Saturday, February 27, 2010


2/27/10 Chile

Doug Noland: "Massive Treasury and agency MBS issuance – in concert with enormous
Federal Reserve monetization – stabilized an inherently unsound Credit
system. This unprecedented expansion of government finance either
reflated (in the case of financial assets) or stabilized (in the case
of real estate) asset markets, which stabilized the level of finance
flowing to the real economy. Much of the post-Bubble Credit system
remains impaired, resulting in an especially uneven flow of finance
throughout.....Nowhere does the temptation for higher inflation seem as indomitable as
it does here at home. And the markets are fine with it. In the old
days, at least the bond “vigilantes” would have objected. But we live
in the financial age where “spread trades,” myriad Credit instruments,
and speculator profits are all bolstered by reflationary policymaking.
Throughout the system, many feel they would benefit from some
additional inflation, while few fear they would be disadvantaged.
Federal Reserve monetization is cheered. Inflationism dogma is as
beloved as ever....For now, the markets are pleased to accommodate U.S. reflationary
policymaking. The dollar has been strong of late, with
Treasury/agency/GSE MBS yields remaining incredibly low. The market
backdrop kind of makes ECB comments extolling the virtues of price
stability – while lambasting inflationism - seem arcane and out of
touch. Meanwhile, the markets have begun to impose discipline on
profligate borrowers in Europe, while rewarding profligacy here at home
(and elsewhere). One would not expect such a divergence to last
forever. And I don’t expect our current competitive advantage in all
things “inflationism” to pay lasting dividends for our nation’s
currency, debt markets or economy."

John Mauldin: "Without showing yet another chart, bank lending has fallen percentagewise the most in 67 years. The actual amount of bank loans is falling each and every quarter, with no signs of a bottom. Consumers are reducing their debt and leverage. Bank loans are being written off at staggering rates. Over 700 banks (I think that is the figure I saw) are officially on watch by the FDIC, with more banks being closed each week.
There is at least $300-400 billion in losses on commercial real estate waiting to be written down. Housing foreclosures are rising and hundreds of billions have yet to be written off. As more families fall into unemployment or underemployment, there will be more writedowns. Is it any wonder that banks are having to shore up their balance sheets and make fewer loans?
With capacity utilization just off all-time lows, why should we expect businesses to borrow to increase capacity? Inventory levels are much lower than two years ago. Businesses no longer need to finance as much inventory. They simply need less."

Berkshire's net worth rose
19.8% in 2009, while the Standard & Poor's 500 index returned
26.5%, including dividends. Change in net worth is the way Berkshire
Chairman Warren Buffett prefers to measure the company's performance.

The number of rigs drilling
for natural gas in the United States climbed by 12 this week to
near a one-year high of 905, according to a report on Friday by
oil services firm Baker Hughes in Houston.
It was the ninth straight weekly gain and puts the gas rig
count at its highest level since March 6, 2009, when there were
916 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded 36
percent since bottoming at 665 on July 17, its lowest level
since May 3, 2002, when there were 640 active gas rigs.
But the rig count is still well off its recent peak above
1,600 in September 2008, and stands at 65 rigs, or 7 percent,
below the same week last year.

Gross daily natural-gas production in the lower-48
states edged 0.7% lower in December as cold winter stymied output, the U.S.
Energy Information Administration said Friday.
Gross output in the lower-48 states was 62.82 billion cubic feet a day, a
slight decrease from November. The EIA revised its November production figure
slightly higher to 63.28 billion cubic feet a day. Production from Louisiana
continued its climb in December as producers continued to exploit the
Haynesville Shale, a rapidly developing natural-gas field in that state.
However, gas production fell 0.3% in Texas and 2.4% in Wyoming. The biggest
production drop came from New Mexico--where output fell 6.1% as "cold weather
hampered operations," the EIA said.
Analysts and traders have been eyeing the EIA's monthly production report for
signs that the big pullback in drilling activity last year is cutting
significantly into production. Output in the lower-48 states has fallen 0.9%
since August 2008--when the natural-gas rig count was at a peak of 1,606 and
gross output stood at 63.38 billion cubic feet a day.

The Chile quake is on par with the Boxing Day quake and tsunami of 2004 which was a 9 on the Richter Scale.

An iceberg the size of
Luxembourg has broken off from a glacier in Antarctica after being
rammed by another giant iceberg, scientists said on Friday, in an event
that could affect ocean circulation patterns.
The 2,500 sq km (965 sq mile)
iceberg broke off earlier this month from the Mertz Glacier's 160 km
(100 miles) floating tongue of ice that sticks out into the Southern
The collision has since halved the size of the tongue that drains ice from the vast East Antarctic ice sheet.
"The calving itself hasn't been
directly linked to climate change but it is related to the natural
processes occurring on the ice sheet," said Rob Massom, a senior
scientist at the Australian Antarctic Division and the Antarctic
Climate and Ecosystems Cooperative Research Centre in Hobart, Tasmania.
Both organisations, along with
French scientists, have been studying existing giant cracks in the ice
tongue and monitored the bumper-car-like collision by the second
iceberg, B-9B.
This 97 km long slab of ice is
a remnant of an iceberg of more than 5,000 sq km that broke off, or
calved, in 1987, making it one of the largest icebergs ever recorded in

Bloomberg (Dawn Kopecki): “Fannie Mae, the mortgage-finance company
under federal conservatorship, said it will seek $15.3 billion in aid
from the U.S. Treasury after posting a 10th straight quarterly loss. A
fourth-quarter net loss of $16.3 billion… pushed the company to request
its fifth draw on an unlimited lifeline from the government…”

Mark Hanson about the home-building market:
"In January, builders sold a whopping 1000 houses per day nationally. During the same month, Foreclosures rang up at 4300 and Notice-of-Defaults at 5100 per day nationally. What a mess. I really thought earlier in the year with massive mortgage rate and tax stimuli -- and the purposeful lack of distressed inventory due to HAMP and other mortgage mod and foreclosure prevention initiatives -- that builders had a shot at some volume.
"But their window of opportunity has now passed. With HAFA coming on line and foreclosures, short sales and deeds-in-lieu about to dump significantly more distressed inventory on the market throughout 2010, the odds that of any meaningful pickup in builder output or sales is significantly decreasing daily."

15 San Francisco hotel owners have defaulted on loans, with the Four
Seasons among them. The number falls in line with 12 hotel defaults in
New York City and 20 in San Diego.

Friday, February 26, 2010

Another Storm

2/26/10 Another Storm

Working gas in storage was 1,853 Bcf as of Friday, February 19, 2010, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 13 Bcf above the 5-year average of 1,840 Bcf. In the East Region, stocks were 23 Bcf below the 5-year average following net withdrawals of 95 Bcf. Stocks in the Producing Region were 20 Bcf below the 5-year average of 627 Bcf after a net withdrawal of 66 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 1,853 Bcf, total working gas is within the 5-year historical range.

Currently being hammered by very cold temps and wind chills in Western Pa. Looking at the NG supply numbers for 2005-2009 (EIA Web site), we had a drop of slighly less than 100 Bcf per week in the 3 week period from 2/19 thru 3/12. This resulted in a total decrease in overall supply numbers from 1840 to 1542. We should easily be able to surpass this cumulative drop given the weather we have just experienced this past week and the extend North/South Central and Eastern US forecast through 3/12. We could/should easily end up with a remaining storage number below 1500 Bcf for come the 3/12 report!

The U.S. economy grew slightly
faster than previously reported in the fourth quarter, but details of
the revision to gross domestic product show final sales in the United
States were actually weaker than reported a month ago, the Commerce
Department estimated Friday.
U.S. real gross domestic product increased at a 5.9% seasonally
adjusted annualized pace, revised up from 5.7% estimated last month.
The revision was exactly in line with expectations. Nearly two thirds
of the growth was accounted for by changes in inventories, not by final
sales. Compared with the first GDP estimate, inventories were bigger,
business investments were higher, and exports were higher.

The Obama administration may expand
efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the
government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White
House conference call, “prohibits referral to foreclosure until
borrower is evaluated and found ineligible for HAMP or
reasonable contact efforts have failed,” according to a
Treasury Department document outlining the plan.
“It is one of the many ideas under consideration in the
administration’s ongoing housing stabilization efforts,”
Treasury spokeswoman Meg Reilly said in an e-mail. “This
proposal has not been approved and there are no immediate
planned announcements on the issue.”

George Ure: "

* If the price index was up nearly 2% in Q4 2009, what is the explanation for claims of near zero inflation in the CPI figures?
* Explain how GDP can be rising so fast with a 'no jobs' recovery.
* Discuss how 'real' Real GDP is when it doesn't consider monetary inflation. Use the Federal Reserve H.6 money stocks table which shows Dec 2009-Dec 2009 M1 monetary inflation of 6.2% in your discussion.
* Bonus question: With all the empty homes around, and Depression-era real unemployment, explain how it is that GDP hasn't crashed? Specifically reveal how outsourcing hits domestic company sales without creating jobs."The Vaughan Co. Realtors,
the third largest residential real estate brokerage company in New
Mexico, has filed for Chap. 11 bankruptcy protection. Douglas F.
Vaughan, the company’s founder, chairman and CEO, also has filed for
personal bankruptcy protection under Chap. 11.

While the U.S. may
never achieve energy independence, billionaire Texas oilman T. Boone
Pickens predicts Congress will pass key energy legislation by Memorial
Day that can “start us back in the right direction.”
“I think Congress
is ready to address the problem. The problem is we are dependent on oil
from the wrong places,” he said in a meeting Thursday with the Houston
Chronicle editorial board.
The legislation,
known as the Natural Gas Act, would dramatically expand the use of
natural gas as a transportation fuel among heavy- duty fleets. House
and Senate versions of the bill provide tax breaks for natural
gas-powered vehicles and fueling stations.
Pickens, 81, has
been one of the most vociferous advocates of using abundant domestic
natural gas supplies in the transportation sector, which accounts for
most of the 21 million barrels a day of crude oil that America

A private equity firm said Friday that it will buy the owner of the
Carl's Jr. and Hardee's restaurants for about $619 million in cash.
Thomas H. Lee Partners will also assume about $309 million in debt from CKE Restaurants Inc.
CKE shareholders will receive $11.05 in cash for each share they own, a
24 percent premium to its Thursday closing price of $8.91.

The EU is pushing Greece to urgently adopt new measures amounting to
more than $5.42 billion, on top of the austerity package already
announced, if it is to achieve its goal of slashing its staggering
budget deficit.

OPEC output reaches 14-month high in February on Saudi gain, survey shows.
ZeroHedge: "When the S&P500 came upon the 3:15pm close, the market had settled
negative, but hardly. The rally was good for 17.50 points from the low
equating to a 1.6% reversal. And in case you didn’t know, a 1% market
move equates to well over $100 billion in market capitalization.
Therefore, this amazing move tacked on ~ $180,000,000,000.00 to the US
(non-rigged) market cap. How nice. Oh, did I mention this was based on
a RUMOR…an UNFOUNDED RUMOR? Not to worry though folks – you can bet
your bottom dollar that the fellas on Fraud Street weren’t about to let
a massive rally fade away to nothing. After the initial period when
AAPL denied the rumor and the market churned around 1097.00, then the
market went even higher. Said another way, Fraud Street kept the gains
based on a known FALSE rumor…and then…wait for it….wait for it…I G N O
R E D the real news of the morning. It was a well timed replay of the
Greek bailout rumor of Feb. 9th. How healthy is this market if its best
moves are 100% fabricated bull$#it? I have another question or two: Who
benefited from this other than Goldman Sachs? I wonder how many magical
S&P500 at-the-money calls were purchased moments before the
explosion? I wonder if the SEC will investigate? Would the Lame Stream
Media ignore this if a false rumor triggered a 1.6% rout? OK, I know
the answer to the last two – and it’s no."

Jim Bunning, a Republican from Kentucky, is single-handedly blocking
Senate action needed to prevent an estimated 1.2 million American
workers from suddenly losing their unemployment benefits next month.
As Democratic senators asked again and again for unanimous consent
for a vote on a 30-day extension Thursday night, Bunning refused to go
And when Sen. Jeff Merkely (D-Ore.) begged him to drop his objection, Politico reports, Bunning replied: "Tough shit."
Bunning says he doesn't oppose extending benefits -- he just doesn't
want the money that's required added to the deficit. He proposes paying
for the 30-day extension with stimulus funds. The Senate's GOP
leadership did not support him in his objections.

The National Association of Realtors said that sales fell 7.2 percent
to an annual rate of 5.05 million units, sharply below market
expectations for a 5.50 million unit pace.

While not fearful of another spike in layoffs,
consumers have turned more gloomy about their job and income prospects,
according to the Thomson Reuters/University of Michigan's Surveys of
have been getting more impatient with the slow progress of the stimulus
program, and confidence in the Obama administration's economic policies
has begun to wane," Richard Curtin, director of the surveys, said in a
The survey's overall index of consumer sentiment was at 73.6 in February, down from 74.4 in January and below the 74.0 forecast by analysts polled by Reuters. The preliminary February reading was 73.7.

(Bloomberg) -- ArcelorMittal South Africa Ltd., a
unit of the world’s biggest steelmaker, threatened “urgent proceedings”
to prevent the producer of most of its iron-ore needs halting supply as
prices of the raw material surge.
Sishen Iron Ore Co., owned by Kumba Iron Ore Ltd.,
“will no longer supply iron ore to ArcelorMittal, on a cost plus 3
percent basis” as set out in their current agreement, the South African
steelmaker said in a statement today.
“It will be negative for Arcelor because they will
have to pay a lot more for iron ore,” Ambrian Partners Ltd. analyst
Peter Davey said by phone from London. “They would have to pay at
market-related prices from Sishen or from export markets.”
Rio Tinto Group, the second-largest iron-ore
producer, and BHP Billiton Ltd., the biggest mining company, are
selling more of the raw material at rising market prices instead of at
rates agreed in annual contract negotiations with steelmakers. Prices
may jump 55 percent in the fiscal year from April 1 on “very tight”
supply, Investec Securities said yesterday.
Steelmakers are in turn seeking to mitigate the
effect of rising costs on profit margins by buying mines. ArcelorMittal
South Africa has set aside funds on its balance sheet to buy mining
resources, Chief Executive Officer Nonkululeko Nyembezi- Heita told
Business Day’s Investors Monthly magazine.
Seeking Assets
The company will “identify mining assets that
complement our activities and we are in the market for iron ore and
coal assets primarily,” she told the Johannesburg-based magazine in an
interview published yesterday. Spokesman Sven Lunsche said that while
the company has “no concrete plans” to buy assets, it is seeking
acquisitions and partnerships.
“ArcelorMittal has rejected SIOC’s repudiation of
the agreement and will institute urgent proceedings against SIOC to
enforce the agreement if the appropriate undertakings are not
received,” the Vanderbijlpark, South Africa-based steelmaker said
today. ArcelorMittal South Africa asked JSE Ltd., operator of
Johannesburg’s stock exchange, to halt trading of its shares until a
further announcement is made on March 3, it said.
Sishen provides “by far the majority” of the iron
ore supplied to ArcelorMittal South Africa, Exxaro Financial Director
Wim De Klerk said in an interview by mobile today. Exxaro owns 20
percent of Sishen. ArcelorMittal South Africa spokeswoman Marion
Green-Thompson declined to comment on the amount of ore the company
uses each year.

U.S. demand for
heating oil through March 5 will be 6 percent above normal for
the period, according to David Salmon, a meteorologist at
Weather Derivatives, which forecasts temperature changes and
the impact on demand for commodities.

The Institute for Supply Management-Chicago Inc. today
said that its business barometer climbed to 62.6, from 61.5
last month.

The Dow Jones Industrial Average sank 9 points to 10,312, the S&P 500 was recently down 1 point at 1,101.9, and the Nasdaq Composite fell 0.4 point to 2,234.

Thursday, February 25, 2010

Natural Gas

2/25/10 Natural Gas

The U.S. Energy Information Administration is expected to report
that 168 billion cubic feet of gas were withdrawn from storage during
that week, according to the average prediction of 15 analysts and
traders in a Dow Jones Newswires survey.
The EIA is scheduled to release its storage data at 10:30 a.m. EST.
The survey's median was 170 billion cubic feet, with a high of a
179 bcf draw and a low of a 147 bcf withdrawal. The storage estimate is greater than last year's pull of 90 bcf from storage and surpasses the five-year average draw, which is 132 bcf.
If the storage estimate is correct, inventories as of Feb. 12 will
total 1.857 trillion cubic feet, about 1% above the five-year average
and 2.7% below last year's level.
Our draws since Dec 1 have totaled 1,775 Bcf to Feb 12. That’s 1.8 Tcf
in 74 days. No other Dec 1-Feb 12 period comes close. Not even the
famed 02-03, which held the top spot, back to 1976, at -1,684 Bcf until
this winter. We beat it by almost 100 Bcf.
Natural gas in storage fell 172 billion cubic feet in the week ended
Feb. 19, the Energy Information Administration said Thursday. Analysts
polled by Dow Jones Newswires were expecting a shallower withdrawal, of
168 billion cubic feet.

The number of people filing initial claims for state unemployment benefits jumped 22,000 to a seasonally adjusted 496,000 in the week ended Feb. 20, the Labor Department reported Thursday. It's the highest rate since mid-November and the sixth increase in the first eight weeks of 2010.
Economists surveyed by MarketWatch expected initial claims to drop to 460,000. The four-week average of initial claims rose 6,000 to 473,750.
In the week ended Feb. 6, the number of people collecting extended
federal benefits fell by 320,000 to 5.68 million, not seasonally
adjusted. Altogether, 11.55 million people were collecting some type of
unemployment benefits in the week of Feb. 6, down from the previous
week's level of 11.8 million.

The number of people filing
initial claims for state unemployment benefits jumped 22,000 to a
seasonally adjusted 496,000 in the week ended Feb. 20, the Labor
Department reported Thursday. It's the highest rate since mid-November
and the sixth increase in the first eight weeks of 2010. Economists
surveyed by MarketWatch expected initial claims to drop to 460,000. The
four-week average of initial claims rose 6,000 to 473,750. In the week
ended Feb. 6, the number of people collecting extended federal benefits
fell by 320,000 to 5.68 million, not seasonally adjusted. Altogether,
11.55 million people were collecting some type of unemployment benefits
in the week of Feb. 6, down from the previous week's level of 11.8

Orders for
U.S-made durable goods soared 3% in January to a seasonally adjusted
$175.7 billion on higher bookings for civilian airplanes, the Commerce
Department estimated Thursday. . December's orders were revised sharply
higher as well to a 1.9% increase from 1%. The 3% gain in orders was
the biggest gain since July. Economists were looking for a 1.5% gain in
total durable goods orders in January. Most of the strength in January,
however, came from the 126% increase in volatile civilian aircraft
orders. Excluding the 15.6% gain in transportation orders, orders fell
0.6% in January.

Coca-Cola Co. (KO) on Thursday said it would buy the North American business of Coca-Cola Enterprises Inc. (CCE)
in a deal that will result in about $4 billion in cash to shareholders
of the Atlanta-based soft drink giant's largest bottler. The Coca-Cola
Company's acquisition of the assets and liabilities of CCE's North
American business includes consideration of Coca-Cola's current 34%
equity ownership in CCE, valued at $3.4 billion. The deal includes the
assumption of $8.9 billion of CCE debt and all of the bottling
company's North American assets and liabilities. Coca-Cola Enterprises
will buy Coke's bottling operations in Norway and Sweden for $822
million as part of the deal. Coca-Cola Enterprises will also get the
right to acquire Coke's 83% equity stake in its German bottling unit.

Charley Blaine: "More than 11.3 million residential properties with mortgages --
about 24% of all such properties with mortgages -- were "underwater" at
the end of 2009.
That means the homes were worth less than the value of their mortgages."

Japan's total public debt is nearing
the value of household wealth, a sign the government bond market is
approaching a "tipping point," according to Mizuho Securities Co.

Gold closed up $11.30 to $1,108.50/oz.

Down nearly 200 points during the session, the Dow Jones Industrial ended at 10,321.03, off 53.13 points, or 0.5%. The S&P 500 Index shed 2.3 points, or 0.2%, to end at 1,102.94, while the Nasdaq Composite Index lost 1.68 points to 2,234.22.

Wednesday, February 24, 2010

New Home Sales Plunge

2/24/10 New Home Sales Plunge

Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday. Economists surveyed by MarketWatch forecast sales to rise slightly to 355,000, with buyers taking advantage of a new federal tax credit. Sales in December were revised higher to 348,000 from 342,000 previously reported. Sales are down 6.1% compared with January 2009's 329,000, which was the previous record-low rate. The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory.

Total returns prepared in its fiscal year-to-date fell 8.2%, Block said. "In light of the foregoing preliminary tax season results, the company's previously announced guidance for fiscal 2010 will not be reached," the company said in a press release Wednesday. Block shares fell 11% in pre-open trade.

Bowne & Co., the New York printer, definitively agreed to be acquired for $11.50 a share, or $481 million, by R.R. Donnelley & Sons Co., the companies said in a Tuesday statement. On Tuesday, Bowne shares closed at $6.97, indicating that R.R. Donnelley, the Chicago printer, is paying a 65% premium. The boards of both companies have approved the terms.

A winter storm threatened to dump more than a foot (30 centimeters) of snow across parts of upstate New York and New England, while forecasters warned of an even more powerful system hitting the northeast tomorrow.

“You may hear it called a ‘snow hurricane’ because blizzard may not even do it justice,” said Alex Sosnowski, an expert senior meteorologist with AccuWeather Inc. in State College, Pennsylvania. “It is like we’re getting a decade’s worth of storms all in one season.”

Warnings for the current storm stretch from Maine through New Hampshire, Vermont and New York state, as well as Connecticut and Massachusetts, according to the National Weather Service. Rain was falling today in New York, while inland it was snowing in Albany, where as much as 13 inches of snow were forecast through the night and today, the agency said.

U.S. mortgage applications fell for a third straight week, with demand for home purchase loans sinking to the lowest level in 13 years as inclement weather weighed, data from an industry group showed on Wednesday.

George Ure: " On Page 4 of the FDIC's Quarterly banking report for Q4 '08 and Q4 2009.

When you to click over to the report here and down about 3/4's of the way look for the line item "Notional Amount of Derivatives" where you will see Q4 of 2008 was listed as $212-trillion m (just 14.93 times 2008 GDP.

But Q4 2009 shows the notional value of derivatives at what? $213,568,137,000,000."

Fitch Ratings-Barcelona/London-23 February 2010: Fitch Ratings has today downgraded the Long-term and Short-term Issuer Default Ratings (IDR) of Greece's four largest banks, National Bank of Greece (NBG), Alpha Bank (Alpha), Efg Eurobank Ergasias (Eurobank) and Piraeus Bank (Piraeus) to 'BBB' from 'BBB+' and 'F3' from 'F2' respectively. The Outlook on the Long-term IDRs is Negative.

In January, employers took 1,761 mass layoff actions involving 182,261 workers. Both measures increased in January after four consecutive over-the-month decreases. Manufacturing events and initial claims both increased in January to 486 and 62,556, respectively.

Barbara Kiviat: "Is the option adjustable-rate mortgage the next subprime disaster? For anyone who remembers that souring subprime loans kicked off the real estate meltdown, that's a scary thought. Recent analysis from Standard & Poor's (S&P) anticipates that a full 37.5% of such loans (dubbed option ARMs) that were written in 2007, at the height of lax lending, will eventually go bad. The kicker is that most option ARMs undergo payment spikes after five years, which means the brunt of the impact has yet to be felt. That will change in late 2010, delivering another blow to the fragile housing market just as it begins to regain strength."

ZeroHedge: "Jose Pinera provides an Entitlement State 101 lecture, in which Chile's former Labor and Social Security Minister demystifies the U.S.'s $100 trillion unfunded benefits problem. Since Pinera is the man who many years ago privatized Chile's entitlement system, America, and the entire Western system, which for the past century has been relying on unfunded liabilities to provide benefits to the population in the hopes that funding day will never come, may do well to listen to what he has to say. His message: the American way of life, more so than anything else, in which reckless spending, living on credit and not saving for the future, is precisely why the US will be bankrupt very soon. Chile swallowed the bitter pill 30 years ago and after a lot of pain, managed to get out of the hole. Will enabler state #1, America, fail where this allegedly "backward" South American country succeeded?"

"There's a risk of a double dip recession round the corner," Shah said. "Given the sovereign debt crisis that is going around the Mediterranean countries, this is going to put a lot of pressure on Europe."

The economic outlook for Europe is deteriorating very rapidly and that is adding to the factors dragging on the economic recovery, Shah told CNBC.

* Irving, Texas.
* Commercial Mortgage Default Rate in U.S. More Than Doubles. The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc. The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent. “The level of distress continues to rise irrespective of improving economic trends,” Sam Chandan, Real Capital’s global chief economist, said in a telephone interview.

In 2010, Blockbuster intends to close 500 to 545 underperforming stores in the U.S.

The Dow Jones Industrial Average added 91.75 points to 10,374.16. The S&P 500 Index rose 10.64 points to 1,105.24. The Nasdaq Composite Index gained 22.46 points to 2,235.9.

General Growth Properties Inc. said Wednesday that it will secure $2.625 billion from Brookfield Asset Management Inc. as part of its recapitalization plan. Brookfield will invest $2.5 billion at $10 a share for new General Growth shares and up to $125 million at $5 a share for existing stock. It will also pay accrued interest to unsecured creditors as part of the package. General Growth is counting on the deal to exit bankruptcy on a standalone basis, the mall operator said.

Tuesday, February 23, 2010

Elliott Wave

2/23/10 Elliott Wave

"Fourth quarter retail segment performance was well above our expectations due to stronger-than-expected holiday sales, combined with well-controlled inventories and disciplined expense controls," said Target Chief Executive Gregg Steinhafel. "In 2010, we expect our guest traffic trends and sales of discretionary categories to benefit from broader implementation of our new merchandise initiatives as well as a continued modest recovery in the economy, and believe Target will continue to gain profitable market share."

Macy's forecast profit this year of $1.55 to $1.60 a share with same-store sales increasing in the range of 1% to 2%

In 2010, it expects earnings per share from continuing operations to grow by around 15.5% to $1.79. "Despite the tough economic environment, we were able to make solid progress against our key initiatives in 2009," said Home Depot CEO Frank Blake.

The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.

A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.

The S&P/Case-Shiller U.S. national home price index, which covers all nine census divisions, fell 2.5 percent in the fourth quarter from the same time a year earlier. This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.

Nearly 20 percent of the U.S. workforce lacked adequate employment in January and struggled to make ends meet with reduced resources and bleak job prospects, according to a Gallup poll released Tuesday. In findings that appear to paint a darker employment picture than official U.S. data, Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.

Underemployed people spent 36 percent less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month, the poll said.

Sears Holdings Corp., the nation's No. 1 department store chain by revenue, will shut 21 underperforming stores May 9.

Elliott Wave Int'l: "It's been nearly 11 months since the outset of the Primary wave 2 rally; by these critical economic measures the rebound is barely registering.The wide disparity between the hope of investor expectations and the reality of economic strength shows that the great bear market -- already ten years old -- remains in its early stages. As the next legdown matures, hope will turn to despair, and it will become impossible to ignore the persistence of the economic contraction."

Rob Kirby: "Something of significance occurred last week that went unreported in the mainstream financial press. This important development was the admission of the Commodities Futures Trading Commission [CFTC] that it was suppressing information that would expose precious metals market manipulation."

State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government.

The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said. Collections from each of the two major revenue sources, income and sales taxes, also fell for a fifth straight quarter

U.S. consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook for the jobs market worsened, according to a private report released Tuesday.

After touching a 16-month high, the Conference Board reported its index fell 11 points to 46 from an upwardly revised 56.5 in January. Last month's fall was sharper than expected.

The number of distressed banks in the U.S. rose to 702 in the fourth quarter, the highest level in sixteen years, according to a report released by the Federal Deposit Insurance Corp. Tuesday. That number is up from 552 at the end of September and 416 at the end of June. This is the largest number of banks on its "problem list" since June 1993.

Crude oil futures edged higher in electronic trade late Tuesday after the American Petroleum Institute reported inventories dropped last week, indicating greater-than-anticipated demand. The industry group said stockpiles for the week ended Feb. 19 fell 3.13 million barrels. Analysts polled by Platts were expecting stockpiles to rise by 2 million barrels. Gasoline stocks, however, rose 1.738 million barrels versus an expected gain of 500,000 barrels. Distillate stocks fell 834,000, and the refinery utilization rate rose to 80.8% from 79.9% in the prior week. Oil for April delivery rose to $79.05 a barrel from a close of $78.86. Oil ended Tuesday's floor session with a 1.8% loss.

The Dow Jones Industrial Average fell 100.97 points, or 1%, to 10,282.41. The S&P 500 Index declined 13.41 points, or 1.2%, to end at 1,094.6, while the Nasdaq Composite Index finished at 2,213.44, or 28.59 points, or 1.3%.

Monday, February 22, 2010

Bloom Energy

2/22/10 Bloom Energy

Mike Burk: "The market is overbought.

The Russell 2000 (R2K) has been up for 8 consecutive days rising 7.7% over that period. The last time the R2K was up for 8 consecutive days was April 5, 2004 and after that peak it fell 11.7% over the next 5 weeks and did not hit a new high until the following November."

ZeroHedge: "As Stone McCarty points out "It is also probably not an accident that the announcement of tomorrow's discount rate hike (and next month's shortening of loan maturities) comes just after the release of the January 26-27 FOMC minutes. The discussion in those minutes further serves to underscore the technical, as opposed to policy, nature of today's move." Yet we think that there is more to this, as the Fed will sooner or later be forced to come face to face with a broken monetary system, in which it stands to lose all control should it not tighten in advance of a potential monetary supply explosion which would lead not only to hyperinflation (should the Fed gets its way, and consumers finally start borrowing), but also to full loss of the Fed's control over the American monetary system. Keep a close eye on this chart: we are confident that the Fed Funds will be hiked before there is another unsymmetrical increase in the discount rate. Alas, the economy is far too weak to sustain a tightening posture at this point. As to what kind of aberrations in the market this action could lead to, we will investigate in the coming days and weeks."

CalculatedRisk predicts 2010 to account for more number of bank failures than 2009 but lesser than the peak of 534 in 1989.

ZeroHedge: "Our findings demonstrate that of the nearly $130 billion in additional cash on the books of S&P 500 companies from June 2008, through September 2009, two key sources, net working capital and a reduced capex spend, have generated over $150 billion, meaning organic operations have accounted for a whopping -$20 billion (yes, negative) of incremental cash."

John Hussman: "Presently, the 4-week moving average of initial claims for unemployment is running at 468,500. This level is normally consistent with monthly payroll job losses on the order of 80,000. Against that, however, we are likely to get significant short-term job growth from census hiring, which can be expected to exert a positive impact on non-farm payrolls through mid-year. I continue to view the 4-week average of initial claims as one of the more informative series to monitor regarding the employment situation."

Schlumberger Ltd agreed to buy Smith International in a $11.34 billion all-stock deal that will boost the oilfield services leader's revenue to double that of its nearest rival.

The deal, still subject to shareholder and regulatory approval, values Smith Stock at $45.84, a 37.5 percent premium over Thursday's closing price, according to a joint statement by the companies on Sunday.

Airgas has announced that its board of directors has voted unanimously against recommending the unsolicited buyout offer from Air Products & Chemicals, Inc. The deal rejected is the most recent $60.00 per share in cash, via an unsolicited tender offer. The board is recommending that Airgas shareholders do not tender their shares to Air Products. The company said that Air Products’ offer significantly undervalues Airgas.

Rob Hanna: " There appears to be a good chance the market will at least test its January highs before it breaks its February lows."

for those who haven't noticed the trend this year we have consumed 42 percent more natural gas than the 5 year average. 5 year avg consumption is 879 bcf and we've consumed 1251 bcf this year....for a 372 bcf increase or 42 percent. and yet natural gas prices are down? wtf? law of supply and demand not playing a factor here as 5 year supply is 2020 bcf, and we're at 2025 bcf as of last report. that's only 5 bcf above the 5 year average storage levels. with demand as high as it's been we should be way up this year in natural gas...not down in prices. eventually the market will correct itself. within a week or two we'll likely be well below the 5 year average. smells like a setup on the bears.

Reliance Industries Ltd., owner of the world's largest oil-refining complex, raised its offer for bankrupt LyondellBasell Industries AF to about $14.5 billion, according to two people with knowledge of the offer.

Drivers pick up enough passengers to qualify for carpool lanes, saving 15 minutes to an hour or more in gridlock plus the usual $4 bridge toll. Riders get a free trip to San Francisco's Financial District.

And everybody gets to scare their friends on the East Coast by boasting about riding with strangers.

But on July 1, an economic shift may test this unregulated system and the reciprocity behind it. As part of a package of toll increases, Bay Area toll bridge officials have decided to do the unthinkable: They're ending the free ride. For the first time, carpools will pay $2.50 to cross state-owned bridges.

That's created a conundrum for the casual carpooling community. Does the driver, who will need to pay the toll through a FasTrak transponder, cough it up in full? Do the passengers - usually two - each pony up $1.25? Or is an even split - 83.33 cents per person - warranted?

Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.

Thirty-seven percent of the company's real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation.

Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.

"More buyers are pooling investments, considering bringing mom and dad into it," said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.

The Chicago Fed National Activity Index was +0.02 in January, up from –0.58 in December.

Winter's worst proved to be far worse than imagined, with as much as five feet of snow burying much of the nation - from Texas through the upper Ohio Valley, to the Mid-Atlantic Coast, and lower New England - in back-to-back-to-back storms.

Life ground to a halt, transportation systems found themselves parked, commerce ceased and - instead of the widely anticipated new round of sales and healthy winter profits - businesses experienced lost revenue and higher costs for everything from employee absences and parking-lot plowing to rooftop shoveling and pipe replacement. So what took place? Natural gas prices fell below $5. In sum, use rose 42% but prices fell. So much for the impact of demand on price.

Lowe's (LOW) says 13 of 23 regions posted positive comp. sales; sees H2 better than H1

Yuan strengthened the most in 11 months on speculation govt will allow more flexibility.

Bloom Energy was launched in Silicon Valley on Wednesday. It’s a refrigerator-sized box which can give the power supply to the whole house. It’s the production of Silicon Valley.

From eight years working was carrying on this project, & raised the funds of $400 million which covers VCs, Kleiner Perkins (financiers in Netscape, Amazon, GoogleGoogleGoogle & many more).

It has “BloomBox” houses fuel cells which operate on oxygen & natural gas, bio gas, landfill gas, & solar energy.

Google was the 1st customer of the company which is running datacenter on 4 bloom boxes for more then one & half year. They operate on natural gas. One of its customer is eBay also, which works on five Bloom boxes in San Jose & had saved $100,000 in energy costs in nine months.
On CBS’ 60 Minutes, Bloom Box will be advertised firstly on television.

Charlie Munger: "Basicland is now under new management, using a new governmental system. It also has a new name: Sorrowland."

The Dow Jones Industrial Average fell 18.97 points to 10,383.38. The S&P 500 Index shed 1.16 points to 1,108.01. The Nasdaq Composite Index declined 1.84 points to 2,242.03.

Yields on 10-year notes rose 2 basis points, to 3.79%. Yields on 30-year bonds increased 3 basis points to 4.74%.

Thermo Fisher Scientific Inc., the world’s largest maker of lab instruments, made an unsolicited takeover offer of about $6 billion for Millipore Corp., according to a person close to the situation.
Millipore hired Goldman Sachs as financial adviser after receiving the bid and a deal could be reached as early as next week, said the person who declined to be identified because the talks aren’t public. Millipore rose $16.01, or 22 percent, to $87.35 at 4 p.m. New York time in New York Stock Exchange composite trading. Thermo Fisher fell $1.12, or 2.3 percent, to $48.10.