Friday, November 14, 2008

The New Currency Order?

11/15/08 The New Currency Order?

Larry Edelson: "To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation....Only this time, it won’t be just the U.S. that devalues its currency. The world is too interconnected. Instead, the world’s leading countries will propose a simultaneous and universal currency devaluation....But they don’t have to confiscate gold. Here’s one scenario.They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce — to a price that monetizes a large enough portion of the world’s outstanding debts.

That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).

And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.

The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)

The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro....I’m talking about a massive asset price reflation, negative real economic growth in the U.S. and Europe — but continued real GDP gains in Asia...To monetize 100% of the outstanding public and private sector debt in the U.S., the official government price of gold would have to be raised to about $53,000 per

ounce...I would not be surprised to see the G-20 monetize at least 20% of the U.S. debt markets. THAT MEANS …
Gold would be priced at over $10,000 an ounce."

George Bernard Shaw: "You have to choose (as a voter) between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold."

Al Capone: "This American system of ours . . . call it Americanism, call it capitalism, call it what you like, gives to each and every one of us a great opportunity if we only seize it with both hands and make the most of it."

Falling for a fourth straight month, U.S. retail sales plunged a record 2.8% in October as sales of autos and gasoline plummeted, the Commerce Department estimated Friday. Excluding the 5.5% drop in auto purchases, retail sales fell a record 2.2%. For their part, the automakers are pleading for a lifeline from Washington, with per capita sales dropping to the lowest levels since World War II. Details Sales of durable goods remained weak. Sales at furniture stores dropped 2.8%, sales at electronics and appliance stores fell 2.3%, and sales at hardware stores fell 0.4%. Sales at the mall were horrible. Department store sales dropped 1.3%, clothing store sales fell 1.4% and sporting and hobby stores sales fell 1.6%. As bad as those numbers are, they are slightly better than in September. Sales at grocery stores were flat, while sales at bars and restaurants rose 0.3%. Sales at health and personal care stores rose 0.4%. Sales at nonstore outlets, such as catalogs and online stores, fell 1.8%

In early Friday trading, December crude was up 34 cents to $58.58 a barrel on Globex, December gold picked up $27.50 to $732.50 an ounce on Globex, and December silver rose 52 cents, or 6%, to $9.32 an ounce.

John Maynard Keyes: "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

Freddie Mac's third-quarter loss increased by more than 20 times to $25.3 billion, or $19.44 a share in the three months ended Sept. 30, compared to $1.2 billion, or $2.07 a share in the year-ago period. Third-quarter results were driven primarily by a non-cash charge of $14.3 billion related to the establishment of a partial valuation allowance against the company's deferred tax assets, $9.1 billion in security impairments on available-for-sale securities and $6 billion in credit-related expenses arising from the "dramatic deterioration in market conditions."

Citigroup plans to lay off at least 10,000 employees in its investment bank and other divisions throughout the world, starting this week, The Wall Street Journal reported Friday, citing unnamed people familiar with the matter.

Abercrombie & Fitch Co. on Friday said that third-quarter earnings were $63.9 million, or 72 cents a share, compared to $117.6 million, or $1.29, in the same period a year ago. Net sales fell 8% to $896.3 million from $973.9 million. Same-store sales fell 14%.The retailer expects earnings per share for the fourth quarter of $1.00 to $1.05 and $3.27 to $3.32 for fiscal 2008.

The average U.S. retail price for a gallon of unleaded gasoline fell 3 cents to $2.15 a gallon on Friday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $3.13 a gallon and a year ago, it sold for $3.11 a gallon.

Credit insurers Euler Hermes, Atradius and Coface are refusing to write policies for suppliers trading with General Motors or Ford Motor Co on credit, the Financial Times reported.

Hong Kong's third-quarter gross domestic product contracted 0.5% from the previous quarter, its second straight quarterly fall after shrinking 1.4% in the second, and marking its first recession since the 2003 Sars outbreak.

Royal Bank of Scotland is looking to cut 3,000 jobs, U.K. media outlets reported.

Brazilian miner Companhia Vale do Rio Doce SA has axed its request to raise prices on iron-ore shipments to Japanese steelmakers, according to a Japanese business report.

Asian stocks were up sharply in early trading Friday, rebounding from three days of declines, after a rally on Wall Street and stronger U.S. dollar restored some confidence. Japan's Nikkei 225 was up 4.2% to 8,598.69, Australia S&P/ASX 200 added 3.1% at 3,812.30 and South Korea's Kospi firmed 2.6% to 1,116.24. New Zealand's NZX-50 also tracked higher, adding 2% to 2,784.40.

J.C. Penney Co.said Friday that its fiscal third-quarter profit fell to $124 million, or 55 cents a share, from $261 million, or $1.17, a year earlier. Sales fell 8.7% to $4.32 billion. Sales at stores open at least a year dropped 10%. The company forecast fourth-quarter profit of 90 cents to $1.05 a share with sales declining as much as 9%. Analysts, on average, estimated the department store operator to earn 53 cents a share in the third quarter and $1.32 for the fourth quarter, according to Thomson Reuters.

An index for U.S. import prices fell the most in two decades - the third consecutive month of declines -- as petroleum prices plunged, the Labor Department reported Friday. The 4.7% decline is the largest import price index drop since the monthly data started in 1988. Excluding petroleum, import prices fell 0.9%. Over the three months ended in October, these prices fell 2.2% -- the largest quarterly decline since the index was first published in 1985.

Sun Microsystems Inc.will lay off between 5,000 and 6,000 employees, or 15% to 18% of its work force, in a move to cut costs by $700-$800 million a year.

Nokia warned that industry volumes for the fourth quarter will be lower than previously expected and said next year's sales will be down. "In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending. The weaker consumer spending has impacted many industries, including the global mobile device market. The mobile device market has also been negatively impacted by the more limited availability of credit, which has limited the purchasing ability of some of our trade customers," Nokia said. Nokia still expects its market share to be at the same level or up from the third quarter.

According to Jeffrey Hirsch (Stock Trader’s Almanac), the Dow has been up 12 out of the last 14 years during the week before Thanksgiving.

The Oil Drum: "At 22 transit systems surveyed last week by the American Public Transportation Association, ridership either stayed the same or increased over the last two months, said Virginia Miller, spokeswoman for the group.

Likewise, MasterCard Advisors reports show that national gasoline demand remains down compared to previous years — though by only 3 to 4 percent a week, compared with the 8 or 9 percent drops of earlier this year."

According to the WSJ, Democrats are scaling back stimulus plans, and a deadlock over the Detroit bailout may push action off until January.

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources. In addition, there is a report that China is expected to shift its reserves into gold and commodities. I expect this has begun and less monies will go into U.S. treasury bonds where I believe fortunes will be lost through monetization of U.S. debt levels.

Chicago's Mayor Daley says corporate leaders told him huge layoffs will impact the city this month and next, and into the new year. He also says city, county and state governments should be prepared for their revenue to fall dramatically because of the souring economy.
"This is going to be all year, so it's going to be a very frightening economy," Mayor Daley said. "Each one tells me what they're laying off, and they're going to double that next year. We're talking huge numbers of permanent layoffs for people in the economy. It's going to have a huge effect on all businesses." "We never experienced anything like this except people who came from the Depression," Mayor Daley said. "When you have that many layoffs early – and they're telling me this is only the beginning of their layoffs – that is very frightening."

B.J. Gupta: "All fingers are not alike, If you cut bigger ones to make all equal it is communism, If you stretch smaller ones to make all equal it is socialism, If you do nothing to make all equal it is capitalism."

According to Bloomberg, Mitsui O.S.K. Lines Ltd., Japan's most profitable shipping line, may mothball some of its largest vessels for the first time in over two decades as charter rates have fallen 98 percent over the last five months.

The world's largest merchant fleet operator may also scrap seven of its capesize ships, used for transporting iron ore and coal, from a fleet of about 100, Masafumi Yasuoka, senior executive officer at the shipping line, said in an interview in Tokyo yesterday.

Investors have redeemed an estimated $85 billion from hedge funds through the end of the third quarter, says Charles Gradante, co-founder of hedge fund adviser Hennessee Group.

Boeing Co. has moved the delivery of its first 747-8 Freighter plane to the third quarter of 2010 from its original target of late 2009. Further, the Chicago aerospace company also delayed the first delivery of its 747-8 Intercontinental passenger jet to the second quarter of 2011, from late 2010.

The $237.2 billion deficit for October included total government spending of $402 billion, a record in terms of outlays.

The spending figure included $115 billion paid to some of the country's largest banks to buy stock, the beginning of a program in which the government will spend $250 billion before the end of the year to take ownership shares in hundreds and potentially thousands of banks. The goal is to bolster banks' balance sheets so that they will resume more normal lending and keep the country from falling into a prolonged recession.

The deficit also was boosted by the government's move to purchase $21.5 billion in mortgage-backed securities, an effort the Bush administration announced when it took control of mortgage giants Fannie Mae and Freddie Mac in September because of rising losses in that market.

Migrant remittances, a vital source of income for poor countries, could decline by up to 6 percent next year due to worsening economic conditions around the world, the U.N.'s trade chief said Friday.

Meredith Whitney, the Oppenheimer & Co analyst who was among the first to warn that banks needed to raise huge amounts of money to offset mortgage losses, worries that cuts to credit limits will constrain already cautious consumers, reinforcing a vicious cycle of bank losses and economic decline.

"If you lose your job, if you get sick, if any unforeseen event happens, that's your slush fund," Whitney said at the Reuters Global Finance Summit in New York.

"If all of a sudden you lose your slush fund (or it) gets cut dramatically -- and it will -- everything about you changes, and you become more guarded as a consumer. You could be absolutely fine in every other area of your life, but getting your credit line cut changes your whole outlook." Over the past decade, American households have piled on $8 trillion in debt, an increase of 137 percent, twice the gain seen in the size of the economy. At $14 trillion, the debt load is now roughly equal to the entire economy's annual output. Much of the increase comes from home mortgages, which have expanded by $6 trillion since 1998, but it also reflects higher balances on credit cards and auto loans.

Natural-gas inventories rose by 62 billion cubic feet for the week ended Nov. 7, the U.S. Energy Department said Friday.Total stocks now stand at 3.467 trillion cubic feet, down 72 billion cubic feet from the year-ago level but 117 billion cubic feet above the five-year average, the government data said. December natural gas was down 3.6% at $6.088 per million British thermal units on Globex.

Boeing Co.'s engineer and technical workers union is seeking authorization from its members to launch a strike if necessary, as representatives from both sides enter a third week of contract bargaining.
The Society of Professional Engineering Employees in Aerospace, or Speea, said late Thursday it was seeking a strike authorization after two days of "non-productive and discouraging dialog" with the company over wages, pensions, medical benefits, and its attempt to remove Utah engineers from the contract.

A car that runs on air may be traveling American roads by 2011. That’s when Zero Pollution Motors says it plans to roll out 8,000 compressed air-powered vehicles (CAVs) in the country, after introducing them here by 2010. The cars are to be sold at an estimated $20,000.

The car under development doesn’t go very fast—maxing out at 35 mph and traveling about 60 miles on a tank of compressed air. A small motor can supplement the compressed air with diesel, gasoline, salad oil or ethanol for driving on the highway, according to The CAVS are also all-glue constructed, which has raised eyebrows as to how they’ll pass U.S. required crash tests, though its makers say they’re confident they’ll pass.

CAV technology was developed by MDI, a German and French company planning to introduce the cars there in 2009 and have already sold the rights for India’s biggest automaker, Tata, to turn the Nano car—the world’s cheapest at about $2,000—into a compressed air vehicle.

This seems like a good alternative to the current thinking on a bailout for GM and Ford. said that 20.76 percent of all homes in the nine-county Bay Area are underwater. The rate is much higher than the national average of 1 in 7 homes, or 14.3 percent.

The Department of Justice said Friday it will require InBev to divest its Labatt USA unit to proceed with its $52 billion acquisition of Anheuser-Busch Cos.

FedEx Corp said Friday it will raise rates for ground and home delivery by an average 5.9% in 2009. The new rates are effective Jan. 5. Aren't we glad fuel prices have dropped dramatically? I will no longer use FedEx. A customer does not need to be screwed.

December gold climbed $41.80, or 5.9%, to $746.80 an ounce Friday afternoon on Globex.

French President Nicolas Sarkozy undercut the American rationale for a U.S. missile shield in Eastern Europe on Friday by saying that the system would do nothing to improve European security.

Over the past five weeks Sunoco has risen from 21+ to 38+. The shares act completely different from other refiners. I'm happy to see the move and I'm pleased with their last quarter; however, others in the group have been undervalued and they have not moved higher. It will be interesting to see whether some development is brought to light. On the other hand, the stock got crushed from 50 to 21+ in 5 weeks.

Fidelity Investments plans to lay off another 1,700 workers in the first three months of 2009, the Wall Street Journal reported Friday.

Boeing Co.said late Friday that it reached tentative, four-year labor agreements with the Society of Professional Engineering Employees in Aerospace IFPTE Local 2001.

The Dow Jones Industrial Average fell 337.94 points, or 3.8%, to end at 8,497.31, leaving the blue-chip index down 5% for the week. The S&P 500 dropped 38.02 points, or 4.2%, to 873.27, translating into a weekly loss of 6.2%. The technology-heavy Nasdaq Composite shed 79.85 points, or 5%, to finish at 1,516.85, leaving it 7.9% lower than where it stood at last Friday's close.

December crude closed at $57.04 per barrel Friday on the New York Mercantile Exchange, down $1.20, or 2.1%, for the session.

Citigroup Inc plans to shed about 10 percent of its global workforce, a person familiar with the matter said Friday, as the bank tries to return to profitability and faces mounting criticism of Chief Executive Vikram Pandit.

The cuts could result in a loss of roughly 35,000 jobs, based on the bank's reported 352,000-person workforce as of Sept 30. The cuts will be on top of the 23,000 jobs Citigroup has already slashed this year.

Thursday, November 13, 2008

Another Welcome Rally

11/14/08 Another Welcome Rally

In morning trading, Britain's FTSE 100 was down about 1.3%. The CAC-40 in France and Germany's DAX were both down slightly. The Nikkei dropped 5.3%.The Moscow Interbank Currency Exchange index lost 9% to 589.23.

Germany's Federal Statistical Office said Thursday that gross domestic product contracted by 0.5% in the July-September period compared with the previous quarter. The economy contracted by 0.4% in the second quarter -- its first decline since late 2004.

In its latest economic forecasts, the Paris-based Organization for Economic Cooperation and Development said gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, representing democracies with market economies. It said the U.S. economy would contract by 0.9 percent, Japan's by 0.1 percent and the euro area by 0.5 percent. Additionally, it was the first time since 1974-5, when they were suffering from the Arab oil embargo and a severe bear market for stocks, that the U.S., Europe and Japan have fallen into recession.This time, all three are shrinking in the same year; in the wake of the first oil price shock in 1973, Japan saw negative growth in 1974 followed a year later by the U.S. and Europe. And it was the first time the organization has seen an aggregate shrinkage in its members economies since it started keeping records in 1970.

Wal-Mart Stores, Inc. reported its sales and earnings for the quarter ended Oct. 31, 2008 . Net sales for the third quarter of fiscal year 2009 were $97.6 billion , an increase of 7.5 percent from $90.8 billion in the third quarter last year.

Income from continuing operations for the third quarter was $3.033 billion , an increase of 6.6 percent from $2.846 billion in the third quarter last year. Diluted earnings per share from continuing operations for the third quarter of fiscal year 2009 increased to $0.77 from the previous year's third quarter result of $0.70 per share. The prior year included a net benefit of $0.01 per share due to the recognition of $46.5 million in after-tax gains from the sale of certain real estate properties.

For the fourth quarter of fiscal year 2009, the Company estimates the comparable store sales increase in the United States to be between one and three percent, according to Tom Schoewe , Wal-Mart Stores, Inc. executive vice president and chief financial officer.

"We estimate diluted earnings per share from continuing operations for the fourth quarter will be between $1.03 and $1.07 ," Schoewe said. "The rapid changes in currency exchange rates during the last few weeks are projected to negatively affect this year's fourth-quarter results by approximately six cents per share. In U.S. dollar terms, strong operating performance in International may be overshadowed by these currency fluctuations.

"For the full year, ending January 31 , we have tightened and modestly reduced our guidance and now forecast diluted earnings per share from continuing operations to be within a range of $3.42 to $3.46 ," he said.

Brett Steenbarger: "While the non-confirmations to date from the new highs/lows and Cumulative NYSE TICK are enticing for bottom-fishers, the weakness among the S&P 500 sectors and the advance-decline line show us in a strong short-term downtrend. We've had some sharp upward bounces during the trading days this week, but the buying interest has not been sustained. We now need to see selling interest and momentum dry up at the range lows if this is indeed to be part of a bottoming process. To date, that drying up has not occurred....122 new 20-day highs on Wed; 1705 lows. Only 4% of SPX stks above their 20-day MA. AD line hits new lows."

John Thain, Merrill Lynch CEO: “Right now, the US economy is contracting very rapidly. We are looking at a per­iod of global slowdown,” he told investors. “This is not like 1987 or 1998 or 2001. The contraction going on is bigger than that. We will in fact look back to the 1929 period to see the kind of slow­down we’re seeing now.”

A day after a suicide bombing in Afghanistan, an attack on a U.S. convoy in a market killed 19 and injured 74.

BT Group, the British telecommunications company, said it would cut 10,000 jobs.

Consumers are expected to return a record $219 billion of merchandise this year, or 8.7 percent of total sales, compared with 7.3 percent in 2007, according to a survey released Thursday by the National Retail Federation.

Joseph LaRocca, a vice president of the retailing group, said that returns of the holiday purchases that many stores rely on to lift them into profitability for the year are expected to be especially high. It is one more measure of the calamity that many retailers are facing as consumers snap shut their wallets.
“Consumers are trading down massively; they are out of money, and that’s where returns come in,” said Howard Davidowitz, chairman of Davidowitz & Associates, a retailing consulting and investment banking firm. “When times are terrible, they look for ways to cut back.” “Fashion is a feel-good purchase that sometimes doesn’t feel so good once you get it home, and that’s what makes it so vulnerable,” said Marshal Cohen, chief industry analyst for the NPD Group, which tracks retail sales.

Over all, the Bureau of Labor Statistics reported on Friday that the legal services industry lost more than 1,000 jobs in October.

According to the American Bankruptcy Institute, there were 18,456 bankruptcies in the first half of this year, compared with 12,985 during the same period of last year.

Consulting firm Accenture reported that 38 percent of consumers plan to shop late in the season to take advantage of discounts.

"In 42 years of retailing, we've never seen such difficult times for the consumer," said Best Buy's president and chief operating officer, Brian Dunn, in a statement. "People are making dramatic changes in how much they spend, and we're not immune from those forces."

The value of residential real estate investments owned by the country's largest public pension fund has plummeted 35% -- a paper loss of $3.3 billion for current workers, retirees and their state and local government employers.
The California Public Employees' Retirement System reported Wednesday that in the year ended June 30 its real estate portfolio declined to $6.08 billion from $9.36 billion, based on 461 independent appraisals of its investments in 288,000 housing units across the country.

"We have seen a significant increase in margin call activity over the past several weeks," concurs a spokesman for TD Ameritrade.

"That increase has certainly been more sustained than in other bear markets, largely because of the sustained nature of the downturn. There have simply been more significant down days (900-, 400- or 300-point drops) in the markets -- many of them consecutive -- than we have seen in recent history. So, instead of one or two days of increased margin calls, you now have weeks of such activity."

Randall W.Forsyth: "The market is down is down more than 40% from its peak since last October. Moreover, notes Natixis Bleichroeder technical analysts John Roque and Adolfo Rueda, the Standard & Poor's stands roughly where it did in 1997. So long-term equity investors have nothing to show for 11 years (other than paltry dividends.)

Roque and Rueda:"It's our take that when the bottom does form it will be accompanied by despair, despondency and neglect and not when people are either looking for capitulation or worried about missing a bear market rally.

"In short, we don't think the characteristics for this bear market's bottom are present yet."

Until then, the market clerks are apt to keep busy."

U.S. foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac.

Foreclosure filings -- default notices, auction sales notices and bank repossessions -- rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac.

That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.

Victoria Marklew: "The Bank of England's Quarterly Inflation Report was released this morning and its outlook for the UK economy was every bit as dismal as feared. The Bank's central projections for GDP growth and inflation are "substantially weaker" than in the August Report, although today's Report also acknowledges that the prospects for both are "unusually uncertain." The central projection is for a pronounced contraction in domestic demand that causes output to fall markedly through the first half of 2009, with the contraction in real GDP reaching around 2.0% on the year by Q2. Assuming a combination of lower interest rates, a gradual expansion in credit, lower global commodity prices, a weaker currency, and continued fiscal stimulus, a gradual recovery should get underway in the second half of next year, with real GDP growth nudging back into positive territory by Q1 2010."

Robert McHugh: "We define a stock market crash as a decline of 15 percent over a short period of time. Since the close on election day, the Industrials have essentially crashed one week later. The Industrials closed on November 4th at 9,625.28. Six trading days later, tonight, November 12th, the Industrials closed at 8,282.66, a 14 percent mini-crash. However, stocks closed below support, 8,400, at the bottom of the triangle we have been showing recently, suggesting more downside is coming. The intraday low for this Bear Market that started in October 2007 is 7,773.71 on October 10th, 2008. This market is definitely in the mood to test that level over the next few weeks. If it breaks below that support level, next support is the October 2002 low of 7,197. If that level is broken, God help us."

First-time filings for state unemployment benefits hit their highest level since September 2001 in the week ending Nov. 8, the Labor Department reported Thursday. Initial claims rose by 32,000 to 516,000 (the highest level since the weeks following the Sept. 11, 2001 attacks), while the four-week average of those claims rose by 13,250 to 491,000. Continuing claims for the week ending Nov. 1 rose to 3.89 million, their highest level since 1983. The four-week average of continuing claims rose to 3.79 million.

The U.S. trade gap narrowed to $56.5 billion in September as trade in goods and services with the rest of the world slowed sharply, further evidence of the global economic slump. Imports dropped a record $12.5 billion to a seasonally adjusted $211.9 billion, a 5.6% decline that was accelerated by the largest-ever monthly decrease in crude oil prices. Exports fell a record $9.9 billion to $155.4 billion seasonally adjusted, a 6% decrease. While the decline in the deficit may have been exaggerated by falling prices, trade in goods also slowed markedly in inflation-adjusted terms, with real imports of goods falling 3.6% to the lowest level in three years. Real exports fell 7.8%.

Gold futures extended their decline Thursday, with December gold falling $5.10 to $713.20 an ounce in electronic trading on Globex. December crude oil rose 62 cents to $56.78 a barrel in electronic trading on Globex.

The average retail cost in the U.S. for a gallon of unleaded gasoline fell 2 cents to $2.18, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $3.16 a gallon. A year ago, it sold for $3.11 a gallon. The highest recorded average price of $4.11 a gallon took place on July 17.

Premier Wen Joabao said that the effect of the global economic crisis on China “is worse than expected,” citing National Bureau of Statistics Director Ma Jiantang.

Las Vegas Sands to fire up to 11,000 workers in Macau after resort projects halted.

In early Thursday trading, Microsoft, Google, Research in Motion, eBay, HP, IBM, DELL, and Intel traded at new 52-week lows. Despite the poor employment numbers, the Dow had a triple digit rise and the Nasdaq rose by 10 points. In a blink of an eye, the rally turned negative.

Washington Post: "No formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed."
"It's a mess," said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

Romanian companies in the chemical and fertilizer industry said Thursday they will lay off some 800 workers as their businesses feel the effects of the global economic crisis.

Rob Hanna: "Spikes in volatility tend to occur near market bottoms. An ATR spike can alert you that a bottom may be coming. Like many indicators that use moving averages, though, the 30-day ATR% is a lagging indicator. It typically peaks after the bottom has been made. Look for this measure to turn down again once a bottom (at least a temporary bottom) is in place." Basically, Rob has pointed out that, the volatility levels now in existence, has only been experienced once previously-- after the Crash of '29.

Aetna Inc. has warned employees that it will pursue "selective" staff cuts as it adjusts to the major economic downturn it expects for next year.

According to Business Week, average annual earnings of workers fell for several years in the 1930s but have not fallen since. And it looks like they won't fall in 2009, either. Businesses are reporting that they plan to increase pay by roughly 3.5% in 2009 for U.S. workers, according to recent surveys by compensation consultants Mercer, Watson Wyatt Worldwide, and Hewitt Associates.

``The labor market is only reinforcing a very pessimistic picture,'' Linda Barrington, a labor economist at the Conference Board, said in a Bloomberg Television interview. ``When you start to see the downward pressure on wages as well as the credit crunch, that's only going to make consumers much more nervous.''

Pound tumbles to 6-1/2 year low below $1.50.

Sprint Nextel offering voluntary buyouts to employees in an effort to trim its workforce and cut long-term expenses, the Kansas City Star reported.

Apparel maker Perry Ellis International Inc. on Thursday said it expects to report third-quarter results below Wall Street expectations as the company marked down merchandise amid sluggish consumer spending.

Begich now leads Stevens 132,196 votes to 131,382 votes, according to the Alaska Division of Elections Web site.

Officials counted approximately 50,000 ballots yesterday and may finish counting the remaining 40,000 tomorrow, according to Jonathan O'Quinn, an elections program manager.

Jim Chanos: "There are opportunities out there. They're just not in the equity markets, they're in the credit markets. True value players would be looking at debt."

Crude supplies were unchanged for a second week, at 311.9 million barrels for the week ended Nov. 7, according to the Energy Department Thursday. Motor gasoline supplies climbed 2 million barrels. Distillate stocks rose 600,000 barrels in the latest week. Refinery utilization was at 84.6% of capacity, compared with 85.3% a week earlier. Following the news, December crude was up 72 cents at $56.88 a barrel on Globex.

Investors in stock mutual-funds pulled an estimated $31.8 billion from their accounts in the week through Wednesday, significantly reversing an inflow of $2.2 billion in the prior week, TrimTabs Investment Research said Thursday. Equity funds that invest primarily in U.S. stocks posted an outflow of $21.3 billion, versus an inflow of $2.3 billion in the previous week. Stock funds that invest mostly in non-U.S. stocks saw an outflow of $10.5 billion, versus an outflow of $140 million in the previous week. In addition, bond funds had an outflow of $6.3 billion, versus an inflow of $518 million in the previous week, while hybrid funds that invest in both stocks and bonds saw an outflow of $2.2 billion, versus an inflow of $184 million in the previous week.

Kohl's warned that it expects to post a profit of 90 cents to $1.05 a share in the fourth quarter, down from a prior range of $1.26 to $1.34 a share due to what the company described as "the most challenging" holiday season in years.

U.S. Steel Corp will lay off 677 worker in the United States and Canada because of the economy and lower steel demand, The Associated Press reported Thursday.

December crude closed at $58.24 per barrel Thursday on the New York Mercantile Exchange, up $2.08, or 3.7%. Johh Kingston, director of oil for Platts, joined other industry observers Thursday in estimating that OPEC will cut production by an additional one million barrels a day at an emergency meeting later this month. The cut would come on top of a 1.5 million barrel trim just a few weeks ago. "It seems fairly certain they'll hold a meeting to discuss further cuts," he said on a conference call.

The U.S. federal government deficit soared in October to a record $237.2 billion, as the government invested more than $136 billion in various bank bailout programs, the Treasury reported Thursday. Excluding the $21.5 billion investment in Fannie Mae and Freddie Mac, and the $115 billion investment in major banks, the October deficit was $100.7 billion, up from $56.8 billion a year ago. The deficit was about $5 billion more than estimated by the Congressional Budget Office.

December gold fell $13.30, or 1.9%, to close at $705 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Nordstrom said late Thursday that its third-quarter profit fell to $71 million, or 33 cents a share, from $166 million, or 68 cents a share, in the year-ago period. The company sees earnings of 35 cents to 45 cents a share for the fourth quarter, and $1.87 to $1.97 a share for the year. Analysts estimate earnings of 70 cents a share in the fourth quarter, and $2.21 a share for the year.

Trading in a 911-point range, the Dow Jones Industrial Average climbed 552.59 points, or 6.7%, to finish at 8,835.25. The S&P 500 gained 58.97 points, or 6.9%, to 911,27, while the Nasdaq Composite surged 97.49 points, or 6.5%, to settle at 1,596.7. The rally occurred after the S&P 500 and Nasdaq had touched new five-year lows earlier in the session

OfficeMax Inc. said late Thursday it will cut 245 jobs from its corporate staff and field management in North America.

Brunswick Corp.said late Thursday it will close its boat plant in Cumberland, Md., and transfer production to a plant in Ashland City, Tenn. The closure will affect 115 jobs, the company said. The plant closure is expected by the end of the year.

``It seems more that investors are doing some massive short covering,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television.

The MSCI Asia Pacific Index added 1.8 percent to 83.76 at 9:55 a.m. in Tokyo, set for a 4 percent drop this week. Japan's Nikkei 225 Stock Average gained 4.2 percent to 8,587.06 and stocks also advanced in Australia and South Korea.

Futures on the Standard & Poor's 500 Index slid 0.4 percent. U.S. stocks rose yesterday, with the S&P 500 advancing in the final hour of trading to close 6.9 percent higher as the rebound in oil prices boosted shares including Exxon Mobil Corp.

Wednesday, November 12, 2008

Bank Stress

11/13/08 Bank Stress

Home values in the United States posted their seventh consecutive quarterly decline, with nearly one-third of Americans who sold in the past year losing money, real estate website said on Wednesday.
Home values fell 9.7 percent year-over-year in the third quarter to a Zillow Home Value Index of $202,966, according to the third quarter Zillow Real Estate Market Reports, which encompass 163 metropolitan areas.
Home values have dropped a total 12.8 percent since the market peaked in 2006. Year-over-year declines in the second quarter were 8.8 percent, indicating that price drops continued to accelerate in the third quarter, the reports showed.
The continued declines in value are causing more homeowners to sell their homes for less than the original purchase price. One in seven, or 14.3 percent, of all homeowners across the country has negative equity, and of homeowners who bought in the last five years, almost one-third, or 29.5 percent, are 'under water', the reports showed.

Best Buy sees FY EPS about $2.30 to $2.90. Best Buy says prior FY EPS view was $3.25 to $3.40. In early morning trading hours, the shares were at $20+.

Benjamin Bollin: "When you see a stock trading up on bad news ? or at least holding steady ? it leads me to believe that some of the capitulation is out of this thing." That did not occur with Best Buy and many others before it. Capitulation comes in its own time, and unfortunately, to date it has not appeared.

Crude oil for October delivery fell $1.23 to $58.11 a barrel in electronic trading on Globex. Gold for December delivery dropped $6.40 to $726.40 an ounce in electronic trading on Globex.

Microsoft Corp.may be near a deal to become the default search provider for Verizon Wireless, according to a report Wednesday in The Wall Street Journal.

The British pound fell to a new all-time low against the euro Wednesday, after the Bank of England slashed its U.K. inflation outlook in a quarterly report. The pound traded at 81.93 pence against the euro in recent action after hitting 82.12 pence in the wake of the report, which appeared to leave the door open to further, aggressive rate cuts by the central bank.

Industrial production across the 15-nation euro zone fell 1.6% in September from the previous month, for an annual drop of 2.4%, the statistical agency Eurostat reported Wednesday.

Macy’s, Inc.reported a loss of 10 cents per diluted share for the third quarter of 2008, ended Nov. 1, 2008, compared with diluted earnings per share of 8 cents for the same 13-week period last year. Excluding division consolidation costs of $16 million ($10 million after tax or 2 cents per diluted share), the third quarter 2008 loss was 8 cents per diluted share. The third quarter of 2007 included May Company merger integration costs of $17 million ($10 million after tax or 2 cents per diluted share). Excluding these items, diluted earnings per share from continuing operations were 10 cents for the third quarter of 2007. The company also reiterated its guidance for fiscal 2008 earnings to be in the range of $1.30 to $1.50 per diluted share ($1.10 to $1.30 per diluted share in the fourth quarter), excluding one-time division consolidation costs and asset impairment charges. Same-store sales in the fourth quarter are expected to be in the range of down 1 to 6 percent. The company said it's cutting its 2009 capital spending to $550 million to $600 million from $1 billion.
I would be shocked if the company earned $1 per share for the year.

The Oil Drum on oil prices: "It's the marginal cost of demand destruction that matters, rather than the marginal cost of production. Demand was driving prices up when it was strong, and it is now driving prices down just as brutally by crumbling just as spectacularly (whether directly, finally, because of high prices, or indirectly via the economic crunch).
But we now, unexpectedly, have a strong "buy" signal again: an article by CERA's Daniel Yergin telling us that current prices are justified."

Investment in new oil supply is already falling short and risking a supply crunch that would be worse than the problems that pushed oil prices to $147 a barrel this summer, the International Energy Agency said on Wednesday.

The developed world’s energy watchdog warned that cuts and delays in investments prompted by the fall in oil prices and the credit crunch were putting the world ”on a bad path”. Fatih Birol, the IEA’s chief economist, said: ”We hear almost every day about a project being postponed. This is a major problem.” For patient investors, I will repeat from a couple of weeks ago. I would consider USO as a holding for the long-term.
“If we continue to see a decline, we’ll start to see more curbing of capital outlays and capital programs,” said Gary Adams, vice chairman of Deloitte’s oil and gas practice in Houston. “I think that is about a year to two-year time frame. Any projects that could start up between now and then could be delayed.”
“I would guess a range of $40 to $50 is where you start to see some eyebrows raised.”

With oil prices down, Brazil’s state-owned oil company, Petrobras, could postpone investments in the Gulf of Mexico to focus on prospects in areas where returns are more certain, Petrobras CEO Jose Sergio Gabrielli said in an interview with the Houston Chronicle last month.
Some offshore blocks leased by Petrobras in the Gulf showed less potential than originally thought, he said.

Robert Prechter: "Because U.S. banks are no longer required to hold any of their deposits in reserve, many banks keep on hand just the bare minimum amount of cash needed for everyday transactions. Others keep a bit more. According to the latest Fed figures, the net loan-to-deposit ratio at U.S. commercial banks is 90 percent. This figure omits loans considered "securities" such as corporate, municipal and mortgage-backed bonds, which from my point of view are just as dangerous as everyday bank loans. The true loan-to-deposit ratio, then, is 125 percent and rising. Banks are not just lent to the hilt; they're past it.... in times of bank stress, it will take a progressively smaller percentage of depositors to cause unmanageable bank runs. If banks collapse in great enough quantity, the FDIC will be unable to rescue them all, and the more it charges surviving banks in "premiums," the more banks it will endanger. Thus, this form of insurance compromises the entire system. Ultimately, the federal government guarantees the FDIC's deposit insurance, which sounds like a sure thing. But if tax receipts fall, the government will be hard pressed to save a large number of banks with its own diminishing supply of capital. The FDIC calls its sticker "a symbol of confidence," and that's exactly what it is."

WSJ: "Dubai's six-year property boom appears finally to be over, with asking prices for some homes here falling as much as 19% in October from the previous month, according to a closely followed survey." Has anyone considered a viable exit strategy? I doubt it.

Intel Corp. said late Wednesday that it expects financial results for its current, fourth fiscal quarter to be "below expectations." The chip maker and technology bellwether said it now expects fourth-quarter revenue to be $9 billion, "plus or minus $300 million," which is lower than the company's previous expectation of between $10.1 billion and $10.9 billion. "Revenue is being affected by significantly weaker than expected demand in all geographies and market segments," Intel said in a statement. "In addition, the PC supply chain is aggressively reducing component inventories."

Shopping network QVC Inc., a unit of Liberty Media Corp., said late Wednesday it plans to shave about 700 jobs, or nearly 6% of its workforce, in the next 14 months.

Iran said Wednesday that it successfully test-fired a new generation of long range surface-to-surface missiles with a range of 1,200 miles, state-run television reported. A senior official said the missile would be used only defensively, but did not identify a potential aggressor.

Michelle Leder: "And, just in case there’s still some doubt over exactly how troubled GM is — cue the club over the head here – the company mentions the words “going concern” — an accounting-speak term that scares the daylights out of most investors — no fewer than 15 times in the 10Q filing."

George Ure: " The power and growing influence of Lobbyists - the Super Citizens of America. A fine cross of "Other People's Money", access to elected officials, and orchestrators of public opinion, they are, in my view, dangerous as a coral snake. And like a coral snake, their damage is systemic.
Lobbying has been a fine growth industry, though, so nothing is likely to change any time soon. Look at Pennsylvania, for example, where it's been 10-years trying to get an effective lobbying disclosure law on the books and still, no tough disclosure laws."

Holiday retail sales will fall 1 percent this year, marking the first decline in almost a quarter century of America's Research Group surveys.

Boone Pickens said the collapse in natural gas prices has forced him to put his wind farm project for Texas on hold.
Pickens has leased hundreds of thousands of acres for a giant wind farm in West Texas, where he plans to erect 2,700 turbines and produce energy for urban areas such as Dallas and Fort Worth.

FedEx Corp. reaffirmed Wednesday it plans to grow revenue by 10 percent and earnings per share by 10 to 15 percent per year.
In fiscal 2008, the package delivery company reported a profit of $3.60 per share on revenue of $37.95 billion.

Russia's central bank raised several key interest rates by 100 basis points late Tuesday, bringing the key overnight repo rate to 8% and the refinancing rate to 12% in a move aimed at reducing inflation and stemming capital flight.

The White House has shelved plans to purchase troubled mortgage assets from banks and other financial institutions, Treasury Secretary Henry Paulson said Wednesday. That program was once the cornerstone of the $700 billion rescue plan for financial markets passed by Congress. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock is a better use of the funds. Some of the money saved from not buying mortgage assets will now be used to shore-up the market for credit card receivables, auto loans and student loans, Paulson said.

For the second day in a row, the Dow was down 300 points during morning trading.

IDC now expects worldwide information technology spending to grow by 2.6 percent in 2009, down from its earlier forecast of 5.9 percent growth. In the U.S., spending is now expected to grow just 0.9 percent, well below IDC's August forecast of a 4.2 percent growth.

Morgan Stanley, which converted into a bank holding company in September, plans to shed 10 percent of staff in its institutional securities unit, Chief Financial Officer Colm Kelleher said.
The cuts are in addition to headcount reductions disclosed earlier this year, Kelleher said today at a banking conference in New York hosted by Merrill Lynch & Co.
Morgan Stanley also said it reduced total assets to below $800 billion by the end of October and aims to fund 50 percent of its holdings with equity, long-term debt and deposits.

Goodwill Industries says sales are up nearly 7 percent this year.

The U.S. recession is likely to be as long and severe as the downturns in 1973-75 and 1981-82, economists at Wachovia said Wednesday. Gross domestic product will likely fall for four consecutive quarters, according to the forecast released by chief economist John Silvia. Domestic demand is expected to fall for five straight quarters, which would be the longest decline since the government started keeping track in 1947. The unemployment rate is expected to peak in late 2010 at 9%, which would be the highest since 1983. In October, the unemployment rate was 6.5%.
As I have said before, I think it will be at least 9%

When the deal closes, Anheuser-Busch shareholders will get $70 in cash for each share of Anheuser-Busch stock, and Anheuser-Busch will become a wholly owned subsidiary of InBev. A specific closing date has not been determined but the companies expect the deal to be finalized before the end of the year.

The EIA expects world oil demand to rise almost 100,000 barrels per day in 2008 and to remain "virtually flat" in 2009. In the U.S., it expects petroleum-product demand to drop 5.4% in 2008 from the 2007 average. It sees an average crude price of $101.45 for this year and $63.50 for 2009.

House Republican leader John Boehner is calling for the Federal Reserve to disclose the recipients of almost $2 trillion of emergency loans from American taxpayers and the troubled assets the central bank is accepting as collateral.
Boehner, in a prepared statement, is also calling on the Federal Reserve to comply with a Freedom of Information Act request from Bloomberg News requesting detail about the loans.

National Semiconductor Corp.said late Wednesday it will cut 330 jobs as a cost cutting measure. Applied Materials Inc.said Wednesday it would cut about 1,800 jobs, or 12% of its workforce, by the end of its 2009 fiscal year as part of a plan to reduce expenses by $400 million annually.

The Dow Jones Industrial Average fell 411.30 points to 8,282.66. The S&P 500 declined 46.62 points to 852.35, while the Nasdaq Composite shed 81.69 points to 1,499.21.
Basically, equities are back to their October lows.

Google Inc.closed the day down 6.6% at $291 - the first time the stock has fallen under the $300 mark since October of 2005.

December crude dropped $3.17, or 5.3%, to close at $56.16 per barrel Wednesday on the New York Mercantile Exchange after tapping a low of $55.83 on Globex. December gold closed at $718.30 an ounce, down $14.50, or 2%, Wednesday on the Comex division of the New York Mercantile Exchange.

Massachusetts Democratic Rep. Barney Frank said his committee will hold a hearing next week to consider a bill to provide $25 billion in federal loans to U.S. auto manufacturers.
This won't sell more cars. You still have the same schmucks running the companies.

China's industrial production decelerated more than expected in October, rising 8.2% in the month from a year earlier, compared to a 11.4% expansion in September, according to data released by the National Bureau of Statistics Thursday.

In early Thursday morning trading, Japan's Nikkei 225 Index was down 4.4%, Australia's S&P/ASX 200 was off 3.9% at 3,766.80, New Zealand's NZX-50 slipped 1.4%.

Tuesday, November 11, 2008

Post Office Layoffs

11/12/08 Post Office Layoffs

"We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide. Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country... a struggling economy. "We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts."

Pepper says the postal service is looking to eliminate 40,000 jobs nationwide. There's not an exact number on how many of those could be from the Ark-La-Tex. Pepper says workers who are not part of union with six or less years of service would likely be the first on the chopping block. "We've identified 16 thousand people that are not covered under contract. We'll see what those numbers add up to."

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche. "The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

This is a point I have raised several times over the past 12 months.

Hang Seng Index drops 3.5% to 14,223.79 in early minutes of Tuesday morning trading.
Japan's Nikkei 225 Average dropped 2.7% to 8,834.30, while the broader Topix index gave up 2.4% to 894.97. Australia's S&P/ASX 200 slumped 3.4% to 3,967.90, South Korea's Kospi shed 2.2% to 1,127.66 and New Zealand's NZX 50 index slipped 0.9% to 2,811.50.

December crude fell 5.1%, or $3.21, to $59.20 per barrel Tuesday morning on Globex after reaching a 20-month low of $58.83. Gold for December delivery dropped $9.40 to $737.10 an ounce in electronic trading on Globex. Other metal futures also posted steep losses, with copper prices falling 3% and silver futures dropping 3.5%.

Slovakia's central bank cut Tuesday its key interest rate by 50 basis points to 3.25%. The rate decision was unscheduled and brings Slovakia's interest rates into line with the European Central Bank's policy rate, said Lars Christensen, chief analyst at Danske Bank.

General Motors Corp.shares fell as much as 17% in early trades Tuesday, touching levels last seen in 1943 a day.

Shares of troubled mall operator General Growth Properties Inc.plunged 70% early Tuesday after the company in a filing warned it may be forced to file for bankruptcy if it can't refinance its debt.

Mexico, the world's sixth-largest oil producer, hedged almost all of next year's oil exports at prices ranging from $70 to $100 at a cost of about $1.5 billion through derivatives contracts, the Financial Times reported on its front page Tuesday, citing bankers familiar with the deal. In contrast, Mexico hedged only between 20% and 30% of its exports last year, the Financial Times reported.

The "preliminary signs of stability" Toll Bros.had seen in early September "were upended by the past month's financial crisis," Robert I. Toll, chairman and chief executive, said in a statement. The company expects to report fourth-quarter write-downs of $120 million to $220 million tied to its communities, land and land options, and joint ventures.

China's export growth eased to 19.2% in October from a year earlier, decelerating from a 21.5% increase in September, government data showed Tuesday.

According to the International Council of Shopping Centers-Goldman Sachs Index, same-store sales dropped 1 percent for the week ended Saturday compared with the previous week. Same-store sales rose 0.4 percent compared with the year-ago period.

Australia's economy, which cruised through the 1997 Asian financial crisis and the dot-com bust, is facing the prospect of its first recession in almost two decades.

Waning global demand for commodities threatens to staunch a five-year flood of export earnings that helped boost Australian incomes by the most in more than 30 years. Without shipments overseas, the economy would have contracted in the second quarter.

The group of euro-member countries fell into "a serious recession in September" and economic contraction will continue through next year, pushing interest rates sharply lower, Bank of America said in a research note Tuesday.

"All major euro-zone members seem to be in recession now," analysts Gilles Moec and Holger Schmieding said in the note.

TJX, which operates the T.J. Maxx and Marshalls stores, says third-quarter profit slipped 5 percent as unfavorable exchange rates and a tough economy crimped results for the discount fashion retailer.

Stavanger-based Statoil’s agreed to pay $3.38 billion for a 32.5 percent stake in Chesapeake Corp's gas assets in the Marcellus shale region in Pennsylvania, West Virginia and New York.

Altria Group has started to cut jobs because of the widespread economic turmoil.

A spokesman declined to say how many cuts would be made but said they were planned for employees of parent company Altria and its cigarette unit, Philip Morris USA. Both are based in Richmond, Va.

Altria Group Inc. also owns cigar maker John Middleton and is also buying smokeless tobacco company UST Inc. to pursue growth outside of cigarettes, which are in less demand from American consumers.

Spokesman David Sylvia confirmed that the company is cutting jobs and said it is deciding how many layoffs there will be between now and February. He said departments that would lose employees have been told that there would be cuts.

The Bank of Israel unexpectedly cut its key interest rate by half a percentage point to 3% Tuesday in an attempt to "strengthen the ability of Israel's economy to deal successfully with the effects of the expected global slowdown."

Ludwig von Mises: "Full government control of all activities of the individual is virtually the goal of both national parties."

Wal-Mart expects earnings per share from continuing operations for the quarter ended Oct. 31 in a range of 73 cents to 76 cents per share. For the fiscal year ending in January, the company expects earnings from continuing operations of $3.43 to $3.50 per share.

Prudential Financial Inc. lowered its annual dividend by about 50% to 58 cents from a previous dividend of $1.15. The dividend is payable on Dec. 19 to shareholders of record as of Nov. 24.

The Dow Jones Industrial Average fell 176.58 points, or 2%, to 8,693.96. The S&P 500 declined 20.27 points, or 2.2%, to 898.94, while the Nasdaq Composite shed 35.84 points, or 2.2%, to finish at 1,580.9. December crude closed at $59.33 per barrel Tuesday on the New York Mercantile Exchange, down $3.08, or 4.9%. December gold closed at $732.80 an ounce Tuesday on the Comex division of the New York Mercantile Exchange, down $13.70, or 1.8%.

The odds of landing a part-time job at department store operator Bealls Outlet Stores Inc. this holiday season are slimmer than getting into Harvard: It's one out of every 45.

Don't think the chances are any better at 7-Eleven. One California store received more than 100 applicants in a week and a half for jobs that pay $8.50 per hour -- and the retailer doesn't even usually hire holiday workers.

California's budget deficit will grow to $28 billion through June 2010 unless lawmakers take bold action, possibly including a hike in the state income tax, the Legislature's nonpartisan analyst said Tuesday.

Friedman, Billings, Ramsey analyst Craig Berger cut his 2009 earnings estimates for Intel as well as AMD because of weakening PC demand. He now expects fourth-quarter PC shipments to decline around 5 percent sequentially, in sharp contract to his forecast a month ago for 3 percent growth.

Asian stocks traded on a weaker footing early Wednesday, with markets in Japan and South Korea tilting more than 1% lower, while Australian and New Zealand saw narrower declines. Japan's Nikkei 225 fell 2.2% at 8,614.68, South Korea's Composite Index, or Kospi, was down 1% at 1,117.63, Australia's S&P/ASX 200 edged lower 0.6% at 3,937.10 and New Zealand's NZX-50 index fell 0.9%.

The rout in global markets will continue while Western world share prices will be ``range- bound'' for ``years'' to come, investor Jim Rogers said.
Markets have yet to ``bottom'' while bond markets will be ``terrible'' for the next decade, Rogers, chairman of Singapore- based Rogers Holdings, said at a conference in Seoul today. Economic ``problems'' may persist until 2010, he said.

Monday, November 10, 2008

Veterans Day

11/11/08 Veterans Day

Elmer Davis: "This nation will remain the land of the free only so long as it is the home of the brave. "

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. In my view, either the matter is fully disclosed or Bernanke and Paulson should be cut loose from government employment. The Congress needs to put an end to this fu--ing bullshit.

Breyten Breytenbach: "In reality the workings of your governing system are opaque and covert, while hiding in the chattering spotlight of an ostensible transparency, even though the ultimate objective is clear."

The US military has been using a secret order to target suspected al-Qaeda terrorists anywhere in the world since spring 2004, the New York Times said, citing unidentified senior American officials.

Vijaya Lakshmi Pandit: "The more we sweat in peace the less we bleed in war."

China's industrial production growth slowed to about 8 percent in the year to October, the first time it has been in single digits since the end of 2001, according to an official who is familiar with the data.

AstraZeneca's cholesterol fighter Crestor dramatically cut deaths, heart attacks and strokes in patients with healthy cholesterol levels but who had high levels of a protein associated with heart disease, researchers said on Sunday.
Crestor, known chemically as rosuvastatin, reduced heart attack, stroke, need for bypass or angioplasty procedures and cardiovascular death by a surprising 45 percent over less than two years.

The AIG aid package of $85 billion dollars is now 70% higher, at $125 billion. Bloomberg reports it could easily scale up to $150 billion.

The Oil Drum: "Russian oil firms are shipping only three quarters of their planned November exports as a government order to cut oil export duties failed to make exports profitable again, Russia's pipeline monopoly said on Sunday."

Regular dropped to an average $1.99 in the Houston area on Sunday. It was the first time the average has been below $2 in more than three years and was barely half the all-time high average of $3.96 on July 14, AAA reported.

Australia's central bank slashed its growth forecasts for this year and next and left the door open for further interest-rate cuts to prop up the slowing economy.
The Reserve Bank of Australia now expects gross domestic product to grow 1.5 percent this year, compared with an earlier forecast of 2 percent, it said in a quarterly policy statement released Monday. The bank estimates growth of 1.75 percent in 2009, down from its previous forecast of 2.5 percent.

Japan's main stock index jumped nearly 6 percent Monday, as investors shrugged off gloomy economic data and focused instead on the weaker yen, China's new economic stimulus package and last week's late gains on Wall Street.

AT&T will buy Centennial Communications for $8.50 a share, or $944 million in cash. The total value of the deal, including assumption of debt, is $2.8 billion. Centennial provides wired and wireless phone services in rural areas of the Midwest and Southeast and in Puerto Rico and the U.S. Virgin Islands. The deal includes 1.1 million wireless subscribers.

Postal and logistics giant Deutsche Post AG, parent of DHL, will exit its U.S. domestic air and ground business, Chief Financial Officer John Allan said in an interview on Deutsche Post's Web site Monday. DHL to cut 9,500 U.S. jobs.

Bill Fleckenstein: "The Democrats might want to be careful now that they have the hot potato, as I believe the economic landscape is liable to be nothing short of disastrous. They may be able to blame a fair amount of it on Bush for a while. But that might be difficult to do four years from now. Thus it's entirely possible that the pendulum which has now swung in their direction could reverse course."

Circuit City Stores Inc. filed for Chapter 11 protection in U.S. Bankruptcy Court in Richmond, Virginia. The company listed $3.4 billion in assets and $2.32 in liabilities. The company, founded in 1949 when Samuel Wurtzel opened Richmond's first retail television store, has lost more than $5 billion in stock market value in two years.
The chain, with 721 stores in the U.S. and about 770 in Canada, has said competition hurt sales, especially at its older locations in lower-income neighborhoods. Inc. and other Web-based retailers of computers, televisions and music also have lured customers away.

Futures on the S&P 500 expiring in December gained 2.7 percent to 961.60 at 5:47 a.m. New York time after China unveiled a $586 billion economic stimulus package and the Group of 20 nations urged central banks to cut interest rates.
Kostin, Trennert and Lee are among the most pessimistic of Wall Street strategists with year-end estimates tracked by Bloomberg. The three expect the benchmark for American equities to end 2008 at an average of 1,075, up 15 percent from its closing level last week.

Europe's biggest bank HSBC Holdings said its profit in the third quarter was ahead of a year earlier as growth in Asia helped offset almost $5 billion in bad debts on U.S. home loans and asset write downs.

State oil firm Saudi Aramco informed at least five customers over the weekend that they would receive about 5 percent less than their contracted allocations next month, the first cut-back in 14 months, industry sources with the refiners told Reuters.
The kingdom ships about half its exports to Asia and a 5 percent cut to the region would equate to about a 175,000 barrels per day (bpd) reduction, or more than a third of the total 466,000 bpd it is expected to cut under last month's OPEC agreement.

U.S. financial services and brokerage companies could lay off another 70,000 workers in an effort to cut costs in the face of a sharp economic downturn and credit constraints, according to a published report.
Layoff plans will be finalized this month as companies prepare next year's budgets, the Financial Times reported. The estimate of 70,000 losses is based on opinions of "executives and analysts," the paper said.

The Russia Trading System index surged Monday as shares of oil and gas companies gained. The dollar-denominated RTS index rose 68.10 points, or 8.95%, from Friday's close to 828.72 in recent trading. Shares of Gazprom, Lukoil and Surgutneftegas were among the gainers.

McDonald's October global comparable sales up 8.2%.

Commodity exchange-traded products had their worst-ever month in October, with outflows totaling $2 billion, Barclays Capital said. Energy products posted $750 million in withdrawals and those linked to agriculture and commodity indexes shrank by $500 million to $550 million each, the bank said. Overall assets under management declined 20% from September, Barclays said.

Russia's ruble may be devalued by as much as 30 percent as the drop in oil prices threatens to wipe out the $91.2 billion current-account surplus, according to Troika Dialog, the nation's oldest investment bank.
``Without an increase in oil prices or an improvement in the capital account of the balance of payments, the central bank will eventually have to devalue the ruble,'' Evgeny Gavrilenkov, Troika's Moscow-based chief economist, wrote in a note today. An average price for Urals crude, Russia's main oil-export blend, of $60 a barrel ``would imply a devaluation of the ruble against the bi-currency basket by 25 to 30 percent,'' he said.

Chinese shipyard orders fell 11% in the first nine months of 2008 as demand slowed from the US and Europe, citing the China Assoc. of the National Shipbuilding Industry. It’s the first drop in orders since the first half of 2005 and the trend is expected to continue. The association also warned of a further drop in vessel prices next year because deliveries will be double this year’s figure.

Gold rose for a second day in London as higher crude-oil prices and a weaker dollar boosted demand for the metal as a hedge against inflation.

The dollar fell against the euro and pound and crude oil advanced more than 5 percent on speculation stimulus plans by China and other major economies may help sustain growth and demand for fuel. China yesterday said it will spend $586 billion through 2010 to prop up its economy, the biggest contributor to global growth.

Gold for immediate delivery advanced as much as $17.45, or 2.4 percent, to $754.10 an ounce and traded at $751.35 by 10:48 a.m. in London. December futures gained $16.80 to $751 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Bullion has dropped 27 percent since reaching a record $1,032.70 an ounce in March. The metal rose to $751.75 in the morning ``fixing'' in London used by some mining companies to sell production, from $735.25 at the previous afternoon fixing.

Ned W. Schmidt: "Greatest source of demand growth for Agri-Foods is coming from China, with India in the back stretch. China, contrary to the misinformation being spread by Street, is not plunging into a near depression as is the case with the United States and Canada. China's growth rate may slow, but the nation's economic size will still expand by more than $200 billion per year for some time. By definition, the income of China will grow by a like amount. A significant and material portion of that income growth will be spent on Agri-Food. The Chinese may consume less copper, but they are not likely to eat less with incomes expanding."

According to, Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.
Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes. Some conservative economists argue that not only should a firm be able to use losses to offset gains, but that in a year when a company only loses money, it should be entitled to a cash refund from the government.
Senior executives from the banking industry told top Treasury officials at the beginning of the year that Section 382 was bad for businesses because it was preventing mergers, according to Scott E. Talbott, senior vice president for the Financial Services Roundtable, which lobbies for some of the country's largest financial institutions.
The notice, which relaxed the Section 382 rules only for domestic banks, was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.
The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.
The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment. Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion.
No one in the Treasury informed the tax-writing committees of Congress about this move, which could reduce revenue by tens of billions of dollars. Legislators learned about the notice only days later.
DeSouza, the Treasury spokesman, said Congress is not normally consulted about administrative guidance.
Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.
"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"

Fannie Mae said its third-quarter loss widened to $29 billion, or $13 a share in its fiscal third quarter ending Sept. 30, from a loss of $1.52 billion, or $1.56 a share in the year-ago period. Fannie Mae also reported a decrease in the non-GAAP estimated fair value of its net assets, from a positive $35.8 billion on Dec. 31 to a negative $46.4 billion on Sept. 30. Third-quarter results were driven primarily by a $21.4 billion non-cash charge to establish a valuation allowance against deferred tax assets, as well as $9.2 billion in credit-related expenses arising from the ongoing deterioration in mortgage credit conditions and declining home prices, the Washington, D.C. lender said.

Mark Twain: "In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot. "

Bunge Limited announced that its Board of Directors has voted to terminate the June 21, 2008 merger agreement between Bunge and Corn Products International, Inc.citing the decision of the Corn Products Board to withdraw its recommendation of support for the merger agreement with Bunge.

A new technology, called the Dynamic Gas Scavenging System (DGSS), could have an impact on both the environment and health care economics.
The system, invented by James Berry, M.D., professor of Anesthesiology, along with Leland Lancaster, M.D, assistant in Anesthesiology, and Steve Morris, M.D., of the University of Mississippi Medical Center, collects air that contains exhaled anesthetic and condenses it, enabling it to be captured and recycled.
Because more than 500,000 gallons of anesthetic are released into the atmosphere in the United States each year, the potential savings from this technology, both financially and environmentally, are huge, Berry said.
“Vanderbilt spends $1 million a year on anesthetic. It is given to patients, then discarded, but it is $2,000 per gallon. My idea was that we can do better.”
The DGSS can recover 99 percent of anesthetics, without chemically altering them in the process.

In early Monday trading, the Dow rose by triple digits and once again, Apple, Google and Goldman Sachs were decliners. The Dow Jones Industrial Average gained 204.38 points to 9,148.19. The S&P 500 rose 19.1 points to 950.09, while the Nasdaq Composite climbed 26.04 points to 1,673.44.

Shares of General Motors Corp. got downgraded to sell from hold and were labeled Monday as likely to be worthless by Deutsche Bank, which said the car maker may not be able to fund its U.S. business past December without government intervention.
GM's shares, part of the Dow Jones Industrial Average, dropped 17% to $3.62 in early action, continuing their recent retreat.
Crude for December delivery gained $3.71 to $64.69 a barrel, after earlier rallying to a high of $65.56 a barrel in electronic trade. Dec. natural gas rallies 6.8% to $7.215/mln BTUs on Globex. Dec. gold climbs $19, or 2.6%, to $753.20/oz on Globex.

Gov. David A. Paterson said he would likely seek cuts to Medicaid and reductions in school aid to address New York’s fiscal crisis.

Rob Hanna: "The market rallied nicely on Friday but volume came in quite a bit below the previous few days. Strong up days on low volume have been creamed lately. A few recent examples would include 9/30, 10/13, 10/20, and 11/4." Monday morning's rally fell by the wayside. The Dow Jones Industrial Average fell 73.27 points, or 0.8%, to 8,870.54. The S&P 500 shed 11.76 points, or 1.3%, to 919.23, while the Nasdaq Composite lost 30.66 points, or 1.9%, to end at 1,616.74.

The pound fell to an all-time low against the euro Monday after British producer price data raised expectations that the Bank of England has room to cut borrowing costs even further.

Rockwell Collins Inc. will cut about 300 jobs, or about 1.5% of its workforce, because of the economic downturn. The company said it will also cut about 100 contract laborers, reduce discretionary spending, and delay 2009 merit increases for management and employees for about three months.

Excluding charges, Starbucks said it earned 10 cents, below Wall Street's target of 13 cents, according to a FactSet analyst survey. The Seattle-based coffee chain earned $158.5 million, or 21 cents a share, a year earlier. For the quarter, sales rose to $2.5 billion, from $2.4 billion. In late trading, the shares changed hands at $9.76. Bottom fishing can be expensive when the wrong fish is hooked.

December crude closed at $62.41 per barrel Monday on the New York Mercantile Exchange, up $1.37, or 2.2%. December gold climbed $12.30, or 1.7%, to close at $746.50 an ounce Monday on the Comex division of the New York Mercantile Exchange.

Australia shares and Japan's stock futures dropped on mounting concern that slumping demand will force companies to lower earnings forecasts.

National Australia Bank Ltd., the nation's biggest by assets, tumbled 7.6 percent after selling new shares at a discount and after Barclays PLC said Goldman Sachs Group Inc. may have its first quarterly loss. U.S.-traded receipts of Toyota Motor Corp., Japan's biggest carmaker, sank 3.8 percent from the closing price in Tokyo, while those of rival Honda Motor Co. dived 3.4 percent.
Australia's S&P/ASX 200 Index fell 3.2 percent to 3,978.90 as of 10:38 a.m. in Sydney. New Zealand's NZX 50 Index lost 0.9 percent to 2,811.32 in Wellington.

The International Energy Agency may cut its 2009 oil demand forecast for a third month as the threat of the worst recession since World War II saps fuel consumption, former IEA analysts said.
The Paris-based adviser to 28 oil consuming nations will reduce the estimated growth in global demand from 700,000 barrels a day, or 0.8 percent, in its next monthly report on Nov. 13, said four analysts who used to work at the IEA and are now at banks. The International Monetary Fund last week warned of the first simultaneous recession in the U.S., Japan and Europe in more than 60 years.

Live Search

11/10/08 Live Search

Microsoft's Live Search is the reason the company does not want to buy Yahoo. You haven't heard of it? If you use the company's search engine while shopping, you can get cash back, such as, $200 on a $1500 laptop computer. Here the information:
"Search for cashback deals at Live Search cashback. Each time you click a Live Search cashback listing, you'll find great deals on the product you chose. Your results will clearly list the cashback savings you'll receive off the store price, and your final bottom-line price that includes tax and shipping costs. Also look for this icon cashback Icon when you search for a product on Live Search to find great cashback deals." In sum, Microsoft is using its cash for outlays to customers using their search engine while shopping. Yahoo has been bypassed and so has Google!

Thousands of Farmers home insurance policyholders will see their rates climb an average 9.9 percent in February. Farmers needed the hike to cover rising labor and materials costs, said spokeswoman Michelle Levy. The new rates don’t account for losses related to Ike, she said.

Lately, the luck has been all bad for Atlantic City’s 11 casinos. Last week alone, a major casino developer put a $2 billion Boardwalk project on indefinite hold, and the city’s newest and most successful casino laid off 400 workers.

"We will be telling our children and our grandchildren about this crisis," said Mohamed El-Erian, co-chief executive of Pacific Investment Management Co., the Newport Beach, Calif.-based investment firm better known as PIMCO. "You cannot turn off the fuel of this crisis easily."

Seneca: "If one does not know to which port is sailing, no wind is favorable."

President-elect Obama's transition chief says the incoming administration is reviewing President Bush's executive orders on stem cell research, oil and gas drilling, and other matters.

Taiwan's central bank cut its key rates for the fourth time in less than eight weeks Sunday, after the island posted its biggest decline in exports in nearly four years as demand from its major export markets including China softened.

The quarter of a percentage point rate reduction followed aggressive cuts by the Bank of England and the Bank of Korea earlier this month.

When we consider the October job losses, keep in mind that in November Chrysler will cut 25% of its white-collar jobs. The reduction is expected to affect about 5,000 employees. Ford and GM will make further cuts and, the October job loss number for the country will be adjusted upward. We are on the way to at least 9% real unemployment or higher.

Swedish Proverb: "Luck never gives; it only lends."

"We are sticking to our plan to buy out the remaining 44 percent of Genentech," William Burns, head of Roche's drugs unit, told Swiss newspaper SonntagsZeitung. "It remains our aim to reach an agreement with Genentech."

Rio Tinto is looking to establish joint ventures with companies backed by the Chinese government, such as Chinalco, its chief executive was quoted as saying in Britain's Observer newspaper on Sunday.

Chinese aluminum giant Chinalco bought a 9 percent stake in Rio this year -- widely seen as an effort to complicate a takeover bid by the world's biggest mining group, BHP Billiton.

Nortel unveiled further restructuring measures expected to save $400 million annually by 2009. It plans to cut an additional 1,300 jobs and will extend its hiring freeze through 2009.

Ecolab said it's filed with the Securities and Exchange Commission to let Henkel sell its entire 72.7 million share stake. Ecolab also said it has agreed to purchase $300 million of its shares directly from Henkel in conjunction with Henkel's sale of Ecolab shares. Henkel has held an investment in Ecolab since 1989. Separately, Ecolab said it expects 2009 adjusted earnings between $1.95 and $2.05 a share, compared to 2008 adjusted earnings between $1.85 and $1.87 a share.

AIG said it was negatively affected by resturcturing, financial dislocation in global markets and catastrophe losses. Excluding $15.1 billion of capital losses, AIG would have reported a $9.24 billion quarterly loss.

Beazer Homes USA Inc., the Atlanta home builder, reported fiscal fourth-quarter closings of new homes fell 38% from the year-earlier period, to 2,441. Market conditions "continued to deteriorate" in the period ended Sept. 30 "amid further erosion of consumer confidence, heightened concerns about the overall economy, and disruptions in the financial and credit markets," Beazer said in a statement on Monday. Orders for new homes rose 10% to 1,083. The cancellation rate fell to 45.7% from 68.1% a year earlier and rose from 36.8% in the fiscal third quarter. At Sept. 30, Beazer had $584.3 million of cash, compared with $454.3 million a year earlier.

The U.K. FTSE 100 index rose 1.9% to 4,446.51, the German DAX 30 index climbed 2.7% to 5,072.42 and the French CAC-40 index advanced 2.9% to 3,568.03.

Iraq will hold long-awaited provincial elections on Jan. 31, a senior Iraqi election official was quoted as saying Sunday in an Agence France-Presse report.

John Hussman: "Stocks are no longer overvalued. That does not mean that they have “hit bottom” or that substantial risks are no longer present, but the prospect for long-term returns is already satisfactory. Between the point that a recession is well-recognized, and a short period before the recession ends, the market's direction is extremely variable and largely depends on how the economic news evolves, as well as the extent to which stock prices become oversold or overbought in the interim. For now, we are retaining a defense with near and out-of-the-money index put options, and expect to gradually increase our market exposure on significant declines."

NRG Energy, the US power producer, on Sunday rejected as “risky” and “opportunistic” an unsolicited $6.2bn merger bid by Exelon to ­create the US’s largest power producer.
After three weeks of considering the October 19 bid, David Crane, president and chief executive of NRG, told the Financial Times the deal undervalued NRG and was at risk of being completed, given Exelon’s difficulties financing the deal.

Sunday, November 09, 2008

Oil Production

11/9/08 Oil Production

Houston, Texas-based Franklin Bank S.S.B. was closed by regulators Friday, the 18th bank failure this year amid the ongoing credit crisis.

Brazil's president on Saturday demanded that major reforms of the international financial system include strong input from large emerging nations and said the collapse of modern banking structures is victimizing the world's poor.

The head of Saudi Aramco, the state-owned oil company, said that at current crude prices it does not make sense to spend large amounts of capital on new and potentially difficult exploration.

Doug Noland: " By and large, the unprecedented growth in Federal Reserve and global central bank balance sheets is (scarcely) accommodating de-leveraging. Between the hedge funds, global “proprietary trading” and other leveraged speculators, it is not unreasonable to contemplate an overhang of (prospective forced and deliberate sales) of upwards of $10 Trillion....The heart of the matter is not so much that banks are refusing to extend Credit but that the entire mechanism of Wall Street risk intermediation has collapsed. After ballooning into multi-Trillion dollar avenues for Credit expansion, intermediation through the ABS and CDO markets is basically over. The convertible bond market has also badly malfunctioned, along with the “private-label” MBS marketplace. Wall Street’s “auction-rate securities” has ceased as a mechanism for Credit expansion, along with myriad other avenues for securitization. And, importantly, derivatives markets, having evolved into an essential element of contemporary risk intermediation and Credit expansion, have suffered a devastating crisis of confidence. Scores of leveraged strategies are no longer viable. Indeed, Monetary Processes essential for funding broad cross-sections of the economy have completely broken down.... the federal government will soon be running Trillion dollar annual deficits. GSE balance sheets will likely commence a period of aggressive expansion. And, importantly, the banking system will have no alternative than to expand rapidly. At this point, timid banks equate to a Bubble Economy spiraling into depression."

According to Bloomberg, China announced a 4 trillion yuan ($586 billion) stimulus plan to spur expansion in the world's fourth-largest economy, helping sustain global growth as the U.S., Europe and Japan teeter on the brink of recession.

The funds, equivalent to almost a fifth of China's $3.3 trillion gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said today on its Web site. China will adopt a ``pro-active fiscal policy'' and pursue a ``moderately loose'' monetary policy, it said.

China is taking steps to bolster its economy less than a week before Premier Wen Jiabao goes to Washington for talks with global leaders on ways to alleviate the world's biggest financial crisis since the Great Depression. People's Bank of China Governor Zhou Xiaochuan said yesterday boosting domestic demand is the best way China can help stabilize the economy.

OPEC nations could further reduce oil output if moves last month to slash production do not bolster plummeting oil prices, OPEC president Chakib Khelil said Saturday.

Khelil, who is also Algeria's energy minister, said an OPEC report would show by the end of the month whether all cartel members have enforced the daily 1.5 million barrel reduction decided in October.

He said he hoped the production cut would raise and stabilize prices at a level manageable for both oil-exporting countries and consumer nations.

Reasonable prices should range "between $70 and $90 per barrel," said Khelil, who currently holds the rotating presidency of the Organization of Petroleum Exporting Countries.

Berkshire Hathaway's net worth fell by roughly $9 billion in October amid all the carnage in the financial markets. In addition, Operating earnings for Berkshire's insurance-underwriting activities took a big hit, falling to $81 million from $486 million in the year-ago quarter. In sum, the quarter was much worse than expected and October was dreadful. There's no place to hide even for Warren Buffett.

John Mauldin: "A lower trade deficit means there will be fewer dollars to buy US debt, just at a time when US debt will explode. That means that US citizens must save and buy that debt, or the Fed will have to monetize it, or rates will have to rise to attract capital."

Mike Burk: "The bottom indicators have been moving sharply upward suggesting a high likelihood of a rally lasting at least several weeks.
Downside volume has been drying up...As long as OTC NL and NY NL do not turn downward it is unlikely the October 24 lows will be penetrated....
A retest of the October 24 low is possible in the next few days, but with the bottom indicators moving sharply upward, it is unlikely the October low will be penetrated.
I expect the major indices to be higher on Friday November 14 than they were on Friday November 7."