friday, on waning volume. At present, I have no pointed views about short-term market direction. Valuations are better than they were a few months ago (though still generally rich), but none of the risks that have concerned me in recent months have diminished."
Landry's Restaurants said that Tilman Fertitta, its chairman and chief executive officer, has proposed buying the Houston-based company's outstanding stock for $23.50 a share in cash.
Wendy's said Monday that its special board committee believes it's in the "final stages" of reviewing the fast-food chain's strategic options.
Student lender SLM Corp., also known as Sallie Mae, has settled a feud over a failed buyout in a deal that refinances a $30 billion credit line and allows buyout firm J.C. Flowers & Co. to escape without paying a breakup fee.
The dollar index was at 75.635, down from 75.970 in late U.S. trading Friday.
Harrah's Entertainment, Inc. Announces Completion Of Merger.
U.S. builders slashed prices by more than 10% in December in a failed bid to boost sales, which dropped about 5% to the lowest level in nearly 13 years, the Commerce Department reported Monday. Sales of new homes fell 4.7% to a seasonally adjusted annual rate of 604,000 in December, far below the 645,000 expected by economists. The median sales price tumbled a record 10.9% to $219,200 compared with November and were down 10.4% compared with a year earlier. For all of 2007, home sales fell a record 26.4% to 774,000 compared with 1.05 million sold in 2006.
The Treasury Department expects to borrow a total of $156 billion in net marketable debt over the January-March quarter, the department said Monday. For the three-month quarter, the amount is $23 billion more than announced in October. The department said lower receipts played a role in the increase in borrowing. Treasury said expects to pay down $122 billion in the April-June quarter.
Crude for March delivery gained 28 cents, or 0.3%, to $90.99 a barrel on the New York Mercantile Exchange. Gold futures surged $16.40 to close at $927.10 an ounce Monday.
Financial-exchange operator CME Group Inc. is in discussions to acquire Nymex Holdings Inc.
American Express reported net profit fell 10% during the fourth quarter after the company took a major charge to its loan loss reserves. However, net revenue rose 10% to $7.36 billion and net income for the full year was up 8% to $4 billion.
VMware Corp. reported a fourth-quarter profit of $78 million, or 19 cents a share, more than doubling the $31 million, or 9 cents a share, that the virtualization software developer earned in the same period a year ago. Revenue rose 80% to $412 million. Excluding charges and one-time items, VMware would have earned $103 million, or 26 cents a share. The revenue missed estimates by $5 million and the stock got hit for 17 points in after hours trading. A ridiculous over-reaction to say the least.
The Dow Jones Industrial Average gained 176.7 points, or 1.5%, to 12,383.9. The S&P 500 advanced 23.24 points, or 1.8%, to 1,353.85, while the Nasdaq Composite rose 23.71 points, or 1%, to finish at 2,349.91.
Wall Street looked to open lower Monday following heavy selloffs on Asian and European exchanges. The global equities selloffs were linked to concerns that there may be more massive write-downs by global banks for subprime loan losses and worries that the Federal Reserve may not cut interest rates as much as investors would like when it ends a two-day meeting on Wednesday. Shares in Shanghai were down by 7.2 per cent, while Tokyo and Hong Kong fell about 4 per cent.
Alliance Data Systems Corp said its $6.76 billion buyout by private equity firm Blackstone Group LP is in jeopardy. In a statement, Alliance Data said the buyer advised in a notice after the market closed on January 25 that it does not expect to win regulatory approval from the U.S. Office of the Comptroller of the Currency for the merger. It also said Blackstone has said it is unwilling to satisfy requirements that the OCC has set. Alliance Data said it believes Blackstone has the ability to close, and strongly disagrees with Blackstone's assertions related to the OCC. It also said Blackstone's notice did not assert any breach of the merger agreement by Alliance Data. Alliance Data said its board of directors and a special committee are evaluating possible courses of action.
In early Monday trading, March crude oil futures were off $1.40 to $89.31. Gold for February delivery gained $7.30 at $918 an ounce on the New York Mercantile Exchange.
Black & Decker said it recognizes that the U.S. economy is slowing and said it doesn't expect a housing recovery in 2008. It sees organic sales declining at a low single-digit rate in 2008 and forecast earnings in the range of $5.40 to $5.90 a share.
Sears Holdings said its president and chief executive, Aylwin B. Lewis, will step down on Feb. 2.
Verizon Communications said on Monday its quarterly profit rose and its wireless customer additions were ahead of analyst estimates. Its profit rose to $1.07 billion, or 37 cents a share, from $1.03 billion, or 35 cents a share, in the year-ago quarter. Revenue rose to $23.8 billion from $22.6 billion.
China's heaviest snowstorms in five decades crushed homes, grounded flights, disrupted electricity and left hundreds of thousands of travelers stranded, a week before millions take to the roads for Lunar New Year holidays.
As many as 5 percent of China's coal-fired power plants, which generate 78 percent of electricity, were shut because snow hampered coal shipments, the National Development and Reform Commission said today. Zhuzhou Smelter Group Co., China's largest zinc refiner, said shortages forced it to cut production.
Mike Burk: "In the past week new lows dried up on both the NYSE and OTC this implies downside risk will be limited for the next several weeks...The persistence of high levels of downside volume suggest another down move is likely, however, it should be limited because new lows have all but disappeared. I expect the major indices to be higher on Friday February 1 than they were on Friday January 25."
McDonald's said fourth-quarter net income was $1.27 billion, or $1.06 a share, compared with $1.24 billion, or $1.00 a share, a year earlier.
Halliburton Co. said Monday its fourth-quarter profit rose almost 5 percent from a year ago, helped by growing business in the Eastern Hemisphere, where the company is placing greater resources. Halliburton said price erosion in its U.S. well cracking business should stabilize some time in the second half of the year, although the oil services giant may see some additional pricing deterioration of about 2% in the early part of 2008.
John Hussman: "Short-term market movements are demonstrating a form of chaotic instability that has generally indicated growing contagion rather than independence among investors. The most important difference between current market conditions and prior crash events is the behavior of interest rates. For example, rates were rising persistently before both 1929 and 1987. The clear downtrend of interest rates may turn out to be a saving grace here, given that the market's most spectacular losses featured hostile rate trends. Still, the best interest rate action has been in Treasuries, while credit spreads have been pushing to new highs, so the favorable trends in Treasury yields are partly a symptom of growing default risks in other areas. My continued concern is that numerous market plunges have been indifferent to both interest rate trends and even valuations, with the main warning flag being deterioration in the quality of market internals, as we observe at present. Both in the U.S. and internationally, “singular events” tend to occur well after internal market action has turned unfavorable, and prices are well off their highs. Though I don't want to put too much emphasis on intra-day behavior, if you examine tick data before major declines both in the U.S. and elsewhere, you'll generally see price movements become chaotic at increasingly short intervals even before the event itself. One way to describe it without mathematics is to spin a quarter on the table and watch (and listen to it) closely - you'll observe a similar dynamic at the abrupt point that the coin moves from an even spin to an irregular one, and again just before it stops. If you imagine a pen drawing out its movements, you would see it tracing out faster and faster circles as it moves from stability to instability. We've been open to a fast clearing rally, which we observed as a 7% surge from intra-day low on Tuesday to intra-day high on Friday, on waning volume. At present, I have no pointed views about short-term market direction. Valuations are better than they were a few months ago (though still generally rich), but none of the risks that have concerned me in recent months have diminished."
Landry's Restaurants said that Tilman Fertitta, its chairman and chief executive officer, has proposed buying the Houston-based company's outstanding stock for $23.50 a share in cash.
Wendy's said Monday that its special board committee believes it's in the "final stages" of reviewing the fast-food chain's strategic options.
Student lender SLM Corp., also known as Sallie Mae, has settled a feud over a failed buyout in a deal that refinances a $30 billion credit line and allows buyout firm J.C. Flowers & Co. to escape without paying a breakup fee.
The dollar index was at 75.635, down from 75.970 in late U.S. trading Friday.
Harrah's Entertainment, Inc. Announces Completion Of Merger.
U.S. builders slashed prices by more than 10% in December in a failed bid to boost sales, which dropped about 5% to the lowest level in nearly 13 years, the Commerce Department reported Monday. Sales of new homes fell 4.7% to a seasonally adjusted annual rate of 604,000 in December, far below the 645,000 expected by economists. The median sales price tumbled a record 10.9% to $219,200 compared with November and were down 10.4% compared with a year earlier. For all of 2007, home sales fell a record 26.4% to 774,000 compared with 1.05 million sold in 2006.
The Treasury Department expects to borrow a total of $156 billion in net marketable debt over the January-March quarter, the department said Monday. For the three-month quarter, the amount is $23 billion more than announced in October. The department said lower receipts played a role in the increase in borrowing. Treasury said expects to pay down $122 billion in the April-June quarter.
Crude for March delivery gained 28 cents, or 0.3%, to $90.99 a barrel on the New York Mercantile Exchange. Gold futures surged $16.40 to close at $927.10 an ounce Monday.
Financial-exchange operator CME Group Inc. is in discussions to acquire Nymex Holdings Inc.
American Express reported net profit fell 10% during the fourth quarter after the company took a major charge to its loan loss reserves. However, net revenue rose 10% to $7.36 billion and net income for the full year was up 8% to $4 billion.
VMware Corp. reported a fourth-quarter profit of $78 million, or 19 cents a share, more than doubling the $31 million, or 9 cents a share, that the virtualization software developer earned in the same period a year ago. Revenue rose 80% to $412 million. Excluding charges and one-time items, VMware would have earned $103 million, or 26 cents a share. The revenue missed estimates by $5 million and the stock got hit for 17 points in after hours trading. A ridiculous over-reaction to say the least.
The Dow Jones Industrial Average gained 176.7 points, or 1.5%, to 12,383.9. The S&P 500 advanced 23.24 points, or 1.8%, to 1,353.85, while the Nasdaq Composite rose 23.71 points, or 1%, to finish at 2,349.91.
Sunday, January 27, 2008
Thoughts
1/28/08 Thoughts
Robert McHugh: "The Wilshire 5000 is essentially the entire U. S. stock market. Since October 2007,three months ago, the stock market lost 19.7 percent, $3.1 trillion of wealth, 30 percent of annual GDP. The Bush/Bernanke $150 Billion Stimulus Program is only 4.7 percent of the past 3 months' losses, a pittance. Wow, homeowners get a free mortgage payment from the government sometime over the next 6 months, as if that will fix the housing and other credit mess. It won't. More stimulus will be necessary.
Not a lot of damage done to internals Friday, and after a spectacular rally Wednesday through Friday morning, we were due for a correction, so we believe this rally has further to go before setting up the next major decline, which should be nasty. Before the rally resumes, we could see another down leg, perhaps as much as 1.5 to 2.0 percent
The Dow Industrials rose 108.38 points Friday morning, then fell 279.82 the rest of the way to close at 12,207.17. NYSE volume was lower on the decline at 90 percent of its 10 day average, which is a plus, with downside volume leading at 74 percent, with declining issues at 57 percent, with downside points at 84 percent...The Dow Theory Primary Trend Bear Market signal from November 2007 confirms we have been in a Bear market since July 2007 (the last time both indices reached a new higher high). That Bear market signal was reconfirmed Thursday, January 17th, which means odds are high we are going much lower from here, after this market finishes the current correction."
New York Attorney General Andrew Cuomo has launched an investigation into Merck & Co. and Schering-Plough Corp.'s handling of a controversial study of their cholesterol drug Vytorin. Mr. Cuomo has served the companies with subpoenas as part of a probe into whether the companies "deliberately concealed" negative results from the study, called Enhance, his office said in a news release on Saturday.
World business leaders said on Saturday the worst might yet be to come in a financial crisis driven by continuing fears of bank losses and uncertainty over U.S. emergency stimulus measures."It's going to take some time for these things to work their way through the system," Citibank Chairman William Rhodes told Reuters in an interview. "In a nine-inning ballgame, I think we're in the fifth inning."
Dave Adelman, president of the National Pawnbrokers Association, said the number of loans at US pawn shops had risen 15-20 per cent since October. He attributed the increase to rising fuel prices and deteriorating economic conditions – an assessment echoed by other industry executives.
Pakistan's President Pervez Musharraf dismissed proposals to allow the United States greater latitude to operate in tribal territories where militants are active, officials said.
Some stores, including the Hannaford Bros. New England supermarket chain, have adopted food rating systems. The Hannaford stores commissioned a panel of nutritionists, including ones from Harvard University, Dartmouth Medical School and UC Davis, to grade its products for nutrition value - zero stars being the worst and three stars being the best. Of the 27,000 items evaluated, 77 percent received no stars, and many were Hannaford's own brands. After a year, the grocery company found that sales of many starred foods, such as lean cuts of beef, increased significantly, while zero-starred foods, like whole milk, dropped.
Venezuelan President Hugo Chavez urged his Latin American allies on Saturday to begin withdrawing billions of dollars in international reserves from U.S. banks, warning of a looming U.S. economic crisis. Chavez made the suggestion as he hosted a summit aimed at boosting Latin American integration and countering U.S. influence. "We should start to bring our reserves here," Chavez said. "Why does that money have to be in the north? ... You can't put all your eggs in one basket."
Brett Steenbarger: "New highs topped out in early June, 2007, well ahead of the market index. Similarly, we can look for an upturn in the cumulative high-low line to confirm a bottoming process in stocks. Thus far, we've seen two consecutive days in which new 20-day highs have outnumbered new lows: on Thursday (649 vs. 401) and on Friday (663 vs. 364)."
API Statistical Report: In 2007, total domestic petroleum deliveries were flat--marking the third year in a row for which they experienced only minimal growth or outright decline.
The Sunday Telegraph: "powerful funds backed by the Qatari government are considering assembling a significant stake in Credit Suisse, one of Europe's largest banks."
The WSJ: "some players within OPEC are talking now about the potential need to cut production, if not at this gathering, then perhaps at the club's regular session in March."
The Seattle Times endorses Sen. Barack Obama for the Democratic nomination for president. He has the grasp, temperament and skills to right our standing in the world. He has broad insight and specific ideas to assuage our own hardworking citizens' fears of an economy turning sour. Obama has thoughtful plans to help citizens with everyday problems: middle-class tax breaks; elimination of income tax for seniors earning less than $50,000; health care for minors.
Earthfiles: "Associated Press and the BBC reported today that official “speaking on condition of anonymity said the satellite had lost power and propulsion, and could contain hazardous materials. The White House said it was monitoring the situation and keeping lawmakers and other countries abreast of the situation.” It is unknown if the American government might try to destroy the satellite before it plunges to Earth sometime in February or March 2008."
Former first daughter Caroline Kennedy has thrown her support behind Sen. Barack Obama, calling him the presidential candidate most capable of carrying on the legacy of her late father, John F. Kennedy.
Perino said Friday that Bush will highlight several policies he believes he can implement "without congressional involvement." Those include revisions of the Federal Housing Administration that Bush asked for in April 2006, she said.
Recently, Starbucks announced a test market offering an 8ounce cup of coffee for $1 with a free refill. After a couple of days, without announcing a cancellation, stores no longer honored the test market. That's truly dumb and creates ill will for the customer.
Hashemi Samareh, chief adviser and life-long confidant to Iran's president, said his country could join a proposed international bank for enriched uranium that would provide countries with safe fuel for nuclear power stations – but only as a supplier.
Robert McHugh: "The Wilshire 5000 is essentially the entire U. S. stock market. Since October 2007,three months ago, the stock market lost 19.7 percent, $3.1 trillion of wealth, 30 percent of annual GDP. The Bush/Bernanke $150 Billion Stimulus Program is only 4.7 percent of the past 3 months' losses, a pittance. Wow, homeowners get a free mortgage payment from the government sometime over the next 6 months, as if that will fix the housing and other credit mess. It won't. More stimulus will be necessary.
Not a lot of damage done to internals Friday, and after a spectacular rally Wednesday through Friday morning, we were due for a correction, so we believe this rally has further to go before setting up the next major decline, which should be nasty. Before the rally resumes, we could see another down leg, perhaps as much as 1.5 to 2.0 percent
The Dow Industrials rose 108.38 points Friday morning, then fell 279.82 the rest of the way to close at 12,207.17. NYSE volume was lower on the decline at 90 percent of its 10 day average, which is a plus, with downside volume leading at 74 percent, with declining issues at 57 percent, with downside points at 84 percent...The Dow Theory Primary Trend Bear Market signal from November 2007 confirms we have been in a Bear market since July 2007 (the last time both indices reached a new higher high). That Bear market signal was reconfirmed Thursday, January 17th, which means odds are high we are going much lower from here, after this market finishes the current correction."
New York Attorney General Andrew Cuomo has launched an investigation into Merck & Co. and Schering-Plough Corp.'s handling of a controversial study of their cholesterol drug Vytorin. Mr. Cuomo has served the companies with subpoenas as part of a probe into whether the companies "deliberately concealed" negative results from the study, called Enhance, his office said in a news release on Saturday.
World business leaders said on Saturday the worst might yet be to come in a financial crisis driven by continuing fears of bank losses and uncertainty over U.S. emergency stimulus measures."It's going to take some time for these things to work their way through the system," Citibank Chairman William Rhodes told Reuters in an interview. "In a nine-inning ballgame, I think we're in the fifth inning."
Dave Adelman, president of the National Pawnbrokers Association, said the number of loans at US pawn shops had risen 15-20 per cent since October. He attributed the increase to rising fuel prices and deteriorating economic conditions – an assessment echoed by other industry executives.
Pakistan's President Pervez Musharraf dismissed proposals to allow the United States greater latitude to operate in tribal territories where militants are active, officials said.
Some stores, including the Hannaford Bros. New England supermarket chain, have adopted food rating systems. The Hannaford stores commissioned a panel of nutritionists, including ones from Harvard University, Dartmouth Medical School and UC Davis, to grade its products for nutrition value - zero stars being the worst and three stars being the best. Of the 27,000 items evaluated, 77 percent received no stars, and many were Hannaford's own brands. After a year, the grocery company found that sales of many starred foods, such as lean cuts of beef, increased significantly, while zero-starred foods, like whole milk, dropped.
Venezuelan President Hugo Chavez urged his Latin American allies on Saturday to begin withdrawing billions of dollars in international reserves from U.S. banks, warning of a looming U.S. economic crisis. Chavez made the suggestion as he hosted a summit aimed at boosting Latin American integration and countering U.S. influence. "We should start to bring our reserves here," Chavez said. "Why does that money have to be in the north? ... You can't put all your eggs in one basket."
Brett Steenbarger: "New highs topped out in early June, 2007, well ahead of the market index. Similarly, we can look for an upturn in the cumulative high-low line to confirm a bottoming process in stocks. Thus far, we've seen two consecutive days in which new 20-day highs have outnumbered new lows: on Thursday (649 vs. 401) and on Friday (663 vs. 364)."
API Statistical Report: In 2007, total domestic petroleum deliveries were flat--marking the third year in a row for which they experienced only minimal growth or outright decline.
The Sunday Telegraph: "powerful funds backed by the Qatari government are considering assembling a significant stake in Credit Suisse, one of Europe's largest banks."
The WSJ: "some players within OPEC are talking now about the potential need to cut production, if not at this gathering, then perhaps at the club's regular session in March."
The Seattle Times endorses Sen. Barack Obama for the Democratic nomination for president. He has the grasp, temperament and skills to right our standing in the world. He has broad insight and specific ideas to assuage our own hardworking citizens' fears of an economy turning sour. Obama has thoughtful plans to help citizens with everyday problems: middle-class tax breaks; elimination of income tax for seniors earning less than $50,000; health care for minors.
Earthfiles: "Associated Press and the BBC reported today that official “speaking on condition of anonymity said the satellite had lost power and propulsion, and could contain hazardous materials. The White House said it was monitoring the situation and keeping lawmakers and other countries abreast of the situation.” It is unknown if the American government might try to destroy the satellite before it plunges to Earth sometime in February or March 2008."
Former first daughter Caroline Kennedy has thrown her support behind Sen. Barack Obama, calling him the presidential candidate most capable of carrying on the legacy of her late father, John F. Kennedy.
Perino said Friday that Bush will highlight several policies he believes he can implement "without congressional involvement." Those include revisions of the Federal Housing Administration that Bush asked for in April 2006, she said.
Recently, Starbucks announced a test market offering an 8ounce cup of coffee for $1 with a free refill. After a couple of days, without announcing a cancellation, stores no longer honored the test market. That's truly dumb and creates ill will for the customer.
Hashemi Samareh, chief adviser and life-long confidant to Iran's president, said his country could join a proposed international bank for enriched uranium that would provide countries with safe fuel for nuclear power stations – but only as a supplier.
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