Friday, September 11, 2009

Import Prices

9/11/09 Import Prices

Higher crude oil prices drove import prices up by 2% in August, the fifth increase in the past six months, the Labor Department reported Friday. Import prices have risen 7.6% so far in 2009 as energy prices have rebounded. Despite the recent gains, import prices are down 15% over the past 12 months. Imported fuel prices rose 9.8% in August, but are down 39.6% in the past 12 months. Prices of nonfuel imports into the United States rose 0.4% in August, the largest gain in a year. Economists surveyed by MarketWatch were expecting import prices to rise 1% in August after falling 0.7% in July. Prices of exports from the United Stats rose 0.7%.

USG Corp. said its L&W Supply Corp. division will close approximately 30 additional distribution centers at the beginning of the fourth quarter, due to ongoing adjustment of operations and staffing to adapt to market conditions.

China's imports and exports both weakened in August from the year-earlier period but grew moderately over the previous month, data showed Friday. Exports were down 23.4% from a year earlier, while imports slipped an on-year 17%. But on month, exports climbed 3.4% in August, while exports were up 1%. The trade surplus widened to $15.7 billion compared to July's $10.6 billion, according to calculations by Dow Jones Newswires.

The Dollar Index fell for a sixth day, its longest losing streak since March. The Dollar Index retreated to 76.587 as of 6:50 a.m. in London, from 76.817 in New York yesterday.

In a blow to the U.S., Russia's foreign minister made it clear that Moscow wouldn't back a new round of tough sanctions against Iran over its nuclear program.

The Obama proposal is an "egregiously expensive and expansive form of government-run health care," McCain said in an online letter to supporters.

Mike Shedlock: "Last week the junk bond default rate hit 10.2 percent. The U.S. junk bond default rate rose to 10.2 percent in August from 9.4 percent in July as the worst recession since the 1930s left more companies unable to pay off debt, Standard & Poor's data showed on Thursday.
The default rate is expected to rise to 13.9 percent by July 2010 and could reach as high as 18 percent if economic conditions are worse than expected, S&P said in a statement.
Default rates have surged from less than 1 percent in 2007 as an economic downturn squeezed corporate revenues and a global credit crunch dried up funding. A 13.9 percent default rate would be the highest since the Great Depression of the 1930s, when it hit 15.9 percent.
Eighteen companies defaulted in August, bringing the year-to-date total to 147."

According to AMG Data, August Equity Fund Inflows $674 Mil; Taxable Bond Fund Inflows $42.4 Bil
xETFs - Equity Fund Inflows $3.6 Bil; Taxable Bond Fund Inflows $37.4 Bil.
For the week ended Sept. 9, Equity Fund Outflows -$4.2 Bil; Taxable Bond Fund Inflows $3.6 Bil
xETFs - Equity Fund Outflows -$509 Mil; Taxable Bond Fund Inflows $3.2 Bil.

According to a new study, the average low-wage urban worker earning $339 a week is cheated out of $51 of that amount by an employer committing one or more workplace violations -- such as paying less than minimum wage, refusing overtime pay, requiring off-the-clock work or preventing workers' compensation claims. Whether damning proof of the government's inability to adequately enforce labor laws or evidence of a need for stronger standards, the report offers insight into the working lives of an often under-the-radar demographic.
The study, funded by the Joyce, Haynes, Ford and Russell Sage foundations, is based on interviews with 4,387 low-income workers --39% unauthorized immigrants, 31% authorized immigrants and 30% U.S.-born citizens -- in the first half of 2008. The median hourly wage for workers surveyed was $8.02, and the workers were in a variety of industries, including manufacturing, construction, food service and child care.

FedEx said it expects earnings of 58 cents per share for the first quarter ended Aug. 31. That's down 53 percent from a year ago, but well above the company's previous prediction of 30 cents to 45 cents per share.
On average, analysts had been looking for a quarterly profit of 44 cents per share.
Its shares climbed $4.23, or 5.8 percent, to $76.89 in morning trading Friday.
The company expects to earn 65 to 95 cents per share for the second quarter.

Sept. Reuters/UofMich Consumer Sentiment Index: 70.2 vs. consensus of 67.3, up from 65.7 in August. 12-month outlook jumps to 79 from 69 in August, the highest since Sept. 2007. "Confidence rebounded in early September as consumers increasingly expected the economy to improve despite their reluctant conclusion that their own financial situation would remain quite problematic for some time."

The NPD Group late Thursday showed a decline in sales of the company's popular "Madden NFL 10" video game.

Sept. gold rises to $1,011.90 an ounce.

The Commerce Department said wholesale inventories declined 1.4 percent in July, more than the 1 percent drop economists expected. But that decline followed a 2.1 percent fall in June, down from the 1.7 percent drop originally reported.
Sales at the wholesale level rose 0.5 percent in July, the fourth consecutive increase and the biggest gain since a 2 percent jump in June 2008.

The Dow Jones Industrial Average fell 22.07 points, or 0.2%, to 9,605.28, leaving it 1.7% higher for the week. The S&P 500 Index fell 1.41 points, or 0.1%, to end at 1,042.73, up 2.6% for the week. The Nasdaq Composite fell 3.12 points, or 0.2%, to 2,080.9.

The U.S. ran a budget deficit of $111.4 billion in August, the Treasury Department reported Friday, marking eleven straight months of deficits. Year to date, the U.S.'s deficit is $1.37 trillion. With one month left in fiscal 2009, receipts and outlays both fell in August. The July deficit was unrevised at $180.6 billion, Treasury said.

Corus, Minn. bank busts bring '09 failures to 91.

Thursday, September 10, 2009

Social Security

9/10/09 Social Security

Congress will have to raise the legal limit on federal debt beyond $12.1 trillion sometime next month.

The Social Security Trust Fund reported an August net deficit of $5.865 Billion. This is the largest monthly deficit in nineteen years. This deficit is now the seventh in the past twelve months. The September monthly benefits cost will be $56.6b up from $51.5 in 2008, a 10% increase. How can we consider making changes in health care prior to providing a firmer
foundation to social security with 52 million beneficiaries and that number is growing.

Neither can the Obama health plan guarantee that people can keep their current coverage. Employers sponsor coverage for most families, and they'd be free to change their health plans in ways that workers may not like, or drop insurance altogether.
In the past Obama repeatedly said, "If you like your
health care plan, you'll be able to keep your health care plan, period." Now he's stopping short of that unconditional guarantee by saying nothing in the plan "requires" any change.
He's dropped the "period."

Australia August unemployment rate 5.8%. Australia August employment drops by 27,100.

Japanese government data released Thursday suggested capital spending remains weak as the world's second-largest economy struggles to keep its nascent recovery on track. The Cabinet Office said Japanese core machinery orders, considered a leading indicator of capital outlays, fell 9.3% in July from June, a deeper drop than the 3.6% average decrease expected by economists surveyed by Nikkei and Dow Jones Newswires. A separate set of data from the Bank of Japan showed pressure on prices remains, with the corporate goods price index for August dropping 8.5% from a year earlier, slightly more than the 8.4% expected by economists surveyed by Reuters.

Van der Moolen, once one of the biggest market makers on the New York Stock Exchange, has filed for bankruptcy in Amsterdam after administrators at the Dutch brokerage failed to find a buyer or construct a business plan as a smaller company.
The 117-year-old company filed for bankruptcy late on Wednesday, saying it could no longer pay salaries or ongoing expenses in September. It had already sought creditor protection a month ago and will now be liquidated.

Monsanto Co., the world’s largest producer of seeds, said earnings per share will fall this fiscal year as the company spends as much as $600 million to cut jobs and reduce costs.
Earnings per share from ongoing operations will fall to a range of $3.10 to $3.30, Monsanto said in a summary of a speech Chief Financial Officer Carl Casale plans to give in London today at a UBS AG conference.
Earnings per share by the same measure in the 2009 fiscal year ended Aug. 30 were at the low end of the previously forecast $4.40 to $4.50, Monsanto said, reaffirming an Aug. 13 statement.

- The U.S. trade deficit widened by 16.3% in July to $32.0 billion, the Commerce Department said Thursday. This is the biggest percentage increase in the deficit since February 1999. The trade deficit was well above the consensus forecast of Wall Street economists of a deficit of $27.5 billion. Imports rose at a record pace in July, outpacing a further gain in exports. Trade activity is still well below last year's level. The U.S. trade deficit with China was $20.42 billion in July compared with $25.01 billion in the same month last year. Excluding petroleum, the deficit rose 18.3% to $23.46 billion. Real imports, which exclude prices, rose 5.3%. Real exports rose 3.9%.

The number of people filing for state unemployment benefits for the first time fell 26,000 to a seasonally adjusted 550,000 last week, the lowest since mid-July, the U.S. Labor Department reported Thursday. Initial claims have been in a fairly narrow range for the past eight weeks. The number of people collecting regular state benefits fell by 159,000 in the week ending Aug. 29 to a seasonally adjusted 6.09 million, the lowest number since April. The not-seasonally adjusted number of people claiming benefits of any kind -- including extended federal benefits -- in the week of Aug. 22 was 9.69 million, up 23,000 from the previous week.

U.S. mortgage foreclosure filings in August hovered near July's record high despite broad efforts to keep borrowers in their homes and will probably rise for another year, according to a report released on Thursday.
Filings -- including notices of default, auction and bank repossession -- dipped 1 percent last month from July's all-time high and were up 18 percent in August from the same month a year earlier, real estate data firm RealtyTrac said.
"The pipeline of early stage foreclosures and delinquent loans is still probably going to overwhelm the system's ability to quickly modify" terms so struggling homeowners can make their monthly mortgage payments, said Rick Sharga, senior vice president at the Irvine, California-based company.
One in every 357 U.S. households with loans got a foreclosure filing in August.

Bank of China Ltd., which led the nation’s $1.1 trillion lending spree in the first half, said ample liquidity has caused “bubbles” in stocks, commodities and real estate.
“The potential risk is that a lot of liquidity goes to the asset market,” Vice President Zhu Min said in an interview in Dalian today. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”

Home prices in the US could fall by another 25 percent because of high unemployment and another leg down will come for stocks, banking analyst Meredith Whitney told CNBC Thursday. "No bank underwrote a loan with 10 percent unemployment on the horizon," Whitney said. "I think there is no doubt that home prices will go down dramatically from here, it's just a question of when."

China's Premier Wen Jiabao said the nation “cannot and will not” pull back from economic stimulus measures.

China “strongly opposes” a ruling by the U.S. Commerce Department to impose duties of as much as 31 percent on steel pipes, the Ministry of Commerce said today.
The U.S. decision doesn’t comply with rules set by the World Trade Organization, the ministry said on its Web site.

U.S. natural gas inventories rose 69 billion cubic feet in the week ended Sept. 4, the Energy Information Administration reported Thursday. At 3,392 billion cubic feet, stocks were 495 billion cubic feet higher than last year at this time and 503 billion cubic feet above the five-year average. After the data, natural gas for October delivery fell 1.7% to $2.782 per million British thermal units. It was down more than 2% before the data.

The first year of recession took a toll on household incomes and drove 2.6 million more people into poverty, the government reported Thursday. Real median household income fell 3.6% in 2008 to $50,303, while the number of people living in poverty rose by 2.6 million to 39.8 million, or 13.2% of the population, the Census Bureau said. The number of Americans without health insurance climbed by 800,000 to 46.3 million, or 15.4% of the population.

Crude inventories fell 5.9 million barrels in the week ended Sept. 4, the Energy Information Administration reported, as imports tumbled 5% to 9.1 million barrels a day. Analysts had expected an inventories drop of less than 2 million barrels. After the data, October crude gained 0.8% to $71.91 a barrel. The EIA data also showed a buildup in gasoline and distillate inventories, as demand weakened. Gasoline inventories rose 2.1 million barrels, and distillate stockpiles, which include heating oil and diesel, rose 2 million barrels.

Tavern On The Green files for chapter 11.

The amount of commercial paper outstanding rose $11.3 billion to $1.174 trillion in the week ended Wednesday, the Federal Reserve said in data released on Thursday. It was the fourth weekly increase, making it the longest string of gains since December, according to Tony Crescenzi, portfolio manager at Pacific Investment Management Co.

Crude rose $1 to $72.30 and natural gas gained 43 cents to $3.26.

The Dow gained 80 points, the Nasdaq 23, and the S&P 10 points.

Wednesday, September 09, 2009

Delinquent and Default

9/9/09 Delinquent and Default

Nationally, about 18% of prime interest-only loans are at least 60 days delinquent.

Morgan Downey: "OPEC members announced cuts in late 2008 totaling 4.2 million barrels per day (Mb/d). Compliance with these cuts is currently running at around 3Mb/d.
Ahead of OPEC members meeting on Wednesday September 9 in Vienna, it is worth elaborating on why OPEC will likely refrain from making any production changes and why they may in fact need a temporary tightening of compliance with existing quotas by up to 500,000 barrels per day."

IHS-Cambridge Energy Research Associates says that global demand will climb next year and should be back to 2007's highs by 2012.

A survey by the nonprofit Conference Board released Tuesday showed that nearly a quarter of households in the U.S. now view television programs online. That's up from 20% last year.
The quarterly Consumer Internet Barometer survey found that news shows were watched by 43% of online viewers, followed by sitcoms, comedies and dramas, watched by 35%. Slightly less than 20% viewed reality shows online, and 18% took in sports.

Rep. Ron Paul: "But all of these problems and their wrong-headed solutions come from one greater problem - which is not understanding the reasons that we are here. The economy is in bad shape because of too much government intervention producing a myriad of unintended consequences and perverse incentives. Healthcare is broken because the doctor-patient relationship has been broken down by hyper regulation and too much government interference. Afghanistan is a mess because they ignored the mission approved by Congress - to seek out those who attacked us on 9/11. They have instead gotten sidetracked with nebulous interventionist tasks such as promoting democracy and nation building. Eight years later, there is no real progress. The Soviets bankrupted themselves fighting in the mountains and caves of Afghanistan and we're about to do the same. If we would just look to history it would be self-evident that there is nothing left to win in Afghanistan, and everything to lose.
Most of all, we need to understand that we don't understand Afghan culture and politics, and for that reason alone, intervening in their affairs is unlikely to produce positive results. The best thing we could possibly do now is to bring our troops home, from Afghanistan, from Iraq, from Japan, from Germany, from all occupied countries, and concentrate on mending badly damaged relationships around the world. Free and honest trade has always been the best way to do that, without fail. Not understanding the benefits of peace, freedom, and nonintervention will always bring about catastrophe."

Kraft Foods plans to cut its supplier base in half, a move that would affect more than 30,000 companies, as the largest North American food maker looks to save more than $300 million a year.

Mike Hogan: "AS "CASH FOR CLUNKERS" DEMONSTRATED, AMERICANS love a deal. And Congress may have yet another for you when it returns from summer recess.
The plan is to offer tax credits worth up to $12,500 on the purchase of new cars and trucks. The catch is that your new vehicle must run on natural gas -- compressed natural gas, or CNG, to be precise. A Senate bill, the counterpart to the House's NAT GAS Act, also would offer up to $64,000 in tax credits on fleet vehicles, and up to $100,000 to anyone opening a CNG filling station."

With the sharp decline in shipping rates, one might consider eliminating copper positions at these high prices.

U.S Dollar Index at another new 11-month low at 76.80 while U.S. stocks gained, sending the Standard & Poor’s 500 Index above its highest close in 11 months. Interesting!

Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration's housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday.

Barry Ritholtz: "The number of temporary workers dropped by 6,500 in August to 1.74 million. The total has fallen each month since January 2008, a month after the current U.S. recession officially started. During the 20-month streak, temporary jobs have declined by 33 percent.
Note also that Manpower said its index of U.S. companies’ hiring plans set a record low for the third straight quarter, dating back to 1962."

Half of the Federal Reserve districts saw evidence the economy had improved by the end of August, although labor markets remained weak and retail sales were flat overall, a Fed report said Wednesday.
Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted gains. Most other areas reported the economy was stable or showing signs of stabilization.

The one exception was the St. Louis region, which continued to report that the pace of decline in economic activity appeared to be "moderating."

Job openings fell to the lowest level in nine years in July, according to a Labor Department report Wednesday, as businesses remain reluctant to hire despite signs the economy is improving.

The department's Job Openings and Labor Turnover survey, or JOLTS report, found that businesses and government advertised 2.4 million open positions on the last day in July, down from 2.5 million in June. That's also the fewest openings since the department began compiling the data in December 2000.

The Dow Jones Industrial Average added 49.88 points, or 0.5%, to 9,547.22. The S&P 500 advanced 7.98 points, or 0.8%, to 1,033.37. The Nasdaq Composite added 22.62 points, or 1.1%, to end at 2,060.39.

The number of U.S. companies that have defaulted on their debt this year rose to 12.2% in August, matching a peak last touched in 1991, Moody's Investors Service said in a report Wednesday. The default rate is expected to rise to 13.2% in the fourth quarter.

"I don't think we are going to go back to business as usual," said Steve Sadove, chairman and CEO of Saks Inc., operator of Saks Fifth Avenue.
The long-term goal is for merchants to carry 1 1/2 months' worth of inventory, compared with 3 1/2 months in the past, says retail consultant Burt P. Flickinger III.

Tuesday, September 08, 2009

The Dollar

9/8/09 The Dollar

The dollar index tumbled to an intraday low of 77.09, an 11-month low and about 1 point higher than the 12-month low last September. The sharp dollar weakness propelled gold futures above the psychologically key level of $1,000 an ounce.

Frank Holmes: "Over the past four decades, September has been the best time for gold in terms of its month-over-month price appreciation."

Japan's current-account surplus came in 19.4% smaller in July than in the year-earlier period, even as the trade surplus rose, the Ministry of Finance said Tuesday. The result was well below an average estimate for a 0.1% drop, according to economists polled by Dow Jones.

Rob Hanna: "From a seasonality standpoint, Labor Day week has historically been a bit weak."

Bill Bonner: "For the last 10 years, the money supply in the United States has expanded at roughly twice the rate of GDP growth. And the Fed doubled its balance sheet in just the last 18 months. This last bit of information is stunning. It took the central bank nearly 100 years to build a balance sheet of $1 trillion. Then, under the leadership of Ben Bernanke, it added another $1 trillion in just a few months."

John Hussman: "My impression is that the changes in mark-to-market rules early this year have quietly allowed bank balance sheets to experience unreported deterioration in recent months, but I suspect that there will be a point very late this year or early next year when the financial officers of major banks will refuse to sharpen their pencils to a stub, and banks will be forced into a fresh round of capital-eliminating asset writedowns....The time for green shoots is now behind us. If the economy is turning, we are now at the point where a recovery should develop visible roots and bear fruit."

The value of international trade passing through Houston, Galveston, Texas City, Freeport, Port Lavaca and Corpus Christi seaports and George Bush Intercontinental Airport plummeted 36 percent in the first six months of this year from $119.7 billion for the first six months of 2008, according to a report recently released by the Greater Houston Partnership.

“This is pretty much underscoring how much we are tied to international trade,” said Patrick Jankowski, the partnership's vice president of research.

The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar.

The yuan bond issue, worth about $879 million, will “promote the yuan in neighboring countries,” the Finance Ministry said on its Web site, and "improve the yuan’s international status.”

“The first step toward internationalization is regionalization,” Shi Lei, a foreign currency analyst at Bank of China in Beijing, said in an interview. “China wants to develop the offshore market in Hong Kong.”

MEMC Electronic Materials Inc.said Tuesday that it will cease production of silicon crystal ingots and wafers at facilities in Sherman, Texas and St. Peters, Mo. About 540 employees in the U.S. will be affected and a small number of these will be offered positions at other MEMC locations.

"Companies are still not going to be in hiring mode," said Manpower Chief Executive Jeff Joerres. "They are in cautious mode." A mark of that caution is that two-thirds of U.S. employers plan no change to staffing, a higher proportion than is typical, he added.

International Business Machines Corp on Tuesday repeated that it expects to earn "at least" $9.70 a share this year.

In a federal filing, the company also reiterated that it was "well ahead" of its plan of achieving earnings per share of $10 to $11 for 2010.

With Costco now at a 5+ point premium to Wal-Mart I am now undoing the hedge put on when Costco sold at a 3 point discount to Wal-Mart and I will reverse the hedge after undoing it.

Valero Energy Corp said Tuesday that it will shut down the coker and gasifier complex at its Delaware City, Del. refinery because of its unprofitability. At least 150 employees and 100 contract workers are affected by the closure. Valero also said a plant-wide shutdown of its Aruba refinery will be extended, resulting in the release of 700 contract workers in September. Valero has about 22,000 employees.

Of the $189B securitized Option ARM loans outstanding, 88% have yet to recast, Fitch notes, and of those, 94% have used minimum monthly payments to allow their loans to negatively amortize. "Having not demonstrated their ability to make payments at the full rate, option ARM borrowers are at the greatest risk of default resulting from payment shock," firm says.

Standard & Poor's said on Tuesday U.S. credit card losses declined in July, but forecast bad loans would soon resume their upward trend as thousands of Americans lose their jobs.

U.S. consumers reduced their credit burden by a record amount in July, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt fell $21.55 billion, or at a 10.4% annual rate, in July to $2.47 trillion. This is the sixth straight monthly drop in consumer credit. Consumers have retrenched since the financial crisis hit the economy in full force last September. Credit has fallen in every month since then except January. Economists surveyed by MarketWatch expected consumer credit to decline by $4.3 billion. This is the longest consecutive string of declines in credit since the second half of 1991. In the subcategories, credit-card debt fell $6.11 billion, or 8.5%, to $905.58 billion. This is the record 11th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell a record $15.44 billion or 11.7% to $1.57 trillion.

Bill Bonner: "The first big diff is that the feds don't spend your money the way you would. Private citizens spend money they don't have on things they want but don't need. The feds spend money that doesn't belong to them on things that the rightful owners don't even want. "

First Solar Inc., the world's largest manufacturer of thin-film solar modules, said it will build a 2-gigawatt solar power plant in Ordos City, Inner Mongolia, China.

Crude rose $3.30 and natural gas added 11 cents.

Monday, September 07, 2009


9/7/09 Cadbury

The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.
UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.
“There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,” Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. “An initiative equivalent to Bretton Woods or the European Monetary System is needed.”

John Crudele: "Even though the nation's gross domestic product seldom equals gross domestic income -- as it technically should -- the two numbers should be moving in the same direction by relatively the same amount.
But that's not happening these days.
While the GDP has been posting negative growth for the past 12 months (or four quarters), the nation's gross income is on a year and a half losing streak.
Since the beginning of 2008, the nation's gross domestic income in consecutive quarters has been unchanged; down 0.1 percent; down 1.1 percent; down 7.3 percent; down 7.7 percent and -- most recently in the second quarter -- off by 2.1 percent.
That last number -- minus 2.1 percent -- is the most impor tant because it shows that the nation's income was down more than twice as much as the 1 per cent drop in the gross national product.
The slowing decline in GDP might have Wall Street excited but the continued decline in GDI shouldn't.
I went as far back as you can in the government's quarterly GDI figures -- 1947 -- and there has never before been a string of six quarters without a gain.
Five was the previous record in 1974.
And the GDI in 2009's second quarter is 4.6 percent lower than it was this time last year, compared with a more modest 3.9 percent in the GDP.
And that 4.6 percent year-over-year decline is worse than the 4.1 percent year-over-year GDI drop in 2009's first quarter and the 2.1 percent slide in the fourth quarter of 2008.
In other words, the nation's gross domestic income has not yet shown any improvement. Hey, at least now you know why you are feeling so lousy. But look at the bright side, you are taking part in history, and that must be worth something."

Mike Burk: "September has a reputation for being a tough month for the market, but there is no evidence this September is going to be one of them. On the other hand the recent upward surge has been weakening.
I expect the major indices to be lower on Friday September 11 than they were on Friday September 4."

Mike Shedlock: "Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks....Because allowances for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings have been wildly over-stated. Moreover, even as problem loans are increasing and expected to keep increasing, allowances for loan losses have gone the other direction."

Rigzone: "According to Jeff Rubin, the cost of developing and producing a new oil sands project in Canada can reach up to $90 a barrel....Nonetheless, as the prices rise again, interest in oil sands has been increasing as of late. Althabasca Oil Sands Corp. announced this week that PetroChina paid $1.9 billion to acquire a 60% stake in its MacKay River and Dover Canadian oil sands projects. Furthermore, the US State Department approved a multi-billion-dollar oil pipeline from Canadian oil sands to US refineries earlier in August.
"Synthetic oil from bitumen is likely to be the single largest source of new supply over the next two decades, principally from Alberta and the Orinoco in Venezuela," Rubin said. "But we need to see a world of triple-digit oil prices to raise that kind of production from tar sands."

James L. Shaefer: "Natural gas will be America’s energy salvation....It’s time we stopped hiding our heads in the sand about today’s energy problems while spending / wasting tens of billions of dollars on taxpayer-funded grants, incentives and subsidies for tomorrow’s solutions. We need – and have readily available – an American source of relatively clean energy today for today’s needs, if only the politicians would stop spending on pork and get the hell out of the way of private industry that is trying to provide this source: clean-burning natural gas....Natural gas is the second-most abundant fossil fuel in America. Coal is first. We are the Saudi Arabia of coal worldwide. China and India together don’t have as much coal as the US, which has 28% of the entire world’s reserves. But coal is dirty. Lots of for-profit firms are doing breakneck research to clean it up, but it’s – currently – dirty.
So is our choice dirty polluting coal or 14.4 minutes of power a day? Of course not. There’s imported oil. However, with the exception of tar-sands oil from Canada, when you add, to the $70 a barrel oil costs when ready for export, the transportation costs, the cost of keeping the Straits of Hormuz open, the costs of foreign wars to assure the continuing supply, the cost of the inevitable oil spills from time to time, and the foreign aid and sweetheart deals our nation makes to keep tyrants, misogynists, and perverts atop otherwise-shaky regimes, the true cost of oil is probably already $200-$300 a barrel....Natural gas-fired plants are currently operating at less than 50% capacity. If this administration and this country is really serious about cutting carbon emissions we will turn to natural gas now, not when two guys in their garage find the solar Holy Grail."

Workers in the 25 to 34 age group have seen the most dramatic rise in unemployment during the past year compared to other age groups. Their unemployment rate went from 5.7 percent in July 2008 to 10 percent in July 2009, according to the Bureau of Labor Statistics. Unemployment rates for older workers have increased in this recession more than in past recessions, and the unemployment rate for adults over age 65 is at an all-time high -- 7 percent in July. That is up from 3.3 percent at the start of the recession in December 2007, but still below the national unemployment rate of 9.7 percent in August. The previous high was 6.6 percent in February 1977.

U.K. chocolate maker Cadbury (UK:CBRY) said Monday that the proposed 10.2 billion pound ($16.7 billion) offer from Kraft Foods Inc. "fundamentally undervalues the group and its prospects." The company said its board is confident in Cadbury's standalone strategy and growth prospects thanks to its strong brands and broad geographic scope.
Kraft Foods believes it can fund its proposal to buy Cadbury Plc for 10.2 billion pounds ($16.7 billion) in cash and shares without tapping the market for new equity. The cash component, of 300 pence a share, would be funded via Kraft's existing cash reserves and debt, the company said in a conference call. Chief Executive Irene Rosenfeld said no disposals are planned under the proposed offer and stated there had been no talks with any Cadbury shareholders to gauge their feelings about an offer. Kraft said it's considering a listing on the London Stock Exchange to solve the problem of U.K. shareholders not able to hold U.S. paper.
Kraft said it's committed to working towards a recommended transaction and to "maintaining a constructive dialogue." The tie-up would create a company with roughly $50 billion in revenues and a global powerhouse in snacks, confectionery and quick meals. Kraft said it sees potential for pre-tax cost savings of at least $625 million annually and total one-off costs of roughly $1.2 billion that would be incurred in the first three years following completion of the deal.
The bid (300 pence in cash and 0.2589 KFT shares per CBY share) represents a 31% premium to Cadbury's Friday close. The giant combo would have $50B in yearly revenue. CBY +37% in London. KFT -2.3% in Frankfurt.
Kraft made its initial proposal on August 28 after a meeting earlier that day between Irene Rosenfeld, Kraft chairman and chief executive, and Roger Carr, chairman of Cadbury.
“We think Cadbury can get much more,” said Andrew Wood, an analyst with Sanford C. Bernstein in New York. “We think 15-16 times earnings before, interest, tax, depreciation and amortisation is a reasonable multiple ... Mars paid 19.5 times for Wrigley in May 2008, and arguably Cadbury has much more profit growth potential than Wrigley had at that time.
“At 15-16 times 2008 ebitda we get £8.55-£9.20, at 15-16 times 2009 ebitda we get £10.00-£10.70.”
Lazard is acting as lead financial adviser to Kraft, with Centerview Partners, Citigroup and Deutsche Bank acting as financial advisers.
Morgan Stanley, UBS and Goldman Sachs are advising Cadbury.
Cadbury is in the third year of a five year cost-cutting program aimed at raising its operating margin from 10% in June 2007 to “mid-teens” by 2011. The maker of Trident gum has closed inefficient factories from Turkey to Spain and spun-off or sold its drinks units to focus on confectionary. Price rises and cheaper marketing helped lift the operating margin by 1.45 percentage points in the first half, excluding currency swings.
“The margin expansion is very strong, and they are going to deliver, or in fact be ahead of, their mid-teen target” Andy Smith, an analyst at Icap Plc in London, said in an interview. “Market fears about input costs were overplayed.” Mr. Smith has a “buy” recommendation on the shares.
The main reason for raising the margin forecast was “good cost control,” Chief Financial Officer Andrew Bonfield said on a conference call. Cadbury is “on track” to cut central management costs by 15 million pounds this year, he said.
Falling media rates mean the company is spending less on advertising as a percentage of sales, Mr. Bonfield added.
First-half profit from continuing operations rose 35% to 319 million pounds (US$522-million), excluding one-time costs, from 237 million pounds a year earlier, the maker of Dairy Milk chocolate said today. That beat the 304 million-pound median estimate of eight analysts surveyed by Bloomberg News and represented growth of 19% at constant exchange rates.
Net income climbed to 313 million pounds from 113 million pounds, boosted by a 234 million-pound contribution from the Australian beverages unit that Cadbury sold in April.

Hershey Co. may not let Cadbury PLC be acquired by Kraft Foods Inc. or another company without a response, according to a report in The Wall Street Journal, citing a source "familiar with Hershey's thinking." Hershey and Cadbury have had merger discussions in the past, the Journal said, and that one option could have Hershey teaming up with Nestle SA to make a joint bid. Other sources cited by the Journal said Hershey could face difficulties financing such a deal.

Venezuelan President Hugo Chavez sealed an agreement to export 20,000 barrels per day of gasoline to Iran, state TV reported Monday. The deal would give Tehran a cushion if the West carries out threats of fuel sanctions over Iran's nuclear program.
The two countries signed the agreement late Sunday during a visit by Chavez, who pledged to deepen ties with Iran and stand together against what he called the imperialist powers of the world.

Barry Ritholtz: "Over the past decade, the U.S. private-sector has lost 203,000 jobs....
In the 1940s, we created 10 million jobs. In the 1990s, we added 19 million new jobs. Even during the much-maligned 1970s, we added almost 16 million jobs.
The 2000s might be zero. Some economy, huh?
The government has created 2.1 million jobs over that period — primarily teachers. And, that’s the weakest government job growth in nearly two decades."

German industrial orders rose 3.5% in July month-on-month after increasing 3.8% in June, the Federal Ministry of Economics and Technology in Berlin reported on Monday.

A deal has been struck to merge the U.K. mobile phone operations of Deutsche Telekom and France Telecom, according to published reports.