Friday, May 01, 2009

Explosive Material

5/1/09 Explosive Material

In an effort to reach more Hispanic customers, Wal-Mart Stores opened the nation’s first Supermercado in Houston and this summer plans to open a Mas Club, a warehouse outlet for Hispanics, patterned after its Sam’s Club.

Grocers like Wal-Mart are increasingly catering to the Hispanic market, which had $984 billion in buying power last year. That is projected to reach $1.3 trillion in 2013, according to market research publisher Packaged Facts.

Lower-income shoppers, including Hispanics, are the nation’s fastest-growing income group and will generate $84 billion in incremental spending during the next decade, according to retail information provider Information Resources.



Earthfiles: "Steven E. Jones, Ph.D., Prof. Emeritus of Physics, Brigham Young University, and now private citizen investigating 9/11, Spring City, Utah: “There was explosive material in the World Trade Center towers – we need to find out who did this and why were we told that it was jet fires that brought these buildings down when we find explosive material?

The other question, of course, for NIST – National Institute for Standards and Technology – the question to them is: why did they refuse to look for explosives in the residue, the dust of the World Trade Center? They refused, and have consistently refused, our pleas to look for residues of explosive materials in the dust.
WHAT ARE THE REASONS THAT NIST GIVES FOR REFUSING?
The reasons are quoted in a paper about a year ago now in April 2008. And in that paper, we quote NIST and its spokesman, Mr. Michael Newman. He said, ‘Well, why would you look if you know it’s not there?’
WHAT IS THE SOURCE OF FUNDING FOR NIST?
It’s part of the Dept. of Commerce. It’s a federally funded laboratory. NIST received a charge from the U. S. Congress to determine why and how the World Trade Center towers fell and World Trade Center Building 7. NIST received that charge from Congress and funding. Over $20 million has been spent. Then NIST comes up with this lame excuse for not looking for explosive materials. That’s part of the question, right? How and why did the towers come down and Building 7? Well, NIST refused to look for explosives and we’ve published now considerable evidence. Perhaps they will finally look for explosive material.
But you know, beyond that, the public I think should be concerned – perhaps even outraged that there is explosive material in the World Trade Center dust and NIST has refused to look for it. We’ve requested this and they have just not replied, except that they won’t look.”



The US space agency NASA plans to eliminate 900 manufacturing jobs over the next five months as it prepares to retire its space shuttle fleet in 2010, NASA officials said on Thursday.



China's PMI 53.5 in April, vs 52.4 in March.



According to AMG Data Services, for the week ended April 29, Equity Fund Outflows -$1 Bil; Taxable Bond Fund Inflows $3.5 Bil
xETFs - Equity Fund Outflows -$244 Mil; Taxable Bond Fund Inflows $929 Mil



Clorox sees FY EPS $3.70 to $3.80.



MasterCard said on Friday that its first quarter profit slipped to $367.2 million, or $2.80 a share, from $446.9 million, or $3.37 a share a year ago. Net revenue slipped to $1.56 billion, from $1.82 billion last year.



Analysts at J.P. Morgan Chase on Friday trimmed their 2009 and 2010 earnings estimates for several large banks, citing higher credit costs, lower net interest income and falling fee income reflected in first quarter earnings results. Morgan cut profit estimates for Bank of America, Citigroup, SunTrust, U.S. Bancorp and Wells Fargo.



U.S. Supreme Court Justice David Souter plans to retire, giving President Barack Obama his first chance to make an appointment to the nation’s highest court, a government official said.



Robert F. Dieli: “An explanation about why the decline in imports is helping GDP growth. As you know, imports are subtracted from GDP. Because imports are declining in absolute terms, you get a positive effect from a negative negative. Just to be clear as to what this chart is telling us: the drop in imports contributed 6.05 percentage points to the GDP growth rate.What this means is that without the contribution from imports, GDP declined at 12.15% annual rate in Q1. In other words, all of the domestic activity was, as the employment numbers suggested, in free fall! Now, this has some important implications for the profile of growth going forward. When imports stop dropping, and they will, the sign on this term will go back to its normal negative, and when it does, it will expose the true growth rate of the domestic economy. We had best hope that GPDI has gotten back on track by the time the positive effect of negative import growth wears off.” This comes courtesy of Barry Ritholtz: In other words, without the impact of slowing imports, annualized GDP contraction would have been about 12%.



The number of new oil and gas wells to be drilled in Canada will drop by 41% to 10,000 this year as low prices and capital worries hammer the country's oilfield service sector, an industry association forecast yesterday. Drilling activity has plunged to the lowest level since 1999 as weak commodity prices convince oil and gas companies to husband their cash and restrain exploration budgets until higher prices return, the Petroleum Services Association of Canada said.



The San Francisco Municipal Railway on Thursday became the latest Bay Area transit agency to use fare increases and service cuts to plug a ballooning budget deficit.
However, these measures could counteract successful efforts over the past year to lure more people out of their cars.
Barring unprecedented intervention by the Board of Supervisors, the basic adult bus and streetcar fare will jump to $2 July 1, a 50-cent increase and the largest one-time raise in nearly a century. Discounted cash fares for seniors, the disabled and youths also will go up, as will the cost of monthly transit passes.

Chevron Corp. said Friday first-quarter profit fell 64 percent as it, along with competitors, was stung by lower oil and natural gas prices.
Chevron, the second-largest U.S. oil company, said its net income for the first three months of 2009 amounted to $1.84 billion, or 92 cents per share. That compared with $5.17 billion, or $2.48 per share, in the quarter a year ago.
The most-recent result included gains of about $400 million, or 20 cents per share, for the sale of assets.

"The availability of natural-gas generation enables us to be much more courageous in charting a transition to a low-carbon economy," says Jason Grumet, executive director of the National Commission on Energy Policy, who was a senior adviser to President Obama during the campaign. 98% of the natural gas consumed in the U.S. is produced in North America.

Yields on the benchmark 10-year Treasury bond rose to 3.19% and on the 30-year to 4.10%. Are mortgage rates about to turn up?

Harvard Medical School Cancels Classes Over Possible Swine Flu.

Warren Buffett says the U.S. economy has made it past the "Pearl Harbor" conditions of last September, but "we're still at war."

The economy has “several years” of economic recovery ahead, said David Sokol, chairman of MidAmerican Energy. “We don’t see any green shoots,” Sokol said in a live interview on CNBC. “We’re out of the emergency room, but we’re in intensive care, and I think we’re going to be there for a while…I think we’ve got several years before we see a recovery.”
He said the housing market is the best indicator of the state of the economy. However, he said he doesn’t see a balanced housing market coming out until the latter half of 2011.

Sokol also said his utility business has seen demand for sources such as steel, aluminum and coal have plummeted since last December due to industrial companies producing less and using a lesser amount of energy.



The factory sector contracted again in April, but the pace of decline slowed, according to the Institute for Supply Management index released Friday. The ISM index rose to 40.1% from 36.3% in March. The ISM has been below 50 for 15 straight months. The new orders index rose to 47.2% from 41.2% in March. The production index rose to 40.4% from 36.4% in March. The employment index 34.4% from 28.1% in March.



U.S. consumer sentiment rose in April, but remained at relatively low levels, according to media reports of a survey released Friday by the University of Michigan and Reuters. The consumer sentiment index rose to 65.1 from 57.3 in March. In mid-April the estimate was 61.9.



Nouriel Roubini: "We are still in a severe and deep and protracted U-shaped recession that – unlike the forecast of the current consensus economists – will not be over in Q3 but will last until the beginning of 2010. So there may be finally light at the end of the tunnel but later rather than sooner, in 2010 rather than in the second half of 2009. There are still significant downside risks and while optimists speak about green shoots there are still plenty of yellow weeds; and while second derivatives are becoming positive especially in the US but, partially, also in other countries, they are not positive enough yet to suggest that the recession will bottom out in Q3 – as predicted by the consensus – as opposed to some time in 2010. The toxic mess and damage caused by this leverage-driven financial crisis and economic recession – including a brutal shedding of employment that shows no sign of letting up – will take much longer to truly heal the financial markets, the financial institutions and the real economy. "



Inflation: corn $4, soybeans $10, and wheat $6. No relief at the supermarket. Wages are stagnant.



Japan’s unemployment rate surged to a four-year high in March and consumer prices fell for the first time in 18 months, indicating any recovery in the world’s second-largest economy is likely to be weak.



Mexico’s economy probably shrank 7 percent in the first quarter from a year earlier as exports plunged, the Finance Ministry said.



The U.K. housing market may not recover until 2012, a year later than earlier projected, as unemployment rises and the financial crisis deters buyers, Savills Plc said.



According to Bloomberg, the size of the Federal Reserve’s balance sheet fell the most in seven years as companies renewed less of the 90-day debt that was taken on by the central bank and other borrowing declined.

Commercial paper held by the Fed fell to $179.4 billion as of yesterday from $240.4 billion, the biggest drop since the original batch of 90-day debt matured in January. Total assets declined $130.1 billion, or 5.9 percent, to $2.07 trillion, the first drop in seven weeks, the Fed said today in Washington.

The Fed’s interest rates are becoming “less attractive” compared with private markets, said Tony Crescenzi, chief bond- market strategist at Miller Tabak & Co. in New York.

Chrysler Financial no longer offering loans: WSJ. Chrysler Financial, which said it would shutter its business Thursday, will direct business toward GMAC LLC, General Motors Corp.'s finance arm, according to the Journal.

The World Health Organization says several laboratories around the world are developing a vaccination against swine influenza A-H1N1. The organization has raised its alert to level five, just below declaring the flu virus outbreak to be a pandemic. The process of vaccine development can take months.

U.S. auto sales in April were on the road to plunging to their lowest levels in nearly 30 years according to sales reports released on Friday, the day after Chrysler LLC filed for bankruptcy.

Ford U.S. April sales down 31.6% to 134,401 units. "We continue to operate in a very challenging economic and competitive environment," Ken Czubay, vice president of sales and marketing, said in a statement.

General Motors Corp. reported a 33.2% drop in April U.S. light vehicle sales to 172,150 cars and trucks from 257,638 in April 2008. Car sales fell 40.6% to 71,775 while light truck sales dropped 26.6% to 100,375. The automaker also forecast second-quarter production of 390,000 vehicles--172,000 cars and 218,000 trucks--down about 53% from 834,000 vehicles in the second quarter last year.

Toyota Motor Corp. reported its U.S. sales fell 41.9% to 126,540 cars and trucks in April from 217,700 in April 2008. Sales of passenger cars slid 42.3% last month to 77,851 while truck sales slumped 41.2% to 48,689.


A federal appeals court has wiped away with one opinion some 300 decisions made last year by the Bush administration's labor relations board.
The U.S. Court of Appeals in Washington said Friday that all the decisions handed down in 2008 by the National Labor Relations Board are invalid because they were made by just two members.

A Reuters survey showed the Organization of the Petroleum Exporting Countries (OPEC) reduced supply in April, implementing 84 percent of its agreed output cut. The compliance rate is a record high, while the average is around 60 percent.
OPEC has agreed to cut some 4.2 million barrels per day of output since September in an effort to counter slumping demand and a $100 collapse in prices.

Crude for June delivery closed up $2.08, or 4.1%, to $53.20 a barrel on the New York Mercantile Exchange. For the week, oil gained 3.2%. Gold closed down $4.80 at $886+.

Randall W. Forsyth: "In any case, with a budget deficit approaching $2 trillion and the Fed nearly doubling the size of its balance sheet, the shock would be if the economy didn't pull out of its nosedive and start to level out.
Whether the economy can generate a self-sustaining recovery once the effects of this adrenaline shot wears off is another question. At that point, "double-dip" may supplant "green shoots" as the cliché of the moment."



Berkshire Hathaway Inc. Vice Chairman Charles Munger said he supports an outright ban of credit- default swaps to prevent speculators from profiting on the failure of companies.

“If I were the governor of the world, I would eliminate it entirely -- 100 percent,” Munger said in a Bloomberg Television interview today. “That’s the best solution. It isn’t as though the economic world didn’t function quite well without it, and it isn’t as though what has happened has been so wonderfully desirable that we should logically want more of it.”

As an alternative or in addition to layoffs, companies will stop hiring people and leave some vacant positions unfilled. Of the companies Watson Wyatt surveyed, 56% have a hiring freeze in place. An additional 10% are planning to freeze hiring this year. Forty-two percent of companies have already frozen salaries, and 14% more plan to, Watson Wyatt found.
Approximately 69% of employers have reduced their merit pay budgets, Watson Wyatt found, the majority in the past two months. Among those employers, the average projected raise was 1.7% for 2009, down from 3.7% last year.

The Dow Jones Industrial Average rose 44.29 points, or 0.5%, to end at 8,212.41, leaving the blue chips up 1.7% for the week. The S&P 500 Index ended at 877.52, up 4.71 points, or 0.5%, which translates into a weekly climb of 1.3%. The Nasdaq Composite added 1.90 points, or 0.1%, to end at 1,719.20, giving it a 1.5% rise from last Friday's close.

Silverton Bank, N.A., of Atlanta was closed Friday by the Office of the Comptroller of the Currency, according to the Federal Deposit Insurance Corporation, making it the 30th bank failure of the year and the 55th since the beginning of the recession.

Citizens Community Bank of Ridgewood, N.J. was closed by the New Jersey Department of Banking and Insurance on Friday, the Federal Deposit Insurance Corporation said, making it the 31st bank failure of 2009 and the 56th since the beginning of financial crisis.

The U.S. death toll for April rose to 18, the military said Friday, making it the deadliest in seven months for American forces in Iraq. The sharp increase from the previous month came as a series of bombings also pushed Iraqi deaths to their highest level this year.

The U.S. jobless rate will probably not rise to levels reached during the recession of the early 1980s and is likely to crest above 9 percent before declining, St. Louis Federal Reserve President James Bullard said on Friday.
"I'm hopeful that we will stay under the peak hit in 1982, 10.8 percent," he told reporters after speaking to the Arkansas Bankers Association.

Thornburg Mortgage a U.S. provider of "jumbo" mortgage loans, filed for Chapter 11 bankruptcy protection Friday and said it plans to wind down and sell off key units.



Tomoeh Murakami Tse: "A group of about 20 firms who declined to go along with the 11-th hour deal struck by the Obama administration to save Chrsyler from bankruptcy, has just released a statement claiming that the deal was unfair.

The group, which does not identify who they are but sources said includes boutique firm Perella Weinberg, hedge fund Stairway Capital and asset manager OppenheimerFund, said they had been “systematically precluded” from engaging in direct negotiations with the government, which they said had been largely done by four large banks that own 70 percent of the $6.9 billion in loans. Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley have all agreed to the government’s offer of $2.25 billion, or 33 cents on the dollar, for the loans.
“We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds,” the lenders who rejected the government offer said.
The holdout lenders -- who said their combined debt holding represents about $1 billion of the $6.9 billion owed to senior secured lenders – struck back at comments from an unnamed administration official this morning that blamed them for causing the imminent bankruptcy. The group said they had offered to accept 60 cents on the dollar, despite “long recognized legal and business principles” that gives senior lenders such as themselves the right to be repaid in full before others recover anything in bankruptcy court.
“Our offer has been flatly rejected or ignored,” the group said. “In its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.”

U.S. Defense Secretary Robert Gates said it could be difficult for the United States to add troops in Afghanistan beyond the 68,000 already approved, despite a top commander's call for a further 10,000 troops next year.
"It would be a hard sell. There's no question about it," Gates said.
President Barack Obama has approved a plan to more than double the number of U.S. forces in Afghanistan to 68,000 troops by the end of 2009, up from about 32,000 in late December.

The Chinese government has suspended all flights from Mexico, according to a report dated Saturday from Xinhua News.

Thursday, April 30, 2009

Chrysler

4/30/09 Chrysler

The number of continuing claims is in uncharted territory with another gain of 133,000 to 6,271,000. Jobless claims unexpectedly fell by 14,000 to 631,000 in the latest week. Yields on 10-year notes, which move inversely to the price, rose 2 basis points to 3.13%. The Labor Department also said continuing claims for benefits set a new record, signaling ongoing difficulty people are having finding a new job. A separate report showed real consumer spending declined 0.2% in March.

Chrysler will file for Chapter 11 bankruptcy protection in New York on Thursday and will be eligible for up to $8 billion in federal aid to rebuild the ailing automaker, according to senior administration officials. In announcing the Chrysler bankruptcy, the goverment said a deal was also clinched with Fiat Spa, which will give the Italian automaker a 20% initial stake in Chrysler. Chrysler says it will temporarily stop most of its vehicle production until its deal with Italy's Fiat is complete. The shutdown is effective Monday and could last up to two months. Auburn Hills, Mich.-based Chrysler LLC says it expects the shutdown to last between 30 and 60 days and then resume with normal production schedules once the agreement is completed.

U.S. employment costs increased a record-low 0.3% in the first quarter, the Labor Department reported Thursday. Wages and salaries rose a record low 0.3%, compared with a 0.5% gain in the previous three months. Benefit costs rose 0.5% in the quarter, matching the rise in the previous quarter. Over the past year, employment costs have risen a record low 2.1%, down from 3.3% in the fourth quarter. Wages and salary costs have increased 2.2% in the past year, also a record low. Benefit costs increased 2.0%.

Real consumer spending fell 0.2% in March after gaining 0.9% in January and 0.1% in February, the Commerce Department reported Thursday. Meanwhile, nominal incomes fell 0.3% in March as wages and salaries slid 0.5%. Americans pocketed the modest tax break they got in March as part of the economic stimulus package, boosting their savings rate to 4.2% of after-tax income in March from 4% in February.

Jobless claims in the previous week were revised to an increase of 32,000 to 645,000 compared with the initial estimate of a rise of 27,000 to 640,000. The four-week average of initial claims fell 10,750 to 637,250. Meanwhile, the total number of Americans receiving state jobless benefits set a record for the 13th straight week. Continuing claims rose 133,000 to 6.27 million. The four-week moving average of continuing claims rose 131,500 to 6.08 million.

Gold for June delivery lost $9.40, or 1%, to $891.10 an ounce in early North American electronic trading. July copper gained 4.9 cents, or 2.4%, to $2.054 a pound.

Exxon Mobil said Thursday first-quarter net income fell 58% to $4.55 billion, or 92 cents a share, from $10.89 billion, or $2.02 a share in the year-ago period.

South Africa's central bank reduced its key interest rate by 100 basis points to 8.5% Thursday, saying that the "global economy continues to be in the midst of a severe synchronized downturn."

Global mobile-phone shipments fell 13% to 245 million in the first quarter, telecoms consultancy Strategy Analytics said on Thursday.

Vice President Joe Biden said Thursday that he would not recommend taking any commercial flight or riding in a subway car “at this point” because swine flu virus can spread “in confined places.” A little more than one hour later, Biden rushed out a statement backing off.
“I would tell members of my family — and I have — I wouldn’t go anywhere in confined places now,” Biden said on NBC’s “Today” show.. “It’s not that it’s going to Mexico. It’s [that] you’re in a confined aircraft. When one person sneezes, it goes all the way through the aircraft. That’s me. …
“So, from my perspective, what it relates to is mitigation. If you’re out in the middle of a field when someone sneezes, that’s one thing. If you’re in a closed aircraft or closed container or closed car or closed classroom, it’s a different thing.”

A report by the Federal Transit Administration estimates it will cost $50 billion to bring the rail systems in Chicago, Boston, New York, New Jersey, San Francisco, Philadelphia and Washington, D.C., into good repair and $5.9 billion a year to maintain them.
Those seven systems carry 80 percent of the nation's rail transit passengers, or more than 3 billion passenger trips a year. They also include some of the oldest subways and commuter railroads. Some of their facilities date back more than a century.

John Hussman: "A persistent element of hope in recent weeks has been the notion that bank operating earnings are “healthy.” To a large extent, this reflects the same sort of investing-on-hope that we saw during the dot-com bubble, the housing bubble, and other brief periods of delusion. The fact is that operating earnings look “healthy” because the only charge to earnings for credit losses is a discretionary “provision” that has been running behind actual defaults one quarter after another. Worse, last week, we learned that the Treasury actively encouraged fraudulent reporting from Bank of America, failing to disclose losses at Merrill Lynch to its shareholders when it was acquiring the company. The Wall Street Journal ran the following bit of testimony, under oath, from Bank of America head Ken Lewis:

Lewis: I was instructed that “We do not want a public disclosure.”

Q: Who said that to you?

Lewis: Paulson…

Q: Had it been up to you, would you (have) made the disclosure?

Lewis: It wasn't up to me.

Q: Had it been up to you.

Lewis: It wasn't.

As a result, instead of Merrill Lynch's bondholders taking a loss on their bonds, or swapping their debt for BofA equity, those bondholders will now be made whole for all of the losses that Merrill incurred, with 100% principal and interest, right alongside of the bondholders of BofA that are being protected. That's what these bureaucrats want during their stint in government service, that's how they advise our elected officials, and then their revolving door takes them right back to Wall Street. This thing is run by investment bankers and corporate bondholders for the benefit of investment bankers and corporate bondholders....For my part, I remain convinced that without serious efforts at foreclosure abatement (ideally via property appreciation rights), mortgage losses will begin to creep higher later this year, surging in mid-2010, remaining high through 2011, and peaking in early 2012. To believe that we are through with this crisis or the associated losses is to completely ignore the overhang of mortgage resets that still remain from the final years of the housing bubble."

The Fort Worth Independent School District in Texas announced it was closing its 140 schools, affecting about 80,000 students. On Thursday, 62 schools in Huntsville, Ala., and Madison, Ala., closed, affecting 31,000 students, and state officials suspended high school sports at least through Monday.

Separately on Wednesday, a top official from the Centers for Disease Control and Prevention raised the urgency of the government's advice to schools.
At a House hearing, Dr. Anne Schuchat said the recommendation that schools consider closing if they have a confirmed case should be a notch stronger now. "At this point we do think it's very prudent to close schools when a case has been confirmed or is highly suspect," Schuchat told the Energy and Commerce Committee.

June gold ends down $9.30, or 1%, at $891.20.

Standard & Poor's said Thursday it downgraded American Express Co. to BBB+/A-2 from A/A-1 on liquidity concerns. S&P also lowered the preferred stock rating on the company to BB from BBB. The outlook is negative. "The ratings action is based on our view that funding and liquidity will remain concerns in the long term in the context of a business strategy that we believe will remain largely wholesale funded," said John Bartko, an S&P credit analyst, in a statement.

Home prices in the Phoenix area are now down by more than 50 percent from the peak. Las Vegas is close, at 48 percent, and five others are down by at least 40 percent: Miami, San Francisco, San Diego, Detroit and Los Angeles. Tampa is close, with a fall of 39 percent.

Black & Decker cuts quarterly div to 12c from 42c.

10-year Treasury bonds yield 3.13% and 30-year now yield 4.05%.

Abercrombie & Fitch Co. is planning to trim its headquarters staff about 9 percent to save money. Spokesman Eric Cerny confirmed Thursday that the company is cutting about 170 positions at its 2,000-strong Columbus, Ohio, headquarters.

NY Times OP ED: "The State-Secrets Privilege, Tamed
Of the many ways that the Bush administration sought to evade accountability for its violations of the law and the Constitution under the cover of battling terrorism, one of the most appalling was its attempt to use inflated claims of state secrecy to slam shut the doors of the nation’s courthouses.
Sadly, the Obama administration also embraced this tactic, even though President Obama criticized the cult of secrecy while running for office, leaving it to the courts to stand up for transparency and accountability.
And that is just what a panel of the federal appeals court in San Francisco did on Tuesday by firmly rejecting the claim that the government can prevent a judge from even hearing those who say they were hurt by federal policies and actions.
The unanimous ruling by a three-judge panel of the United States Court of Appeals for the Ninth Circuit reinstated a civil lawsuit brought against a government contractor by five victims of the extraordinary rendition program, under which foreigners were kidnapped and flown to other countries for interrogation and torture.
The panel said the government can ask a judge to decide on a case-by-case basis whether disclosing particular evidence would jeopardize national security. But it recognized the affront to civil liberties and the constitutional separation of powers in the Justice Department’s argument that the executive branch is entitled to have lawsuits shut down whenever an official makes a blanket claim of national security. Michael Hayden, the former director of the Central Intelligence Agency did that, quite unconvincingly, in this case.
“According to the government’s theory, the judiciary should effectively cordon off all secret actions from judicial scrutiny, immunizing the C.I.A. and its partners from the demands and limits of the law,” Judge Michael Hawkins said in the opinion.
Doing so, Judge Hawkins said, would “perversely encourage the president to classify politically embarrassing information simply to place it beyond the reach of the judicial process.”
Judge Hawkins demolished the government’s underlying proposition that facts known and discussed throughout the world can be treated as state secrets in a United States court. He likened it to upholding a secrecy claim regarding the Pentagon Papers after their publication by this newspaper because the government refused to declassify them.
The decision’s overall effect is to trim the state secrets privilege back to proper size. It was meant to be an evidentiary rule that triggers court review of whether disclosing specific documents would jeopardize national security, not a mandate to judges to dismiss entire cases.
The ruling is an opportunity for Attorney General Eric Holder to rethink the administration’s position on the abusive use of the state-secrets privilege.
Instead of appealing, and seeking to deny rendition victims the legal process required by justice and treaty obligations, Mr. Holder and the White House should be encouraging Congress to pass the State Secrets Protection Act pending in the Senate. The measure would protect legitimate secrets without undue compromise of people’s rights by establishing uniform rules for handling claims of state secrets, similar to the wise regimen set forth in the new decision."

The Dow Jones Industrial Average fell 17.61 points, or 0.2%, to end at 8,168.12, giving the blue-chip index 7.3% ahead for April. The S&P 500 declined fractionally, or 0.1%, to 872.81, which translates to an advance of 9.4% for April, the index's best monthly rise since March 2000. The Nasdaq Composite rose 5.36 points, or 0.3%, to finish at 1,717.30, leaving the technology-laden index with a monthly gain of 12.3%, its best gain since October 2002.

Windows 7 will launch on Oct. 23.

June crude-oil futures shed $0.22 to $50.90/barrel.

Defense Secretary Robert M. Gates said he had asked for funding in case a new cell block is needed to house detainees from the prison at Guantánamo Bay.

According to the NY Times, millions of Americans enjoying their small windfall from President Barack Obama's ''Making Work Pay'' tax credit are in for an unpleasant surprise next spring.
The government is going to want some of that money back.
The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.
But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.
At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.

According to Bloomberg, the Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.
The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said.
Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.

Wednesday, April 29, 2009

Slightly Slower Decline

4/29/09 Slightly Slower Decline

The Fed Statement: "Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability." Would you want to depend on Fed forecasts? I won't and would not.

The German government said the country’s economy will shrink by 6 percent this year, sharply revising a previous forecast of a 2.5 percent contraction. It forecast slight growth of 0.5 percent in 2010.

The board of I.B.M. raised its dividend by 10 percent and authorized an additional $3 billion worth of share buybacks, underscoring the technology company’s relative strength even in a weak economy.
I.B.M. said it would pay a quarterly dividend of 55 cents a common share, up from the previous 50 cents. The dividend is payable June 10 to stockholders of record on May 8. It is the 14th year in a row that the company has raised its dividend.

At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said.

Moody's reaffirmed its full-year guidance of $1.40 to $1.50 a share.

For the full year, Rockwell Automation cut its earnings forecast to the range of $1.40 to $1.70 a share, compared to its prior outlook of $1.55 to $2.25 a share given in February.

Jones Apparel plans to exit 225 locations the next two years even as it continues to test and evaluate new concepts.

Burger King now expects its 2009 adjusted earnings per share to be in the range of $1.39 to $1.42.

Excluding the amortization of intangible assets, Medco pegged profit for 2009 in a range of $2.67 to $2.77 a share, which would translate into growth of 15% to 19%.

Time Warner stuck to its guidance of 2009 earnings from continuing operations to be flat compared to last year's $1.98.

"Looking forward, the fundamentals that drive our outlook are essentially unchanged. We expect customer activity in North America to continue to decline, and see little chance of a recovery before the end of the year," said Baker Hughes CEO Chad Deaton.

The European Commission's economic sentiment indicator for the 16-nation euro zone rebounded to 67.2 in April from a record low of 64.7 in March, marking the first rise since May 2007, the EC said Wednesday.

The broad M3 measure of money supply in the 16-nation euro zone grew at an year-on-year rate of 5.1% in March, decelerating from 5.8% in February, the European Central Bank said Wednesday.

Royal Dutch Shell Plc, Europe’s largest oil company, said crude prices are unlikely to rebound in the next 12 to 18 months as it reported a 62 percent slump in first-quarter profit.

Rob Hanna: "I’ve discussed my Volume Spyx indicators on the blog a fair amount. What I haven’t shown is that Spyx readings can also be useful on weekly charts. The calculations for Spyx readings are proprietary but basically it looks at volume on a relative basis across multiple securities. For the Nasdaq chart it’s looking at Nasdaq securities. As the name would imply, it looks for “spikes” in the relative volume statistics.
Over the past 2 weeks the Nasdaq Volume Spyx weekly chart has been giving readings with potentially bearish ramifications."

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.The Bureau emphasized that the first-quarter “advance” estimates are based on source data that are incomplete or subject to further revision by the source agency.

The dollar index, a measure of the greenback against a trade-weighted basket of currencies, fell to 84.56, down from 85.18 in North American trading late Tuesday.

A day after Textron Inc. reported a 63-percent drop in earnings, the company says it will expand job cuts, eliminating 8,300 jobs, or 20 percent, of its global work force as the recession continues to weaken demand for corporate planes.

Crude inventories jumped last week by more than twice what was expected, while gasoline reserves dropped sharply even as demand for motor fuel remained below last year's levels, according to government data released Wednesday.
For the week ended April 24 crude inventories rose by 4.1 million barrels, or 1.1 percent, to 374.7 million barrels, which is 18 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Gasoline inventories slipped by 4.7 million barrels, or 2.2 percent, to 212.6 million barrels, which is even with year-ago levels. Analysts expected stockpiles of the motor fuel to rise by 900,000 barrels.
Demand for gasoline over the four weeks ended April 24 was 0.5 percent lower than a year earlier, averaging 9.1 million barrels a day.

Pres. Obama: "I think that we should distinguish between finance as the lifeblood of our economy, and finance as a significant industry where we have a comparative advantage."

"We are in the midst of a serious global recession," said Keith Nosbusch, chief executive of Rockwell, which cut its fiscal 2009 profit target for the second time this year.
"There is still a great deal of uncertainty," Nosbusch told investors on a conference call. "There are some signs that both macro indicators and customer activity is beginning to stabilize. We believe it's too early to declare that the market has bottomed, but we do believe the steepest sequential declines are behind us."

The ruling by the Ninth U.S. Circuit Court of Appeals in SF is the first major setback for the new administration's attempt to use secrecy doctrines to fend off challenges to clandestine activities authorized by Pres. George W. Bush. Pres. Obama's Justice Department is also defending a Bush wiretapping program in lawsuits pending in SF.

Judge Michael Hawkins, Ninth U.S. Circuit Court of Appeals: "As the founders of this nation knew well, arbitrary imprisonment and torture under any circumstances is a 'gross and notorious...act of despotism.' "

Brazil's central bank late Wednesday cut its benchmark interest rate by 100 basis points to 10.25%, in line with market expectations.

The Reserve Bank of New Zealand cut its official cash rate by 50 basis points Thursday (local New Zealand time), bringing it to a record low 2.5%.

The Senate approved a $3.55 trillion budget blueprint for fiscal 2010 on Wednesday, joining the House in handing President Barack Obama a legislative victory. The vote was 53 to 43.

Starting May 5, Starbucks will sell a grande iced-coffee for under $2. "There will be minor changes that will lower prices on some of our popular items such as tall lattes and slightly increased prices on our larger and more complex beverages," Starbucks CEO Howard Schultz said in a conference call. Starbucks reported a 77% drop in its profit for its fiscal second-quarter. Profit was hurt by hefty charges to close stores.

First Solar Inc. said late Wednesday that its first-quarter profit rose to $164.6 million, or $1.99 a share, from $46.6 million, or 57 cents a share, in the year-ago period. Revenue rose to $418.2 million from $196.9 million last year.

Visa Inc.said late Wednesday that fiscal second-quarter net income came in at $536 million, or 71 cents per class A common share, up 71% from a year earlier when the card payment processing giant made $314 million, or 39 cents per class A common share. Adjusted for a normalized tax rate, restructuring and purchase amortization, net income was $553 million, or 73 cents per class A common share, the company added. Visa was expected to make 64 cents a share, according to the average estimate of 24 analysts in a Thomson Reuters survey. Net operating revenue in the fiscal second quarter of 2009 was $1.6 billion, up 13% versus the prior year. "Though slightly negative in the U.S., payments volume continued to grow on a constant dollar basis in all other regions globally," Visa said.

The Dow Jones Industrial Average ended at 8,185.73, up 168.78 points, or 2.1%. The S&P 500 Index added 18.48 points, or 2.2%, to 873.64, while the Nasdaq Composite rose 38.13 points, or 2.3%, to 1,711.94.

Ten-year note yields jumped 8 basis points to 3.09%, after earlier trading around 3%, at the time the highest since the Fed's previous meeting when it announced it would buy U.S. debt. The Fed said the economic outlook has improved but it is likely the economy will remain weak for some time.

"They noted that economic activity has contracted at a slower pace and then they ran down a list of things we already know from inventory reductions to labor market weakness," said Dan Greenhaus, an analyst at Miller Tabak & Co. "All in all, the FOMC statement is reflecting the increasing stability we're seeing in the overall economy," said Greenhaus.

Gold for June delivery fell $4.70, or 0.5%, to $895.80 an ounce in North American electronic trading. Crude oil for June delivery rose $1.13, or 2.2%, to $51.03 a barrel in electronic trading on Globex.

ExxonMobil Corp.said Wednesday its board increased the quarterly dividend to 42 cents from 40 cents.

General Dynamics Corp. said Wednesday that demand for the business jets appears to have stabilized. "Over the last several weeks, the backlog has stabilized significantly and I believe there is less risk to our production plan for this year and next than when we announced the production cuts in early March," said Chairman and Chief Executive Nicholas Chabraja, on a post-earnings call with analysts.

According to Bloomberg, “President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA.” It is my understanding that Fiat is putting up no cash in Chrysler. Meanwhile, American taxpayers blew $12 billion on Chrysler thanks to the Administration not knowing its ass from first base.

Japan’s industrial output rose for the first time in six months, twice the pace predicted by economists, adding to evidence the worst of the recession may be over.
Factory production climbed 1.6 percent from February, when it dropped 9.4 percent, the Trade Ministry said today in Tokyo. The median estimate of 33 economists surveyed by Bloomberg News was for a 0.8 percent gain.
Companies plan to increase production in April and May to replenish inventories that fell 3.3 percent last month, the report showed.

Manhattan is the epicenter of a sharp, global commercial real estate downturn, with rents sliding 14.6% in the first quarter.

President Barack Obama: "Even as we clear away the wreckage of this recession, I have also said that we cannot go back to an economy that is built on a pile of sand -- on inflated home prices and maxed-out credit cards, on overleveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all."






















4/29/09 Slightly Slower Decline

The Fed Statement: "Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability." Would you want to depend on Fed forecasts? I won't and would not.


The German government said the country’s economy will shrink by 6 percent this year, sharply revising a previous forecast of a 2.5 percent contraction. It forecast slight growth of 0.5 percent in 2010.

The board of I.B.M. raised its dividend by 10 percent and authorized an additional $3 billion worth of share buybacks, underscoring the technology company’s relative strength even in a weak economy.
I.B.M. said it would pay a quarterly dividend of 55 cents a common share, up from the previous 50 cents. The dividend is payable June 10 to stockholders of record on May 8. It is the 14th year in a row that the company has raised its dividend.

At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said.

Moody's reaffirmed its full-year guidance of $1.40 to $1.50 a share.

For the full year, Rockwell Automation cut its earnings forecast to the range of $1.40 to $1.70 a share, compared to its prior outlook of $1.55 to $2.25 a share given in February.

Jones Apparel plans to exit 225 locations the next two years even as it continues to test and evaluate new concepts.

Burger King now expects its 2009 adjusted earnings per share to be in the range of $1.39 to $1.42.

Excluding the amortization of intangible assets, Medco pegged profit for 2009 in a range of $2.67 to $2.77 a share, which would translate into growth of 15% to 19%.

Time Warner stuck to its guidance of 2009 earnings from continuing operations to be flat compared to last year's $1.98.

"Looking forward, the fundamentals that drive our outlook are essentially unchanged. We expect customer activity in North America to continue to decline, and see little chance of a recovery before the end of the year," said Baker Hughes CEO Chad Deaton.

The European Commission's economic sentiment indicator for the 16-nation euro zone rebounded to 67.2 in April from a record low of 64.7 in March, marking the first rise since May 2007, the EC said Wednesday.

The broad M3 measure of money supply in the 16-nation euro zone grew at an year-on-year rate of 5.1% in March, decelerating from 5.8% in February, the European Central Bank said Wednesday.

Royal Dutch Shell Plc, Europe’s largest oil company, said crude prices are unlikely to rebound in the next 12 to 18 months as it reported a 62 percent slump in first-quarter profit.

Rob Hanna: "I’ve discussed my Volume Spyx indicators on the blog a fair amount. What I haven’t shown is that Spyx readings can also be useful on weekly charts. The calculations for Spyx readings are proprietary but basically it looks at volume on a relative basis across multiple securities. For the Nasdaq chart it’s looking at Nasdaq securities. As the name would imply, it looks for “spikes” in the relative volume statistics.
Over the past 2 weeks the Nasdaq Volume Spyx weekly chart has been giving readings with potentially bearish ramifications."

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.The Bureau emphasized that the first-quarter “advance” estimates are based on source data that are incomplete or subject to further revision by the source agency.

The dollar index, a measure of the greenback against a trade-weighted basket of currencies, fell to 84.56, down from 85.18 in North American trading late Tuesday.

A day after Textron Inc. reported a 63-percent drop in earnings, the company says it will expand job cuts, eliminating 8,300 jobs, or 20 percent, of its global work force as the recession continues to weaken demand for corporate planes.

Crude inventories jumped last week by more than twice what was expected, while gasoline reserves dropped sharply even as demand for motor fuel remained below last year's levels, according to government data released Wednesday.
For the week ended April 24 crude inventories rose by 4.1 million barrels, or 1.1 percent, to 374.7 million barrels, which is 18 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Gasoline inventories slipped by 4.7 million barrels, or 2.2 percent, to 212.6 million barrels, which is even with year-ago levels. Analysts expected stockpiles of the motor fuel to rise by 900,000 barrels.
Demand for gasoline over the four weeks ended April 24 was 0.5 percent lower than a year earlier, averaging 9.1 million barrels a day.

Pres. Obama: "I think that we should distinguish between finance as the lifeblood of our economy, and finance as a significant industry where we have a comparative advantage."

"We are in the midst of a serious global recession," said Keith Nosbusch, chief executive of Rockwell, which cut its fiscal 2009 profit target for the second time this year.
"There is still a great deal of uncertainty," Nosbusch told investors on a conference call. "There are some signs that both macro indicators and customer activity is beginning to stabilize. We believe it's too early to declare that the market has bottomed, but we do believe the steepest sequential declines are behind us."

The ruling by the Ninth U.S. Circuit Court of Appeals in SF is the first major setback for the new administration's attempt to use secrecy doctrines to fend off challenges to clandestine activitiesauthorized by Pres. George W. Bush. Pres. Obama's Justice Department is also defending a Bush wiretapping program in lawsuits pending in SF.

Judge Michael Hawkins, Ninth U.S. Circuit Court of Appeals: "As the founders of this nation knew well, arbitrary imprisonment and torture under any circumstances is a 'gross and notorious...act of despotism.' "

Brazil's central bank late Wednesday cut its benchmark interest rate by 100 basis points to 10.25%, in line with market expectations.

The Reserve Bank of New Zealand cut its official cash rate by 50 basis points Thursday (local New Zealand time), bringing it to a record low 2.5%.

The Senate approved a $3.55 trillion budget blueprint for fiscal 2010 on Wednesday, joining the House in handing President Barack Obama a legislative victory. The vote was 53 to 43.

Starting May 5, Starbucks will sell a grande iced-coffee for under $2. "There will be minor changes that will lower prices on some of our popular items such as tall lattes and slightly increased prices on our larger and more complex beverages," Starbucks CEO Howard Schultz said in a conference call. Starbucks reported a 77% drop in its profit for its fiscal second-quarter. Profit was hurt by hefty charges to close stores.

First Solar Inc. said late Wednesday that its first-quarter profit rose to $164.6 million, or $1.99 a share, from $46.6 million, or 57 cents a share, in the year-ago period. Revenue rose to $418.2 million from $196.9 million last year.

Visa Inc.said late Wednesday that fiscal second-quarter net income came in at $536 million, or 71 cents per class A common share, up 71% from a year earlier when the card payment processing giant made $314 million, or 39 cents per class A common share. Adjusted for a normalized tax rate, restructuring and purchase amortization, net income was $553 million, or 73 cents per class A common share, the company added. Visa was expected to make 64 cents a share, according to the average estimate of 24 analysts in a Thomson Reuters survey. Net operating revenue in the fiscal second quarter of 2009 was $1.6 billion, up 13% versus the prior year. "Though slightly negative in the U.S., payments volume continued to grow on a constant dollar basis in all other regions globally," Visa said.

The Dow Jones Industrial Average ended at 8,185.73, up 168.78 points, or 2.1%. The S&P 500 Index added 18.48 points, or 2.2%, to 873.64, while the Nasdaq Composite rose 38.13 points, or 2.3%, to 1,711.94.

Ten-year note yields jumped 8 basis points to 3.09%, after earlier trading around 3%, at the time the highest since the Fed's previous meeting when it announced it would buy U.S. debt. The Fed said the economic outlook has improved but it is likely the economy will remain weak for some time.

"They noted that economic activity has contracted at a slower pace and then they ran down a list of things we already know from inventory reductions to labor market weakness," said Dan Greenhaus, an analyst at Miller Tabak & Co. "All in all, the FOMC statement is reflecting the increasing stability we're seeing in the overall economy," said Greenhaus.

Gold for June delivery fell $4.70, or 0.5%, to $895.80 an ounce in North American electronic trading. Crude oil for June delivery rose $1.13, or 2.2%, to $51.03 a barrel in electronic trading on Globex.

ExxonMobil Corp.said Wednesday its board increased the quarterly dividend to 42 cents from 40 cents.

General Dynamics Corp. said Wednesday that demand for the business jets appears to have stabilized. "Over the last several weeks, the backlog has stabilized significantly and I believe there is less risk to our production plan for this year and next than when we announced the production cuts in early March," said Chairman and Chief Executive Nicholas Chabraja, on a post-earnings call with analysts.

According to Bloomberg, “President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA.” It is my understanding that Fiat is putting up no cash in Chrysler. Meanwhile, American taxpayers blew $12 billion on Chrysler thanks to the Administration not knowing its ass from first base.

Japan’s industrial output rose for the first time in six months, twice the pace predicted by economists, adding to evidence the worst of the recession may be over.
Factory production climbed 1.6 percent from February, when it dropped 9.4 percent, the Trade Ministry said today in Tokyo. The median estimate of 33 economists surveyed by Bloomberg News was for a 0.8 percent gain.
Companies plan to increase production in April and May to replenish inventories that fell 3.3 percent last month, the report showed.

Manhattan is the epicenter of a sharp, global commercial real estate downturn, with rents sliding 14.6% in the first quarter.

President Barack Obama:
"Even as we clear away the wreckage of this recession, I have also said that we cannot go back to an economy that is built on a pile of sand -- on inflated home prices and maxed-out credit cards, on overleveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all."

Tuesday, April 28, 2009

Hybrid Flu

4/28/09 Hybrid Flu

The World Health Organization, acknowledging the growing threat of swine flu, raised its global pandemic alert, saying the disease is no longer containable.
The alarm level, increased to 4 from 3, is at its highest since the warning system was adopted in 2005, and the virus has been confirmed in the U.K., Mexico, the U.S., Canada, New Zealand and Spain. The emphasis worldwide should be on treating patients and strengthening preparations for outbreaks, said Keiji Fukuda, assistant director-general for health security and environment.

The UAW would eventually own 55% of the stock in a restructured Chrysler under the deal it struck with the firm.

GM outlined a new turnaround plan that would leave the U.S. government controlling the auto maker, as it set up a showdown with bondholders.

According to the AP, “Home prices in the once red-hot Middle East boomtown of Dubai plunged 41 percent in the first three months of 2009.”

The Wall Street Journal reports that PetroChina’s net fell 35%.

Nouriel Roubini says he doesn’t see much in the way of “glimmers of hope” other economists have noted. Unemployment, capital investment, and exports are all worsening, and while there are a few signs of stability in housing, it’s not much. Overall, he figures, the odds of a prolonged “L-shaped” depression have fallen to less than 20%, from about 30%, thanks largely to the efforts of this administration and, to some extent, the last. He expects global contraction of 2% this year, and expansion of about 0.5% next year, “so small it’s going to feel like a recession still.”

Proposed reduction in defense spending puts 100K jobs at risk, contractors and trade unions say.

According to Reuters, although it's called swine flu, this new strain is not infecting pigs and has never been seen in pigs. The threat is person to person transmission.
* It is genetically different from the fully human H1N1 seasonal influenza virus that has been circulating globally for the past few years. The new flu virus contains DNA typical to avian, swine and human viruses, including elements from European and Asian swine viruses.

"We're really at a point of a lot of speculation and not a lot of facts," said Liz Wagstrom, a veterinarian who is the National Pork Board's assistant vice president for science and technology.
Preliminary investigations of U.S. cases have determined that none of the people infected with the hybrid flu had contact with hogs.
The World Organization for Animal Health is referring to it as the North American flu. But Gary Anderson, a researcher with the Kansas State Veterinary Diagnostic Laboratory, said it was more accurate to call it a hybrid flu.
"The core of its genetics is a swine influenza virus," he said. "But it has pieces and parts of swine, human and avian (viruses).

With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.

Home prices fell 2.2% in 20 major cities in February after a 2.8% decline in January, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. Prices in 20 cities are down 18.6% in the past year, compared with a 19% drop in the 12 months ending in January. It was the first time in 16 months that the decline in prices did not set an annual record. Prices fell in all 20 major cities in February, led by a 5% drop in Cleveland.

Barry Ritholz: "The Fed banks are holding total capital of just $45.7 billion against the sum total of $2.19 trillion in assets, meaning the Fed is leveraging its capital 48-to-1. That compares to only 27-to-1 two years ago."

The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest level since November's 44.7.

At least 17 of 30 regional banks that have less than $100 billion in assets may need to raise additional government or private capital, according to a report by Oppenheimer & Co. Inc. on Tuesday. According to the report, a conversion of government and private shares to common shares at most of the 30 banks would, on average, bring their capital levels to levels that bank regulators would consider satisfactory based on stress test scenarios released by bank regulators. However, it is unclear whether these banks are voluntarily conducting government stress tests on their financials. These banks are somewhat smaller in size than the 19 largest financial institutions bank regulators are examining with stress test results expected for those banks on or around May 4.

Chicago-based bank Northern Trust said on Tuesday that it priced a 15 million share common stock offering at $50 a share, raising about $750 million. The company also said it launched a $500 million senior note offering.

The recent rise in stocks and talk about green shoots in the markets are optimistic assumptions, as the world downturn "still has a way to run," Hugh Hendry, Chief Investment Officer at Eclectica, told CNBC Tuesday.
World gross domestic product looks overestimated, because global consumption has been based on debt, and this cannot continue, Hendry told "Squawk Box Europe."
"In the last five weeks we had a rally in risk. Big deal," he said.
"I am fearful of the surplus countries, like China and Germany. I think GDP has been overstated," Hendry added.

Business conditions remain difficult in Masco's markets. The Company currently estimates that 2009 housing starts will decline 40 percent to approximately 550,000 units. The Company also anticipates that consumer spending for home improvement products and demand for certain of the Company's International products will continue at depressed levels in the near-term.
While the unprecedented changes in the global economic and financial market environment make forecasting future business conditions extremely difficult, the Company currently estimates that its 2009 sales will decline approximately 20 to 25 percent compared to 2008. The Company's previous guidance estimated that its full- year 2009 percentage sales decline would be mid-to-high teens.
The Company currently estimates that its 2009 full-year loss will be in a range of $(.15) to $(.35) per common share, reflecting the additional sales decline. The guidance also includes approximately $26 million pretax ($.05 per common share, after tax) of additional costs and charges for plans undertaken to further rationalize the Company's business (resulting in a full-year total of approximately $70 million pre-tax, $.13 per common share after-tax), but does not include any additional costs and charges that may result from the continued evaluation of the Company's businesses or any other charges. The Company's previous guidance was a range of approximate break-even to a loss of $(.30) per common share for the full-year 2009.

Companies began restricting employee travel in response to a potential flu pandemic that has claimed at least 149 lives in Mexico and weighed stronger measures, while an unconfirmed case at Ernst & Young led the firm to close a portion of its New York office.

Honda Motor Co, Japan's No. 2 automaker, has suspended all global business travel until at least May 6 due to the outbreak. Honda, which also has production facilities in Mexico, is considering sending Japanese families of expatriate workers home, although production was continuing as normal, a spokeswoman said.
Other companies are considering restrictions.

The Standard & Poor’s 500 Index lost 0.3 percent to 855.16. The Dow Jones Industrial Average slipped 8.05 points, or 0.1 percent, to 8,016.95. The Russell 2000 Index of small companies added 0.7 percent.

Chrysler's biggest lenders and the U.S. government reached a breakthrough framework deal to cut the automakers' debt by $6.9 billion, but bankruptcy still loomed as a strong possibility to complete restructuring.

Swine Flu

4/27/09 Swine Flu

General Motors Corp. said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take company stock in exchange for half GM's government debt as part of a major restructuring effort needed to get more government aid. offered equity to bondholders under a plan to reduce liabilities by $44 billion.
GM will shrink the number of dealers 42 percent to 3,600 and drop more union and salaried positions by the end of 2010, according to a regulatory filing today. Holders of $27.5 billion in bonds would receive 225 shares of stock for each $1,000 in principal.

Copper for May delivery lost 7.9 cents, or 3.8%, to $1.9725 a pound in early North American electronic trading. Meanwhile, June gold was down 60 cents, or 0.1%, at $913.50 an ounce.

Shares of anti-viral drug maker Gilead Sciences were up almost 5% at $48.00 in premarket trading Monday on anticipation that there will be a spike in demand for the company's flu-fighting agent, Tamiflu, given the worldwide outbreak of the swine flu virus. Gilead receives royalties on Tamiflu, which is marketed by Swiss conglomerate Roche.

Timken cut its quarterly dividend in half, to 9 cents a share. Timken expects its full-year 2009 financial results to come in between a loss of 15 cents a share and a profit of 15 cents a share.

Oil futures fell 5% in early trading Monday, as the outbreak of a deadly swine flu raised concerns over the prospects for a global economic recovery. Crude oil for June delivery dropped $2.49, or 5%, to $49.06 a barrel in electronic trading on Globex.

Humana raised its 2009 earnings per share guidance to a range of $6.10 to $6.20. According to FactSet data, analysts had been expecting earnings of $5.88 for the year.

Stock futures pointed to a more than 1 percent drop at the open on Monday as investors worried that a possible global flu outbreak could throw a wrench into the economy's ability to climb out of a recession.

Circulation at U.S. newspapers continues to fall.
The Audit Bureau of Circulations said Monday that average daily circulation declined 7.1 percent in the October-March period from the same six-month span in 2007-2008.
That was faster than the 4.6 percent fall recorded in the April-September period of 2008.

"As a consequence of confirmed cases of Swine Influenza A (swH1N1) in California, Texas, Kansas, and New York, on this date and after consultation with public health officials as necessary, I, Charles E. Johnson, Acting Secretary of the U.S. Department of Health and Human Services, pursuant to the authority vested in me under section 319 of the Public Health Service Act, 42 U.S.C. § 247d, do hereby determine that a public health emergency exists nationwide involving Swine Influenza A that affects or has significant potential to affect national security."



Silver nanoparticals have antibacterial and antiviral applications. The swine flu could ave an impact on the price of silver.



The global financial crisis could become "a human and development calamity" for many poor countries, the World Bank said, urging donor nations to speed delivery of money they have pledged and consider giving more.



The anxiety over the swine virus has vastly altered the rhythm of Mexico City, with millions of people staying home and many of those who venture out doing so wearing masks. On Sunday, Catholic Masses across the city were canceled. One of the most popular Mexican professional soccer teams played a game in an empty stadium that can seat more than 100,000 people. Mayor Marcelo Ebrard said he might have to shut down all public transportation if the crisis worsens.



Paul Krugman: "

Furthermore, paying vast sums to wheeler-dealers isn’t just outrageous; it’s dangerous. Why, after all, did bankers take such huge risks? Because success — or even the temporary appearance of success — offered such gigantic rewards: even executives who blew up their companies could and did walk away with hundreds of millions. Now we’re seeing similar rewards offered to people who can play their risky games with federal backing. ...
Why are paychecks heading for the stratosphere again? Claims that firms have to pay these salaries to retain their best people aren’t plausible: with employment in the financial sector plunging, where are those people going to go?
No, the real reason financial firms are paying big again is simply because they can. They’re making money again (although not as much as they claim), and why not? After all, they can borrow cheaply, thanks to all those federal guarantees, and lend at much higher rates. So it’s eat, drink and be merry, for tomorrow you may be regulated.
Or maybe not. There’s a palpable sense in the financial press that the storm has passed: stocks are up, the economy’s nose-dive may be leveling off, and the Obama administration will probably let the bankers off with nothing more than a few stern speeches. Rightly or wrongly, the bankers seem to believe that a return to business as usual is just around the corner.
We can only hope that our leaders prove them wrong, and carry through with real reform. In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again."

The European Union said to postpone nonessential travel to the U.S. and Mexico.

Verizon Communications Inc. on Monday reported earnings grew 5 percent in the first quarter, boosted by its acquisition of Alltel Corp. and strong demand for its wireless, Internet and TV services.
Verizon, which is the second-largest telecommunications provider, said that it earned $3.21 billion, or 58 cents per share, compared with $3.05 billion, or 57 cents per share, a year ago.
Excluding charges related to its acquisition of Alltel, Verizon earned 63 cents per share — 4 cents higher than analysts polled by Thomson Reuters had expected.

Brett Steenbarger: "We're also seeing smaller cap issues holding their own versus large caps. This continued strength in buying/speculative sentiment is not what we normally observe at major market tops, suggesting to me that any near-term correction that we see may be part of a more extended topping or consolidation, rather than the start of a fresh bear market. "

In the fourth quarter, state sales tax collections dropped 4%, the steepest decline in 50 years, according to the Nelson A. Rockefeller Institute of Government. Online sales taxes could help states generate at least $52 billion in added revenue over the next six years, according to an Apr. 13 study conducted by three University of Tennessee professors. Requiring virtual stores to collect taxes, even in parts of the country where they don't have physical operations, would also place e-tailers on a more even footing with brick-and-mortar stores.

According to seekingalpha, "the credit-card industry, which is already under fire from the Obama administration, is getting hit with a double-whammy these days: losses are growing even as fewer people use plastic.
In the last six months, record numbers of consumers have stopped paying their credit-card debt. On top of that, many other consumers are cutting back on their credit-card spending. Both trends are leaving banks that issue credit cards with huge losses.



"Revenues for issuers will be impacted not just by cardholders carrying smaller balances in the future, but even more by a decrease in transaction volume," says Greg McBride, chief economist with Bankrate.com. "Card issuers profit from interchange income every time a cardholder swipes the card."

"Credit card delinquencies mimic the unemployment rate," says McBride. "As jobs go away, as they have, so too does the ability of people to pay their debts."



The U.S. Food and Drug Administration and the Centers for Disease Control and Prevention told people on Sunday not to eat raw alfalfa sprouts, saying they may be contaminated with salmonella.



Geithner said April 21 that $109.6 billion remains in TARP, or $134.6 billion including expected repayments in the coming year.



The Oil Drum: "China's oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has said. In a new update, EI said that Chinese net crude imports and domestic production averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding figure in 2009. EI did not take into account stockpiles that the Chinese government has allegedly been building to make use of the low oil prices. The statistics exacerbates the widespread fear among analysts that oil demand, and therefore oil prices may seriously suffer this year because of low "actual demand".



If the swine flu were not enough, MEXICO SHAKEN BY MAGNITUDE 6.0 QUAKE CENTERED NEAR ACAPULCO.



The Treasury Department sold $40 billion in 2-year notes on Monday to yield 0.949%. The amount matches a record for that security set in the last three monthly sales. Investors offered $2.72 for every dollar available, compared to an average of $2.54 at the last four sales. Indirect bidders, a group of investors that includes foreign central banks, bought 28.7% of the sale, compared to 36.6% on average in the last four. Yields on the existing 2-year note [s:ust2yr] stayed 5 basis points higher at 0.91%.



Arch Coal slashed its full-year profit estimate to between 20 cents and 60 cents per share, far short of consensus expectations of $1.71 per share.

Production targets were cut to between 116 million and 120 million tons from an earlier estimate between 120 million and 127 million tons.

The Centers for Disease Control said during a press conference Monday that current flu vaccines were ineffective in battling the new strain of swine flu called H1N1. The agency added it was currently in discussions with world health officials as to whether to request drugmakers start work on a vaccine against the current swine flu virus, but were unsure if the strain would still be relevant come the fall 2009 flu season. Because they are cultivated, flu vaccines generally take months to produce. Instead of expecting a vaccine, CDC officials advised citizens to practise better preventive hygiene, such as constant handwashing and use of skin sanitizers.

Bank of America Corp. and Citigroup Inc., which have each received $45 billion in government bailout funds, have been told by regulators that "stress test" results show they may need to raise additional capital, The Wall Street Journal said.

British Petroleum reduced its spending target for this year after first-quarter profit fell 64 percent on lower oil and natural gas prices.

Pfizer's profit slid 2 percent to $2.73 billion as cost-cutting by the drugmaker did not offset big drops in sales for several medicines.

Honda had a slight profit for the year as a strong motorcycle business, cheaper cars and aggressive cost-cutting are helping the company weather a downturn that has some rivals fighting for survival.

G.M. expects to pare its American work force to 38,000 union employees, compared with 395,000 at its peak in 1970.



Daimler, which announced it will divest its remaining 19.9 percent stake in Chrysler, said the outlook for the rest of the year remained poor.



Many housekeepers, bus boys, dishwashers, doormen, valets and customer service agents have either lost their jobs or are working significantly fewer hours.



Fortune Brands Inc., which makes consumer products ranging from Jim Beam bourbon to Titleist golf balls, said it expects its first-quarter profit to beat analyst expectations but slashed its dividend by 57 percent in a cash-saving move.

Fortune Brands expects to report a profit of 5 cents per share for the first three months of the year. Excluding one-time items, the company expects a profit of 30 cents per share.

The International Air Transport Association said that the global recession continued to draw down industry demand and revenues in March, though stabilization in cargo shipments offers a "glimmer of hope." For March, international cargo traffic fell 21.4% compared to a year ago, the fourth consecutive month where the decline hovered around the 21% to 24% range, IATA said. "It's not the end of the recession, but we may have found the floor," the trade group said in a statement. International passenger traffic fell 11.1% for March, while airlines cut capacity by just 4.4%, leading to a 5.4 percentage point decline in average load factor at 72.1%, IATA said. International revenues in March are expected to be down 20%, the group said.

Paccar Inc.said that first-quarter earnings fell to $26.3 million, or 7 cents a share, from $292.3 million, or 79 cents a share, in the same period a year ago.

Nokia said it's cutting 450 jobs as it plans to focus investments on fewer services initiatives and increase the use of common enablers.

U.K. Chancellor Alistair Darling has ruled against breaking up Britain's largest banks and may force them to adopt higher capital ratios as an insurance gainst future financial crises, the Financial Times reported.

Jacobs Engineering cut its per-share profit outlook for fiscal 2009 to a range of $3.10 to $3.50, down from the previously issued forecast of $3.55 to $3.90.

United States Steel Corp.said it swung to a net loss for the first quarter and slashed its dividend by 83%.

The Dow Jones Industrial Average fell 51.29 points, or 0.6%, to 8,025.00. The S&P 500 Index shed 8.73 points, or 1%, to stand at 857.50, while the Nasdaq Composite declined 14.88 points, or 0.9%, to 1,679.41.

The U.S. Treasury Department said Monday it expects to issue $361 billion in debt in its second quarter, almost double what it estimated three months ago.

Sunday, April 26, 2009

Sky-High Deficits

4/26/09 Sky-High Deficits

"In order to achieve a stable oil market, the influence of excessive speculative activities in the oil exchanges, which lead to price volatility, should be limited through more regulation and control," Hossein Noqrekar-Shirazi, Iran's deputy oil minister for international affairs was quoted as saying by Iran's Press TV.
Saudi Oil Minister Ali al-Naimi urged his colleagues to confront what he said was unfounded fears about supplies, adding that such perceptions had "largely contributed to skyrocketing prices, in the past," the official Saudi Press Agency reported.
The statement issued by the officials said that volatility in the market is harmful to both producers and consumers and that "financial markets have an impact on oil price formation," according to Kyodo. It said officials, tackling the issue of supervision of over-the-counter markets and transparency, called for "further harmonized actions such as introduction of position limits."
OPEC, along with the International Energy Agency, has repeatedly warned about the dangers of falling investment in the oil sector. While many projects have been scaled back or delayed, many of its most influential members have said they are pressing ahead with oil investments despite the downturn.

Mike Burk: "On March 6 there were 827 new lows on the NYSE and 567 on the NASDAQ. Those numbers are big enough to suggest a high likelihood of a retest of the March 9 lows.
Since the March low each successive high has been accompanied by an expansion of new highs, that pattern failed last week.
It has only been a week and things could change quickly, but, for now, the deterioration in new highs suggests a weakening market....I expect the major indices to be lower on Friday May 1 than they were on Friday April 24."

U.S. dollar buying 96.81 yen vs 97.38 yen Friday.

Spot gold prices up $4.20 to $917.20 a troy ounce.

Buyers for Gatwick airport in London have until Monday to submit bids, BBC News reported Sunday.

People’s Bank of China Governor Zhou Xiaochuan said China’s current-account surplus “‘will no longer be a serious problem” as the country’s economic-stimulus plan stokes domestic demand.
Zhou, speaking to reporters in Washington yesterday, said “hopefully the current-account surplus is going to shrink” as China’s economic stimulus plan begins to show results.
“For the medium term, I think probably this will no longer be a serious problem,” said Zhou, who was in Washington for the International Monetary Fund meeting.
China’s current-account surplus rose 15 percent to $426 billion last year, the State Administration of Foreign Exchange reported last week.

“The economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers, director of the White House National Economic Council, said yesterday on “Fox News Sunday.”

At least one of the 19 financial institutions that received a government stress test would require additional capital, based on the initial findings, according to a source.

Budget deficits across the industrialised world will remain sky-high next year in spite of reduced spending on fiscal stimulus, the International Monetary Fund warned on Sunday.
It said the Group of 20 leading economies taken together would run a budget deficit of 6.5 per cent next year compared with 6.6 per cent in 2009.

Cholesterol-lowering drugs called statins that are a major weapon against cardiovascular disease may also protect men against prostate cancer and other urological problems, new research suggests.
In a study involving 2,447 men who were followed for 14 years, those taking statins were two to three times less likely to be diagnosed with prostate cancer compared with those who weren't taking the medicines. The longer they were taking the medicines, the lower their risk of the cancer. The men were similarly less likely to have a biopsy to test for prostate tumors or to have elevated levels of prostate-specific antigen, or PSA, a marker for increased risk of the disease.
The findings were presented Sunday at the meeting of the American Urological Association here. Researchers from the Mayo Clinic, Rochester, Minn., who conducted the study, said the results were intriguing, but they cautioned that they are from an observational study and not robust enough to recommend statin therapy to aid in prevention of prostate cancer. That would take a large and prolonged randomized trial.
"It was a fairly substantial lower risk," said Jennifer St. Sauver, an epidemiologist at Mayo and one of the investigators on the study. "If men are already taking statins for something else, maybe they are getting another benefit as well."

The United Auto Workers union says it has reached a concession agreement with Chrysler, Fiat and the US government. The union says the deal is painful but takes advantage of the second chance the company was given by the Treasury Department.

Japan gov't expects economy to shrink 3.3% in FY09.

Breaking The Law

4/25/09 Breaking The Law

China's Chery Automobile Co. reportedly plans to invest as much as $700 million to build a production plant in Latin America's largest country.
A company executive in Brazil tells O Estado de S. Paulo newspaper he expects the factory will begin operating in two years with an annual production capacity of up to 150,000 vehicles.

Spain’s unemployment rate rose to 17.4% in the first quarter.

REPORTER: If Henry Paulson and Ben Bernanke really told the CEO of Bank of America to keep quiet about losses at Merrill Lynch, they were probably breaking the law. That’s according to Lynn Turner, former chief accountant at the SEC.
LYNN TURNER: If these allegations are proven true, both Bernanke and Paulson should be prosecuted by the SEC to the fullest extent of the law.

Eric Savitz: "THE STREET'S ENCHANTMENT WITH all of that cost-cutting is not good news for the Valley's army of engineers, programmers, marketers and salespeople. The jobless rate in Santa Clara County, Calif., is up to 10.8%, and you can bet that the number will move even higher."

Barack Obama’s administration should seize the political opportunity offered by Goldman Sachs‘ and JPMorgan‘s request to repay $45bn in troubled asset relief funds, according to Barney Frank, the influential Democratic lawmaker.

Robert Reich: "As delinquencies mount and profits shrink, card lenders are raising fees and interest rates, including rates on existing balances. They're also charging higher fees when customers exceed their credit limits, and shortening the duration of the teaser rates. When a customer makes a payment in excess of what's owed, card companies now routinely apply the excess to balances with the lowest rates rather than those carrying the highest rates. And banks disclose very little of relevance: For example, most customers have no idea how long it will take them to pay off their balances if they make minimum repayments, or what interest they're actually paying on their balances.As more and more Americans find themselves in the credit-card squeeze, they're complaining loudly. But the bankers have their own loud lobbyists on Capitol Hill, whose voices haven't been muzzled despite the giant bank bailout. Last month, the Senate Banking Committee reported a bill that bans rate increases for existing balances, among other things. But the vote was close -- 12 in favor, 11 opposed -- and its future in the Senate is uncertain. A House bill advanced yesterday, sponsored by Representative Carolyn Maloney, Democrat from New York, has only a fifty-fifty chance of succeeding. Meanwhile, the Fed is working on a set of watered-down reforms scheduled to go into effect a year from July, but that's way too far off to avoid the pending battle. Enter Obama. The Treasury holds lots of cards given how dependent the big banks are on its solicitude. Meanwhile, the public has grown weary and suspicious of the bank bailouts. Knowing how unpopular the bailouts have become, the Administration is considering how to get additional capital to the banks without going back to Congress for the money. One big idea is to convert taxpayer-provided bank loans into bank equity -- even though the swap puts taxpayers at greater risk (after all, loans have to be repaid, but equity can continue to fall). That's why getting tough on the banks' credit card lending practices has such appeal for the Administration, politically. It puts the White House on the side of the people rather than Wall Street, on an issue that the public is becoming more and more upset about. And the Administration's push could be enough to get reform legislation through Congress."

Floyd Norris: "THE current recession has become the second-worst in the last half-century and is close to surpassing the severe 1973-75 downturn, according to the Index of Coincident Indicators, based on government data and compiled each month by the Conference Board, a private organization.
Unlike the more widely followed Index of Leading Indicators, which is supposed to help forecast changes in the economy, the coincident index is aimed at simply recording how the economy is doing now.
The decline in the 1970s recession was 6 percent, a figure that is likely to be eclipsed within a few months."

Bloomberg writes “The U.K.’s top sovereign credit rating may be at risk as the government’s finances worsen, Moody’s… said. Britain’s ‘balance sheet is deteriorating rapidly, due to a combination of weakening revenues and the accumulation of sizeable assets and contingent liabilities as a result of successive bank bailouts,’ analysts at Moody’s led by Arnaud Mares… wrote… ‘The government is taking risks with public finances.’”

Doug Noland: "If we step back and ponder the unprecedented scope of today’s global fiscal and monetary stimulus, we shouldn’t be all that surprised by the fledgling reflationary forces observable both at home and abroad. I have labeled emerging dynamics the “Government Finance Bubble.” There is mounting evidence that this Bubble is developing critical mass and should be taken seriously."

John Mauldin: "At some point inflation starts to show up again, because when you start running two-trillion-dollar deficits and you start trying to borrow it, at the same time the Fed is printing money, at some point in this process the bond markets (and the currency markets) are going to rebel. An unsustainable trend will keep going until it stops. I don't know when that day is, but the current policies mandate that we will hit the proverbial wall. One day it will be just like August 2007. Someone is going to ring a bell and the Treasury bond market is going to look the deficits and wonder how they will fund them, and they are going to let out a huge gasp and then throw up. Because you can't run two- to three-trillion-dollar deficits as far as the eye can see....I think we are going to lower valuations, and when that happens we will have compressed price to earnings ratios just like we did in 1982. The world will be coming to an end and we'll be moaning and groaning. We haven't gotten as bad as we were in '82 -- whoever pointed that out is correct.
But what will happen? The stock market will be a coiled spring and we'll have a bull market and we'll get to have fun in the stock market again. Until then, be careful."