Friday, June 12, 2009


6/12/09 OPEC

According to Reuters, World Bank President Robert Zoellick said “I personally believe you might be able to see some aspects of recovery in 2009 and 2010, but from a policy point of view, that isn’t the core question because we have a large degree of uncertainty.”

The Organization of Petroleum Exporting Countries said oil production rose for a second month in May, weakening compliance with quotas, as the group lowered its forecast for global oil demand in 2009.

The 11 OPEC members bound by production quotas, which exclude Iraq, pumped 25.903 million barrels a day in May, an increase of 118,800 barrels a day from April, the Vienna-based organization said in its monthly oil report today, citing secondary sources that include estimates from analysts and news organizations.

According to AMG Data Services, May Equity Fund Inflows $21.4 Bil; Taxable Bond Fund Inflows $35.6 Bil
xETFs - Equity Fund Inflows $13.8 Bil; Taxable Bond Fund Inflows $29.9 Bil.

For the week ended June 10, Equity Fund Inflows $5.6 Bil; Taxable Bond Fund Inflows $3.5 Bil
xETFs - Equity Fund Inflows $978 Mil; Taxable Bond Fund Inflows $2.6 Bil

U.S. import prices rose 1.3 percent in May, the Labor Department said on Friday, but the gain was powered by petroleum prices and underlying import price pressures were more muted. Year-over-year, import prices declined by a record 17.6 percent.

Non-petroleum import prices rose 0.2 percent in May, the first increase since July 2008, and were down a record 5.8 percent over the year.

Export prices rose 0.6 percent in May compared with forecasts for a 0.4 percent gain. They rose 0.4 percent in April and are down 6.5 percent over the year.

Soros Says CDS are Destructive, Should be Outlawed.

Ecuador bought back 91 percent of its defaulted bonds via an international auction and renewed threats to take action against other "illegal" debt, the country's leftist government said on Thursday.

President Rafael Correa called the debt buyback a "resounding victory" and the start of a new era in international markets that he says are at fault for the global financial crisis hurting poor nations. Ecuador shocked investors by refusing to pay $3.2 billion in 2012 and 2030 global bonds last year, saying the debt was riddled with irregularities when issued in 2000 after the renegotiation of a previous default.

According to a report from market researchers NPD Group, May was the first time since August 2007 that the games industry made less than $1 billion from consoles and games, with revenues of just $863.3 million - a drop of 23 percent on last May's figure.

Industrial production in the 16 countries that use the euro dropped by a record 21.6 percent in the year to April, official figures showed Friday, stoking fears that the euro zone remains in the grip of recession despite signs elsewhere that a recovery of sorts may be underway.
The European Union's statistics office Eurostat said industrial output during the month fell by 1.9 percent in April -- the eighth consecutive monthly decline. That was more than the 1 percent markets expected and higher than the 1.4 percent recorded in March.

August gold fell $14.70, or 1.5%, to $947.30 an ounce in early North American electronic trading.

Medicare pays hospitals 71% and doctors 81% of what private insurers pay.

Arthur Laffer: "We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s."

The ratio of household net worth to personal disposable fell to 4.67 times, the lowest since the third quarter of 1992.

Leaders of Brazil, Russia, India and China will probably use their first summit next week to press the case that their 15 percent share of the world economy and 42 percent of global currency reserves should give them more clout.

As of June 11, 2009, W.H.O. lists seventy-four countries that have officially
reported 28,774 cases of swine flu A/H1N1, including 144 deaths.

On Feb 23, Moody's cut Fiat's debt rating to junk status. That made them a perfect candidate to take over Chrysler! It's a marriage made in hell.

VF Corp , owner of brands such as Wrangler, Lee, Vans and The North Face, has seen its markets in the United States "stabilize" but does not expect a return to growth in 2009, its chief executive said on Friday.

The University of Michigan and Reuters consumer sentiment index rose to 69 in mid-June from 68.7 in May.

About 3 months ago Microsoft traded at $15 and is now $23. The stock has barely had a downtick during this period.

The Dow Jones industrial average gained 28.34 points, or 0.32 percent, to 8,799.26. The Standard & Poor's 500 Index gained 1.32 points, or 0.14 percent, to 946.21. The Nasdaq Composite Index dropped 3.57 points, or 0.19 percent, to 1,858.80.
For the week, the Dow gained 0.4 percent, the S&P 500 added 0.7 percent and the Nasdaq rose 0.5 percent.
For the year, the blue-chip Dow average is up 0.26 percent.

Thursday, June 11, 2009

Household Net Worth

6/11/09 Household Net Worth

The number of first-time claims for state unemployment benefits fell 24,000 to 601,000 in the week ended June 6, the Labor Department reported Thursday. The four-week average of initial claims fell 10,500 to 621,750. In the week ended May 30, continuing claims for benefits reached a new record high, rising 59,000 to 6.82 million from an upwardly revised level in the prior week. Continuing claims have set fresh record highs for 19 consecutive weeks. The four-week average of these continuing claims rose 57,250 to a record 6.75 million. The level of initial claims is up 55% from the same period in the prior year, and the level of ongoing claims is more than double last year's level. The insured unemployment rate - the proportion of insured workers who are collecting benefits - remained at 5.1%, the highest rate since December 1982.

The latest jobless claims show the economy may have a "jobless recovery" that could hurt stocks, Art Cashin told CNBC.

Foreclosure filings in May fell 6% from April, but rose 18% from May 2008, RealtyTrac reported on Thursday. Foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on nearly 321,500 properties in the month. May was the third straight month in which filings exceeded 300,000. One of every 398 U.S. housing units was the subject of a foreclosure filing in the month, the Irvine, Calif., consultant and marketplace reported. RealtyTrac reported fewer defaults and auctions but a 2% increase in bank repossessions. Nevada remained the state with the highest foreclosure rate, with 1 in 64 housing units the subject of a filing. California was second with 1 in every 144, and Florida was third with 1 in every 148.

Aerial Services of Livermore, is a frontline warrior in locating the backyard breeding sites. Last year, mosquito districts hired it to fly over almost every county in California. It covered 3,500 square miles - about one-third of the state's urban area - and "harvested" 27,000 algae-ridden pools, providing the districts with photographs, maps, street addresses, latitude/longitude and parcel data, including ownership.
"We find lots of mosquito sources at foreclosed homes," said John Rusmisel, district manager for Alameda County's Mosquito Abatement District. "It's an ongoing and big problem."
He hired Aerial Surveys to do surveillance over 75 square miles of the Tri-Valley area last week at a cost of $8,000 to $10,000. "Google Earth is great, but if you want to know real-time, an airplane is best," Rusmisel said.
Foreclosures and the economic downturn have ramped up the mosquito districts' work. In Contra Costa County, for instance, of 25,000 homes that were in the foreclosure process in 2008, more than 2,000 had swimming pools, according to the Contra Costa Mosquito & Vector Control District.

General Motors Corp. plans to cancel production of the hybrid-electric version of its Chevrolet Malibu sedan for the 2010 model year due to slow sales that has led to a backlog of inventory of the vehicles on dealer lots, The Wall Street Journal reported late Wednesday

The International Energy Agency increased its forecast of 2009 world oil demand by 120,000 barrels a day, citing stronger-than-forecast first quarter data from countries belonging to the Organization for Economic Cooperation and Development. Global oil demand is projected at 83.3 million barrels a day, down 2.9% compared to year earlier. "These revisions do not necessarily imply economic recovery but may reflect a slowing in previously sharp decline," the IEA said.

The World Health Organisation (WHO) was poised on Thursday to declare that the new H1N1 virus has caused the first influenza pandemic in more than 40 years, health sources said on Thursday.

China's investment surged in May as the government poured money into its economic stimulus, helping to offset an unexpectedly sharp drop in trade, and economists said the world's third-largest economy was improving.
Spending on factories and other fixed assets soared 32.9 percent in the first five months of the year, the National Bureau of Statistics said. Merrill Lynch said that translated into growth in May of up to 38 percent.
"Domestic activity has picked up, thanks to the government stimulus spending," said economist David Cohen of Action Economics in Singapore.
May exports fell by a record 26.4 percent from the same month of 2008, while imports contracted by 25.2 percent, the customs agency said Thursday. That exceeded most economists' forecasts.

The next test of the US Treasury’s issuance program looms on Thursday with the sale of $11bn in 30-year bonds. An auction of 30-year bonds last month went badly as investors signalled their concerns about the budget deficit.
“That did not go well last time, so there is also some additional concern,” said Dominic Konstam, head of interest rate strategy at Credit Suisse.
Traders said the good news of the day was that buyers entered the market when yields reached 4 per cent. “There should be natural support for the 10-year note around 4 per cent,” said Mr Konstam.

U.S. ad spending on media such as TV, print and online display ads fell 14% to $30.18 billion in the first quarter from a year earlier, according to TNS Media Intelligence.

Obama has now hired 21 czars with more on the way. That's what we need---more gov't
employees to add to the multi-trillion dollar budget deficit. Maybe if Obama cut down on his daily speeches and travel plans, he could actually perform some of this work himself. I guess 365 day campaigning is too time consuming.

July copper was last up 4.3 cents, or 1.8%, at $2.41 a pound on the Comex division of the New York Mercantile Exchange. August gold fell $8.40, or 0.9%, to $946.30 an ounce, and July silver lost 25 cents, or 1.6%, to $14.975 a pound. Oil futures extended their gains on Thursday after data showed a rise in U.S. May retail sales as well as a decline in weekly initial jobless claims. Crude oil for July delivery gained 70 cents, or 1%, to $72.06 a barrel in electronic trading on Globex.

The Clorox Co. said its board declared a quarterly dividend of 50 cents a share, payable Aug. 14 to stockholders of record on July 27. The amount represents an increase of 4 cents a share, or 9%, in the company's quarterly dividend. Clorox confirms 2010 earnings per share in the $4.00-to-$4.15 range and 1% to 2% sales growth.

Japan's economy shrank at a 14.2 percent annual pace in the first quarter -- better than first thought, but still the worst quarterly contraction ever for the world's second-largest economy.

On Wednesday, rates on 30-year fixed-rate mortgages climbed to 5.79%, up from 5% two weeks ago, according to HSH Associates. That jump will cut roughly in half the number of borrowers with an incentive to refinance, according to FTN Financial.

The White House has refused a request from Sen. Chuck Grassley for all the exemptions it’s granted to President Barack Obama’s ethics policy.
“The American people deserve a full accounting of all waivers and recusals to better understand who is running the government and whether the administration is adhering to its promise to be open, transparent and accountable,” Grassley wrote in a letter Wednesday to the director of the U.S. Office of Government Ethics.
Obama tasked that independent agency with implementing his ethics policy, and Grassley’s letter asks the office to explain every waiver and recusal granted under the policy and to post them on its website.

Brazil says it is to offer $10bn in financing to the IMF to help improve the availability of credit in developing countries.

It is the first time that South America's biggest economy has ever made a loan of this kind.

At least 35 states have introduced legislation this year asserting their power under the Tenth Amendment to regulate all matters not specifically delegated to the federal government by the Constitution.
"This has been boiling for years, and it's finally come to a head," said Utah State Rep. Carl Wimmer. "With TARP and No Child Left Behind, these things that continue to give the federal government more authority, our rights as states and individuals are being turned on their head."
Montana Gov. Brian Schweitzer recently signed into law a bill authorizing the state's gun manufacturers to produce "Made in Montana" firearms, without seeking licensing from the federal Bureau of Alcohol, Tobacco, Firearms and Explosives. Similar laws are being considered in Utah, Alaska, Texas and Tennessee.
The Montana law is expected to end up in the courts, where states' rights activists hope judges will uphold their constitutional right to regulate firearms.
That would reverse a longstanding trend, said Martin Flaherty, a professor of constitutional law at Fordham Law School.

Robert Natelson, a law professor at the University of Montana: "If the states are serious about returning the federal government to its historical origins, they're going to have to do more than pass resolutions. They're going to have to turn down money and litigate."

Ayn Rand: "The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."

Qualcomm now expects third-quarter operating profit of $830 million to $880 million, up sharply from its earlier estimate of $550 million to $650 million. "We are very pleased to raise our fiscal third quarter guidance, reflecting the strong worldwide demand for wireless broadband powered by 3G CDMA," the company said. However, they cautioned that it sees Q4 chipset units declining sequentially, putting a damper on the upbeat outlook for the current quarter.

500 jets have been sidelined since the start of 2008. Delta Air Lines said Thursday it will cut 10% from its system capacity this year as it wrestles with falling demand and rising oil prices. The Atlanta-based carrier and the world's largest airline said it would also reassess its staffing needs among its 70,000 employees. In a letter to employees, company executives said industry passenger revenue has fallen 20% in the first four months of the year compared to the same period in 2008, overtaking more than $6 billion in total benefits expected this year from lower jet fuel prices.

According to RGE Monitor, Russia, Brazil, India and South Korea have all expressed interest in buying the SDR denominated bonds issued by the IMF to meet its funding needs. Saudi Arabia might also be interested. these bonds would not only allow them to diversify their reserve assets but also provide limited duration funding for the IMF as it expands its mandate.

The IMF has raised global growth estimates for 2010 to 2.4 percent from 1.9 percent in April, a G8 source who has seen the latest figures said on condition of anonymity.

The yield on 30-year Treasury bonds rose to 4.84%. The 10-year Treasury yield was as high as 4.0038 percent, at 9:05 a.m. in New York, according to BGCantor Market Data. The yield last touched 4 percent on Oct. 16.

Investors in bonds that packaged $62 billion of debt for U.S. offices, hotels and shopping malls are bracing for more loan defaults through 2010 as Bank of America Merrill Lynch says landlords’ monthly payments may jump 20 percent or more.
Principal is coming due on the so-called partial interest- only loans as an 18-month-old recession saps demand for commercial real estate. About $179 billion of such loans were written between 2005 and 2007 and bundled into bonds, according to data from Bank of America Merrill Lynch.

My best indicators for the consumer remain Wal-Mart and Costco. There is nothing in their most recent sales to indicate the consumer is becoming looser with their dwindling available funds. As such, in my view, the economy remains headed for a one-way ticket to Palookaville.

U.S. businesses reduced their inventories for the eighth straight month in April. Business inventories fell 1.1%. Meanwhile, business sales fell 0.3% in April. With inventories falling faster than sales, the inventory-to-sales ratio fell to 1.43 from 1.44 in March. The ratio was 1.27 a year ago, an indication of just how far inventories have gotten out of line with sales. Retail inventories fell 1% and retail sales fell 0.3%. Auto dealers' inventories fell 2.4%.

The European Central Bank fears another banking crisis in 2010 if the recession drags on, said ECB financial stability expert Dejan Krusec on Wednesday, cited on the website of the Daily Telegraph.
"The problem is not 2009. Euro-area banks are well enough capitalized to cover losses. The problem is 2010. We are concerned about the length (of the recession)," said Krusec.

The newspaper added that the ECB forecast of a 4.6 percent contraction this year with no recovery until mid-2010 precluded any chance of a V-shaped rebound.

Copper imports by China, the world’s largest consumer of the metal, climbed for a fourth month to a record in May, beating analyst expectations.
Inbound shipments advanced by 6 percent from the previous month to 422,666 metric tons, the Beijing-based customs office said today, citing preliminary data. A decline to a level above 300,000 tons had been expected, Minmetals Starfutures Co. said.

China has become a net importer of lead. About 1.6 Mt of mined zinc production has been cut or closed and 1.4 Mt of refined zinc output in 2009. Importantly, some of the mine closures are likely to be permanent, while others will take time and require financing to restart.

Hitwise said 36% of the U.S. traffic to Bing came from other MSN web sites.

Natural gas inventories rose 106 bcf last week. After the data, July natural gas rose 11.7 cents, or 3.1%, to $3.825 per million British thermal units.

"A long slog, with continuing high levels of unemployment, seems to be in store," Volcker, a former chairman of the Federal Reserve, said.

"This is not an environment in which inflationary pressures are at all likely for some time to come," he added.

The yield advantage of 10-year Treasury notes over comparable- maturity German bunds increased to the widest level since October 2007. Relative return on assets is one thing.

Relative risk is something else. In my view, the Fed's toxic balance sheet and the nation's multi-trillion deficits project high levels of risk.

The Federal Reserve was served a subpoena from a Congressional committee Tuesday, as lawmakers demanded documents related to Bank of America' s acquisition of Merrill Lynch.

Neither the Fed nor the U.S. Treasury can master the business cycle. Printing trillions of dollars of debt will ensure a market crash. You can go to the bank on that-- as long as it is not a federal insured institution.

The net worth of U.S. households fell by $1.3 trillion in the first quarter, a seventh straight decline that has seen their wealth drop by nearly $14 trillion, the Federal Reserve reported Thursday. Household net worth fell at a 9.9% annual rate in the first three months of the year to $50.4 billion, the lowest in more than four years. U.S. families have lost 22% of their wealth since the peak. Households and businesses reduced their outstanding debt in the quarter. Total private-sector debt fell at a 0.4% annual pace, the first time that private-sector debt had declined since the Fed's records begin in 1952.

Karl Denniger: "That is, asset values have declined at a rate nearly ten times that of the debt in the system against those assets." As debt service gets more difficult, he says, the permanent drag on consumption remains."

With an hour and one half to go in the trading session, the Dow is up 100 points and the VIX has declined to 27+. Another 5% drop or so, and one might consider going long the VIX.

August gold finished at $962 an ounce, up $7.30, or 0.8%. Crude ends up $1.35, or 1.9%, at $72.68 a barrel.

The Treasury Department sold $11 billion in 30-year notes on Thursday to yield 4.72%. Bidders offered 2.68 times the amount of debt being sold.

According to Bloomberg, Brazil, Russia, India and China’s plan to shift some foreign reserves into International Monetary Fund bonds may be more a signal of their growing financial clout than a lack of demand for U.S. assets.

“They’re saying they are part of the big leagues,” Alberto Ramos, an economist at Goldman Sachs Group Inc., said in a telephone interview from New York. “They’re not buying IMF bonds to diversify reserves. They want to be seen as having a large voice” in global markets, he said.

The outstanding call options on the UNG October $20 strike price amounts to about 61,000 contracts. With UNG at $14.80 and the calls going for 90 cents, that's a big bet natural gas will have a large move in the next several months.

The U.S dollar index closed very weak at 79.40.

The Dow ends up 31 points, the Nasdaq up 9, and the S&P UP 5.

Wednesday, June 10, 2009

Audit The Fed

6/10/09 Audit The Fed

The Federal Reserve's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant's Interest Rate Observer, told CNBC.

The U.S. trade deficit widened by 2.2% in April to $29.2 billion, the Commerce Department said Wednesday. The deficit was in line with the consensus forecast of Wall Street economists. Exports fell faster than imports in January. Exports are now at their lowest level since July 2006 while imports have sunk to their lowest level since September 2004.
In April, the goods and services deficit decreased $33.0 billion from April 2008. Exports were down $33.7 billion, or 21.8 percent, and imports were down $66.7 billion, or 30.7 percent.

According to the WSJ, the tally of credit derivatives worldwide stood at $27.8 trillion in 2.2 million contracts in the week ended June 5.

The Obama administration's attempts to fight the financial crisis with more cash is like treating a bad tooth with Novocain instead of a root canal, Nassim Taleb, author of "The Black Swan," told CNBC Wednesday.

In Japan, orders for machinery slid 5.4 percent in April from a month earlier, much more than analysts had expected, official data showed Wednesday.

Brazilian mineral extractor Vale said that it has concluded iron ore and pellet price negotiations for 2009 with Nippon Steel Corporation and POSCO. The settlement was followed by the Japanese steelmakers Sumitomo Metal Industries, Kobe Steel and Nisshin Steel Co. Prices for iron ore fines decreased by 28.2% and for lumps by 44.47% compared to a year ago. The new reference prices per dry metric ton iron unit for 2009 are $0.8543 for Southeastern System fines, $0.8987 for Carajás sinter feed, $0.9942 for Southeastern System lump and $1.0094 for Southern System lump. The blast furnace pellet price decreased by 48.3% relatively to 2008 and the new reference price per dry metric ton iron unit for 2009 is $1.1043.

At the end of 2008, the world's proven oil reserves stood at 1.258 trillion barrels, excluding Canadian oil sands, down 0.2% from 1.261 trillion barrels in 2007, according to BP's statistical review of world energy released Wednesday. Over the year, global oil consumption fell by 0.6%, or 420,000 barrels a day; the first decline since 1993 and the largest drop for 27 years. World primary energy consumption - including oil, natural gas, coal, nuclear and hydro power - grew by 1.4% in 2008, the slowest growth since 2001.

Home Depot Inc. raised its profit forecasts for the year Wednesday. It estimated its per-share profit to be flat to down 7% with adjusted profit declining by 20% to 26%. That compared with its previous guidance of profit falling 7% and on an adjusted basis, dropping by 26%. Its sales are estimated to decline by about 9% with comparable store sales expected to fall in the high-single-digit percentage.

Hong Kong shares rallied Wednesday, led by China shares after mainland media indicated upside surprises in economic data due out later this week. The Hang Seng Index ended 4% higher at 18,785.66 and the China Enterprises Index, the local benchmark of China shares, jumped 5% to 11,033.55. Two Chinese newspapers reported industrial production data for May, due to be officially released Friday, rose by 8.9%. The newspapers both accurately reported PPI and CPI data ahead of the official release Wednesday.

Fontainebleau Las Vegas, a $3 billion resort project, filed under the bankruptcy laws, The Wall Street Journal reported.

The average 30-year fixed mortgage rate jumped 0.32 percentage point in the June 5 week to 5.57 percent. That was nearly a full point above the record low rate of 4.61 percent in March, the trade group said.
The vast majority of mortgage activity this year has been from homeowners cutting costs with new loans at rock-bottom rates.
The Mortgage Bankers Association's seasonally adjusted index of total applications dropped 7.2 percent to a four-month low of 611.0 in the latest week.

The U.S. Supreme Court on Tuesday cleared the way for Chrysler LLC to exit bankruptcy court, lifting a stay on its proposed sale to a group including Italy's Fiat SpA. The Supreme Court, in a brief order, said that the funds had not "carried the burden" of proving that their grievances merited the court's attention. Indiana Treasurer Richard Mourdock said he was "disappointed" by the decision. Thomas Lauria, a White & Case lawyer who led the legal challenge, said his experiences in the past month "cause me to...directly raise the question as to whether our judiciary is today able to fulfill its constitutional mission, that is, to ensure that the rule of law prevails -- particularly in the face of perceived crisis."

Russia may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the central bank said today. The comment drove Treasuries and the dollar lower. As of late May, Russia's international reserves stood at $401.1 billion, the third biggest in the world.

Crude inventories fell by 4.4 million barrels in the week ended June 5, the Energy Information Administration reported. Analysts surveyed by energy information provider Platts had expected an increase of 800,000 barrels. Imports fell 676,000 barrels a day from the previous week, while gasoline demand rose slightly from a week ago, the EIA report showed. The EIA also said gasoline inventories fell 1.6 million barrels and distillate stockpiles declined 300,000 barrels.

Bobcat announced last week that its plants in Bismarck and Gwinner will shutter for part of June and July due to the sluggish worldwide economy.
The company says its Bismarck plant will be closed Wednesday through Friday and again July 6 through July 10.
At the Gwinner plant, production workers will be off the job from June 10 through June 12, from June 24 through June 26 and June 29.

Rob Hanna: " On Tuesday the Nasdaq/NYSE volume 20-day average closed over 1.65. High levels of Nasdaq trading as opposed to NYSE suggest excessive speculation by investors. Once this level exceeds 1.4 (as Tradestation measures it), is has generally indicated a bearish bias."

The Federal Reserve said 5 of its 12 banks saw the economic downturn moderating, though none of the districts saw growth returning this year, and also said credit conditions remained tight while wages and prices were flat or falling.

The U.S. federal budget deficit widened to $189.7 billion in May as receipts dropped and outlays rose on further spending for bailouts and stimulus programs, the Treasury Department reported Wednesday. Outlays rose in May to $306.9 billion, up 6% compared with May 2008. Outlays included $18 billion in the Troubled Asset Relief Program, which is the bailout fund for banks and the automakers. Receipts fell to $117.2 billion in May, down 6% compared with last May. Through eight months of the fiscal year, the budget deficit has widened to $991.9 billion, more than three times higher than the $319.4 billion recorded at this time last year.

The Treasury Department sold $19 billion in 10-year notes on Wednesday to yield 3.99%, the most the government has had to pay since August.

July crude rose $1.32, or 1.9%, to end at $71.33 a barrel on the New York Mercantile Exchange, closing at the highest level for a front-month contract since Oct. 20.

Ten lenders that persuaded the U.S. yesterday to sell back preferred shares for $68 billion may need to spend another $5.1 billion on warrants held by the Treasury to free themselves from government curbs.

Two U.S. auto-parts supplier trade groups asked the Treasury to provide as much as $10 billion in new aid as the industry struggles with cuts in car production.

The Federal Reserve lost $5.25 billion in the first quarter on the securities it acquired with last year's bailouts of Bear Stearns and insurer American International Group, according to a report issued Wednesday.

Cadence Design to cut 225 jobs, or 5% of workforce.

Dow industrials off 24.26 points to 8,738. Nasdaq Composite sheds 7.05 points to 1,853. The S&P 500 Index shed 3.27 points, or 0.4%, to 939.16

Vulcan Materials Co. is cutting its third-quarter dividend to 25 cents from 49 cents. It will also offer 11.5 million common shares in a public offering.

Ron Paul's bill to audit the Federal Reserve (HR 1207) now has 207 co-sponsors, and the numbers keep growing!

Brazilian interest-rate policymakers late Wednesday cut the country's benchmark interest rate by more than expected, to 9.25%. The cut of the Selic rate by 100 basis points surpasses expectations for a cut of 75 basis points, according to a poll of analysts conducted by Dow Jones Newswires. The reduction marks the fourth time this year that the rate has been cut, and it now stands at its lowest level since the Selic was established in 1999.

"While GM does not control the market or its stock price, GM management strongly believes that any recovery for the common stockholders in the Chapter 11 bankruptcy process is highly unlikely, even under the most optimistic of scenarios," the company said in a statement.

Tuesday, June 09, 2009

Economic Fascism

6/9/09 Economic Facism

Senior Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a Republican congressman said.
"We heard across the board -- in private -- substantial, continuing and rising concern," Representative Mark Kirk said after a trip to China that included talks with government officials and central bank chief Zhou Xiaochuan. "It's clear that China would like to diversify from its dollar investments," the lawmaker said at the Center for Strategic and International Studies, a Washington think-tank. Kirk said that Chinese leaders were sharply critical in private of the US Federal Reserve's policy of "quantitative easing" -- a form of flooding the financial system with cash, which critics deride as printing imaginary money.

Martin Hutchinson: "Reported growth in productivity is likely to be far lower in the next few years than in the recent past. Like the downtrend of 1973-82, the new downtrend will be difficult to explain and may be prolonged. The likelihood of a prolonged period of sluggish productivity growth is thus yet another reason to expect the 2010s to be economically a miserable period."

Talbots to cut corporate headcount by about 20%.

Lloyds Banking Group will cut more than 1,500 jobs and close all the branches of its Cheltenham & Gloucester mortgages and savings arm, according to a Sky News report

German retailer Arcandor AG says it has filed for bankruptcy protection, a day after the government rejected its bid for state-backed emergency credit.

Barry Ritholtz: "The bottom line remains: Two thirds of the economy is dependent upon consumer spending, Oil is now ~$70 a barrel (gasoline coming up on $3), and the consumer’s ability to borrow, tap equity, or otherwise live a profligate, unfunded lifestyle has been radically crimped. "

A new survey released last week shows the extent home prices are being reduced across the country. Nationwide, almost a quarter of homes on the market (23.6%) have experienced at least one price cut, totaling $27.4 billion in reductions. 28% of San Francisco listings are recording price chops with trimmings averaging 11% of the original price.

Ian Mathis: "According to Bloomberg, off-balance sheet assets just for the four biggest U.S. banks were about $5.2 trillion at the end of 2008. The rumor is that the new rule would force these banks to recognize only around $1 trillion of that. And though people say ‘off-balance sheet assets’ – what we are really talking about is more assets bought with very little equity.”

Gasoline prices remain well below those of last summer, when the national average for regular gasoline soared above $4, but economists say the recent gains are a growing economic problem and may presage a rise in the overall inflation rate.
“This hits everyone,” said Robert J. Shiller, an economist at Yale. “It has the potential to affect your confidence.” He said that the recent rise in gasoline prices could effectively offset the new $400 to $800 payroll tax cut most employees are receiving this year as part of the Obama administration’s effort to stimulate the economy.

William McGurn: "Of course, the inability to measure Mr. Obama's jobs formula is part of its attraction. Never mind that no one -- not the Labor Department, not the Treasury, not the Bureau of Labor Statistics -- actually measures "jobs saved." As the New York Times delicately reports, Mr. Obama's jobs claims are "based on macroeconomic estimates, not an actual counting of jobs." Nice work if you can get away with it."

Internet advertising in the United States dropped 5% in the first quarter, marking the marketing medium's first downturn since 2002 when the Web was still recovering from the dot-com bust.
The data released Friday by the Interactive Advertising Bureau and PricewaterhouseCoopers provided another reminder of the widespread pain wrought by the longest U.S. recession since World War II .

According to the WSJ, U.S. wholesalers reduced their inventories during April more than expected, and a gauge measuring undesired supply made a promising dip.

Wholesale inventories fell 1.4% to a seasonally adjusted $405.4 billion, after dropping a revised 1.8% during March, the Commerce Department said Tuesday. Originally, Commerce estimated inventories fell 1.6% in March.
Inventories at U.S. wholesalers fell in April for the eighth straight month as distributors tried to cut excess supply apace with decreasing sales.
The 1.4 percent decline in stockpiles was larger than forecast and followed a revised 1.8 percent decrease in March that was larger than previously estimated, the Commerce Department said today in Washington. Sales fell 0.4 percent to the lowest level since 2005.

Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index climbed to 50.8 in June from 48.6 in May, marking its highest reading since November 2008.

Blyth said it still expects to earn $3 to $3.30 per share in fiscal 2010. Lane said that estimate seemed "optimistic given continued sluggish fundamentals."

President Obama and his economic team are preparing regulatory reform measures that will seek to limit risk-taking on Wall Street, Treasury Secretary Timothy Geithner said Tuesday. "A centerpiece of what the President will recommend in terms of financial reform will be a much more conservative set of constraints on risk-taking across the financial system more evenly enforced with more effective oversight," Geithner told a subcommittee of the Senate Appropriations Committee. The plan will seek more tools for the Securities and Exchange Commission and bank regulators to curb excessive compensation practices on Wall Street. Economic fascism's finest hour.

The Energy Information Administration on Tuesday raised its outlook for this year's crude-oil and gasoline prices. Crude prices are expected to average $58.70 a barrel this year, the EIA said in a monthly report. That's up from the $52 a barrel the EIA had forecast a month ago. It also raised the outlook for next year's crude price to $67.42 from $58. The EIA also said regular gasoline prices are expected to average close to $2.70 a gallon in July. The annual average regular gasoline price in 2009 is expected to be $2.33 per gallon.

The S&P 500 has sustained a break atop its 200-day across six straight sessions.

Intel Corp.lost share in worldwide total microprocessor revenue in the first quarter of 2009, ending a year of sequential market gains, iSuppli Corp. said Tuesday. Intel's share fell 2.5% to 79.1%. Meanwhile, Advanced Micro Devices Inc.'s market share rose about 2.3% to 12.8%. Both chip giants suffered lower sales as a result of the economic downturn, iSuppli said.

Shares of Eddie Bauer plummeted 44.8% to 26 cents in recent trading. Hilco Consumer Capital LLC and CCMP Capital Advisors LLC have expressed interest in bidding for the company's assets in private talks, according to Bloomberg, and that the final decision on a bankruptcy filing has yet to be made.

Crude oil for July delivery rallied $1.92, or 2.8%, to end at $70.01 a barrel on the New York Mercantile Exchange. That's the first time a front-month crude contract closes above $70 since Nov. 4 of last year.

DJIA down 1.51 (0.02%) to 8,763. S&P 500 up 3.29 (0.4%) to 942.43. Nasdaq up 17.7 (1%) to 1,860.

The Energy Dept said natural gas production would fall 1.1% this year.

SUPREME COURT LIFTS STAY ON CHRYSLER-FIAT DEAL, REPORTS SAY. That is most unfortnate but hardly surprising.

Monday, June 08, 2009


6/8/09 Transportation "Microsoft may price Windows 7 as low as $100 to offset the effects of the recession on PC operating system sales and the public’s rejection of Vista, the current version of Windows.
The price cut would be unprecedented. It could drive up sales of Microsoft’s software and PCs in general. It could also put intense pressure on Redmond’s margins and sales.
According to ComputerWorld, Microsoft has already slashed the licensing prices for Vista in an attempt to revive anemic sales. Window 7 is viewed as a better product, so a $100 price point could get customers back into the habit of updating their operating systems with each new version of the Microsoft’s system."

The IATA expects global airline losses to reach as high as $9B in 2009, nearly double a previous forecast.

The government has shelved a plan to finance the investor purchases of mortgage loans.

A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency.
In an interview with Reuters, Guo said it was in American interests to see the yuan, also known as the renminbi, become a currency that is traded across the globe. He said that is largely because of the symbiotic relationship between U.S. purchases of Chinese goods and China's purchases of U.S. assets with the proceeds.

Guo, who is a former head of China's foreign exchange administration, said there should be "mutual cooperation" between the U.S. and China to promote China's financial sector and markets.

The difference in yield, or spread, between two- and 10- year notes narrowed to 252 basis points, the least since May 21. The so-called flattening yield curve indicated investors bet economic recovery will result in policy makers having to increase borrowing costs in the future.

McDonald's Corp. said Monday that global comparable sales rose 5.1% in May. In the U.S., same-store sales rose 2.8% and in Europe comparable sales rose 7.5%. Australia was the catalyst for 6.4% growth in the Asia/Pacific region. The company warned its profit in the second quarter could be cut due to fluctuating exchange rates.

Gold is up nearly 8% this year, and silver is up more than 30%. The Standard & Poor's 500 index has surged 39 percent from a 12-year low on March 9.

The delinquency rate for bank-issued credit cards rose 11 percent in the first three months of the year, according to credit reporting agency TransUnion.

The delinquency rate jumped to 1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion said. The statistic measures the percentage of card holders who are three months or more past due on their payments for cards bearing MasterCard and Visa logos, along with American Express and Discover cards.
The average total debt on bank cards also rose, jumping to $5,776 from $5,548 last year.

John Hussman: "We have an economy that is likely to produce a very stagnant recovery even if one has begun – of which I am also skeptical.... Last week, we abandoned the last of our index call options on strength, and are now back to a fully hedged position....
What about the March low? Given the recent advance, shouldn't investors treat that as an “absolute” buy level now? While it may sound absurd, it is not at all clear to me that the March low was the final low of the current cycle. Yes, it might have been (and we are willing to accept some amount of market exposure if our measures of internals improve), but I believe that investors should not rule out even the 500 level on the S&P 500 as a plausible outcome over the coming 18 months. If you study the fundamentals of this economy – particularly the debt burdens, the narrow margin by which many debtors are above water, and the adjustable rate reset schedule – there is far more to be concerned about than might be gleaned from sentiment surveys like consumer confidence or even the ISM numbers. Moreover, there is a far weaker prospect for a return to 2007-like profit margins than investors seem to recognize."

U.S. corn and wheat inventories before the 2010 harvests will be smaller than the government estimated in May as wet weather cut planted acreage and trimmed yields, analysts said. Soybean supplies on Aug. 31 may fall to the smallest in five years on record export demand.

Liz Pulliam Weston: "Of households that earn $20,600 or less, more than one in four devote at least 40 cents of every dollar earned to debt payments, according to the Federal Reserve's latest Survey of Consumer Finances. Among the top 10% of earners, by contrast, fewer than one in 25 households has debt service that large.

Among households earning $59,601 to $98,200, the percentage rose from 9.8% to 12.7%, or nearly 30%.
For those earning $98,201 to $140,900, the percentage more than doubled, from 3.5% to 8.1%."

General Mills said it expects fiscal 2009 earnings to exceed its prior profit outlook by several cents, due to a good operating performance and a lower quarterly tax rate.

Chinese vaccine maker Sinovac Biotech Ltd. said it has begun production of a vaccine to prevent the H1N1 virus, also known as the swine flu. The company said it is currently able to produce up to 30 million doses of pandemic vaccine per year, and hopes to combine the H1N1 virus into a broader pandemic vaccine known as Panflu. Sinovac added that the number of doses it is able to manufacture will depend on how the H1N1 virus batches perform.

Gerard Jackson: "The Obama administration is the most financially irresponsible one in US history. His outrageous spending and borrowing will lead to ever rising taxes (John Taylor estimates that balancing the budget, even in 10 years time, would require a permanent 60 per cent tax increase) the ramifications of which must inevitable bear down on economic recovery....What we need to consider is whether the point has now been reached where the size of the monetary injection needed to stimulate recovery is now so large that it results in stagflation....People do not seem to realise that the other term for economic growth is capital accumulation. There is absolutely nothing in Obama's economic program that will cause the capital structure to expand. On the contrary, everything points to a contraction. This means that real wages and living standards would have to fall."

S&P lowers Ireland long-term credit to AA.

Wells Fargo & Co., ProLogis and more than 150 other companies raised $82.2 billion this quarter, beating the record pace at the height of the technology bubble in 2000, according to data compiled by Bloomberg. The combination of adding shares and restricting dividends will reduce annual equity returns as much as 4.1 percent, the data show.
“The math is inescapable,” said Alan Gayle, the Richmond, Virginia-based director of asset allocation at Ridgeworth Investments, which manages $60 billion. “You’ve got weak earnings, the share price goes down and then, ‘What? They want to raise equity?’ Clearly that isn’t a good thing.”

Rob Hanna: "I noted in Thursday night’s Subscriber Letter that AAPL and GOOG had both risen for 8 days in a row. Additionally, those two along with MSFT and ORCL all had 2-day RSI’s of over 98. That’s an extremely overbought level. These 4 stocks are among the top 7 and make up about 26% of the Nasdaq 100. Using the list of current Nasdaq 100 stocks I studied action among the current 8 highest weighted. In addition to the 4 above this includes RIMM, QCOM, CSCO and GILD. I looked at other times since 2007 that at least 4 of these 8 stocks closed with a 2-day RSI in excess of 94. It’s not exactly a layup that a pullback should immediately begin. Still, risk appears to greatly outweigh reward when several of the top components are strongly overbought short-term. A brief look at the W/L Ratio suggests this. A pullback does normally come at some point in the next few days though. In fact of the 21 instances where the conditions were met, only one did not experience a close below the trigger day’s close within the next 4 days."

Julian Robertson: "I ask anyone to give me an example of an economy beefed up by huge amounts of quantitative easing that did not inflate tremendously when or if the economy improved. I think what we're doing now will either fail, or it will result in unbelievably high inflation - and tragically, maybe both. That would mean a depression and explosive inflation, which is frightening."

Texas Instruments Inc. raised and narrowed its second-quarter revenue and earnings per share estimates. The Dallas-based chip maker said it now expects revenue in the range of $2.3 billion and $2.5 billion, compared to a previous range of $1.95 billion and $2.4 billion. TI also said it now expects earnings per share in the range of 14 cents a share to 22 cents a share, compared with a prior range of 1 cent a share to 15 cents a share.

The U.S. Supreme Court blocked the sale of Chrysler's assets after a group of Indiana pension funds appealed the sale. The funds argued that the sale of Chrysler to Italian automaker Fiat is unconstitutional. A court spokesman said that the sale is stayed "pending further order of the court."

Down more than 100 points during the day, the Dow Jones Industrial Average rose 1.36 points to 8,764.4. The S&P 500 Index fell nearly 1 point to 939.14, while the Nasdaq Composite ended at 1,842.4, off 7.02 points.

The ATA Tonnage Index declined a seasonally adjusted 2.2% in April. This is better than the 4.5% contraction in March, but still negative. U.S. rail carload traffic in May 2009 fell 24.7 percent”, the worst y/y % decline of the recession. See the green shoots?

Sunday, June 07, 2009

Wages And Benefits

6/7/09 Wages And Benefits

Benjamin Franklin: “Let honesty and industry be thy constant companions, and spend one penny less than thy clear gains; then shall thy pocket begin to thrive; creditors will not insult, nor want oppress, nor hungerness bite, nor nakedness freeze thee”

Brian Pretti: "Very quickly, the history of the two components of the ECI (wages and benefits) is seen below. The year over year change in wages has never been this low in the records of the data. And in terms of growth in benefit costs, we’re pushing historical lows as we speak. What does all of this mean? It tells us labor is under serious total compensation pressure. And since benefit costs to employers are falling rapidly, this tells us one of two things is correct. Either employees are simply losing employer sponsored benefits they will need to make up on their own out of wages or total household resources, or their personal participatory costs in employer sponsored benefits are climbing rapidly (think co-pays, etc.). Either way, labor is under serious wage and benefit pressure, really unlike anything seen over the prior three decades at least.....The financial markets are trying their best to discount a typical consumer and/or corporate demand led economic recovery of the type seen over the past half century. Yet when looking at things like the credit markets, personal income circumstances and the complexion of household balance sheets crying out for deleveraging, current conditions are quite different than any recession of the prior half-century, with the government acting as Atlas holding up the world of "demand," per se, for now. Just what type of a valuation multiple do we put on a financial market under these character circumstances? This is a very important question the financial markets will be facing head on during the second half of this year and early next. For now, the key recovery fingerprints of every single economic recovery of the last half century are missing from the current puzzle (housing demand, auto demand and reacceleration in consumer credit growth). Standing in for these classic drivers is the US government. For how long will this be the case and what should investors be paying for this stand in role? Yes, the old market saw is hokey, but I can’t get this one out of my mind. First price, then optimism…then earnings. There can be no break in the chain in cyclical bull market character, and the first two have already gone a long way in terms of playing out. Absent household balance sheet reacceleration in leverage it sure seems a good bet forward corporate earnings are now as dependent on household wages, salaries and broader personal income as at any time in recent memory. And corporations to protect margins and nominal profits are pressuring wages and salaries downward. Time to place your wagers as we look ahead?"

"What we're seeing here is a bear market rally," Jim Lacamp, portfolio manager at RBC Wealth Management, told CNBC. "It could go higher, it could go substantially higher, but it is usually not the stuff that bull markets are made out of."

The federal government is seeing a surge in hiring -- including about 1.4 million workers for the 2010 Census. This is the employment stimulus package. What would nonfarm payrolls look like without census workers and the birth/death bogus job bullshit? Look at job sites and see how many jobs are offered. It should take you 5 minutes to go down the list.

The credit report is becoming the latest hurdle for unemployed workers in a dismal U.S. job market. Up to half of employers use credit screening to weed out potentially troublesome hires, though estimates vary, and the practice is on the rise. Mary M. Massad, managing director of screening services for personnel management company Administaff Inc., said credit checks help companies hire "the highest-quality individuals."

"China is going to be a positive force in the world and the market, and as a consequence, its power and influence are likely to grow. Personally, I believe it's going to grow faster than most people currently expect," Soros said.

Fools Rush In

6/6/09 Fools Rush In

Alan Abelson: "While payrolls slid by 345,000, much below the consensus guess, it was the usual hokey number, getting a lift from the wonderful birth/death model, which somehow summoned up 220,000 jobs and did so, magically, out of thin air."

Bill Gross: "Staying rich in this future world will require strategies that reflect this altered vision of global economic growth and delevered financial markets. Bond investors should therefore confine maturities to the front end of yield curves where continuing low yields and downside price protection is more probable. Holders of dollars should diversify their own baskets before central banks and sovereign wealth funds ultimately do the same. All investors should expect considerably lower rates of return than what they grew accustomed to only a few years ago. Staying rich in the "new normal" may not require investors to resemble Balzac as much as Will Rogers, who opined in the early 30s that he wasn't as much concerned about the return on his money as the return of his money."

President Dmitri A. Medvedev, who rarely misses a chance to accuse the United States of causing the global financial crisis, told an economic forum on Friday that wobbly American financial policy had made the dollar an undesirable currency for reserves held by central banks. A new world currency may be on the agenda when Medvedev meets counterparts from Brazil, India and China on June 16 at a summit in the Ural Mountains city of Yekaterinburg, the Kremlin said.

Doug Noland: "We’re witnessing the same analytical errors today that were made in the post-tech Bubble analysis: the willingness to inflate an even greater Bubble for the cause of mitigating the pain from the so-called deflationary risks associated with a bursting of THE Bubble. And with each reflation comes a heightened governmental role in both the markets and real economy – to the point where Washington is essentially backstopping the financial and economic systems.....An activist central bank pegging interest rates and manipulating the cost (hence, the flow) of finance creates wonderful opportunities for the savviest traders playing the money game most adeptly. The expansion of Bubbles creates great opportunities and then, for the enlightened, the bursting of these Bubbles provides only greater profits. Mr. McCulley is fond of blaming the “shadow banking system” for our acute financial and economic fragility. Yet the responsibility lies more generally with a deeply flawed monetary policy regime – a regime hopelessly locked in interest-rate manipulation and inflationism....I see no reason to back away from the view that the fundamental dilemma today lies not so much in finance but with our deeply impaired economic structure. This structure is a manifestation of years of mispriced finance, Credit and speculative excess, and resource misallocation. From this perspective, it should be obvious that greater Fed-induced market price distortions and Treasury/Fed-induced Credit expansion will only exacerbate structural impairment and delay readjustment....At some point the inflationists should accept the reality that they are a big part of the problem – and not the solution. Is that what the bond market is beginning to tell us? "

Mike Paulenoff: "The U.S. Nat Gas Fund ETF (UNG) was up for most of the session Friday, closing flat, while the U.S. Oil Fund ETF (USO) closed down more than three-quarters of a percent. My pattern work is warning me that crude oil prices are peaking, but that natural gas prices are bottoming. Could that actually happen?
I have been in this business long enough not to doubt what I think the charts are telling me. With that in mind, let's have a look at the pattern that continues to develop in the UNG. The UNG closed more than 40 cents off its intraday low and was threatening intraday to hurdle key micro resistance at 15.02 on the way to revisit its prior rally peak at 16.10. If such a scenario unfolds, then a hurdle of 16.10 will be considered extremely bullish and should trigger upside acceleration towards 17.75-18.00 thereafter.
At this juncture, only a sudden downside reversal and break of 14.00 will begin to compromise my current outlook." One should note the ratio of a barrel of crude to a thousand cubic feet of natural gas last week rose above 18-to-1, a rather elevated level not seen since the 1990-'91 period.

Bank of Lincolnwood, Lincolnwood, Illinois, was closed Friday by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Republic Bank of Chicago, Oak Brook, Illinois, to assume all of the deposits of Bank of Lincolnwood.

The Oil Drum: "Over the next 11 years, Canada's oil industry is likely to produce 500,000 barrels a day less than was forecast a year ago, the Canadian Association of Petroleum Producers (CAPP) said Friday.
The forecast for the oilsands has dropped even further, the industry group said in an annual report on expected future production."

In the U.S., long a lure for Latin American immigrants, the number of undocumented workers from the region appears to have peaked, and may now be falling, according to a recent study by the Pew Hispanic Center. The population of South Americans, for example, has declined by as much as 400,000 from a peak of about three million in 2006, says Pew demographer Jeffrey Passel. Much of the declines are among high-skilled workers from Colombia, where the security situation has improved, and Brazil, whose economy has seen huge growth in recent years.
"What we're seeing is the normal outflow" of migrants leaving the U.S. to go back home, and "a huge drop-off in the inflow" coming into the U.S., says Mr. Passel.
In the case of Mexico, Latin America's largest supplier of new immigrants to the U.S., data released this week by the Mexican government shows emigration to the U.S. dropped 13% in the first quarter of 2009. In the same period, more people returned to Mexico than left Mexico for the U.S., about 139,000 and 137,000, respectively.

A record 27 percent of the nation's 14.5 million jobless have been unemployed for about six months or longer. Many are only now seeing their unemployment benefits expire, their homes falling into foreclosure and their lives upended. The number of long-term unemployed (jobless at least 27 weeks) increased by 268,000 in May, to 3.9 million.
In April, 47.1 percent of all people collecting state unemployment insurance exhausted the usual maximum of 26 weeks of benefits without finding work, according to the Bureau of Labor Statistics. That is the highest rate on record, going back to 1972, when the Labor Department began keeping track.
The $787 billion stimulus package that Congress passed in February contained $27.1 billion to help states extend unemployment benefits. As of mid-May, 2.5 million people were collecting extended benefits. The time limit has been increased to 59 to 79 weeks.
In December 2007, there were about two unemployed workers for every opening, Labor Department data show. As of March, there were five for every opening.

The average 30-year mortgage rate rose to a six-month high of 5.29% this week from 4.91% the previous week, according to Freddie Mac. "If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity," said economist Ed Yardeni, who runs his own investment firm. "Even worse, they could abort any necessary recovery in home sales and prices."

Retail, manufacturing employment fell at an accelerating pace—by 156,000 jobs in May, compared with April's loss of 149,000 jobs. "The concern is that we're replacing $25-an-hour jobs with $12-an-hour jobs," says Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. Morici says this trend has been going on for decades in the U.S., but that "the recession is exacerbating this weakness in the economy." How about $8 an hour jobs!

"We're losing our middle class now," says Andrew Stettner, deputy director of the National Employment Law Project, or NELP, a low-wage worker advocacy organization. "Will those who lose middle-class jobs go back to middle-class jobs? That's the big question."

Michael Santoli: "When the corporate-level profit outlook is as hazy as it is now, and when the market has so confounded the majority's stance, the technical picture gets more attention -- thus, all the focus last week on the S&P 500's surpassing its 200-day average for the first time in 358 days, the longest such streak aside from the one that ended in the summer of 1932. The almanac says that when the index spent 200 or more days beneath the 200-day average, there then was typically some additional upside over subsequent months. But note that this market has also had to rise more in order to nudge above this 200-day measure than in any past instance, aside from '32 -- and that in early 2002, this crossover proved a painfully false signal of strength."

The Indiana pension funds which own $42.5M of Chrysler's $6.9B in secured debt pull out their last stop, appealing to Supreme Court Justice Ruth Bader Ginsburg to block Fiat's purchase of Chrysler's assets. Unless Ginsburg decides to hear the appeal, the sale will close Monday.

Mike Burk: "The market is overbought and likely to correct over the next week or so.
I expect the major indices to be lower on Friday June 12 than they were on Friday June 5.

John Mauldin: "According to the Economist the total US spend on healthcare is 15.4% of GDP including both state and private . With that it gets 2.6 doctors per 1,000 people, 3.3 hospital beds and its people live to an average age of 78.2....
As a whole Europe spends 9.6% of GDP on healthcare, has 3.9 doctors per 1,000 people, 6.6 hospital beds and live until they are 81.15 years old."