Saturday, January 30, 2010

Bank Failures

1/30/10 Bank Failures

Three bank failures in Florida, Georgia and Minnesota have brought the number of bank failures in 2010 to 12, according to the Federal Deposit Insurance Corp. late Friday. In Florida, Immokalee's Florida Community Bank will have its $795.5 million in deposits taken over by Miami's Premier American Bank. First National Bank of Georgia in Carrollton will have its $757.9 million in deposits taken over by Carrollton's Community & Southern Bank. Marshall Bank of Hallock, Minn., will have its $54.7 million in deposits taken over by United Valley Bank of Cavalier, N.D. Cornelia, Ga.-based Community Bank & Trust was closed by regulators Friday, bringing the number of U.S. bank failures this year to 13.

Roubini Calls U.S. Growth `Dismal and Poor', Predicts Second-Half Slowdown
Los Angeles, Calif.-based First Regional Bank was closed by regulators Friday, marking the 14th U.S. bank failure of 2010.

Chinese state media says the defense ministry is suspending military exchanges with the United States over its planned $6.4 billion arms sale to neighboring Taiwan.

Rob Hanna: "Amazingly, Thursday’s close marked a 50-day low in the S&P. It was just last week that the S&P closed at a 50-day high. Moving from a 50-day closing high to a 50-day closing low so quickly is quite rare. I only found 6 other instances. Unfortunately, while it appears rare, it doesn’t appear predictive."

Tim W. Wood: "I can tell you now that the Bear has a few more luring tricks up his sleeve. My cycles work tells me that there will be a rebound rally on both a short and an intermediate degree ahead. The short-term rebound will serve to convince a few more that the decline is over and again they will reenter, and just when all the sheep are pulled back in, the Bear will make another sneak attack. This will in turn give us a bit more of a wash out, and then once the market begins to move back up with the intermediate degree bounce, Kudlow, Cramer and the gang will be screaming that we have now seen a healthy and needed correction and that we are once again back on the road to prosperity. But, the cycles work suggests otherwise and again, that intermediate-term rebound will serve to suck every last drop of cash it can back into the market. Then, depending on how the next rally of intermediate degree sets up that will likely set the stage for the Bear to return with full vengeance....From a Dow theory perspective we now have a short-term non-confirmation in place. Reason being, the closing high for the Transports occurred on January 11th, while the closing high for the Industrials occurred on January 19th."

Food Stamps and other entitlement programs have replaced the food lines of the Great Depression.

Argentinian President Cristina Fernandez has told a gathering at her Presidential Palace that pork is even better than Viagra for spicing things up in the bedroom - and credited a satisfying weekend with her husband to the meat.

"I've just been told something I didn't know, that eating pork improves your sex life," she said in a televised speech to the leaders of the Argentinian meat industry, "I'd say it's a lot nicer to eat a bit of grilled pork than take Viagra."

Argentina’s central bank President Martin Redrado resigned last night after a standoff with the government over its plan to use $6.6 billion in reserves to pay debt due this year. “I have followed the Constitution, the law and the central bank rules,” Redrado said during a press conference in Buenos Aires. “My cycle has ended at the bank.”

ZeroHedge: "The average loss severity on CMBS liquidation has just hit a record of 52.7%. That means that on average less than half the loan is recovered in liquidation."

Japan’s housing starts fell to the lowest level since the nation celebrated its postwar recovery by hosting the Olympics in 1964, as builders were hobbled by dwindling household incomes and sustained deflation.

Construction companies broke ground on 788,410 homes last year, 27.9 percent fewer than in 2008, the Land Ministry said today in Tokyo. That was the lowest since 751,429 recorded in 1964. The pace of decrease eased in the past four months.

The US administration is speeding up deployment of defenses against potential Iranian missile attacks in the Gulf to heed off any possible retaliation, The New York Times reported Saturday.

The move involves placing specialized ships off the Iranian coast and anti-missile systems in at least four Arab countries -- Qatar, the United Arab Emirates, Bahrain and Kuwait -- the Times said, citing administration and military officials.

Oman has also been approached, although no Patriot missiles have been deployed there yet, US officials told the newspaper, adding that the willingness of other Arab states to accept the US defenses reflects growing unease in the region over Iran's ambitions and capabilities.

Friday, January 29, 2010


1/29/10 January

Benefit costs rose 0.5% in the quarter, while wages and salaries rose 0.5%. For all of 2009, the employment cost index increased a record low 1.5%. Economists said the weak trend is not surprising given high unemployment rate.

February may be one of the coldest ones in the last 50 years. There's a warning from that much of the nation, including Oakland County, should prepare for another round of severe cold and snowy conditions, starting next week. senior meteorologist and long range forecaster Joe Bastardi sees a "top-10 cold February" in store for much of the United States, compared to the last 50 years.
"I believe the physical drivers are all there for a major cold month, much like this December was," Bastardi said.

Tony Blair opened himself up to a charge of misleading Parliament today when he told the Iraq Inquiry that by any objective analysis the threat posed by Saddam Hussein's chemical and biological weapons programme had not increased after 9/11.

Chevron Corp said fourth-quarter net income fell to $3.07 billion, or $1.53 a share, from $4.9 billion, or $2.44 a share in the year-ago period. Wall Street analysts expected earnings of $1.66 a share for Chevron, according to a survey by FactSet Research. Net oil-equivalent production for the quarter was more than 9% higher than the year-ago period, driven by new capital projects. The oil major said revenue rose to $48 billion from $43 billion, on higher oil prices and production increases. Chevron's upstream earnings rose to $4 billion from $3.2 billion, while its refining and marketing business swung to a loss of $613 million from net income of $2.1 billion.

Real gross domestic product increased at a 5.7% seasonally adjusted annual rate in the final three months of the year. About two-thirds of the growth came via the swing in inventories. The 5.7% increase was in line with the 5.4% gain expected by economists surveyed by MarketWatch. Even with healthy growth in the second half of the year, the economy shrank 2.4% in 2009, the worst drop since the 10.9% decline in 1946. Inventories added 3.39%.

"The GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker — a few grains won’t do." David Rosenberg

A senior Federal Reserve official warned on Friday that the uncertain path of interest rates in coming months poses risks for banks inattentive to the match of durations among their assets and liabilities.

Federal Reserve Vice Chairman Donald Kohn told a conference sponsored by the Federal Deposit Insurance Corp that the usual uncertainty about interest rates is compounded in the current situation by the fact that rates are near zero and the Fed has massively expanded the amount of reserves in the banking system.

"Borrowing short and lending long is an inherently risky business strategy," Kohn said. "Intermediaries need to be sure that as the economy recovers, they aren't also hit by the interest rate risk that often accompanies this sort of mismatch in asset and liability maturities."

China is expected to raise the deposit reserve requirement ratio after the Lunar New Year holidays to curb surging liquidity.

The Reuters/University of Michigan consumer sentiment index rose to 74.4 in January from 72.5 in December, according to media reports. It's the highest since January 2008.

The Chicago purchasing managers index rose to 61.5% from 58.7% in December.

-Natural gas futures climbed Friday, supported by wintry weather in the U.S. Midwest and Northeast.

Natural gas for March delivery on the New York Mercantile Exchange was trading 12.7 cents higher, or 2.47%, at $5.265 per million British thermal units after opening floor trade 8.4 cents higher at $5.222/MMBtu.

Frigid temperatures in the major gas-consuming regions over the next two weeks were expected to bolster the demand for natural gas for heating. Utilities and financial traders were buying up gas in response to the weather forecasts, which had been revised from more moderate outlooks earlier in the week.

"Some of the utilities got caught short going into the weekend," said Ed Kennedy, a broker with Hencorp Becstone Futures in Miami. "It's going to be a lot colder."

Commodity Weather Group, a Bethesda, Md. private forecaster, was predicting below-normal temperatures in the eastern half of the U.S. from January 29 to Feb. 2, and in the Northeast from Feb. 3 to Feb. 7.

"The short-term numbers are colder-than-expected in parts of the Midwest and East Coast," CWG meteorologists wrote in a note to clients Friday.

So far, administration officials have not laid out how they plan to double American exports to $2 trillion in 2015, from $1 trillion today. Mr. Obama said he was starting a National Export Initiative that will "help farmers and small businesses increase their exports," but did not elaborate. White House officials, when pressed, said only that the commerce secretary, Gary F. Locke, would give a speech on the matter next week.

Separately, on Thursday, Mr. Locke announced that, as part of a plan to reduce export burdens on American companies, the United States might remove restrictions on exports of goods with potential military applications when such technologies were available worldwide.

"We have too many controls on items readily available around the world," Mr. Locke told the United States-China Business Council.

Export control rules are meant to keep dual-use technologies like computer encryption software and airplane parts out of the hands of American foes that could use them for military purposes.

India raises bank reserve rate by 75 bps, more than expected; Keeps key interest rates.

Japan Consumer Prices fall 1.3% in December - the 10th monthly decline.

Nasdaq down 5.3% in January, S&P down 3.7%, and Dow down 3.5%.

Thursday, January 28, 2010

Debt Ceiling

1/28/10 Debt Ceiling

Bookings for durable goods excluding transportation equipment climbed 0.9 percent last month, more than anticipated, figures from the Commerce Department showed today in Washington. Total orders increased 0.3 percent, less than forecast, depressed by a drop in demand for commercial aircraft. December 2009 new machine orders was down a full 25.1% compared with 2008 figures.

Initial jobless applications declined to 470,000 in the week ended Jan. 23, higher than anticipated, from 478,000 the prior week, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance dropped to the lowest level in a year and those receiving extended benefits also fell.
The four-week average of initial claims rose 9,500 to 456,250. A Labor Department official said there were no reports of backlogs at state offices. Meanwhile, the number of Americans receiving state jobless benefits held steady fell 57,000 to 4.60 million in the week ending Jan 16. The four-week moving average of continuing claims fell 94,250 to 4.7 million. Overall, 11.5 million Americans received federal and state unemployment benefits on an unadjusted basis in the week ended Jan. 9, the latest period for which the data is available. This is down from 12.0 million in the prior week.

The Baltic Dry Index fell 5% today and has broken below 3000 for the first time since Oct 28th and follows the recent correction in Chinese/Hong Kong equities. The market pullback has been of course due to policy steps to slow lending growth and tame the growing property/construction bubble that is heavily reliant on steel and thus iron ore and iron ore is the key commodity in dry bulk.

John Carney: "

Here's a list of what the iPad replaces:

That's right: nothing.

The iPad replaces nothing I have. It isn't a usefully functional personal computer and it doesn't work well as a phone. Instead, it would add to the stuff I carry around with me.

I don't want more stuff to carry around.

When I asked some of my Twitter friends about this, they told me that the iPad would replace newspapers and magazines. I think they're wrong. A newspaper or a magazine is easily acquired, cheap, light weight, resilient, foldable for easy storage, and disposable. If I accidentally leave it somewhere, I haven't lost much. When I'm done with the paper, I just throw it away.

The iPad is the opposite of these things. It is expensive, heavy, fragile, stiff, and permanent. When I'm done reading something, I would have to make sure I remember not to leave my iPad behind. I would be stuck with it even when there's nothing I want to do with it. I'll probably have to carry an entirely new bag just to tote the thing around."

Another 153,127 workers being laid off in mass firings in December.

The expansion of the Panama Canal slashes the cost of shipping them by sea.

The deeper, wider canal will allow A.P. Moeller-Maersk A/S, China Ocean Shipping Group Co. and other lines to ship more cargo directly to New York and Boston instead of unloading it on the West Coast for trains and trucks to finish the journey east. That could save exporters 30 percent, the canal operator said.

The $5.25 billion Panama Canal project, scheduled for completion during its centennial in 2014, may take business from ports including Los Angeles and Seattle, and railroads including Berkshire Hathaway Inc.’s Burlington Northern Santa Fe Corp. It costs as much as $1,000 more per cargo container to use trains than ships, said Lee Sokje, a shipbuilding analyst at Mirae Asset Securities Co. in Seoul.

Twenty-nine percent (29%) of U.S. voters now say the country is heading in the right direction, according to the latest Rasmussen Reports national telephone survey.

This is the lowest level of voter confidence in the nation’s current course so far this year - and ties the findings for two weeks in December. Those readings marked the lowest finding since February. At the start of 2010, 32% felt the country was heading in the right direction.

The majority of voters (65%) continue to believe the nation is heading down the wrong track, a figure that's held roughly steady since mid-November.

WSJ report as further validation of its Natural Gas acquisition strategy. The article reports that recent cold spells in the eastern US have "erased a glut of gas... the shrinking supplies are bolstering prices." And weather forecasts for February and March point to continued natural gas demand for both consumers and industry as inventories dwindle.

Natural gas inventories down 86 billion cubic feet.

Natural gas in U.S. storage for the week ended Jan. 22 stood at 2.521 trillion cubic feet--five higher than last year and 3.6% above the five year average, the EIA said on Thursday.

The reported draw re-establishes the storage surplus relative to both last year and the five year average, after bouts of cold weather had brought stockpiles roughly in line with those historic measures.

"There is still some potential here for prices to hold and turn higher in our view, as the market looks ahead to higher withdrawals in the weeks ahead," Tim Evans, an analyst with Citi Futures Perspective in New York, wrote in a note to clients on Thursday.

A mere three hours before the Bernanke cloture vote, America just got permission to hit 100% Debt/GDP. Thank Senate Democrats who just approved an amendment increasing the US debt ceiling by $1.9 trillion.

ZeroHedge: "StandardStandard & Poor's Ratings Services no longer classifies the United Kingdom (AAA/Negative/A-1+) among the most stable and low-risk banking systems globally due to our view of the country's weak economic environment, the reputational damage we believe has been experienced by the banking industry, and what we see as the high dependence on state-support programs of a significant proportion of the industry."

The median amount of time it takes builders to sell a completed unit is now 13.9 months: an all time record, and 50% higher than a year ago.

Chinese gold production topped 300 tons in 2009, a new record, making China the largest producer of the precious metal in the world for the third year in a row, according to media reports Thursday citing the China Gold Association. The association said that gold production reached 313.98 tons last year. Last month, consultancy group GFMS said China would surpass India this year as the world's largest consumer of gold, with total demand forecast at 432 tons. March gold futures finished down 90 cents at $1,084.80 an ounce on Thursday.

Microsoft Corp. said Thursday its fiscal second-quarter net income rose to $6.66 billion, or 74 cents a share, from $4.17 billion, or 47 cents a share in the same period a year earlier. Revenue for the period ended in December rose 14% to $19.02 billion, Microsoft said. Analysts had expected the Redmond, Wash.-based software giant to post earnings of 59 cents a share, and $17.9 billion in revenue, according to Thomson Reuters data. Microsoft's results included $1.7 billion in revenue deferred from prior quarters, related to pre-sales and a marketing program for its recently-released Windows 7 operating system. Inc. said Thursday that fourth-quarter earnings surged 70% thanks to strong holiday sales of media products and other items. For the period ended Dec. 31, Amazon reported net income of $384 million, or 85 cents a share, compared to net income of $225 million, or 52 cents a share, for the same period the previous year. Sales rose 42% to $9.52 billion. Analysts were expecting earnings of 72 cents a share on revenue of $9.04 billion, according to consensus forecasts from Thomson Reuters.

The Dow Jones Industrial Average fell 115.7 points to 10,120.46. The S&P 500 Index declined 12.97 points to 1,084.53. The Nasdaq Composite ended at 2,179.00, off 42.41 points.

Wednesday, January 27, 2010

The Fed

1/27/10 The Fed

Caterpillar updated its outlook for 2010, saying it now expects a profit of $2.50 a share on sales of $35.6 billion to $40.5 billion. Analysts' average earnings forecast was $2.71 a share, according to Thomson Reuters I/B/E/S.

Nouriel Roubini: Weak economic recovery under way due to weak labour markets. First half of 2010 will be better than second half due to stimulus factors. Expects an eventual stock market correction (last October he was calling for a 10% to 20% drop that never transpired), and bearish on commodities... we're seeing the start of a global asset bubble, says Greece is already bankrupt and thinks the eurozone is at risk of breaking up sometime down the line.

Japan just received a downgrade warning from S&P over their credit rating and the U.S. is not far behind. Standard & Poor's lowered its outlook for Japan's sovereign debt rating to "negative." While Japan's long-term debt rating remains double-A, the outlook for that high rating no longer is "stable."
Doug Elmendorf, the director of the Congressional Budget Office, called the outlook for the federal budget "bleak." The CBO projects the current year's deficit of $1.35 trillion to equal 9.2% of GDP. CBO forecast total publicly held debt to rise to 60% of GDP this year and 67% by 202o. In 2001, publicly held debt equaled just 33% of GDP.

Several Chinese banks have ordered some branches to suspend lending for this month.

Darrell Issa: "Public Disclosure As A Last Resort: How the Federal Reserve Fought to Cover Up the Details of the AIG Counterparties Bailout From the American People: "The fact that a quasi-government agency, unaccountable to the American people, likely wasted billions of taxpayer dollars and went to great lengths to prevent Congress and the American people from learning about these actions demonstrates the threat that the Federal Reserve poses to basic principles of American democracy."

Boeing gave a cautious outlook for 2010 after dealing with program delays and declining orders in 2009.

Greek bond yields rose on Wednesday to the highest levels since the country joined the euro in April 2001 as the finance ministry said no deal had been reached to sell bonds to China.

Over 80 percent of all the gains from March 2009 through last week’s high have occurred on Mondays.

Rep. Ed Towns, D-N.Y., chairman of the House Oversight and Government Reform committee, on Wednesday said the circumstances surrounding the New York Federal Reserve $182 billion bailout of American International Group Inc. "create an air of suspicion and distrust among the American people." Treasury Secretary Geithner and his predecessor, Henry Paulson, defended their decision to complete the bailout, arguing that it was necessary to ensure the financial market did not collapse. "The taxpayers were propping up the hollow shell of AIG by stuffing it with money, and the rest of Wall Street came by and looted the corpse," Towns said.

Sales of new U.S. homes fell 7.6% to a seasonally adjusted annual rate of 342,000 in December from 370,000 in November after a popular tax credit for buyers was set to expire, the Commerce Department estimated Wednesday. It was the lowest seasonally adjusted sales pace since March. For all of 2009, sales of new homes fell 8.6% to a record-low level of 374,000, down about 23% from 2008's level. The records date back to 1963. Economists surveyed by MarketWatch were looking for a small gain in December to about 365,000. The number of unsold homes dropped 1.7% to 231,000, the lowest in 38 years.

Crude oil futures slumped on Wednesday after the Energy Department reported a drop of 3.9 million barrels in U.S. crude inventories. Analysts polled by Platts expected a 2-million-barrel increase in commercial crude-oil supplies for the week ended Jan. 22. Crude oil for March delivery recently fell 14 cents, or 0.2%, to $74.58 a barrel, after briefly slumping as low as $73.86 in electronic trade. The EIA also reported distillate supplies rose by 400,000 barrels and gasoline inventories were up by 2 million barrels in the latest week.

“We urge the president to remember that natural gas is not only an environmental solution, it is an economic solution for our country,” Natural Gas Supply Association Pres. R. Skip Horvath said in a statement.
The industry employs several million people already and is posed to add more as power plants, homes, businesses, and factories increase demand, Horvath noted, adding, “Those jobs create revenue in addition to the billions of dollars the natural gas industry already generates for state and federal government through royalties and taxes.”

The Apple iPad has a 9.7-inch touch-screen and looks similar to an enlarged version of Apple's mega-popular iPhone. Jobs said the iPad is designed to fill a gap between the iPod touch and iPhone and its MacBook line of laptop computers.

"We asked if there was room for a third category in the middle, something between a laptop and a smartphone. In order to create a new category, it needed to be far better at doing some key tasks such as browsing the Web, doing e-mail, sharing photos, watching video, gaming and reading e-books," he said.

He also took a dig at netbooks, the ultra-small laptops that other companies have launched in an attempt to fill this market.

The Federal Reserve on Wednesday left interest rates near zero and vowed to keep them there for a while to nurture an economic recovery held back by stubbornly high unemployment.

Oil for March delivery closed the New York floor session at $73.67 a barrel, off $1.04, or 1.4%. Gold for April delivery also sank $13.80 to end the New York floor session at $1,085.70 an ounce. Copper, silver, platinum and palladium also ended lower.

The Dow Jones Industrial Average added 41.87 points to 10,236.16. The S&P 500 Index climbed 5.33 points to 1,097.5. The Nasdaq Composite Index gained 17.68 points to 2,221.41.

Tuesday, January 26, 2010

Rally Fails

1/26/10 Rally Fails

Brent Steenbarger: "Note the recent spike in the CBOE put/call ratio. Spikes in the ratio have been a nice tell recently for market lows, as excess pessimism has indicated that weak longs have been shaken from their positions.
What makes this spike different from recent ones is that it is not occurring at a higher price low. In a bull market, you want to see stocks hitting oversold levels and bearish sentiment levels at successively higher prices. The retracement of the late 2009/early 2010 strength suggests that a longer-term topping process may be occurring, fueled by monetary tightening in China and the relative weakness of many non-U.S. equity markets."

Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit after a surge in lending in the first half of this month.
Bank of China Ltd. has stopped extending new corporate loans in the Shanghai area, except for clients who have repaid earlier borrowings, said a person familiar with the matter who declined to be identified. China Construction Bank Corp.’s branch in the city has been told to screen applications for personal loans and mortgages more carefully and to stop new lending once a monthly quota is met, another person said.

China’s benchmark stock index fell to a three-month low today on concern a government clampdown on lending will slow the world’s third-largest economy. Credit Suisse Group AG said in a note today that a countrywide lending halt that started Jan. 19 may trigger a “meaningful” decline in manufacturing.

Federal Reserve policy makers are considering adopting a new benchmark interest rate to replace the one they’ve used for the last two decades.

The central bank has been unable to control the federal funds rate since the September 2008 bankruptcy of Lehman Brothers Holdings Inc., when it began flooding financial markets with $1 trillion to prevent the economy from collapsing. Officials, who start a two-day meeting today, have said they may replace or supplement the fed funds rate with interest paid on excess bank reserves.

“One option you might want to consider is that our policy rate is the interest rate on excess reserves and we let the fed funds rate trade with some spread to that,” Richmond Fed President Jeffrey Lacker told reporters on Jan. 8 in Linthicum, Maryland.

Stephen Schork: "Natural Gas: Open interest in the Henry Hub contract rose for the fourth consecutive week according to the CFTC, rising 3.0 percent to 782,549 contracts as of last Tuesday. That raises the year-on-year surplus from 6.91 percent last week to 8.84 percent this week, and is most likely contributing to the increased volatility seen in the contract.

Total length held by swap dealers and money managers continued in the vein of last week’s 20.0 percent increase by rising 14.6 percent to 47,409 contracts. This is a bullish signal and could imply continued upward strength — prices have risen 4.7 percent since Tuesday."

Baker Hughes Inc., the oilfield services provider that agreed in August to buy BJ Services Co., expects the acquisition to be completed by April as scheduled.

Japan’s sovereign credit rating outlook was on Tuesday cut to “negative” by Standard & Poor’s over the dimming prospects for reducing the country’s swelling debt load.

The decision came as the Bank of Japan kept rates on hold at 0.1 per cent for the 13th consecutive month and forecast that deflation in 2010 and 2011 would be less severe than it previously thought.

Ron Paul: "First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes. Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money. The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power."

John Tamny

"Newspaper headlines last week and over the weekend pointed to a vote on Fed Chairman Bernanke's re-nomination that is increasingly dicey. Rather than achieve the lame-duck status that will come with a near-miss vote, Bernanke should step down.

The irony in all of this is that absent the happy bonus situation on Wall Street which revealed a healthier banking system, Bernanke likely would have sailed through to re-nomination. The bank bonuses, while arguably correct, reminded voters of the bailouts of those same banks which were incorrect, but that Bernanke helped engineer.

Bonuses aside, Bernanke should step aside for the simple reason that the Fed which he oversees has failed miserably. Indeed, while in a rational world the Fed's sole mandate would involve it overseeing a dollar-price rule in terms of gold (thus making it largely irrelevant) to the exclusion of all other policies, it is presently charged with maintaining full employment, low inflation and a sound banking system. It has done none of those things."

November Case-Shiller data showed that after having recorded several sequential increases in prices, November's -0.2% decline is substantiating the October -0.1% decline. The decline on a YoY basis was -5.3%. On a seasonally adjusted basis, the Composite 20 also indicated a moderation, as the sequential rate of increase declined from 0.3% to 0.2% in November, and indicated the same YoY decline as the unadjusted data of -5.3%. 15 of the 20 markets they track fell sequentially on a nominal basis.

S. Korean economic growth eases to 0.2%, slowest pace in three quarters.

The Conference Board's Consumer Confidence Index increased to 55.9 -- the highest in more than a year. That compares with 53.6 in December. Still, consumer confidence remains very weak, far below the average level of 95. The improvement in January was due mainly to better feelings about the present situation. Consumer expectations also improved. Assessments of the labor market improved marginally.

The U.S. budget deficit will hit $1.3 trillion in 2010, congressional budget analysts estimated Tuesday, in a fresh piece of grim news for President Barack Obama. The Congressional Budget Office's estimate assumes current laws and policies remain unchanged. Economic growth will also probably be "muted" for the next few years, the CBO said in its budget outlook for 2010.

58 percent of Apple's revenue now comes from overseas.

About 6 million e-readers will be sold this year, up from 3 million last year, Forrester estimates.’s Kindle has about 60 percent of the market, while Sony’s products have 35 percent, Forrester says.

Rob Kirby: "According to the most recent data from the U.S. Office of the Comptroller of the Currency, the notional value of derivatives held by U.S. commercial banks increased $804 billion in the third quarter of 2009, or 0.4%, to $204.3 trillion. Seven banks hold 99.8% of all derivatives."

The American Petroleum Institute said inventories fell by 2.225 million to 326.08 million barrels in the week ended January 22. Analysts polled by Platts expected a 2-million-barrel increase in crude oil stocks. Crude oil for March delivery was down 4 cents at $74.67 a barrel, after earlier rising 7 cents in electronic trade. It had finished on a loss of 55 cents, or 0.7% at the New York Mercantile Exchange. The API also reported a rise of 916,000 barrels in gasoline stocks. Distillate stocks fell 1.978 million barrels, it said. Platts analysts projected an increase of 1.7 million barrels in gasoline inventories and a decrease of 1.8 million barrels in distillate supplies.

The Dow Jones Industrial Average fell 2.57 points to 10,194.29. The S&P 500 Index declined 4.61 points to 1,092.17. The Nasdaq Composite Index fell 7.07 points to 2,203.73.

No. 1 home-improvement retailer Home Depot Inc. is cutting 1,000 jobs and shutting three underperforming pilot stores as the company consolidates human resources, finance, real estate and construction functions, spokesman Ron Defeo said in an interview.

Monday, January 25, 2010

Home Sales

1/25/10 Home Sales

Sam's Club, the warehouse club division of Wal-Mart Stores Inc is cutting roughly 11,200 jobs, or about 10 percent of its workforce, as it outsources in-store product demonstrations and eliminates positions used to recruit new business members.

John McCain came out this morning against Bernanke.

A new message attributed to al-Qaida leader Osama bin Laden claims responsibility for sending the failed airplane bomber to the United States last month. The message says attacks will continue as long as the U.S. supports Israel.

An analysis by CNBC shows Fed Chairman Ben Bernanke is likely to win confirmation, though he will likely draw more opposition than any chairman in recent history.

Last weeks sell off relieved the markets overbought condition with little damage to the breadth indicators. There may be a little more downside, but, it is likely, most of the decline is behind us.

I expect the major averages to be higher on Friday January 29 than they were on Friday January 22.

Overall office vacancy in the fourth quarter in Los Angeles, Orange, San Bernardino and Riverside counties was 18.5%, a substantial jump from 14.4% a year earlier, according to commercial real estate brokerage Cushman & Wakefield.
"Vacancies are up, and I believe they will continue to go up this year as we have continued job losses," said Joe Vargas, leader of the company's Southern California offices.

ZeroHedge: "Economics 101: when supply is greater than demand, prices fall; when supply is $700 billion greater than demand, prices plunge. An in-depth look at the supply-demand mismatch of the 2010 US Treasury market demonstrates that the truth is much worse than you may think, and why Bernanke's first act upon reconfirmation will likely be the announcement of the second part of Quantitative Easing."

John Hussman: ":Despite last week's decline, the Market Climate remains characterized by overvalued, (intermediate-term) overbought, overbullish and rising-yield conditions. As I noted last week, this is " a situation that has historically been associated with a moderate continuation of upward stock market progress and a tendency to make successive but very marginal new highs, typically followed by abrupt and often severe market losses within a time window of about 10-12 weeks. As usual, that's not a forecast - just a regularity. But it's a harsh enough regularity to turn our knuckles white here."

Ericsson announced on Monday an extra 1,500 job cuts under restructuring which bit deeply into fourth-quarter net profit at the firm, the world leader in phone network equipment.

Total announced job cuts are now about 6,500, generating huge restructuring charges with the intention of bringing equally huge cost savings.

Hungary's central bank decided Monday to lower its base rate by 25 basis points to 6.0%. The decision was in line with market expectations. In recent trading, the U.S. dollar gained 0.4% against the Hungarian forint, while the euro edged up 0.1% against the forint.

Ben Chapman: "Accept that we are now in a depression, Stock Markets still grossly overvalued, poverty rates increase across midwest, a lots opportunity to regulate the banks,Goldman Sachs reports record profits and still bonusing employees richly, mainstream America goes on a financial diet, suburbs now home to American poor....How can there be a recovery with 22.5% unemployment, and with the additional threat of further unemployment? Who will buy the new housing and the tremendous inventory overhand? What will happen to the commercial inventory building up? Who has money in America to buy cars and trucks? Credits to buy housing for subprime and ALT-A buyers will end up with a 50% failure rate. Cash for clunkers was a colossal failure. Such exercises in futility only buy time, just as stimulus packages, and monetization do the same thing. The elitists behind the scenes know this just as we know this. That means the colossal deficit increase of $1.4 trillion a year will add 10% yearly to the federal debt to GDP ratio that will be over 100% by 2011. The tax liability to service this debt will be overwhelming. Government debt is rising exponentially and if further stimulus is not added the credit crisis will be renewed. This is why the Fed cannot remove further liquidity from the financial system, especially after having taken M3 from 17 to 18% to 6%. Incidentally, England and the ECB have done the same thing, and they still see rising inflation. If further stimulation is not forthcoming, or war, or default comes, we will see inflation reverse and deflation take over and that could last for ten years or more. This deflation, if allowed to take its course, will cause losses of $12 to $15 trillion from the economy and cause unemployment to rise to 40% to 50%. That would also entail cutting extended benefits. That would give us the scenes we saw in the 1930s. The debt we are facing knows no precedent in modern times, and there is no possible way it can be paid."

U.S. Dec. existing home sales fall 16.7% to 5.45m. The 16.7% percentage decline from November to December was the largest on record, the National Association of Realtors reported. The decline was larger than the 11% drop to 5.80 million that was expected by economists surveyed by MarketWatch. Sales in December were up 15% compared with December 2008. The median sales price rose to $178,300 in December, up 1.5% compared with a year earlier. It's the first year-over-year increase in prices since August 2007.

The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-one percent (41%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -16.

"I do see all of the signs of a credit induced real estate bubble ( in China)that i think is going to be a doozy," Jim Chanos stated.

Gold for February delivery finished up $6, or 0.6%, at $1,095.70 an ounce on the New York Mercantile Exchange. Crude oil for March delivery finished on a gain of 72 cents at $75.26 a barrel on the New York Mercantile Exchange, after losing more than 4% over the prior three trading sessions.

Apple on Monday reported a fiscal first-quarter profit of $3.38 billion, or $3.67 a share, compared with earnings of $2.25 billion, or $2.50 a share in the same period a year ago. Revenue rose 32% to $15.68 billion as Apple reported sales of 8.74 million iPhones in the quarter ended in December. The results topped the estimates of analysts surveyed by Thomson Reuters, who forecast Apple to earn $2.07 a share on $12.06 billion in revenue.

The Dow Jones Industrial Average rose 23.88 points, or 0.2%, to 10,196.86. The S&P 500 Index climbed 5.02 points, or 0.5%, to 1,096.78. The Nasdaq Composite Index added 5.51 points, or 0.3%, to 2,210.8.