Thursday, November 20, 2008

Plummet Day

11/21/08 Plummet Day

This Thanksgiving, the price of gasoline is expected to be below $2 a gallon. Some analysts foresee pump prices as low as $1.75 a gallon this winter.
The average US price of a gallon of regular is now $1.99, according to, a price-tracking firm. The last time gasoline prices were this low was March 2005.

Evan Esar: "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today. "

Weekly U.S. initial jobless claims rose by 27,000 to 542,000 in the week ending Nov. 15, the highest since July 1992, the Labor Department reported Thursday. The four-week average of initial claims climbed by 15,750 to 506,500, the highest since January 1983. Continuing jobless claims rose by 109,000 to 4.01 million in the week ending Nov. 8 and the four-week average of continuing claims rose by 71,250 to 3.86 million. The insured unemployment rate climbed to 3.0%.

The Senate is scheduled to vote today on a House-passed measure to extend unemployment benefits by at least seven weeks. People in states with a jobless rate higher than 6 percent would get an additional 13 weeks. The House passed the measure 368-28 on Oct. 3.

Small businesses employing 49 or fewer people shed 25,000 jobs in October, the first time they had cut employment since 2002, according to figures from Automatic Data Processing.

The US Fed will probably cut interest rates to zero percent over the next two months to staunch deflation, according to JPMorgan Chase. The Fed will lower borrowing costs by 50 basis points at each of the next two policy meetings on Dec. 16 and Jan. 28, JPMorgan economist Michael Feroli wrote.

Two-year notes yield 0.99%, lowest on record.

John Kenneth Galbraith: "The conventional view serves to protect us from the painful job of thinking."

Chinese officials warned Thursday that the country faces a "grim" employment outlook with demand for workers falling and job seekers in the cities outnumbering new jobs by two-to-one as the economy slows.

GMAC applies to Treasury for Capital Purchase Program funds.

Some of China's auto manufacturers, hit by slower sales growth in their once-booming home market, are asking for tax cuts to help their bottom lines, particularly in terms of producing environmentally friendly vehicles, The Wall Street Journal reported Thursday.

Wal-Mart Stores Inc.will buy wind power from Duke Energy (DUK) to supply up to 15% of the retailer's total energy load in approximately 360 Texas stores and other facilities.

Brady Corp. cut its earnings forecast and announced plans to reduce its 8,000-strong workforce by 10% and freeze salaries.

Trading was suspended on Russian equity markets for an hour early Thursday after another sharp fall in the country's Micex Index, according to a Bloomberg report. Russian shares were down as much as 9% before the halt was called by regulators, the report added.

U.K. retail sales fell 0.1% in October compared to the previous month, according to data released by the Office of National Statistics Thursday.

French automaker PSA Peugeot Citroen said it's cutting 2,700 jobs through voluntary departures.

Sandvik, the Swedish industrial tool maker, said it's cutting 2,450 jobs, mostly in its materials technology division in Sweden.

The Ifo World Economic Climate fell in the fourth quarter to its worst level in more than 20 years, to 60 points from 73.4 points in the third quarter. The long-term average of the poll is 96.8. Both the current situation and the expectations for the coming six months have worsened further. The Ifo Institute, which produces a closely watched German economic gauge, said it polled 1,001 experts in 91 countries.

U.K. aerospace group Rolls Royce said Thursday that it will cut between 1,500 and 2,000 jobs in 2009 due to the economic slowdown and delays to individual programs such as the Airbus A380 and Boeing's 787 aircraft.

Deutsche Bank is looking to cut 900 jobs, mostly in New York and London, according to a report in the Financial Times.

Intevac Inc., the Santa Clara, Calif., producer of disk-drive- and chip-manufacturing equipment and imaging products and systems, said on Thursday that it would cut more than 15% of its worldwide workforce.

Isuzu Motors will terminate the jobs of 1,400 part-time workers by year end, according to a media report Thursday.

Japan's Nikkei 225 slipped 4.1% at 7,937.92, dipping below the 8,000-point level for the first time since Oct. 29. Australia's S&P/ASX 200 down 3.3% at 3,385.00, South Korea's Kospi was down 4.5% at 971.69 and New Zealand's NZSX-50 retreated 2% to 2,651.71.

Four out of 10 Bay Area employers contacted in a survey anticipate cutting jobs within six months, according to a dismal report on the region's business pulse being issued today.

The cost of health insurance for major Texas employers is climbing about 6 percent next year, a cost that would have been higher if not for making the benefits a little less generous, according to an annual survey by benefits consulting firm Mercer.
Major Texas employers had a 5.6 percent increase in what they paid for employee health care this year, and the cost would have gone up an average of 7.7 percent in 2009 if not for cost-cutting measures such as higher deductibles and co-pays.
A third of the Texas companies surveyed say they will shift more of the cost to their workers, according to the report released Wednesday.

The Swiss National Bank has cut its key interest rate in half to 1 percent, its second reduction this month.

Ashland Inc.said Thursday it will cut its quarterly cash dividend to 7.5 cents a share from 27.5 cents a share.

Gold for December delivery rose $10.90, or 1.5%, to $746.90 an ounce in early electronic trading. Crude for December delivery expires Thursday, and oil dived below $50 a barrel for the first time since May 2005---quite a drop from $147.

Japan's exports to Asia fell in October for the first time since 2002, showing that the fallout from the credit crisis has spread to neighbors such as China and adding momentum to investors' flight to the safety of cash.

Yields on speculative-grade corporate bonds surpassed 20 percent for the second straight day as a declining economy increased the risk of default.
The average yield on high-yield, high-risk debt rose to 20.81 percent today, from 20.14 percent on Nov. 18, the previous record, according to Merrill Lynch & Co.'s U.S. High Yield Master II index. The level is the highest since Merrill began collecting overall yield data in January 1986.

The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets, Friedman Billings Ramsey analyst Paul Miller said.
Eight financial companies -- Citigroup Inc, Morgan Stanley, Goldman Sachs Group Inc, Wells Fargo & Co, JPMorgan Chase & Co, American International Group Inc, Bank of America Corp and GE Financial -- are in greatest need of capital, he said.

Berkshire Hathaway shares have dropped 43.7 percent from their all-time closing high of $149,200 on December 10 last year. The S&P is down 45.1 percent compared to Berkshire's drop. Credit-default swaps protecting against a Berkshire default have more than tripled in price over two months and some are even asking if Berkshire could lose its triple-A credit rating.
Buffett points out that Berkshire has been paid almost $5 billion now for writing option contracts that wouldn't require any payouts for at least another 10 years, and would only be future money-losers if global stocks don't recover by then.

Copper production exceeded demand by 26,800 metric tons this year through September, the World Bureau of Metal Statistics said yesterday. Inventories monitored by the LME have more than doubled in the past six months and are at the highest since March 2004.

Chevron said Thursday it would be unable to meet its contractual obligations on exports from its Escravos oil terminal in Nigeria until the end of the year because of an attack by militants, according to published reports. "This is due to breach on the main onshore pipeline carrying about 90,000 barrels per day to Escravos," a company spokesman told AFP.

According to S&P data, 101 is almost double the 59 companies with share prices below $10 in October 2001 when the dotcom meltdown was in full swing and almost triple the 35 sub-$10 stocks in October 1987. Only five S&P 500 companies had share prices of more than $100 on Wednesday.
Twenty-five stocks, or five percent of the index, don't make the $1 billion mark in market cap, and just 11 exceed the $100 billion level.
In fact, a third of the entire index is not even qualified to be in the index -- 186 stocks have market caps under $4 billion, the minimum value for consideration for S&P 500 membership.

In early Thursday trading, the Dow Jones Industrial Average fell 160 points, or 2%, to 7,837, with 29 of its 30 components opening in the red. The S&P 500 index fell 19 points to 787, while the Nasdaq Composite lost 23 points to 1,363. GM and Citigroup each fell 10%. Berkshire Hathaway dropped $7,200 to $76,800. Goldman Sachs dropped over 5 points to 49+, a level below its original IPO price years back. The stock has cascaded about 200 points from its high. Even the bright guys get kicked in the balls during a brutal bear market.

Edgar R. Fiedler: "He who lives by the crystal ball soon learns to eat ground glass."

Manufacturing conditions in the Philadelphia region continued to deteriorate in November, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed diffusion index fell to negative 39.3 in November from negative 37.5 in October. The new orders index dropped to negative 31.4 from negative 30.5, while the shipments index remained unchanged at negative 18.8. Employment fell to negative 25.2 from negative 18.0. Inflationary pressures disappeared. The prices paid index dropped to negative 30.7 from 7.2.

The Conference Board said Thursday that the index of leading economic indicators fell 0.8% in October, with negative contributions from six of the 10 indicators. Only the money supply and the interest rate spread were positive in October, indicating that the Fed is leaning hard against the downturn. The index has fallen at a 4.7% annual pace in the past six months.

U.S. natural gas inventories rose unexpectedly, up 16 billion cubic feet in the week ended Nov. 14, the Energy Information Administration reported Thursday. Analysts at IHS Global Insight had expected a fall of 2 billion cubic feet. After the data, natural gas futures for December delivery slumped 6.7% to $6.293 per million British thermal units.

JPMorgan Chase & Co is cutting about 3000 of its investment banking staff as the credit crunch and slowdown in the economy bite into bank earnings, people familiar with the situation said on Thursday.

The Associated Press plans to cut 10% of its workforce, or about 400 employees, in 2009, Reuters reported Thursday, citing a town hall meeting at the AP.

Gold for December delivery rose $12.70, or 1.7%, to end at $748.70 an ounce on the Comex division of the New York Mercantile Exchange. Crude closed below $50 a barrel.

The New York Times Co.'s board on Thursday declared a quarterly dividend of 6 cents on its Class A and Class B common stock, down from 23 cents in the third quarter.

Thursday was an important day. Yields on U.S. Treasury bonds plunged to their lowest level ever, and that was on all maturities. At the same time, the S&P 500 fell to its lowest level in 11 1/2 years and the Dow and the Nasdaq plummeted to their lowest level in 5 1/2 years. The Dow Jones Industrial Average fell 444 points, or 5.6%, to end at 7,552. The S&P 500 index fell 54 points, or 6.7%, to 752, after breaking through its 2002 bear-market closing low of 776. The Nasdaq Composite lost 70 points, or 5%, to end at 1,316. All of the major bank stocks were crushed as was the energy sector.

Citigroup Inc. is considering auctioning off parts of the firm or selling the company outright, according to a media report late Thursday. The online edition of The Wall Street Journal, citing unnamed sources, reported that Citigroup executives are in preliminary stages of discussing a possible sale.

Bank of New York Mellon Corp. said late Thursday it is cutting 1,800 jobs, or about 4% of its worldwide workforce.

According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $3.549 billion in the week ended 11/19/08 with Domestic funds reporting net inflows of $3.987 billion and Non-domestic funds reporting net outflows of -$438 million; Excluding ETF activity, Equity funds report net cash outflows totaling -$3.285 billion with Domestic funds reporting net outflows of -$2.003 billion and Non-domestic funds reporting net outflows totaling -$1.283 billion;
ExETFs, the Growth & Income sector report net inflows for the fourth week in five to Large Cap Value funds. Exchange Traded (Equity) funds report net inflows of $6.834 billion.
Excluding ETF activity International funds report net outflows of -$805 million;
Excluding ETF activity Taxable Bond funds report net outflows totaling -$3.346 billion;
Money Market funds report net cash inflows totaling $42.353 billion;

Wednesday, November 19, 2008

Fear Abounds

11/20/08 Fear Abounds

Marcus Aurelius: "If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment."

BASF, the world's biggest chemicals company, said it's cutting 20,000 jobs and warned adjusted earnings before interest and tax won't grow this year. It's temporarily shutting down 80 plants worldwide and reducing production at 100 plants. Flexible working time arrangements will be used wherever possible and scheduled maintenance work is being brought forward. Most affected will be the company's main site in Ludwigshafen, Germany, where 5,000 jobs will be lost.

Nouriel Roubini: "This housing recession is not bottoming out. The production of new homes starting is falling sharply, but demand until recently had fallen even more, therefore this excess supply of inventory of the new and existing homes kept on becoming larger, and that put downward pressure on home prices.
Based on Case-Shiller, home prices have already fallen by about 20 percent from the peak, given the excess supply number and other factors I would expect home prices are going to fall another 20 percent for a cumulative fall of 40 percent from the peak. Now in 1991, the cumulative fall based on Case-Shiller was only 5 percent, now we’re going to have 20, another 20, 40 — something we haven’t seen since the Great Depression."

GlobalEurope Anticipation Bulletin: "Phase IV of the Global Systemic crisis: Breakdown of the Global Monetary System by summer 2009
The G20-meeting held in Washington on November 14/15, 2008, clearly demonstrated that this kind of summits is doomed to inefficiency because they concentrate on curing the symptoms (banks’ and hedge funds’ financial difficulties, derivative markets’ explosion, financial and currency markets’ dramatic volatility, ...) rather than the fundamental root of the current crisis, i.e. the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system. Three visions of the future of global governance will be dividing world’s largest players (United-States, Eurozone, China, Japan, Russia, Brazil) by spring 2009...With 88 percent of the people surveyed convinced that the US dollar will keep falling (and none at all claiming the contrary), the Europeans appear to have resumed with their pre-summer 2008 level of pessimism regarding the future of the US currency."

Cheri Huber: "Every time we choose safety, we reinforce fear."

An alternative measure of core inflation, which doesn't automatically exclude food and energy costs, declined at a 0.6% annual rate in October, the largest decline in the 25-year history of the data, the Federal Reserve Bank of Cleveland reported Wednesday.

The dramatic recent expansion in Federal Reserve lending to financial markets is destabilizing because the support has extended to areas outside supervision, said Richmond Fed President Jeffrey Lacker on Wednesday.

Federal Reserve policymakers now expect the U.S. economy to contract for as much as a year, with the risk that the slowdown could persist for even longer, according to edited minutes of a closed-door meeting of the Federal Open Market Committee on Oct. 28 and 29. The minutes were released Wednesday.

For the full year 2008, BJ's Wholesale Club now expects earnings per share of $2.20 to $2.30, up from $2.10 to $2.20 previously forecast. For 2009, BJ's expects earnings of $2.27 to $2.39 a share.

Europe stocks in opening trade Wednesday failed to extend the prior day's late-session advance. U.S. stock futures also pointed to a weaker start, with the Dow industrials contract falling 90 points. The U.K. FTSE 100 fell 0.6% to 4,185 and the German DAX 30 lost 0.3% to 4,563.

The Shanghai Composite Index surged more than 6% in late trading Wednesday, led higher by oil giant Sinopec amid expectations the introduction of a new fuel tax, due in the days ahead, will herald an eventual shift toward market pricing for gasoline, a move that could improve margins of oil producers.

Neptune Orient Lines Ltd. said Wednesday it will cut about 1,000 staff positions globally as part of efforts to reduce costs. The majority of the cuts will take place in North America because of the higher operating cost base, the company said in a statement on its Website Wednesday.

Toyota Motor Corp. has cut its automobile sales forecast in China by 14.3% this year, according to a Japanese media report Wednesday.

After holding their own for most of the year, Houston-area home values took a hit last month.The median price for a single-family home fell 2.7 percent in October to $142,000 compared to a year ago, the Houston Association of Realtors said Tuesday.
That's after rising 4 percent in September and eking out small gains most months this year.
"If people purchased in the last couple of years, there's a good chance they may not see any appreciation if they had to sell right now," said Sandra Gunn of Sandra Gunn Properties. "They may have to take a little bit of a hit."

Nearly 50 percent of Americans plan to spend less on restaurants and fast food, a recent survey commissioned by Boston Consulting found. They're cutting back on restaurant spending more than on any other retail category, the study found.
"Supermarkets provide consumers with affordable ways to feed their families. But consumers are trading down to less expensive products, which means grocers are seeing lower sales volumes," noted Mark Hamstra, retail-financial editor of Supermarket News.
On the plus side, stores enjoy higher profit margins when consumers choose store brands over national brands, he said, and increasingly they are.

Toyota Motor Corp said on Wednesday it would stop all of its North American factories for two days next month, while rival Nissan Motor Co renewed its pessimism over the industry's near-term prospects.
Tight credit and worries over the spread of recession around the world have battered car sales in all major markets, forcing automakers to cut production to prevent inventories from ballooning further.
Toyota, the world's biggest automaker, had already canceled all U.S. production of slow-selling light trucks for three months this summer. A spokeswoman said production would be reduced further in 2009 at three U.S. assembly plants.

Boeing Co is reworking its entire production schedule, adding up to 10 weeks to original delivery dates for all 3,734 jetliners in its order backlog as it tries to recover from a machinists' strike, the Wall Street Journal said, citing people familiar with the situation.

Rob Hanna: "Monday’s breadth study suggested a bounce was likely. On Tuesday the bounce arrived. The S&P rose about 1%. But breadth was still miserable. The NYSE Up Issue % came in at 36%. Weak breadth on an up day is something I’ve gone over before. Three such studies from the blog came on June 10th, September 11th, and October 24th. While the bullish study from last night remains valid, these three are all in conflict with it.
Having studies based on one indicator conflict with each other is not normal. In this case it’s NYSE Up Issues %. It muddies my interpretation of the given indicator and dilutes its value. It’s very rare but in such cases I simply zero out the studies. When the edge is not clear, I step aside and wait until there is a clear edge."

Russia's international reserves, the third-biggest after China's and Japan's, have fallen $122.7 billion, or 21 percent, since Aug. 8 as the central bank tried to shore up the ruble. At the same time, President Dmitry Medvedev, 43, has pledged more than $200 billion of tax cuts, loans and other measures to maintain economic growth, threatened by plummeting oil prices and investor flight.

According to the NY Times, China’s car industry is quietly pressing Beijing for government help as it copes with a jarring slowdown, top Chinese auto executives said.
This autumn, after six years of 20 percent or more annual growth, vehicle sales were flat or slightly negative, a shock to an industry that has borrowed heavily to build ever more factories for a market that had once seemed insatiable.
Chinese executives are now telling the government here that they also need emergency measures. They are seeking lower taxes on new cars, lower fuel prices and increased grants for research into hybrid cars and new technology.

Mitt Romney: "A managed bankruptcy may be the only path to the fundamental restructuring the auto industry needs."

“China matters because China is the world’s largest producer and consumer of coal,” Pearce Hammond, an analyst with Simmons & Company International in Houston, said Tuesday on a conference call about the state of the coal industry.
He said demand weakness stands out in China, which became a net importer of coal last year, because its industrial production rose by 8.2  percent last month, the smallest gain in seven years. In September, that production rose 11.2 percent, Hammond said.
But most alarming, he said, is a 17 percent drop in China’s crude steel output, signaling a significant contraction in demand for metallurgical coal, the kind used to make steel. The kind used to generate electricity is called thermal coal.

Ford's CEO Mulally took exception to charges the company had been badly managed, saying that "if everybody can remember, we had gotten back to profitability in the first quarter of this year ... None of us ever anticipated that we'd be in a world where our sales in this industry have fallen by 40 percent in the first nine months."

Light, sweet crude for December delivery was down 60 cents at $53.79 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007. Gold for December delivery rose $3.20, or 0.4%, to $735.90 an ounce in early electronic trading.

Bank of America Chief Executive Kenneth Lewis said on Tuesday that the U.S. economy will get worse before it improves, and forecast record losses for the U.S. credit card industry.
"We, as an industry, may end up with possibly the highest credit card losses the industry has ever experienced," Lewis said.

Applications for U.S. home mortgages declined last week, with loans for purchases of single-family homes falling to their lowest level in nearly eight years, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity fell 6.2 percent to 398.6 in the week ended Nov. 14.

Factoring out food and energy, consumer prices (core CPI) fell by 0.1% in October, vs. consensus of +0.1%. Core prices are up 2.2% from a year ago. Meanwhile, food prices in October rose 0.3%, the smallest gain since May.

U.S. home builders reduced their starts of new homes by 4.5% in October, driving new construction to the lowest level since just after World War II, the Commerce Department estimated Wednesday. Housing starts dropped to a seasonally adjusted annual rate of 791,000 in October, the slowest pace since similar records were first kept during the housing boom in the late 1940s. Housing starts have now fallen 38% in the past year and are down about 70% from the peak in early 2006. Building permits, which are typically less volatile than the starts data, fell 12% to a record-low seasonally adjusted annual rate of 708,000 in October, down 40% in the past year.

Nouriel Roubini: "Now this fall in home prices is important for 3 reasons. As long as it occurs, residential construction is going to keep on falling in absolute terms as a share of GDP. Secondly there is the huge wealth effect coming from a fall of $6 trillion of housing wealth. But most important factor I think is that right now ongoing is that with such a fall in home prices, by the end of next year about 40 percent of all households with a mortgage are going to be underwater, negative equity with the value of their homes below the value of their mortgages. So, about 21 million out of the 51 million houses that have a mortgage, will be under-water by the end of 2009. And there’s a huge incentive to walk away from your home, because the US mortgages are not recourse loans.
Now, not everybody is going to walk away. Let’s be even conservative. Let’s assume that only 1 out of 5 people that are underwater are going to walk away. If you do the math — I’m not going to go into the detail of it — you get additional losses for the financial system of the order of $400 billion dollars. This is on top of all the other write-downs that have already had been made through subprime-kind of a writedown. [30:00] So that’s another huge loss for the financial system. This is just assuming that only 1 out of 5 people underwater are going to walk away. If it’s more like 40 percent, then the losses is another $800 billion. So you’re in a situation in which you can wipe out a good chunk of the capital of the financial system. So that’s what we are observing...Unfortunately I don’t think we’re at the bottom of the housing crisis, we’re not at the bottom of the mortgage crisis, we’re not at the bottom of the financial and banking crisis, and certainly we’re not at the bottom of the severe economic crisis. So I’m quite still pessimistic looking ahead."

Over the year, real earnings decreased 0.9 percent.

Petrobras has postponed construction tenders for 28 deep-sea drilling rigs to 2009.

Analysts at Barclays Capital said on Tuesday they cut their price targets and earnings forecasts for the oil service and drilling sector because of an expected 25 percent drop in North American exploration and spending programs in 2009.
Spending by oil and gas producers outside the United States is expected to be flat with 2008 levels, Barclays said in a note to investors.

Ross Stores Ross cut its fourth-quarter earnings per share forecast to 69 cents to 75 cents and sees same-store sales down 1% to 3%. For fical 2008, Ross expects to earn $$2.26 to $2.32 a share.

The Semiconductor Industry Association said in a report Wendesday it expects the first decline in chip sales since 2001. Although the forecast projects 2008 sales of $261.2 billion, a 2.2% increase from 2007, it said sales in the "historically strong" current quarter, are seen declining 5.9% from the prior quarter, and 2009 sales falling by 5.6% to $246.7 billion before resuming growth in 2010.

Fox-Pitt Kelton said it expects Citigroup Inc to take net write-downs of $3 billion during the fourth quarter, and widened its loss expectation on the company for the period to reflect higher credit costs and write-downs.

U.S. petroleum deliveries, an indication of demand, dropped 5% from January through October - marking their largest decline since the early 1980's, the American Petroleum Institute said in a monthly report released Wednesday. Total domestic deliveries averaged 19.6 million barrels per day in the January-to-October period, the lowest level for the period since 2000, the API said.

Stillwater Mining's company-wide restructuring will involve an estimated 21% reduction in our 1,770 person workforce, including about 320 employees and about 50 contractors. A drop of 60% in the prices of platinum and palladium are getting the blame for the layoffs. Stillwater Mining is majority-owned by a subsidiary of Norilsk Nickel, a huge Russian mining company that controls about 50% of the world's supply of palladium.

The American Petroleum Institute reported Wednesday a rise of 8 million barrels in crude supplies for the week ended Nov. 14. The Energy Department had said supplies were up 1.6 million barrels for the week. Motor gasoline supplies were up 710,000 barrels, the API said. The government had reported that supplies rose by 500,000 barrels. Distillate supplies were up 126,000 barrels, the API said. They fell 1.5 million barrels for the week, according to the Energy Department. Refinery utilization was at 84.9% of capacity, compared with 84.6% a week earlier.

The average U.S. retail gasoline price fell 2 cents to $2.05 a gallon on Wednesday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline cost an average of $2.92 a gallon and a year ago it cost $3.09 a gallon.

Dec. gold ends up $3.30, or 0.5%, at $736 an ounce. December crude closed at $53.62 per barrel Wednesday on the New York Mercantile Exchange, down 77 cents, or 1.4%, for the session.

The Dow Jones Industrial Average fell 426.91 points, or 5.1%, to 7,997.28, with all 30 of its components finishing in the red. Blue-chip Citigroup Inc. fell an astounding 23.4%. The S&P 500 dropped 52.54 points, or 6.1%, to 806.58, while the Nasdaq Composite shed 96.85 points, or 6.5%, to end at 1,886.42.
The S&P 500 and the Dow both closed at their lowest levels since March 2003.
The financial crisis has already wiped out $6.69 trillion of value from the S&P 500 since its October 2007 high.

Boeing Co. will cut about 800 positions at its integrated defense systems facility in Wichita, Kan. in 2009. The layoffs will affect managers and salaried and hourly workers.
Sara Lee to cut 185 jobs on Chicago plant closure. Akamai Technologies Inc. said late Wednesday that it will cut 110 jobs, or about 7% of its global workforce, in the fourth quarter to reduce costs.

Humana sees earnings of $3.80 to $3.90 a share for 2008 and $5.90 to $6.10 a share for 2009.

Intuit Inc. said Wednesday its fiscal first-quarter net loss widened, and it cut its sales and profit guidance for fiscal 2009.

Turkey's currency fell sharply against the euro and the dollar Wednesday after the central bank unexpectedly cut its benchmark interest rate by 50 basis points to 16.25%.

Class A shares of Warren Buffett's Berkshire Hathaway Inc fell more than 12 percent on Wednesday to below $84,000, a 3-year low.

Goldman Sachs Group Inc. closed at its lowest price since the firm first sold shares for $53 apiece to the public in 1999, as the profit outlook darkens for a company that set a record for Wall Street earnings last year.
The stock fell $6.85, or 11 percent, to $55.18 in New York Stock Exchange composite trading, giving the company a market value of $26 billion. The New York-based firm's value reached a high of $105 billion, or $248 per share, on Oct. 31, 2007.

Marilyn Ferguson: "Ultimately we know deeply that the other side of every fear is a freedom."

Tuesday, November 18, 2008

The Housing Debacle

11/19/08 The Housing Debacle

Home Depot Inc.said sales for the fiscal year ending in January could fall as much as 8% compared with the prior year. The company also expects that earnings per share from continuing operations will decline by about 24% on the year, a forecast it called "consistent with previous guidance." This doesn't include a charge taken in connnection with its "store rationalization" plan, under which 15 stores will be closed and 50 stores have been removed from Home Depot's expansion program.

Ford Motor Co said it would cut its stake in Mazda Motor Corp.of Japan to a bit more than 13% from 33.4%, raising $540 million from the sale. The accord enables Ford to raise capital "that will help fund our product-led transformation," and enables both firms to continue their strategic partnership, Ford President and Chief Executive Alan Mulally said in a Tuesday statement. Ford will sell the shares to Mazda and to a group of Mazda's strategic partners, the companies said.

Pier 1 Imports Inc.said that based "on current trends and a cautious view of Thanksgiving business," third-quarter comparable-store sales should fall 16% to 18%. The company expects a loss before interest, taxes, depreciation and amortization of $16 million to $20 million. These Ebitda figures exclude charges, Pier 1 said in a statement on Monday.

Boise Inc.said that at its St. Helens, Ore., paper mill it would halt pulp production and cut annual paper-output capacity by 200,000 tons. Boise said it would cut 300 jobs at the mill plus 25 posts in sales, marketing and logistics elsewhere in the company.

Jerry Yang is leaving as Yahoo!'s CEO.

The Nikkei was off 2.3% to 8,328. The Hang Seng fell 5.5% to 12,792.The Shanghai Composite dropped 6.3% to 1,902.

Rob Hanna: "This Breadth Indicator Says We May Bounce Soon. One indicator I watch is the 10-period EMA of Up Issues / (Up Issues + Down Issues). When it gets extremely low it normally signals the market is oversold and likely to bounce. On Monday it crossed below 0.36. "

The National Retail Federation predicts a 5.6% decline in sales of gift cards this holiday season -- the first drop in the six years it has tracked the category -- as consumers seek bargains on gifts instead. Sales of gift cards are expected to hit $24.9 billion this season, down from $26.3.

Pepsi Bottling Group Inc., which bottles Pepsi beverages, on Tuesday cut its 2008 profit outlook and announced a restructuring plan that will affect more than 3,000 jobs worldwide.

The head of China's biggest offshore energy producer said Tuesday he thinks oil prices are likely to return to the $70-$80 barrel range, though he did not give a timetable and said low prices could continue for some time.

"We see, and there is mostly consensus in the industry and the financial market of around $70 or $80 a barrel," CNOOC chairman Fu Chengyu said. "But I believe low prices will last for some time."

The California State University system for the first time in its history is proposing to turn away qualified students due to a worsening state budget crisis.
As part of a plan to slash its 450,000 enrollment by 10,000 students for the 2009-2010 academic year, the 23-campus system, the nation's largest, will push up application deadlines and raise the academic bar for freshmen at its most popular campuses, Chancellor Charles B. Reed said Monday.

Medtronic sees 2009 EPS $2.90 to $2.98.

U.S. producer prices fell a record 2.8% in October, the most since 1947, as gasoline prices plummeted a record 24.9%, the Labor Department reported Tuesday. Overall finished energy goods prices fell 12.8%, the most since 1986, while food prices declined 0.2%. Excluding food and energy, core producer prices rose 0.4% in October. Analysts polled by Producer prices are up 5.2% over the past 12 months. Further back in the production pipeline, prices for intermediate goods fells a record 3.9% in October, while prices for crude goods fell a record 18.6%.

The index for finished consumer foods edged down 0.2 percent in October after rising 0.2 percent in September. Leading this downturn, meat prices decreased 5.6 percent subsequent to a 0.6-percent fall a month earlier. Prices for mayonnaise, salad dressings, and sandwich spreads; unprocessed finfish; and canned fruits and juices turned down in October. By contrast, the processed young chickens index increased 5.9 percent following a 0.6-percent decline in September. Prices for natural cheese (except cottage cheese) and melons also turned up in October. The indexes for fresh vegetables (except potatoes) and for sugar and confectionary products advanced more than they had a month earlier.

"The current macroeconomic and retail environment is unprecedented, and consequently, it is impossible to predict future performance with any degree of certainty," said Saks Chief Executive Stephen Sadove. Saks shares fell 5% Monday to $3.85.

Gold for December delivery fell $6.90 to $735.10 an ounce in early electronic trading.

Hewlett-Packard Co on Tuesday announced preliminary fourth-quarter earnings of 84 cents a share, with adjusted earnings of $1.03 a share. The company will release more details on Nov. 24. Analysts expected earnings of $1 a share, according to a survey by FactSet. "HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio and numerous cost initiatives," the Palo Alto, Calif.-based tech firm said. For the first quarter, HP expects adjusted earnings of 93 to 95 cents a share, in line with the estimate of 94 cents a share. For 2009, the computer giant expects earnings of $3.38 to $3.53 a share, and adjusted earnings of $3.88 to $4.03 a share, ahead of the Wall Street target of $3.86 a share. The adjusted 2009 earnings exclude after-tax costs of approximately 50 cents a share, related primarily to the amortization of purchased intangibles.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China’s two exchanges, declined 147.41, or 7.4 percent, to 1,839.82 at the close, the most since June 10. The measure is down 66 percent this year, leaving it valued at 12.9 times trailing earnings, less than a third of the valuation a year ago.

The government on Nov. 9 announced it would spend more to build railways, low-rent housing and infrastructure in rural areas to boost growth in the world’s fourth-largest economy. The plan triggered an 18 percent gain in the CSI 300 through yesterday, while the MSCI Asia Pacific Index shed 5.1 percent.

The number of companies at risk of running out of cash reached the highest level since 2002 in October as job losses and tightening credit weakened consumer spending, according to Moody's Investors Service.

The percentage of companies with an SGL-4 rating, Moody's lowest level of liquidity rating, rose to 14 percent last month from 12.6 percent in September, the highest since the index was designed in 2002, analysts led by John Puchalla wrote in a report released today.

After Cleveland-based Cliffs Natural Resources' termination of its $2.7 billion takeover of coal producer Alpha Natural Resources, an analyst on Tuesday said this could lead to a short-term positive boost.

Friedman, Billings, Ramsey analyst Amir Arif said this decision could result in a near-future lift ranging from $2 to $4 per share, but, he added, there could be additional downside risk. Arif said he would "remain on the sidelines" and wait for the share price to fall in the mid-teens.

Hedge-fund assets may fall to about $1 trillion by the middle of next year, a decline of almost 50 percent from their peak in June, because of market losses and client withdrawals, Citigroup Inc. said in a report.

BHP Billiton Ltd., the world's largest mining company, had its 2009 profit forecast reduced 31 percent by Macquarie Group Ltd. because of declines in commodity prices and cuts to production.

Aluminum fell to a three-year low and copper declined in London on speculation more metal will be shipped out of China, adding to global supplies as demand falters. Zinc also fell.

China will lower export tariffs on some aluminum to 5 percent from 15 percent as of Dec. 1, the Ministry of Finance said Nov. 14. Shipping costs, measured by the Baltic Dry Index, have plunged more than 90 percent since the end of May.

``This allows China to compete on price with producers globally and of course what will happen in this environment, prices will fall,'' said Daniel Brebner, an analyst at UBS AG in London. ``The key issue is that freight rates have declined. It allows for greater competition by manufacturers and producers in various parts of the world.''

Union Pacific warns fourth-quarter shipping volumes will be lower than originally predicted amid the worsening economy.

At the end of September, the rail stocks were continuing their strength versus a deteriorating market and I suggested eliminating positions in the rails as the stocks did not reflect the deteriorating economic conditions.

A Wachovia analyst said Tuesday that while the slower delinquency rate at CarMax Inc. is encouraging, that rate will likely increase down the road as unemployment continues to rise.

ON Semiconductor Corp. said Tuesday that it was withdrawing from its joint proposal with Microchip Technology Inc. to acquire Atmel Corp. ON Chief executive Keith Jackson said, "While we believe that Atmel's Nonvolatile Memory and RF and Automotive businesses would be an attractive strategic acquisition, we have decided to withdraw from the proposal due to the unforeseen deterioration in the semiconductor market since we announced our proposal as well as the unprecedented weakness in the financial markets."

Host Hotels & Resorts Inc. lowered it outlook for fourth-quarter and full-year comparable hotel revenue per available room Tuesday, citing softening economic conditions.

The lodging industry has been pressured as consumers continue to tighten spending due to the ongoing housing slowdown, diminishing credit, rising food costs and recession worries.

As Thanksgiving draws closer, Walmart announced today it will take aggressive pricing action by rolling back food prices to put incredible savings on the table. As part of the retailer's Operation Main Street program, Walmart is launching new savings on food as it works to cut the cost of Christmas week by week, saving Americans more than $200 million over and above its everyday low prices this holiday.

Last week, the American Farm Bureau Federation (AFBF) shared news that the cost of the traditional Thanksgiving dinner has increased. To combat this, Walmart intends to help families serve up the kind of Thanksgiving dinner they want, without the worry.

InBev SA closed its $52 billion (euro41 billion) takeover of Anheuser-Busch Cos.

James Quinn: "Egan-Jones, an independent rating agency, calculates that GE is levered ten-to-one, a more conservative and higher number than the company's eight-to-one figure. Cofounder Sean Egan believes that, depending on the off-balance-sheet holdings, actual leverage could be still higher. His firm rates the company single-A. Looking at GE’s Balance Sheet between 2003 and today, clearly shows a deteriorating situation. Long-term debt grew from $172 billion in 2003 to $381 billion by the 1st quarter of 2008, a 121% increase. Their long term debt to equity ratio grew from 68% to 77%. Short-term debt grew from $157.4 billion in 2003 to $218.7 billion in the latest quarter, a 40% increase. The 70% increase in profits between 2003 and 2007 were undoubtedly juiced by the use of prodigious amounts of debt. Stockholder’s equity is at the same level as 2004. With cash of only $59.7 billion and short-term debt of $218.7 billion, the freezing up of the credit markets has put GE at major risk when trying to rollover their debt."

On Monday, Berkshire Hathaway fell below $100,000.

The National Association of Realtors says home prices fell in four out of five U.S. cities in the third quarter, the latest sign of how the U.S. housing market's decline is spreading throughout the country.

Among 152 metropolitan areas included in the trade group's survey, 120 posted declines in median home sales prices compared with a year ago, the Realtors group said Tuesday.

Nationally, sales fell by 7.7 percent in the third quarter compared with the same period a year ago. Sales of foreclosures and other distressed properties made up around 40 percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.

Shares of Corning Inc. tumbled 12 percent Tuesday after the specialty glass maker lowered its fourth-quarter sales and profit guidance to reflect slumping demand for glass used in flat-screen televisions and computers.

Profit in the October-December period will be at the low end or below a previous projection of 20 cents to 28 cents a share, the company said. Sales are expected to fall below previous guidance of $1.1 billion to $1.2 billion.

The company also said it was withdrawing previously disclosed guidance for 2009.

Net overall capital inflows into the United States rose to $143.4 billion in September, the Treasury Department said Tuesday. This is the largest increase since January 2006. Inflows were only $21.4 billion in August. China has replaced Japan as the largest holder of U.S. Treasury securities, according to the report. Net foreign purchases of long term securities rose to $66.2 billion in September from $21.0 billion in August. Net foreign purchases of US securities were $30.9 billion in September. Private investors accounted for all the purchases. Foreign official institutions were net sellers in the month.

In Oklahoma, gasoline now averages $1.85 a gallon. In Missouri, it sells for $1.77 a gallon. In Hawaii, gasoline sells for $3 a gallon.

UPS Inc. expects its busiest day overall for shipping packages this year will be Dec. 18.

For the first time since it went public in 1999, the Atlanta-based company is not forecasting how many packages it will ship that day. United Parcel Service also will not project how many seasonal employees it will hire this year to help it through the holiday shipping season that runs from Thanksgiving until Christmas.

November sales remain weak midway through the month, according to a key measure of retail sales, as lower gas prices do little to spur consumers to visit the mall.

According to the International Council of Shopping Centers-Goldman Sachs Index, same-store sales edged up 0.3 percent compared with the previous week. Year-over-year, however, same-store sales edged the opposite direction, down 0.1 percent.

Paulo Coelho: “Pitiful is the person who is afraid of taking risks. Perhaps this person will never be disappointed or disillusioned; perhaps she won't suffer the way people do when they have a dream to follow. But when the person looks back-she will hear her heart”

The NAHB/Wells Fargo Housing Market index slumped five points to 9 in November, the lowest since the measure was started in January 1985. Readings below 50 mean more builders view market conditions as poor than favorable.

It was the largest one-month drop in the confidence measure since it fell six points in August 2006 to 33 from a reading of 39 the prior month.

Gold for December delivery fell $9.30, or 1.3%, to $732.70 an ounce on the Comex division of the New York Mercantile Exchange. December crude closed at $54.39 per barrel Tuesday on the New York Mercantile Exchange, down 56 cents for the session.

The platinum market will likely see a supply deficit of 240,000 ounces in 2008, according to an interim report issued by Johnson Matthey Tuesday. Platinum supplies are expected to fall 4.2% to 6.28 million ounces for the year, with the largest decrease seen in South Africa, it said. Demand is seen at 6.52 million ounces, down 2.3%, but global platinum demand for the production of auto-catalysts will grow, it said.

Analyst Jacques Rousseau of Back Bay Research said gasoline margins are at or below the cash operating cost break-even level in most regions of the U.S. and that refiners are likely to reduce production through the rest of the year. Distillates such as diesel and heating fuel still generate profits of about $20 a barrel. Rousseau said he expects gasoline and distillate inventories to decline by about 500,000 barrels each in the weekly supply data due out Wednesday.

Washington attorney Eric Holder is President-elect Barack Obama's top choice to be the next attorney general and aides have gone so far as to ask senators whether he would be confirmed, an Obama official and people close to the matter said Tuesday.

Holder, a former U.S. attorney who served as the No. 2 official in the Justice Department under President Bill Clinton, would be the nation's first black attorney general.

KLA-Tencor Corp.said late Tuesday that it will cut about 15% of its workforce by the end of June 2009 because of current market conditions. KLA-Tencor employs about 6,000 people.

Lawson Software Inc.said late Tuesday it will cut 200 jobs, or about 5% of its global workforce, by the end of the year.

The Dow Jones industrial average rose 151.17 points, or 1.83 percent, to 8,424.75. The Standard & Poor's 500 Index gained 8.37 points, or 0.98 percent, to 859.12. And the Nasdaq Composite Index added just 1.22 points, or 0.08 percent, to 1,483.27.

HP's stock shot up 14.5 percent to end at $33.59 on the New York Stock Exchange, while another tech bellwether and Dow component, International Business Machines Corp rose 3.4 percent to $80.08. Boeing fell 3.9 percent to $39.56. The Chicago Board Options Exchange Volatility Index , or the VIX, lost 2.18 percent to end at 67.64.

In early Wednesday morning trading, Japan's Nikkei 225 was down 1.6% at 8,198.26, South Korea's Kospi fell 2% at 1,015.69, Australia's S&P/ASX 200 was off 1.9% at 3,453.00, and New Zealand's NZSX-50 fell 0.5% at 2,702.18.

General Electric Co said on Tuesday it planned to cut costs by $2 billion next year at its finance arm, GE Capital, which has dragged lower the U.S. conglomerate's results as a result of the global credit crunch.
GE said it would reorganize the GE Capital arm -- created in July when the company merged its commercial and consumer finance arms -- to focus on three regional centers in Europe, Asia and the Americas. The changes will take effect January 1.

Monday, November 17, 2008

Layoffs Continue

11/17/08 Layoffs Continue

"I believe that the crisis that is happening in the states needs to be elevated in the national discussion about restoring our economy," said California state Assembly Speaker Karen Bass (D). "California is the world's sixth-largest economy. And just as we cannot let the auto industry fail, we can't let the state of California fail."

Nouriel Roubini: "The consequence of falling prices (i.e. the prime reason why nominal interest rates should be that low) is that the real value of nominal liabilities will rise as do real interest rates once the nominal interest rate hits the zero bound. The incentive towards hoarding cash and saving instead of investing is thus self-reinforcing as the deflationary spiral takes hold. Any increase in money supply (like quantitative easing) goes into servicing higher real debt levels--> breaking a deflationary spiral therefore requires fiscal stimulus or balance sheet restructuring or both."

Union Pacific Corp., the nation's largest freight railroad, has laid off or reduced hours for 1,500 engineers and conductors since 2007 because of the struggling economy.

At least 110 banks have requested more than $170 billion from the Treasury Department's rescue fund, and many more are expected to have submitted applications before Friday's deadline.

British company Leyland Trucks said Thursday it would cut about 250 jobs, or a fifth of its work force, blaming a dramatic drop in demand.
The PACCAR Inc. subsidiary said the move was prompted by a crash in the market for heavy trucks across Europe.
It also said its factory in Leyland, in northern England -- which has been producing trucks for 116 years -- would double the length of its Christmas break to two weeks.
Leyland Trucks Ltd., founded in 1896, makes about 17,000 trucks annually. Its vehicles can be found hauling cargo on roads from Western Europe to North America.
It was acquired by Bellevue, Washington-based PACCAR, the world's No. 2 maker of big rig trucks, in 1998. Paccar's Kenworth manufacturing plant in Renton will be a shadow of its former self in January, when 430 workers are laid off as the company copes with a major slump in sales of heavy-duty trucks.

United States Steel Corp. has laid off about 3 percent of its production workers in North America as a global economic slowdown cuts into demand for steel used in construction, autos and appliances.
The Pittsburgh-based company said Thursday the layoffs, effective immediately, include 500 employees in the U.S. and 175 in Canada. All of the workers are union members.

The University of Texas Medical Branch in Galveston was already in financial distress before Hurricane Ike's devastation and laying off 3,800 people is designed to keep the state's oldest medical school from going bankrupt, officials said.
The UT Board of Regents unanimously approved the cuts Wednesday during a meeting in El Paso, saying they want to keep the medical school in Galveston but could not allow it to continue losing as much as $40 million a month since Ike hit the island in September.

Ameristar announced companywide layoffs Friday that include cutting six percent of salaried positions at its St. Charles, Mo., facility.
Across all eight Ameristar Casinos Inc. (Nasdaq: ASCA) locations in the U.S., 4.5 percent of employees will be shed, according to Rebecca Theim, director of communications at Ameristar.

In the latest sign that times are getting tougher, new jobless claims in the state climbed in October to 72,627 — 75 percent higher than a year earlier, the Georgia Department of Labor reported Thursday.

Economists say the job market typically lags the economy: Companies often don’t start cutting until the economy is sagging, and they don’t start hiring until the recovery has already begun.

On 11/11, a Sunoco insider purchased 10,000 shares at $31.35. This was the second 10,000 share purchase in the last few months by an officer of the company.

Economists surveyed by MarketWatch expect starts to fall to 776,000 in October, a post-war low that would knock out a record set in January 1991.

J.P. Morgan Chase & Co. is planning thousands of job cuts worldwide, including hundreds within London, U.K. Telegraph reported Sunday, citing people close to the matter.

Paul Saxena: "Central banks and governments are printing TRILLIONS of paper currencies around the world, the US has now become a socialist society and all this money-creation should result in a huge inflationary tsunami in the future. In my opinion, those who are forecasting deflation, don't understand our monetary system. What we have seen in the recent past is not deflation but a contraction in asset prices due to liquidation. Today, governments and central banks have the ability and motive to expand the supply of money ad infinitum and you can bet your house that paper currencies will lose tremendous purchasing power over the next decade. So, cash and fixed income assets will probably turn out to be the worst assets to own. In fact, I would argue that US Treasuries are grossly overvalued today and they are likely to crash somewhere down the road. In a few years from now, long-term interest rates in the US will go through the roof as the US Dollar and its overvalued bond-market collapses."

Japan's Nikkei drops 1% to 8,382.16 in early minutes. Australia's S&P/ASX 200 shes 2.2% to 3,667.40. New Zealand's NZX 50 index loses 1% to 2,739.97.

British house sellers became increasingly desperate in November, cutting asking prices by 2.9% from the previous month and by 7.1% from levels seen a year ago, U.K. property Web site Rightmove reported Monday.
The average property asking price declined to 222,979 pounds ($330,222) from 229,691 pounds in October, Rightmove's monthly index of house prices showed.

Japan says its economy contracted in the third quarter, the second consecutive quarter of decline, officially putting the world's No. 2 economy in a recession.
Japan's gross domestic product fell at an annual pace of 0.4 percent in the July-September period, following a 3.0 decline percent decline in the April-June period, the Cabinet Office reported early Monday.

Citigroup said early Monday that it plans to cut about 50,000 jobs in the near-term and to cut expenses by 20%. It also plans to continue selling off risky assets. Citi said at the end of the September it employed 352,000 people, and that its near-term headcount target is about 300,000.

The U.S. is in for a "prolonged" recession dragging into 2009, the National Association for Business Economics says. In its November survey, the organization sees a contraction in inflation-adjusted gross domestic product of 2.6% in the cards for the fourth quarter, with the weakness carrying well into next year. A small contraction in growth for the 2008 third quarter satisfies the definition of the U.S. economy being in recession -- two consecutive quarters of negative growth -- at the end of the year. Full-year GDP growth rates are pegged by NABE at 0.2% for 2008 and 0.7% for 2009. "Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit-market stresses and evidence of spillover to the real economy," said NABE President Chris Varvares, president, Macroeconomic Advisers, in a statement. A total of 96% of the economists surveyed by NABE believe that a recession has begun.

Lowe's Companies forecast fourth-quarter profit below current Wall Street estimates and cut its full-year outlook, saying rising unemployment, falling home prices and tight credit would continue to pressure its business.

John Hussman: "In short, with stocks both undervalued and oversold, it is appropriate to accept a modest amount of market risk and a good sensitivity to “local” fluctuations, but we remain hedged to defend against any major and unexpected deterioration."

Sunday, November 16, 2008

The Slumping World Economy

11/16/08 The Slumping World Economy

“John Whitehead, former co-chairman of Goldman Sachs Group Inc., said the economy may slump deeper than it did during the Great Depression and that a growing U.S. deficit threatens the country’s creditworthiness, Reuters reported… The nation’s record deficit is poised to balloon as the public calls on government for more support, he said. ‘I think it would be worse than the Depression… We’re talking about reducing the credit of the United States of America, which is the backbone of the economic system.’”

Bloomberg reported “Philadelphia, Atlanta and Phoenix are asking the U.S. Treasury Department for part of the $700 billion financial rescue package to help them finance construction projects and pay bills. They seek $50 billion on behalf of cities nationally to spend on infrastructure and loans lasting for as long as a year to aid cash flow.”

California faces a $27.8 billion budget shortfall over the next 20 months, according to an analyst for the Legislature, the Los Angeles Times reported.

Doug Noland: "The greatest Bubble in the history of mankind – nurtured by decades of flawed economics, flawed finance, flawed policymaking and irresponsible behavior throughout – is bursting, and there is little our authorities can do about it. Everyone was content during the boom to buy into the notion of all-powerful Fed reflation and Washington stimulus. We must now come to grips with the reality that the entire framework advocating post-Bubble “mopping up” strategies was specious... Regrettably, G20 policymakers will this weekend focus efforts on global stimulus and pay only lip service to monetary system reform...The global abandonment of any semblance of monetary or fiscal discipline is a hallmark of this extraordinary period of bursting Bubbles. Stable “money” may be the key – but it’s also nowhere to be seen."

Mike Burk: "The bottom indicators have been moving sharply upward suggesting a high likelihood of a rally lasting at least several weeks.

There were 1514 new lows on the NASDAQ October 10.

There were 788 new lows on the NASDAQ on October 24.

There were 664 new lows on the NASDAQ on November 13.

Progressively fewer new lows on retests are a good thing, however, the numbers are too large and the implication is current bear market has not run its course. In the past month there have been two unconfirmed lows suggesting a significant rally in the near future. However, the high number of new lows on the retests imply additional retests if not further declines.

Many records have been broken over the past few weeks so any conclusions drawn from past performance are suspect. That said, there have never been more than 2 retests of lows with the bottom indicators moving upward.

I expect the major indices to be higher on Friday November 21 than they were on Friday November 14."

The Iraqi cabinet voted overwhelmingly Sunday to approve the security agreement that sets the conditions for the Americans' continued presence in Iraq from Jan. 1 until the end of 2011.

Iran called on OPEC Saturday to cut production by a further 1 million to 1.5 million barrels per day when it meets in Cairo later this month, state television's Web site reported Saturday.

Saudi King Abdullah says he expects a government investment program in oil and other sectors to total more than $400 billion over the next five years.

The king says the spending is targeted at helping shore up the region's economy in the face of the global financial crisis.

Sears shares fell 14 percent, their biggest one-day drop, to $38.27, Friday after the Commerce Department reported a 2.8 percent decline in October retail sales. As recently as September, Sears stock was trading at more than $100.

As the financial crisis makes cash and credit increasingly scarce, the ancient custom of bartering is booming. Cost-conscious consumers are getting creative to make every dollar count. Some are dusting off books, DVDs, video games and other little-used items to trade for necessities or gifts. Others are exchanging services such as house painting for Web design or guitar lessons for clerical work.

President-elect Barack Obama urged Congress to extend unemployment benefits as part of a ``down payment'' on a U.S. economic rescue plan as world leaders meet in Washington today to fight the global recession.

Extended assistance ``for the more than 1 million Americans who will have exhausted their unemployment insurance by the end of this year'' is an immediate priority, Obama said in the Democratic Party's weekly radio address.

Bloomberg reported the cost of living in the U.S. probably fell in October by the most in almost sixty years, while manufacturing and homebuilding sank deeper into a recession, economists said before reports this week.

Consumer prices probably dropped 0.8 percent last month, the most since 1949, according to the median estimate in a Bloomberg News survey. Builders broke ground on the fewest houses in at least a half century and factory output weakened further, other reports may show.

In mid-May, Berkshire Hathaway reported holding 17.5 million shares of ConocoPhillips as of March 31. As of the end of the third quarter on September 30, according to Berkshire's just-released quarterly portfolio filing with the SEC, the stake was up to 84 million shares. From June to the present, the shares have dived from 95 to about 45.

The number of personal bankruptcy filings jumped nearly 8 percent in October from September, after marching steadily upward for the last two years, said Mike Bickford, president of Automated Access to Court Electronic Records, a bankruptcy data and management company.

Filings totaled 108,595, surpassing 100,000 for the first time since a law that made it more difficult — and often twice as expensive — to file for bankruptcy took effect in 2005. That translated to an average of 4,936 bankruptcies filed each business day last month, up nearly 34 percent from October 2007.
Robert M. Lawless, a professor at the University of Illinois College of Law, pointed to the tightening of credit by banks as a significant factor in the increase in October. As banks have pulled back on lending, he said, consumers have been finding it more difficult, and in many cases impossible, to use credit cards, refinance their home mortgages or fall back on their home equity lines to get them through a rough period.

Chalk up the G20 meeting to pure bullshit.