Friday, November 13, 2009

Plant Closings

11/13/09 Store Closings

The U.S. trade balance widened more than forecast to $36.5 billion in September and import prices rose 0.7% last month. "While trade is not a prime driver of currencies, the combination of rising imbalances and extremely low rates is typically a U.S. dollar negative," said strategists at Barclays Capital. The dollar index ($DXY), a measure of the U.S. unit against a trade-weighted basket of rival currencies, declined to 75.359 compared to 75.648 in late New York trading on Thursday. This is the biggest percentage increase in the monthly trade gap since February 1999. The data suggests that third quarter growth will be revised down from its initial estimate of a 3.5% gain. Imports rose faster than exports in September. Trade activity has recovered to levels not seen since the financial crisis hit in the fall of 2008. The U.S. trade deficit with China widened to $22.1 billion, the largest since last October. The deficit for the year-to-date now totals $274.58 billion, down from $551.44 billion in the first nine months of 2008.

The Federal Housing Administration’s mortgage insurance reserves fell to the lowest level in history and the government said more steps are needed to shore up the agency that guarantees one of every five single-family loans.

The net capital ratio, or reserves after accounting for projected losses, fell to 0.53 percent in the year ended in September, from 3 percent in fiscal 2008 and 6.4 percent in 2007, according to an annual review sent today. While FHA said the fund “has good prospects,” it is changing its risk models to account for the possibility of the ratio falling below zero.

“Additional actions” will be needed to shore up the agency, Housing and Urban Development Secretary Shaun Donovan said at a news conference in Washington today. The insurance fund tripled in size last year and has taken on more risk as private industry sources for lenders to finance and insure home loans dried up and mortgage default rates rose to record highs.

United Commercial was the 120th bank seized by federal regulators so far this year. Last November, it received $298.7 million under the federal government's Troubled Asset Relief Program.

"This is the first failed bank that had received TARP money," said Matthew Anderson of Foresight Analytics in Oakland, which tracks real estate and banks.

Besides understanding his own state’s finances, New York Gov. David Paterson apparently has an excellent grasp of California’s fiscal situation.

So much so, in fact, that Paterson feels confident speculating publicly about the probability of California eventually defaulting on its municipal bond debt.

“The market is sending many errant signals right now,” notes Dan Amoss. “U.S. policymakers are trying to reinflate stocks, houses and wages, while also recapitalizing an undercapitalized banking system with overt and covert subsidies. All of these actions are extraordinarily costly — so costly that creditors are getting nervous.

The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October.

This was well below economists' median expectation of a reading of 71.0, according to a Reuters poll.

The index of consumer expectations fell to 63.7 in early November from 68.6 in October.

Blockbuster closing another 115 stores.

Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according
to EIA estimates. This represents a net increase of 25 Bcf from the previous
week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above
the 5-year average of 3,404 Bcf. In the East Region, stocks were 118 Bcf above
the 5-year average following net injections of 8 Bcf. Stocks in the Producing
Region were 223 Bcf above the 5-year average of 976 Bcf after a net injection of
10 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a
net addition of 7 Bcf. At 3,813 Bcf, total working gas is above the 5-year
historical range.

Movie Gallery to Shutter 450 stores by Year's end. 200 stores in the Waldenbooks Specialty Retail segment will be closed across the country.

Naples, Fla.-based Orion Bank, which had $2.7 billion in assets as of last month, was closed by regulators Friday.

The Dow Jones Industrial Average added 73 points, or 0.7%, to end at 10,270.47, leaving the blue-chips average up 2.5% for the week. The S&P 500 Index rose 6.24 points, or 0.6%, to 1,093.48, leaving the broader index up 2.3% from the week ago close. The Nasdaq Composite gained 18.86 points, or 0.9%, to 2,167.88, up 2.6% for the week.

Thursday, November 12, 2009


11/12/09 Wal-Mart

The government said jobless claims fell by 12,000 to 502,000 in the week ended Nov. 7. Initial jobless claims have hovered above 500,000 for 52 straight weeks. Economists surveyed by MarketWatch expected initial claims to drop to about 510,000. Continuing state claims declined 139,000 to a seasonally adjusted 5.63 million, the lowest since March.

Wal-Mart Stores Inc.said Thursday that its third-quarter profit rose to $3.24 billion, or 84 cents a share, from $3.14 billion, or 80 cents a share, a year earlier. Sales rose to $99.4 billion from $98.3 billion. Analysts, on average, estimated profit of 81 cents a share on sales of $99.2 billion, according to FactSet. The company had forecast profit of 78 cents to 82 cents a share. Wal-Mart forecast fourth-quarter profit of $1.08 to $1.12 a share in the fourth quarter and raised its full-year outlook to $3.57 to $3.61 a share from a previous projection of $3.50 to $3.60. Analysts estimated profit of $1.12 a share in the fourth quarter and $3.58 for the year, FactSet data showed. The company said U.S. comparable-store sales during the 13 weeks from October 31 to January 29 would be flat.

Kohl's expects fourth-quarter earnings of $1.14 to $1.24 a share, compared to the Wall Street target of $1.23 a share.

The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 30% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -10 (see trends). Republicans have opened a six-point lead on the Generic Congressional Ballot.

“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
Never is a long time.

Rob Hanna: "Apparently the VIX should not be on the rise when the SPX is hitting new highs. The fact that it rose Wednesday implies a short-term pullback."

Sam Foucher: " Based on data from the 2009 BP Statistical Review, the OECD oil consumption in 2008 decreased by -3.2% while demand within emerging economies increased by +3.1%. The report also indicates that oil production from OECD countries has been declining since 1997 and is now below 23% of the world production."

The number of Americans receiving foreclosure notices was down 3 percent on a month-to-month basis, as 332,292 properties generated a foreclosure notice. That was 18.9 percent higher than last October. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)

“It’s good to see that foreclosures have slowed down marginally, but we don’t really think it’s a trend,” said Rick Sharga, vice president of marketing at foreclosure tracking Web site RealtyTrac, which released the report.

British Gas said wholesale gas prices will rise from about 31p to 49p a therm for winter 2010-11 and 57p for the following winter.

Mike Shedlock: "In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.

These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found.

The Center on Budget and Policy Priorities, a liberal research group, says the states need additional federal fiscal relief to avoid budget cuts that will hurt both the economy and people. State and local spending accounts for about one-eighth of the GDP.

And in California, Gov. Arnold Schwarzenegger said Tuesday that his state is facing a budget gap of up to $7 billion. The state will likely announce across-the-board spending cuts in January."

"There's just too many houses out there for the population we have," said Brian Peterson, an economist at Indiana University who focuses on housing. "The market's going to take a couple years to clear."

The homeowner vacancy rate dropped to 2.6% in the third quarter from 2.8% a year ago, when homeowner vacancies hit their all-time high. But a jump in the rental vacancy rate, to 11.1% from 9.9% a year earlier, more than offset that decline.

The latest forecast from the International Research Institute for Climate and Society (IRI), is calling for a cold winter in the Eastern U.S., down through east Texas, a normal winter in the Midwest, out through the Rockies and into California, but a warm winter through the Pacific Northwest and Plains and through all of Canada.

After three consecutive months of sequential growth, freight traffic in the U.S. declined 0.5% in September from August, the Bureau of Transportation Statistics said Thursday. On a year-to-year basis, September is the tenth of the past 14 months to post a decline. The Freight TSI index, which measures changes in freight shipments in ton-miles, was 95.7, up 2.3% from its 12-year low in May

Playboy Enterprises Inc is in talks to sell itself to Iconix Brand Group Inc., Bloomberg News reported Thursday, citing two unidentified sources close to the situation. Shares of Playboy rose 31.1% to $3.75 in recent trading..

The Pierce County Council ( WA) has approved a 2010 budget that cuts more than 300 jobs, raises fees and paves the way for a major consolidation of county government in the year ahead.

Crude stockpiles rose by 1.8 million barrels in the week ended Nov. 6, the Energy Information Administration reported. Analysts polled by Platts had expected an increase of 1 million barrels. Gasoline inventories rose 2.5 million barrels and distillate stockpiles, which include heating oil and diesel, added 300,000 barrels. Demand for gasoline dropped 1.9% from a week ago to 8.8 million barrels a day, the EIA said. After the data, December crude futures remained lower, down 2.5% at $77.37 a barrel.

"Consumers have entered a period of stabilization," said Kamalesh Rao, director of Economic Research for MasterCard Advisors. "We are not seeing robust measures of acceleration."
SpendingPulse estimates that sales, excluding autos, rose 2.4 percent in August and 0.6 percent in September but stayed at September's level during October.

Nordstrom Inc. reported late Thursday fiscal third-quarter net income rose to $83 million, or 38 cents a share, from $71 million, or 33 cents, a year ago. Net sales for the three months ended Oct. 31 rose 3.5% to $1.87 billion as shoppers hit by the recession gradually returned to stores. Same-store sales for the quarter slipped 1.2% from a year ago. The results matched what analysts polled by FactSet Research had expected. Nordstrom, citing continued improvement through the third quarter, raised its full-year earnings outlook to $1.83 to $1.88 a share from $1.50 to $1.65 previously.

The Dow Jones Industrial Average lost 93.79 points, or 0.9%, to finish at 10,197.47, near its lowest level of the session. The S&P 500 Index dipped 11.27 points, or 1%, to 1,087.24. The energy sector sank 2% along with crude-oil futures, which also hit by a buildup in U.S. crude inventories. The Nasdaq Composite fell 17.88 points, or 0.8%, to 2,149.02.

The United States federal government ran a deficit of $176 billion in October, the first month of the 2010 fiscal year, the Treasury Department reported Thursday. Receipts were $135 billion, the Treasury said, while outlays were $311 billion. The deficit was a little higher than a congressional estimate of $175 billion and marked the 13th consecutive monthly budget shortfall. A year ago in October the deficit was $156 billion.

Wednesday, November 11, 2009

Veterans Day

11/11/09 Veterans Day

LPS' October Mortgage Monitor also cites large "shadow" foreclosure and real estate owned property inventories. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline.
Nearly one-third of foreclosures remain in pre-sale status after 12 months - twice as many as the previous year. The six-month average deterioration ratio has risen the past two months to 300%, showing that for every loan that improves in status, three more deteriorate further.

Robert McHugh: "At this point we have an inter-market Bearish divergence between the Industrials and the S&P 500, the NASDAQ Composite, the NDX, and the Trannies. On Monday, the Industrials hit a new high for the rally from March 2009. The S&P 500, NASDAQ Composite, NDX and the Trannies did not. We believe a major top is coming, and soon, if it did not arrive Monday. Monday’s rally came on low volume, which is indicative of terminal rallies."

Rocky Vega: " Billionaire hedge fund investor Jim Chanos, the famous Enron short seller, is in the camp of professionals who view China as headed toward a crash. The China bears suspect that the economy is not as healthy as portrayed, and that many of its components that are actually stronger have become overheated. Basically, they believe that the “entire system is teetering toward collapse.”

Employers initiated 1,776 extended mass layoff events that resulted in 277,924 job separations in the third quarter of 2009. The total number of events reached a record high for any third quarter. Nine major industry sectors had a record high number of events for a third quarter.

Macy's reported a narrower than expected loss in its third quarter, but shares fell as its forecast for the holiday season fell short.

FedEx said it sees holiday shipping up 8%. UPS will raise their prices in 2010.

Wal Mart is offering an amazing deal on the Xbox 360 on Saturday, giving customers who purchase the $200 Arcade bundle a $100 gift card! Wal-Mart Stores Inc. said Wednesday it will offer a $100 gift card with each purchase of a BlackBerry mobile phone and two-year contract, the discounter's latest incentive ahead of the holiday season.

Gold rose to record highs above $1,115 an ounce on Monday as the dollar slid to 15-month lows, with hopes for a global economic recovery and gains in equity markets boosting the appeal of higher-yielding currencies.

Stubbornly high joblessness threatens to trigger loan defaults and drag on consumption next year, hobbling a U.S. economy struggling to rebound from recession, World Bank President Robert Zoellick said Wednesday.

ZeroHedge: "Let's do the math: the US Gov't needs to roll about $5 trillion (and increasing) every year, Commercial Real Estate has a $3 trillion refi cliff around 2014 and the banking system has a $7 trillion roll maturity by 2012. In other words at or about 2012, or at the time Barack Obama is sure to be enjoying record approval ratings (high or low, your choice) courtesy of 30% unemployment, the American economy will be straddled with not just the ongoing burden of issuing about $2 trillion in debt each year to finance what can only be characterized as a budget concocted by the most hard-core, raving lunatics in the Federal Insane Asylum Reserve, but will have to deal with roughly $15 trillion of rolling maturities."

Pragmatic Capitalist: "I don’t know if any characteristic of this massive 6 month rally has been more apparent than the huge futures run-ups we’ve seen at random points during the trading day. Without news, the S&P 500 futures get gunned on huge volume and surge higher. I’ve seen it at least every other day for 6 months. It tends to occur on low volume days such as the one we’re currently experiencing. As you can see in the chart below, the futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume. Effectively, they can take out every asking price with a large enough order and immediately create a 0.25% bump in the market in no time. If you’ve been wondering why we’ve seen huge surges on low volume days and conviction high volume selling on down days this explains much of it.

I don’t know if there is malfeasance behind this or if the buyer is simply too stupid to input trades at the bid (like most rational investors do as they try to achieve the best low price), but this is certainly an odd phenomenon that I cannot recall occurring so routinely over the course of my career. Who is the mystery institutional buyer that just needs to place their huge block orders with such urgency?"

Ucilia Wang: "General Electric plans to close its only U.S. solar panel factory because production costs have exceeded sale prices.

The Fairfield, Conn.-based company told the Dow Jones Clean Technology Insight that silicon panel manufacturing at its facility in Delaware, will stop in January.

GE will shutter the factory altogether by June. The factory can produce 34 megawatts of solar panels per year and employs 82 people. GE plans to layoff the workers with severance packages.

The move reflects the tough times experienced by solar energy equipment makers worldwide as supply far exceeded demand over the past year. Recession and a big reduction in solar subsidies in Spain - once a booming market - are key contributors.

Some manufacturers have seen prices for their products fall by anywhere from 30 percent to 50 percent over the past year."

“I think stocks are topping out, commodities are topping out and the dollar is making a bottom,” says Robert Prechter, president of Elliott Wave International and author of “Conquer the Crash“.

According to Yahoo Finance - Tech Ticker, Prechter also makes the seemingly counterintuitive argument that the dollar will rally because there’s so much debt, rather than being doomed because of it.

The New Zealand dollar fell after central bank Governor Alan Bollard said the “significant” increase in the currency is unlikely to be sustainable and may slow an improvement in the nation’s current-account deficit.

Bloomberg reports: "China, rejecting calls from Europe and Japan, will keep the yuan from gaining against the dollar until exports revive, state researchers said. Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008, Beijing-based Zhu Baoliang, the chief economist at the State Information Center, said in an interview yesterday. China will stick with its 'tough stance' on the currency, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a separate interview."

The U.S. has agreed to pay $3 million to a former government worker who accused officials with the CIA and State Department of spying on him with a bugged coffee table.

Rather than comply with a court order to provide lawyers in the case with what the U.S. government says is classified information, the government has agreed to settle to end the 15-year-old suit.

A close review of the case suggests that the Justice Department may have also decided to pay off the plaintiff in order to quash the series of damaging legal rulings issued by the influential judge overseeing the case that would have forced them to disclose the classified information. Those decisions may have a bearing on the “state secrets privilege” that the Bush and Obama administrations have used to try and thwart a high-profile lawsuit in California over illegal wiretapping conducted in the war on terror.

Whether it's over or not, the recession has made retirement at age 65 more difficult. New analysis from the Center for Retirement Research at Boston College found that 51 percent of Americans have a high risk of not being able to maintain their current lifestyle in retirement, up from 44 percent in 2007. "If they retire at age 65, they will not be able to maintain the same standard of living as they did before," says the center's director, Alicia Munnell, about the households at risk. These Americans will have to significantly cut their expenses when they leave the workforce at age 65--or delay retirement. "The later you retire, the more likely you are to be able to maintain your standard of living," Munnell says.

China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.

Just one in 20 Americans say they plan to buy a home within the next year, and they're most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices appear to have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.

Hewlett-Packard Co. said Wednesday it has agreed to buy networking software and equipment maker 3Com Corp. in a deal the companies valued at $2.7 billion. The company said it will give 3Com stockholders $7.90 per share. Both HP's and 3Com's boards have approved the deal, which HP expects will close in the first half of 2010. HP also issued a preliminary report Wednesday for the three months that ended in October. On an adjusted basis, HP said it earned $1.14 per share, about 11 percent higher than a year ago. Revenue fell 8 percent from the same period a year ago, to $30.8 billion.

Applied Materials said it expects net sales to grow by more than 30% in fiscal 2010.

The Dow industrials gained 44.29 points, or 0.4%, to end at 10,291.26. The S&P 500 Index rose 5.5 points, or 0.5%, to 1,098.51. The Nasdaq Composite added 15.82 points, or 0.7%, to end at 2,166.90.

Gold for December delivery finished at a new record close of $1,114.60, up $12.10, or 1%, on the day at the New York Mercantile Exchange.

The most significant change at Wal-Mart is that the majority of its discount stores (as opposed to its Supercenters) will open Thanksgiving morning at 6 a.m. and stay open through Friday evening. Last year, those stores closed Thanksgiving evening and reopened early Friday morning. By keeping the stores open for 24 hours, Wal-Mart is hoping for a steady flow of shoppers instead of mammoth crowds swelling outside its stores in the wee hours of Friday.

Tuesday, November 10, 2009


11/10/09 Unemployment

John Crudele: "My friend John Williams of Shadow Government Stats thinks the true unemployment rate would be 22.1 percent if everyone -- all discouraged former workers, encouraged, involuntary part-timers and the like -- were included."

Electronic Arts Inc. reported a wider quarterly loss on Monday and announced plans to lay off as many as 1,500 workers in an effort to reduce costs, as the video-game publisher tries to shift its focus away from retail-based game sales.

The layoffs amount to about 17% of the company's current workforce, with 900 positions being cut from the game development units. The company says the layoffs will help it save about $100 million a year in expenses

ICSC sees November sales could be up 5% to 8% against easy comparisons. In November 2008, sales tumbled by a historic 7.7%.

The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.

...The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008.

"Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty," the IEA said in its annual World Energy Outlook report.

Rep. Ron Paul: "If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government's reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won't come from higher taxes, it won't come from rationing of care, and it won't come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar's back.

Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness."

Charles Goyette: "Gold's recent advances signal that we are in a period of major transition now. The American dollar's role as the world's reserve currency is inherently unstable and the signs of a breakdown are all around. Just as the monetary authorities have been unable to reinflate the high-tech bubble or the real estate bubble, when the dollar bubble is finally burst, no other paper currency will be able to take its place."

Energy companies shut 29.6 percent of oil production and 27.5 percent of natural gas output by Monday in the Gulf of Mexico as Tropical Storm Ida spun through the region.Ida came ashore at Dauphin Island, Alabama, near Mobile Bay, Tuesday at 5:40 a.m. CST (1140 GMT).The Gulf is the source of 25 percent of U.S. domestically produced oil and 15 percent of natural gas. About 40 percent of U.S. refining capacity is located on the Gulf Coast.

CBS is reporting President Obama has decided to send 40,000 more troops to Afghanistan. The decision indicates one direction of the Obama administration's foreign policy - a large, long term force in Afghanistan. Former Soviet President Mikhail Gorbachev, drawing on his experience of military failure in Afghanistan in the 1980s, said the U.S. can’t win the conflict there and should begin pulling out its soldiers.

The UK government's credit rating is "absolutely" safe, despite a warning earlier from Fitch Ratings that Britain is the major economy most at risk of losing its AAA status, UK Trade Minister Mervyn Davies said Tuesday.

Home prices fell in the third quarter from year-ago levels in about 80 percent of U.S. metropolitan areas, the National Association of Realtors said Tuesday.

The industry trade group said median prices fell compared to a year earlier in 123 of 153 metro areas, while 30 areas saw prices rise.The national median price fell 11.2%.

Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index slipped to 47.9 in November from 48.7 in October. Had the figures been reversed and were higher, the main stream news would have made it a big headline.

Advanta Corp. files for bankruptcy, may turn over its banking unit to regulators.

ZeroHedge: "..S&P Price Oscillator Is Three Standard Deviations From Mean: 99% Outlier Market."

Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.

If Asia's loose monetary policy is left unaddressed it will ultimately blow a bubble of "mind-boggling size" that could become uncontrollable without fiscal tightening, Frederic Neumann, economist at HSBC, told CNBC Tuesday.

The housing market has improved slightly and prices are starting to stabilize, but we could see another downswing this winter, James Lockhart, vice chairman of WL Ross & Co. and former director of the Federal Housing Financial Agency, told CNBC Tuesday. “We are bouncing along the bottom in the housing market, but we’re not out of the woods yet,” he said. “I think we still have a ways to go.”

Copper stockpiles held in duty-free warehouses in China, the top user, may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year, according to Xi’an Maike Metal International Group.

The Dow Jones Industrial Average gained 20.03 points to 10,246.97. But the broad S&P 500 Index was less than 1 point lower at 1,093.01, while the Nasdaq Composite fell 2.98 points to end at 2,151.08.

Adobe Systems said Tuesday it is cutting 680 full-time jobs, or about 9 percent of its work force, to align costs with its fiscal 2010 budget.

The American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m. Energy producers in the U.S. idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said in a statement today. About 560,000 barrels of oil output and 1.9 billion cubic feet of daily gas production remain shut.

U.S. workers were reluctant to quit their jobs in September as businesses showed no signs of increased hiring, a government report showed Tuesday.
The job separations rate, a measure that covers all terminations of employment, stood at 3.3 percent in September, unchanged from the previous month, the Labor Department said in its monthly Job Openings and Labor Turnover Survey.
The quits rate, a subset of total separations and a barometer of how easy it is for workers to change jobs, remained unchanged in September at 1.4 percent, suggesting a lack of confidence in the economy jump-starting job growth.

Monday, November 09, 2009

Kraft and Cadbury

11/9/09 Kraft and Cadbury

Kraft Foods Inc. has made a 9.8 billion pound ($16.4 billion) cash-and-stock offer for British candy maker Cadbury PLC.

Monday's hostile offer values each Cadbury share at 717 pence, lower than Kraft's previous rebuffed approach of 745 pence.

Kraft says the price "represents a substantial premium to the unaffected share price of Cadbury," referring to a surge in the British company's stock since Kraft's previous bid was made public in September. Kraft Foods said the bid is priced 37% above Cadbury's close on July 3 and said no other potential offeror has publicly declared its interest in acquiring Cadbury.

Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying "Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."

The U.S.Dollar Index made a new 15-month low at 74.93. The standard of living for all Americans continues to decline-- year after year. Where is the outcry?

McDonald's Corp. said Monday that its October same-store sales rose 3.3%. Comparable sales, or constant-currency sales at restaurants in operation at least 13 months, were down 0.1% in the U.S., up 6.4% in Europe and climbed 4.7% in Asia, Middle East and Africa. Total systemwide sales rose 10.3% and were up 5.2% excluding the impact of currency translations, McDonald's said.

General Electric Co. and Comcast Corp have agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far, a source familiar with the matter said on Sunday.

The resolution of that issue brings the parties one step closer to an agreement, but French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, the source said.

The euro pushed back up above $1.50 Monday after finance ministers from the Group of 20 rich and developing countries steered clear from addressing the weakness of the U.S. currency against most of its competitors at a meeting over the weekend.

At the meeting in St. Andrews, Scotland, the finance ministers pledged to "continue to provide support for the economy until the recovery is assured" -- in effect telling the markets that borrowing costs will not be rising any time soon.

The thinly traded November gold contract rose $14.20, or 1.3%, to $1,109.30 an ounce, the highest level for a front-month gold contract.

Gold for December delivery, the most-active contract, climbed $13.50, or 1.2%, to $1,109.20 an ounce on the Comex division of the New York Mercantile Exchange, after hitting $1,111.70.

"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.

That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. In September, the National Association of Realtors reports that nearly 70 percent of all sales were on homes priced $250,000 or lower.
Home values are still worst in the local markets that saw the biggest housing boom and bust. These are in California, Florida, Arizona and Nevada.

John Hussman: "“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”

While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us."

Brad Setser: "In my view, it will be hard for the dollar to emerge as major funding currency."

“Bullion is likely to begin outperforming its producers”, the mining stocks, John Roque, managing director at WJB Capital Group, told Bloomberg. According to his technical analysis, “gold should do better than gold equities … it doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.”

Louis Uchitelle,
The New York Times

"A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation....The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country....American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.

“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”

“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.

China will raise retail fuel prices later on Monday, an industry source familiar with the situation told Reuters, with gasoline and diesel likely to hit their highest prices ever following the widely expected rise.

The source did not elaborate or say how big the price rise would be, but industry website C1, which has correctly predicted price movements in the past, said the government would add 480 yuan ($70.32) per ton to the pump price of both diesel and gasoline.

Tom Burghardt: "As AT&T whistleblower Mark Klein revealed in a sworn affidavit that described how the company physically split and copied the traffic that flowed into its offices, NSA was virtually duplicating, sifting and storing the entire Internet. Klein wrote in his self-published book:
What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...
This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in the their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)
Klein's revelations were confirmed by former NSA analyst and whistleblower Russell Tice, who told MSNBC's Countdown with Keith Olbermann in January that the NSA "had access to all Americans' communications" and spied "24/7" on domestic political activist groups and "U.S. news organizations and reporters and journalists."
In demanding that the independent federal judiciary toss these cases, the Obama administration is asserting a broad interpretation of Executive Branch privileges that caused much outrage and hand-wringing by congressional Democrats--when they were out of power.
Under the "change" regime however, what were once viewed by Democrats and their supporters as prime examples of Bushist lawlessness and contempt for constitutional safeguards, are now deemed vital state secrets that "protect" the American people, even as the capitalist state wages an endless "War on Terror" to seize other people's resources for geostrategic advantage over the competition. As Glenn Greenwald wrote:
That was the principal authoritarian instrument used by Bush/Cheney to shield itself from judicial accountability, and it is now the instrument used by the Obama DOJ to do the same. Initially, consider this: if Obama's argument is true--that national security would be severely damaged from any disclosures about the government's surveillance activities, even when criminal--doesn't that mean that the Bush administration and its right-wing followers were correct all along when they insisted that The New York Times had damaged American national security by revealing the existence of the illegal NSA program? Isn't that the logical conclusion from Obama's claim that no court can adjudicate the legality of the program without making us Unsafe? (Glenn Greenwald, "Obama's latest use of 'secrecy' to shield presidential lawbreaking," Salon, Democrat or Republican, "liberal" or "conservative:" what matters most for all factions in Washington is the defense and preservation of the class privileges of the capitalist elite. Criminality on such a scale requires that the armed fist of the state is mobilized and ever-vigilant; ready at the nonce to crush anyone who would challenge the prerogatives of our masters."

Business Week: "While the Oracle-Sun merger still is likely to be O.K.'d in the end, the EU will probably ask Oracle's CEO to give up some control over MySQL, Sun's open-source software."

Pfizer Inc.will "significantly" reduce research and development at some of its sites and shut down six out its 20 sites. Pfizer said it will shut down its R&D operations at Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and at Gosport, Slough/Taplow in the United Kingdom. The company will also move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations. Pfizer said the moves will result in staff reductions, but it did not specify how many.

Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will eliminate as many as 2,500 jobs to reduce costs after losing subscribers to rivals.

Electronic Arts to cut 900 workers.

The Dow Jones Industrial Average rose 203.52 points, or 2%, to 10,226.64. The S&P 500 added 23.78 points, or 2.2%, to 1,093.08. The Nasdaq Composite rose 41.62 points, or 2%, to 2,154.06.

Sunday, November 08, 2009

Rules of the Investing Road

11/8/09 Rules of the Investing Road

1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking

Rules of the Investing Road

11/8/09 Rules of the Investing Road

1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking