Saturday, March 06, 2010


3/6/10 CBO

The CBO, in an annual analysis of the White House budget proposal, said today that under Obama’s plan deficits would never shrink below 4 percent of the economy between now and 2020. The
cumulative deficits would total $9.76 trillion, and debt held by the
public would amount to 90 percent of the nation’s gross domestic
product by 2020, the CBO said.
Regulators shut banks in Maryland,
Illinois, Florida and Utah, pushing the number of U.S. failures
to 26 this year and placing more pressure on the Federal Deposit
Insurance Corp. to dispose of a growing pile of toxic assets.
The FDIC was unable to find buyers for two banks --
Centennial Bank in Ogden, Utah, and Waterfield Bank of
Germantown, Maryland -- according to statements posted on the
agency’s Web site. In the largest of yesterday’s failures by
assets, Boca Raton, Florida-based Sun American Bank was
purchased by First-Citizens Bank & Trust Co.

“Fannie Mae and Freddie Mac bondholders shouldn’t assume the government
will make them whole on their investments as Congress retools the
companies, House Financial Services Committee Chairman Barney Frank
said. ‘Please don’t think this is federally guaranteed, I don’t think
it is, I don’t think it should be, I don’t feel any obligation to bail
you out,’ Frank told reporters… Congress will ‘certainly not’ extend
any new protections to bond and mortgage-security investors beyond what
exists, Frank said. A ‘whole range’ of options is being considered for
investors in the two government-seized companies, ‘from paying nothing
to a haircut to whatever,’ Frank said.”

Doug Noland: "This week marked the one-year anniversary of a historic stock market
rally. The S&P500 enjoys a one-year gain of 66.8%. The broader
market has fared even better. The small cap Russell 2000 and
S&P400 Mid-Caps sport 12-month gains of 90.6% and 87.4%. The past
year also witnessed record junk debt issuance and an amazing turnabout
in financial conditions. Housing markets may be stuck in the mud, but
government-induced reflation has worked wonders for equities, corporate
debt and global risk assets more generally.
Long-time readers may have noticed that awhile back I stopped the
weekly presentation of bank Credit and asset data. For the record,
bank Credit declined $470bn over the past year, or about 5%. I
specifically have not emphasized this bank contraction, believing it
had become a deceptive indicator of financial conditions. Also luring
in those anticipating deflationary conditions, M2 “money supply”
expanded just under 2% over the past year. There has been no reason to
fret a substandard $200bn one-year expansion of narrow “money,” not
with Treasury and agency securities inflating a couple Trillion and the
Fed monetizing a Trillion of MBS.
One year ago, the Federal Reserve held $69bn of mortgage-backed
securities. Their hoard now surpasses $1.027 TN. Over the past year,
Treasury has run deficits of about $1.5 TN. Our government’s
“electronic printing press” has dispersed unprecedented purchasing
power to households and businesses throughout the economy. The Fed’s
Trillion dollar monetization has unleashed unmatched liquidity
throughout the financial markets....Massive U.S. deficits and near-zero interest rates ensure a steady flow
of finance (newly created as well as an ongoing exodus out of
low-yielding instruments) to debt markets around the world. Confidence
runs high that ultra-loose U.S. financial conditions will continue to
underpin Credit expansions globally. Politicians may talk tough, and
they do put on a good show. Meanwhile, markets function with reticent
aplomb, knowing they’ve got policymakers right where they want them."

Adoption of a value-added tax in the U.S. would be a fair, efficient
way to help restore the country's financial health, argues Bloomberg
BusinessWeek's Chris Farrell.

Barron's: "Workers who drew pay for even one hour during their pay period
(typically, two weeks to a month) were counted as employed in February.
Too, the BLS points out, some unknown number of workers could well have
been added for clean-up and repairs after the storm.... While the unemployment rate held at 9.7%, our preferred measure,
which includes the underemployed, edged back up to 16.8%, from the
previous month's 16.5%.
That insightful pair, Philippa Dunne and Doug Henwood, who run the
Liscio Report, deftly sum up the February employment story as "more of
the same -- minor losses that look good compared to the bloodletting of
early 2009, but rather sad compared to a textbook recovery."
Among other less-than-ebullient data they cite, the probability of
someone out of work in January finding a job in February fell to 20.1%,
from 24.5% the previous month. And though the rate at which folks
voluntarily left jobs also declined, from 2.7% to 2.4%, they comment
that, alas, "the hiring strike continues."

China is pushing for the yuan to be added to the basket of currencies
that comprise the IMF's special drawing rights, aiming for its
inclusion in 2015, Japanese daily Sankei Shimbun said on Saturday.

Non-Seasonally Adjusted Consumer credit was actually down by $4 billion.

ZeroHedge: "On a non-seasonally adjusted basis, consumer credit has declined by
$108 billion in the past 12 months. What may be surprising, is that
were one to strip away the contribution from the Federal Government of
$78 billion, the decline would have been almost double, or $187
billion. Furthermore, in January, NSA consumer credit would have
declined by $14 billion had it not been for the... wait for it...
Federal Government, which sourced $10.4 billion in new consumer credit."

China central bank Governor Zhou Xiaochuan said China would eventually
move away from its current exchange rate policies but he gave no


3/5/10 Payrolls

U.S. nonfarm payrolls declined
for the 25th time in the past 26 months, falling by 36,000 in February
to 129.5 million, the Labor Department estimated Friday. Job losses
were concentrated in construction, schools, retail and publishing.
Manufacturing jobs rose by 1,000, the second increase in a row. The
unemployment rate was steady at 9.7%. Severe snow storms during the
survey week may have depressed the payroll count, but the Bureau of
Labor Statistics said it could not quantify the impact. Total hours
worked fell by 0.6%, likely due to weather-related shutdowns. The
employment report was better than expected, as economists surveyed by
MarketWatch were forecasting a drop of 90,000. They expected the
unemployment rate to rise to 9.8%.
The Labor Department said job losses for December and January had been
revised to show 35,000 fewer jobs lost than previously reported.
Temporary hiring added 48,000.
The average workweek for all employees slipped to 33.8 hours from 33.9 hours in January.
The number of long-term unemployed (those jobless for 27 weeks and over) was 6.1 million in February and has been about that level since December. About 4 in 10 unemployed persons have been unemployed for 27 weeks or more. Census hiring was 15,000. So 51,000 jobs lost ex-Census.
In February, the civilian labor force participation rate (64.8 percent) and the employment-population ratio (58.5 percent) were little changed.
The CES Birth-Death Model numbers amounted to + 97,000 for Feb.
The economy has lost almost 3.3 million jobs over the last year, and
8.43 million jobs since the beginning of the current employment

The new millennium has been rough on older workers, who have seen a whopping 331% increase in unemployment over the last decade, according to the AARP.
number of unemployed workers older than 55 shot up to 2.1 million in
December from 490,000 in January 2000, according to an analysis of data
from the government Bureau of Labor Statistics by the nonprofit's
Public Policy Institute.Unemployment among workers older than 65 jumped 235%, to 479,000 from 143,000. For
the unemployed over age 55, the average jobless period has expanded
85.6% to 34.7 weeks from 18.7 weeks. The period has stretched 32.7% for
job hunters over age 65, who are now unemployed an average of 32.9
weeks compared to 24.8 weeks in 2000.Many graying workers, AARP said, are now attempting to postpone or come out of retirement.

The US rig count for February 2010 was 1,350, up 83 from the 1,267
counted in January 2010 and up 30 from the 1,320 counted in February

C.Fred Bergsten: "President Obama has smartly suggested that a new export strategy
could support 2 million very good American jobs, more than created by
his stimulus initiative. The United States already sells about $1.5
trillion worth of goods and services annually to the rest of the world,
which creates about 10 million high-paying jobs. Every $1 billion of
additional exports will produce about 7,000 very good jobs. Robust
export expansion would also reduce our large trade deficits and
resultant need to borrow abroad to finance them. Last week the president suggested an ambitious but realistic goal of
doubling exports over the next five years. An effective US export
strategy must focus on four variables: the exchange rate of the dollar,
trade agreements, our own export controls, and tax policy."

ZeroHedge: "Joseph Stiglitz - former head economist at the International
Monetary Fund (IMF) and a nobel-prize winner - said yesterday that the
very structure of the Federal Reserve system is so fraught with
conflicts that it is "corrupt" and undermines democracy.
Stiglitz said:
>we [i.e. the IMF] had seen a governance structure that corresponds to
>our Federal Reserve system, we would have been yelling and screaming
>and saying that country does not deserve any assistance, this is a
>corrupt governing structure."
>Michael Panzer: "Interestingly enough, if you look back at the history of the
>relationship between productivity and labor costs, the last time we saw
>a gap between the two as wide as it is now was -- you guessed it -- in
>the 1970s, before the Great Stagflation."
>Bill Bonner: "The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.
>Let us summarize: Innocent fellows are seduced by debt. They fall in
>love with deficits. Debt proves to be an evil temptress. Our heroes are
>Isn’t the story more or less the same in Britain and America too?"
>Copper demand in China, the world’s largest consumer of the
>metal, is “weak” because of lackluster consumption from the power
>industry, Tongling Nonferrous Metals Group Co. said. “From
>what we learned from our customers, copper demand is now weak,”
>Chairman Wei Jianghong said today in an interview in Beijing. Tongling
>is the country’s second-largest copper smelter. Demand “isn’t very strong,” bigger rival Jiangxi Copper Co. also said today. Slowing
>demand in China may indicate stockpiles in the country may continue to
>climb after reaching the highest level in more than seven years in
>February. “About 60 percent of copper is used in the power
>industry, and our sales to wire-and-cable users reflected that demand
>is rather weak,” Wei said while attending the National People’s
>Congress. “The demand is not very strong in the first place,” Jiangxi
>Copper Chairman Li Yihuang said in Beijing at the congress. “But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.”
>China’s banks are facing increasing
>risk in their lending policies, Premier Wen Jiabao said today in
>his annual report to the country’s legislature.
>“Latent risk in the banking and public finance sectors are
>increasing,” Wen said, according to a copy of his speech
>distributed today at the National People’s Congress meeting.
> * The Obama Health Reform Bill's Dishonesty on Cost. Any
>bill that counts 10 years of taxes but only six years of spending as a
>way to bring down the deficit is dishonest. Hopefully enough
>congressional Democrats will vote against this and start the process
>over again, in a more fiscally responsible way. As Ryan said to the
>president, "[W]e are all representatives of the American people. We all
>do town hall meetings. We all talk to our constituents. And I've got to
>tell you, the American people are engaged. And if you think they want a
>government takeover of healthcare, I would respectfully submit you're
>not listening to them."

Regulators on Friday closed Bank of Illinois, Normal, Ill., and Waterfield Bank, Germantown, Md., bringing the total tally of failed banks to 25 so far this year, the Federal Deposit Insurance Corporation said. The failure of Bank of Illinois marks the third bank closure in the state for this year while Waterfield Bank is the first to be shuttered in Maryland. Heartland Bank and Trust Company will assume all deposits of Bank of Illinois while the FDIC will act as a receiver for Waterfield Bank.

- Sun American Bank of Boca Raton, Fla., became the 23rd bank of the year to fail, according to the Federal Deposit Insurance Corp. on Friday. First Citizens Bank, the primary subsidiary of First Citizens BancShares, will assume the estimated $443.5 million in deposits and purchase the bank's $535.7 million in assets. The bank is also Florida's fourth failure of the year.

The Dow Jones Industrial Average added 122.06 points, or 1.2%, to 10,566.2, leaving it 2.3% higher for the week. The S&P 500 Index climbed 15.73 points, or 1.4%, to 1,138.7, a weekly advance of 3.1%, while the Nasdaq Composite rose 34.04 points, or 1.5%, to 2,326.35, up 3.9% from the week-ago close.

Thursday, March 04, 2010

Natural Gas

3/4/10 Natural Gas

A withdrawal of 150 billion cubic feet or more in
tomorrow’s report would give gas prices one last boost for the season
and potentially lift futures above $5 per million Btu, John Kilduff said in
a telephone interview.
Industrial demand for natural gas, which represents
about 29 percent of consumption, may also be on the rebound with a
recovery in the U.S. economy.
“Storage used to be 500 billion cubic feet above the
five- year average and now it’s not, so there’s little question that
the market is physically tighter than it used to be,” said Tim Evans,
an energy analyst at Citigroup Global Markets Inc. in New York. “We’ve
been taking the winter premium out of the market, so now it’s more of a
discussion over the appropriate price level than the facts.”
December consumption of natural gas by factories,
refiners, chemical plants and steel mills was 7.4 percent higher than
the previous year, reaching 19.1 billion cubic feet a day from 17.8
billion in 2008, according to the Energy Department’s Natural Gas
Monthly report, released late yesterday.
Power generators also bought more gas in December
than a year earlier, jumping their purchases 9 percent, according to
the report.
“Industrial demand surprised our forecast to the
upside,” James R. Crandell, a commodities research analyst at Barclays
Capital in New York, said in a note to clients.

The number
of people filing for initial unemployment benefits declined by 29,000
in the week ending Feb. 27 to a seasonally adjusted 469,000, the Labor
Department reported Thursday. Initial claims had risen sharply the
previous two weeks, in part because of administrative backlogs, extreme
weather and the holiday. The four-week average of initial claims - a
better gauge of the trend than the volatile weekly number - fell by
3,500 to 470,750. The number of people receiving regular state jobless
benefits declined by 134,000 to a seasonally adjusted 4.5 million. The
total number of people receiving benefits of any kind rose by 145,000
to 11.5 million, not seasonally adjusted.

ZeroHedge: "As for the extremely volatile (and delayed) Emergency Unemployment
Compensation series, that increased by 207,632 in the week ended
February 13. Oddly enough, snow storms were once again implicated, this
time for the decline of claims, even though the data being from the
last week of February saw some pretty dramatic snowfall precisely then.

The Greek
government plans to issue a 10-year euro-denominated bond, Dow Jones
Newswires reported on Thursday, citing one of the lead managers of the
deal. Lead managers will be Barclays Capital, HSBC Holdings, National
Bank of Greece, Nomura and Piraeus Bank SA, according to the report.
Price guidance is in the area of 310 basis points over mid-swaps, Dow
Jones reported. The Greek finance ministry's press office told
MarketWatch that there is no official announcement of the bond issue
and the deal cannot be confirmed. The news comes after Greece announced
new austerity measures on Wednesday aiming to save 4.8 billion euros
through cutting spending and raising some taxes.

Q4 Productivity and Costs: +6.9% vs. +6.5% expected and +6.2% prior. Unit labor costs -5.9% vs. -4.9% expected and -4.4% prior.

Barack Obama will host ten House Democrats who voted against the health care bill in November at the White House;
he's obviously trying to persuade them to switch their votes to yes.
One of the ten is Jim Matheson of Utah. The White House just sent out a
press release announcing that today President Obama nominated
Matheson's brother Scott M. Matheson, Jr. to the United States Court of
Appeals for the Tenth Circuit.

Wal-Mart Stores Inc on Thursday said it raised its annual dividend
by 11 percent, citing its strong underlying operations and free cash
The world's biggest retailer said that for its current
fiscal year, which began on February 1, its board approved an annual
dividend of $1.21 per share, up from $1.09 per share a year ago.

Gartner boosts global PC shipment growth forecast for 2010, and sees worldwide PC spending up 12.2% in 2010

25% Say U.S. Heading In Right Direction, Lowest Since Obama Took Office. Just
25% of U.S. voters now say the country is heading in the right
direction, the lowest level of voter confidence since early January
2009. Correspondingly, the latest Rasmussen Reports national telephone
survey finds that 69% believe the nation is heading down the wrong track, the highest level measured in 14 months.

However, since January 2008 (the recession began a month earlier) 8.4
million Americans lost their jobs. As such, two years ago retail
gasoline was over $3 (with Nymex crude oil averaging $92.93), this last
January Nymex crude averaged $78.40, with retail gasoline around $2.70.
Consequently, back then the EIA estimates refiners earned 7.8 cents on
the dollar, today they earned only 5 cents… and that was with crude oil
below $80. Thus, The Schork Reportprojects
that should WTI head back to $95 and consumers fail to respond (which
seems reasonable), then this summer is shaping up to be rather ugly for
the downstream side of Big Oil’s ledger!

forward-looking gauge of home buying declined sharply in January,
dropping to the lowest seasonally adjusted level since last April, an
industry trade group reported Thursday. The pending home sales index
fell a seasonally adjusted 7.6% in January after a revised 0.8% gain in
December. The index remained 8.8% higher than in January 2009. The
index tracks sales contracts signed on previously owned homes.

It would not be appropriate to
introduce the International Monetary Fund as a "supplier of help" for
Greece as the nation attempts to meet its debt commitments, European
Central Bank President Jean-Claude Trichet said in his monthly news
conference Thursday. Trichet praised the IMF for providing Greece with
technical assistance as it attempts to slash its budget deficit.
Trichet said the commitment by European Union leaders last month to
help Greece if needed was "important."

Boosted by demand for new
airplanes, orders for U.S.-made factory goods rose 1.7% in January
after an upwardly revised 1.5% gain in December, the Commerce
Department estimated Thursday. Economists were expecting a 2.5%
increase. Orders for durable goods increased 2.6%, revised down from
the 3% reported last week. Core capital equipment orders -- the best
monthly indicator of business investment -- fell 4.1% after two months
of strong gains. Orders for nondurable goods increased 0.9%, led by
petroleum and food.

A dozen House of Representatives Democrats opposed to abortion are
willing to kill President Barack Obama's healthcare reform plan unless
it satisfies their demand for language barring the procedure.

Natural gas in storage falls 116 bcf: EIA. A Platts survey of analysts
expected a larger withdrawal of 128 to 132 billion cubic feet. Down
ahead of the storage data, natural gas for April delivery fell further
in its wake, with the contract off 12 cents, or 2.5%, to $4.640 per
million British thermal units. Working gas in storage was 1,737 Bcf as of Friday, February 26, 2010,
according to EIA estimates. This represents a net decline of 116 Bcf
from the previous week.

The futures decline sent the $3.5 billion U.S.
Natural Gas Fund, the largest exchange-traded fund in the fuel, to its
lowest price since it started trading almost three years ago.
The fund shed 31 cents, or 3.6 percent, to $8.34 at
12:31 p.m. A close at that price would be the lowest ever for the fund,
which has lost 84 percent of its value since trading began on April 18,
The Commerce Department said Thursday that factory orders rose 1.7
percent in January, slightly below the 1.8 percent gain economists had
expected. It was the best showing since a 1.8 percent advance in

A measure to give some 57 million elderly people, veterans and
persons with disabilities a $250 check was rejected by the Senate on
Wednesday, a setback for the powerful seniors' lobby.
President Barack Obama has called for Congress to approve the payments to make up for their
benefits not increasing this year, but the Senate defeated it 50 to 47.

The U.S. will make a monumental mistake if it doesn't utilize one of
its most prevalent energy resources, natural gas, energy tycoon Boone
Pickens told CNBC Thursday."You've got 4,000 trillion cubic feet of natural gas—that makes us
number one in the world," Pickens said. "We're going to be fools, we'll
be identified as the dumbest people in the world if we don't capitalize
on this resource and replace OPEC oil."

Natural-gas futures declined
nearly 4% Thursday after the government reported supplies fell less
than anticipated last week, while crude-oil prices also dropped, but
held above $80 a barrel. The natural-gas futures contract for April
delivery fell 18 cents, or 3.8%, to end at $4.58 per million British
thermal units. Crude for April delivery fell 66 cents, or 0.8%, to
$80.21 a barrel on the New York Mercantile Exchange. Gold for April delivery dropped $10.20 an ounce to $1,133.10. The euro slipped to $1.3560 from $1.3708 late on Wednesday.

The Dow Jones Industrial Average rose 47.38 points to 10,444.14, with the index now in the black for the year. Up for a fifth consecutive session, the S&P 500 Index rose 4.18 points to 1,122.97. The Nasdaq Composite Index added 11.63 points to 2,292.31.

Wednesday, March 03, 2010


3/3/10 Jobs

Private-sector firms in the
U.S. eliminated 20,000 jobs in February, the 25th decline in a row,
according to the ADP employment report released Wednesday. It was the
fewest jobs lost since 22,000 jobs were added in January 2008. In
January, a revised 60,000 jobs were lost, compared with the 22,000
originally reported, ADP said. The adverse weather had only a very
small effect on the ADP report due to the methodology used to construct
it, ADP said.

An investment group led by J.P. Morgan Asset Management and Water Asset Management said it's buying SouthWest Water Co.
for $275 million, or $11 a share in cash, a 56% premium to Tuesday's
close. Prior to the closing of the acquisition, members of the
partnership will invest approximately $16 million in 2.7 million newly
issued SouthWest Water shares under a private placement, priced at
$6.00 per share. SouthWest Water intends to use the proceeds to assist
the financing of ongoing utility infrastructure investments.

Banks that are seen as too large to fail should be broken up in order
to make the financial system more stable, Dallas Federal Reserve
President Richard Fisher said on Wednesday.

Costco also said February same-store sales rose 9 percent, including the impact of fuel prices and foreign exchange.
Costco earned $299
million, or 67 cents per share, for its fiscal second quarter, ended
Feb. 14, compared with $239 million, or 55 cents per share, a year
Excluding a charge
for employee benefits, Costco earned 70 cents per share. Analysts, on
average, were expecting 72 cents, according to Thomson Reuters I/B/E/S.
Quarterly sales rose 11 percent to $18.36 billion excluding membership fees, which rose 9 percent to $386 million.

Millions of homeowners haven't benefited from the lowest mortgage rates
in nearly a half-century because they can't or won't refinance.

Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

There were 42,090 layoff intentions announced in
February, down sharply from 71,482 in January and from the 186,350 job
cuts announced in February 2009, job placement firm Challenger, Gray and
Christmas, Inc. said in a report released Wednesday. The data are not
seasonally adjusted.
Layoffs in February were led by the pharmaceutical sector, which
reported 25,857 job reductions in the month. Challenger noted that Merck
had announced a larger number of post-merger layoffs.
"It may be a couple of more months before hiring begins to surge,
but it is clear that employers have shifted away from downsizing and are
poised to start adding workers," said John Challenger, chief executive
officer of Challenger, Gray & Christmas.
"We are seeing more job cuts related to business strategy, as
opposed to cuts stemming from recessionary pressure," he added. "In
other words, we expect more cuts from mergers and acquisitions or from
companies shifting focus from one business area to another."
Of the 42,090 job cut intentions reported in February, 20,068 were
reported to be due to mergers and acquisitions.
In other data released, hiring intentions fell to 8,300 in February
from 31,381 in January and from 14,972 in February 2009. February hiring
plans were led by the electronics sector.

The ISM Services Index for February came in at 53.0, which is above the
reading of 51.0 that had been widely expected and up from the 50.5
that had been posted in January.

The percentage of U.S. home sellers who cut their asking price
declined again in February and sellers made slightly smaller reductions
in prices, real estate website said on Wednesday.
median list price of homes, however, fell in January, Zillow said in a
report, which was obtained by Reuters ahead of its scheduled release.
one in five homes, or 19.5 percent, listed for sale on the Zillow
website had at least one price reduction as of the end of February,
down from 19.8 percent in January, Zillow said.
Home sellers reduced prices by a median 6.7 percent in February, down from 6.8 percent in January.
percentage of homes on the market with price reductions has declined
steadily for much of the past year. In February 2009 more than
one-third, or 33.2 percent, of homes listed on Zillow had a price
reduction, and the median reduction was 8.7 percent.

Crude inventories rose by 4.1 million barrels,
or 1.2 percent, to 341.6 million barrels. That was 3.7 percent below
year-ago levels, the Energy Department's Energy Information
Administration said in its weekly report.
expected a build of 1.1 million barrels for the week ended Feb. 26,
according to a survey by Platts, the energy information arm of
McGraw-Hill Cos.
inventories rose by 700,000 barrels, or 0.3 percent, to 231.9 million
barrels. That was higher than analysts' expectations and 7.4 percent
above year-ago levels.
for gasoline over the four weeks ended Feb. 26 was 0.1 percent higher
than a year earlier, averaging nearly 8.8 million barrels a day.
the same time, U.S. refineries ran at 81.9 percent of total capacity on
average, a rise of 0.7 percentage point from the prior week. Analysts
expected capacity to fall to 81.1 percent.
of distillate fuel, which include diesel and heating oil, fell by
900,000 barrels to 151.8 million barrels for the week ended Feb. 26.
Analysts expected a decline of 975,000 barrels.

EIA expects this year's annual average natural gas Henry Hub
spot price to be $5.37 per million Btu (MMBtu), a $1.42-per-MMBtu increase over
the 2009 average of $3.95. EIA projects
continuing price increases in 2011, averaging $5.86 per MMBtu for the

Erasing a roughly 60-point climb, the Dow Jones Industrial Average ended at 10,396.76, off 9.22 points or 0.1%. The S&P 500 Index added half a point to end at 1,118.79, while the Nasdaq Composite Index finished almost flat at 2,280.68.

Tuesday, March 02, 2010


3/2/10 Obama

Obama Eyes Stopping US Drilling

Intelligence Group, Inc. (click for details)
Tuesday, March 2, 2010
Display Printer Friendly Page

The Obama administration is taking steps to close off several parts of
the Intermountain West to industrial activity, including four areas
believed to hold significant oil and natural gas deposits.
If successful, the initiative would block future production of
hydrocarbons in the San Rafael Swell in Utah, the Otero Mesa in New
Mexico, the Vermillion Basin in Colorado, and the Northern Prairie in
The US Interior Department is leading the effort and says it is
authorized to take such action under the Antiquities Act of 1906.
Interior officials hope to designate 14 areas as "national monuments,"
which would ban drilling or other activities that may disturb the
landscape. Existing leaseholders would not be affected.
One area targeted for national monument status, the 1.2 million-acre
Otero Mesa in southeastern New Mexico, is believed to hold large
natural gas deposits. The Bush administration allowed companies to
drill some exploratory wells in the region several years ago.
Broader development initiatives have been delayed, however, after a US
appeals court ordered federal agencies last May to conduct preparatory
planning work again to comply better with guidelines outlined in the
National Environmental Policy Act.

Washington Post: "IN AMERICA'S climate debate, one of the most promising developments of
recent months has been the growing recognition in Washington that
natural gas may play a key role in curbing carbon emissions. The
resurgence of gas comes through the discovery of massive deposits in
Appalachian shale formations and elsewhere -- a reserve that offers the
prospect of stable domestic supplies and relatively low prices. Since
burning natural gas produces half the emissions of burning coal,
switching the two fuels could put a significant dent in America's
carbon footprint."

Fertilizer maker CF Industries Holdings Inc relaunched a hostile bid worth $4.75 billion to buy rival Terra Industries in a move to break up Terra's planned takeover by Norway's Yara International .
which had called off a year-long effort to buy Terra in January, said
it was now offering $47.40 per share in cash and stock for the company
based on Monday's closing prices. Terra shares were up 12.5 percent to
The move is the latest chapter in the battle by fertilizer companies to expand their market shares in the agricultural industry,
which has started to rebound as the global economic crisis fades.
Last month, Terra agreed to be bought by Yara for $4.1 billion in an all-cash deal that valued the company at $41.10 per share.

BP has made a
joint- venture deal with privately held Lewis Energy Group that will
expand the British oil giant's position in the U.S. natural gas
business and find it entering a fast-emerging field in South Texas,
according to a person familiar with the situation.
Under the deal, BP
will take a 50 percent stake in 80,000 acres of the Eagle Ford Shale
play and is acquiring additional acreage in smaller pending deals, the
person said.
Company officials
are expected to announce the venture in London today at BP's annual
strategy presentation to investors and analysts.
Daren Beaudo, a BP
spokesman in Houston, declined to comment. Officials with San
Antonio-based Lewis could not be reached for comment.
The deal would be
the latest in a string of similar moves by major oil companies to enter
or expand in unconventional rock formations in the U.S., where huge
amounts of natural gas have been discovered in recent years.
In December, Exxon
Mobil Corp. said it would acquire Fort Worth's XTO Energy in a deal
valued at $41 billion. A month later, France's Total agreed to pay $2.3
billion for 25 percent of Chesapeake Energy Corp.'s acreage in the
Barnett Shale play in North Texas, and the companies said they may
jointly develop acreage in the Eagle Ford Shale and in several Canadian
natural gas plays.
Royal Dutch Shell,
Norway's Statoil and others have also written big checks for access to
North American shale plays, and so has BP.
In 2008, BP did two
deals with Oklahoma City-based Chesapeake, worth nearly $3.7 billion,
that gave it access to unconventional reserves in Oklahoma and Arkansas.
Oil companies are
looking to expand holdings of natural gas amid stricter environmental
laws and forecasts that use of cleaner-burning fuel will grow in coming

The White House also wants to add $37 billion in taxes on U.S. oil and
natural gas companies, rehashing a proposal to Congress that failed the
first time around. History shows that once drilling costs jump due to
higher taxes, investment starts to dry up.

The board of bankrupt LyondellBasell Industries AF rejected a $14.5
billion bid from Reliance Industries Ltd., an oil refiner and explorer
controlled by India's richest man, two people briefed on the matter

Australia’s central bank resumed
raising interest rates after a one-meeting pause, judging that
faster-than-anticipated economic growth will allay concerns
that European deficits may roil global confidence.
Reserve Bank of Australia Governor Glenn Stevens increased
the benchmark overnight cash rate target to 4 percent from 3.75
percent in Sydney today, as forecast by 14 of 19 economists in a
Bloomberg News survey. The rest saw no change. Stevens said
rates should be closer to “average,” which he last week signaled
may be 75 basis points higher than today’s new level.

The massive earthquake that struck Chile on Saturday may have
shifted the Earth's axis and created shorter days, scientists at NASA
The change is negligible, but permanent: Each day should be
1.26 microseconds shorter, according to preliminary calculations. A
microsecond is one-millionth of a second.
A large quake shifts massive amounts of rock and alters the distribution of mass on the planet.
that distribution changes, it changes the rate at which the planet
rotates. And the rotation rate determines the length of a day.
worldly event that involves the movement of mass affects the Earth's
rotation," Benjamin Fong Chao, of NASA's Goddard Space Flight Center in
Greenbelt, Maryland, said while explaining the phenomenon in 2005.

"Taxpayers filed 142.4 million individual income tax returns for 2008, which was 0.5 percent fewer than the 143.0 million returns filed for 2007. Adjusted gross income (AGI) also declined between 2007 and 2008, falling by 3.7 percent to $8.2 trillion. This was the first time since 2002 that AGI decreased from the previous year. Also between 2007 and 2008, taxable income decreased 5.1 percent to $5.6 trillion, total income tax decreased by 6.2 percent to $1.0 trillion, and total tax liability fell by 6.0 percent to just under $1.1 trillion. "

"It's clear IBM is moving work offshore at a record rate," said Lee Conrad, national field coordinator ofAlliance@IBM.
union reported that IBM had cut more than 1,200 jobs in the U.S. and
Canada as of Monday afternoon. Conrad said the total is likely to
increase as more information is collected.
Facing increasing
competition, IBM has been cutting staff for years. The global
technology giant employs an estimated 10,000 in Research Triangle Park.
The New York-based company laid off about 10,400 people last year in
North America, according to Alliance@IBM.

ZeroHedge: "February was not an auspicious start to Obama's record budget
deficit-busting plans. The Daily Treasury Statement for the full month
of February was just released, and it disclosed that while corporate
tax withholdings, net of refunds, actually climbed marginally to $3.4
billion from $(3.4) billion in February 2009, individual tax
withholdings plunged to a multi-year low of $30.7 billion. Combined,
the two items also posted a multi low of $34 billion, less than the
previous recent low from February 2009 when the first leg of the
Greater Depression was allegedly at its zenith."

. OSI Pharmaceuticals Inc. rejected a
$52-a-share hostile takeover bid from Astellas Pharma Inc. as investors
anticipated a higher offer and possible bidding war. OSI “is not
interested in undertaking a sale” at that price, the Melville, New
York-based company said yesterday in response to the $3.5 billion cash
offer from Astellas, Japan’s second-largest drugmaker. If successful,
the tender offer starting today would help Astellas gain treatments for
cancer, a key growth area the Tokyo-based company has identified to
cope with falling sales of its biggest drug Prograf. The takeover
attempt follows Astellas’ failed $1.1 billion offer last year for CV
Therapeutics Inc and analysts say it may face a rival bid from
Roche Holding AG, OSI’s partner for the Tarceva cancer drug.

Winter Storms to Distort US Jobless Figures - Summers.

For the week ended Feb. 27, retail sales fell 0.8% from the week
earlier and eked out a 0.7% gain from a year ago, according to data
from the International Council of Shopping Centers and Goldman Sachs released on Tuesday.

The success of wind power in Texas has come at the expense of natural
gas. If the wind build-out continues, by 2013 the amount of gas
consumed to make electricity could fall by 18.5%, as gas plants sit
idle for longer, according to Tudor Pickering & Holt, a
Houston-based energy investment bank.

Pfizer Inc is set to join the bidding for German generic-drug maker Ratiopharm GmbH, offering as much as 3 billion euros, Bloomberg reported on Tuesday.

The Dow Jones Industrial Average ended at 10,405.98, up 2.19 points. The S&P 500 Index added 2.6 points, or 0.2%, to finish at 1,118.31. The Nasdaq Composite Index climbed 7.22 points, or 0.3%, to 2,280.79.

Monday, March 01, 2010

March 1

March 1

Floyd Norris: "More than $1 in every $10 that American banks have
outstanding in loans is lent to a troubled borrower, a ratio far higher
than previously seen in the quarter-century that such numbers have been

Mike Burk: "The market comfortably consolidated its mid February gains last week. That consolidation may continue for a few more days, but, the 1st few days of March are seasonally very strong.
I expect the major averages to be higher on Friday March 5 than they were on Friday February 26."

U.S. consumer spending rose 0.5% in January, while income increased 0.1%.

Real disposable income decreased 0.6 percent in January, in contrast to an increase of 0.2 percent in December. Real PCE increased 0.3 percent, compared with an increase of 0.1 percent.
Government wage and salary disbursements increased $6.1 billion, compared with an increase of $2.7 billion. Pay raises for federal civilian and military personnel added $7.1 billion to government payrolls in January.
Prudential Plc, Britain’s biggest
insurer, agreed to buy an Asian life insurance unit from
American International Group Inc. for $35.5 billion in cash and
stock to gain more than 20 million customers in the region.

“Natural gas prices, as if wounded by the
resiliency of domestic production, continue to weaken despite steady
draws on inventories that well exceed last year's pace,” analysts at
Barclays Capital wrote in a note today. Technically,
the charts are bearish, says MF Global’s Mike Fitzpatrick, who expects
$4 natural gas to be tested very soon. Optimists at the U.S. Energy
Information Administration see natural gas futures averaging
$5.37/mmBTU this year.

Germany and France will help bail out Greece by taking 50% of a 30 billion euro offering by the troubled nation.

A winter storm that pummeled New York
City for two days broke a monthly record for snowfall in Central Park
that stood for 114 years, according to the National Weather Service.

China Manufacturing Slows More Sharply Than Expected. The
pace of Chinese manufacturing slowed more sharply than expected last
month, an official survey of purchasing managers showed on Monday.
Output and new orders -- both aggregate and overseas orders -- remained
above the threshold of 50 that indicates an expansion of activity. But
backlogs of orders, employment and stocks of purchases all fell below
the boom-bust line, according to the survey, which is compiled by the
China Federation of Logistics and Purchasing (CFLP) for the National
Bureau of Statistics.

The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 25%
of the nation's voters Strongly Approve of the way that Barack Obama is
performing his role as President. Forty-two percent (42%) Strongly
Disapprove giving Obama a Presidential Approval Index rating of -17.

“I’ll tell you one thing, if Speaker
Pelosi rams this bill through the House using a reconciliation process,
they will lose their majority in Congress in November,” House Minority
Whip Eric Cantor (R-Va.) said on NBC’s “Meet the Press.”

March 1 (Bloomberg) -- Federal Reserve Vice Chairman Donald
Kohn said he will leave in June after four decades at the
central bank, where he helped Ben S. Bernanke and Alan Greenspan steer the U.S. through recessions and crises.
Kohn, 67, said he is resigning effective June 23, the end
of his four-year term as vice chairman. History will judge
Chairman Bernanke and the Fed to have met challenges over the
last several years “with great speed, imagination and
effectiveness,” Kohn said in his resignation letter to
President Barack Obama, released today by the Fed.
The departure opens a third vacancy on the seven-member Fed
Board of Governors, giving Obama the chance to pick a majority
of the panel after appointing Daniel Tarullo in 2009.

"Reconciliation cannot be used to pass comprehensive health care
reform," Sen. Kent Conrad, D-North Dakota, chairman of the Budget
Committee, told CBS' "Face the Nation." He added, "It won't work
because it was never designed for that kind of significant legislation."
under the scenario Democrats are considering, the procedure could prove
to be the key to enacting the full package of reforms.
To get to
the president's desk, a bill must first win passage in the House of
Representatives and Senate. Last year, the two chambers voted -- and
passed -- different versions of the bill. They differ on key points.

Africa’s biggest gold mines face an indefinite strike
from March 7 unless owner Gold Fields Ltd. resolves a dispute over a
fitness test with South Africa’s largest labor union.
The National Union of Mineworkers threatened to stop
work at all of the company’s operations unless the test for new
recruits is abolished, Johannesburg-based Gold Fields said in a
statement today. Gold Fields is Africa’s third-largest producer of the
precious metal.
South Africa has the world’s deepest and most
dangerous mines, where workers drill the metal out of rock as deep as
2.35 miles (3.8 kilometers) underground in hot, dark and damp
conditions. Some 164 miners died in rockfalls, transportation and other
accidents at the mines last year, the NUM said.

The Institute for Supply Management said Monday its manufacturing index
read 56.5 last month, slightly slower than the 58.4 growth in January.
It was also slower than the 58 level expected by economists polled by
Thomson Reuters.

Spending on
U.S. construction projects fell at a seasonally adjusted rate of 0.6%
in January, the Commerce Department estimated Monday. The decline was
wider than the 0.5% drop expected by economists surveyed by
MarketWatch. Spending in December dropped an unrevised 1.2%.
Residential outlays in January rose 1.1%, while nonresidential outlays
fell 1.4%, and public outlays fell 0.7%.

Exxon Mobil Corp.'s spending exceeded its cash flow in 2009, drawing
down one of the oil industry's largest treasure troves in a year of
weak energy prices.
The Texas oil giant received $29.9 billion in cash from operations
and asset sales last year while spending $53.12 billion in capital
investments and money given to investors via dividends and share
buybacks. Exxon's cash reserves -- padded by years of booming energy
prices -- shrank to $10.7 billion at the end of 2009 from $31.4 billion
at the close of 2008, according to an annual filing Friday with the
Securities and Exchange Commission.“

Caixin: What is your attitude toward China now? Positive or negative?
“Soros: I’m very cautious, until the economy cools off a little. When it does, I will be more optimistic again.

“James Dunne, senior managing principal of Sandler O’Neill, said 300 to
400 banks could be seized this year, especially as institutions start
to deal with deteriorating commercial real estate loans.

“Monetary policy has worked very well,” said Sebastien
Lavoie, an economist at Laurentian Bank Securities in Montreal.
The Bank of Canada estimates consumers will account for more
than half of a 2.9 percent expansion this year.
When the bank raises rates “it won’t be baby steps; it
will be major jumps,” Lavoie said. The first increase could be
three-quarters of a percentage point, he said, and the rate
could reach 3 percent next year, he said.

The main runway at New York's John F. Kennedy International will be
closed for four months starting March 1. Millions of travelers will
experience delays — including some not flying anywhere near the Big
With about one-third of JFK's
traffic and half of its departures being diverted to three smaller
runways, planes will wait on longer lines on the ground for takeoffs
and in the air for landings. Delays at one of the nation's largest
airports will ripple to cities across the U.S., including Los Angeles, San Francisco and Orlando.

Two thousand federal transportation workers were furloughed without
pay on Monday, and the Obama administration said they have a Kentucky
senator to blame for it.
Federal reimbursements to states for
highway programs will also be halted, the Transportation Department
said in a statement late Sunday. The reimbursements amount to about
$190 million a day, according to the House Transportation and
Infrastructure Committee.
The furloughs and freeze on payments
were the result of a decision last week by Republican Sen. Jim Bunning
to block passage of legislation that would have extended federal
highway and transit programs, the department said. Those programs
expired at midnight Sunday.
The extension of transportation
programs was part of a larger package of government programs that also
expired Sunday, including unemployment benefits for about 400,000
Bunning objected to the $10 billion measure, saying it
would add to the budget deficit. He didn't respond to a request Monday for comment.

Oil futures closed lower Monday,
undercut by a higher dollar, worse-than-expected manufacturing data
that suggested lingering pressure on energy demand, and profit-taking
after the contract topped $80 a barrel. Oil for April delivery closed
New York floor trade at $78.70 a barrel, off 96 cents, or 1.2%. Natural
gas for Aril delivery closed at $4.679 per million British thermal
units, down 13 cents, or 2.8%. The most active heating-oil and
natural-gas futures also closed lower.

The Dow Jones industrials closed up 79 points to 10,404. The Nasdaq Composite Index added 35 points to 2,270, and the Standard & Poor's 500 Index gained 11 points to 1,116. Here's how the market compares with a year ago. On March 2, 2009, the first day of trading in March, the Dow fell a whopping 300 point, or 4.2%, to 6,763. A week later, the blue-chip index bottomed at 6,547.