Saturday, March 13, 2010

Lehman's Collapse

3/12/10 Lehman's Collapse, which just issued its early hurricane season forecast, not only believes that the 2010 season will be more active than last year, but the private company sees the potential for an "extreme season" with an above-normal threat all along the Atlantic and Gulf coasts.

In a 2,200-page report made public on Thursday, examiner Anton
Valukas, chairman of law firm Jenner & Block, reported the results
of his more than year-long investigation into the firm's collapse,
which worsened the global financial crisis.
The examiner said
that while some of Lehman's management's decisions "can be questioned
in retrospect" and the firm's valuation procedures for its assets "may
have been wanting," those responsible for the firm had used their
business judgment and were largely not liable for the firm's collapse.
He did not find that Lehman's directors had explicitly violated their fiduciary duty.
in the report the examiner also revealed explosive allegations about a
gimmick, known as "Repo 105," that was used for the sole purpose of
manipulating Lehman's books.
The examiner concluded that the
gimmick, which dated back to 2001 and was used without telling
investors or regulators, gave the appearance that Lehman was reducing
its overall leverage levels in 2008 when in reality it was not,
partially leading to its collapse.
He also said Lehman could have
potential claims against JPMorgan Chase & Co and Citibank in
connection with demands for collateral and certain changes made to
guaranty agreements in Lehman's final days.

Led by a big gain in
electronics, U.S. retail sales increased a seasonally adjusted 0.3% in
February, despite three major snow storms in the East, the Commerce
Department estimated Friday. Sales have risen in four of the past five
months, and were up 3.9% compared with a year earlier. Most categories
of retailers recorded month-over-month increases. Auto and truck sales
were an exception, falling 2% compared with January. Excluding autos
and trucks, retail sales increased 0.8%.
Economists surveyed by MarketWatch were expecting sales to be
unchanged, and for sales excluding autos to rise 0.1%.

Norwegian fertilizer company Yara International ASA (NO:YAR)
said Friday it will not propose an improvement to the cash merger
agreement signed on Feb. 12 by Yara and U.S.-based Terra Industries
Inc. In March, CF Industries Holdings Inc.
made a better offer to buy Terra. The merger agreement between Yara and
Terra may be terminated under certain circumstances, including if Terra
receives a superior proposal, Yara said. If Terra terminates the merger
agreement under such circumstances, Yara will be entitled to a $123
million break-up fee. "Terra would be a perfect fit to Yara and
attractive at our proposed valuation, but we will not increase our
offer that was first accepted by the Terra board," said Jorgen Ole
Haslestad, president and CEO of Yara International ASA. The "U.S.
remains an attractive market for us and we will continue to search for
opportunities to grow our business in the region," Haslestad said.

Chris Vermeulen: "

Natural Gas - Daily Trading Chart
This chart is actually very attractive looking. Even if you do not understand how to read charts I think it's safe to say this one is a no brainer
I will be closely watching for a potential low risk setup in the coming days.
George Ure: "So if you want a fine zoom-in on irrational, try this one on for size: The Dow has run up from last year about this time being 6,627 to yesterday's close around 10,612.
That's a 60.1% increase for stocks and all this teetering on a retail sales increase of a whopping 3.9% increase from year ago retail sales...but that doesn't take into account whatever monetary inflation is.
Say, you don't think it would be a fine time to look at how much more M1 money is sloshing around the system, do you? Lemme see,Feb 2009 was 1.5621 trillion and this year it's 1.7104 increase of 9.5% in M1."

The bulk of 2009's drop in credit card debt
instead came because banks were forced to write off loans consumers
failed to pay, according to an analysis of Federal Reserve data.
Loans are typically charged off by banks once they're 180 days past due, under the assumption that the debt won't be repaid.

U.S. companies increasingly exposed to unwanted takeover attention, FT reports.

Swelling ranks of homeowners who are seriously delinquent but haven't
yet lost their homes may soon lead to a new round of foreclosures.

Middle Class Money Angst Still Apparent in Data
Fed's Flow of Funds numbers again show average Americans' net worth gaining more by mortgage defaults than asset appreciation.

U.S. consumer sentiment dipped
in early March, according to media reports on Friday of the
Reuters/University of Michigan index. Amid signs that the labor market
is approaching a trough but remains frail, the consumer sentiment index
declined to 72.5 in March from 73.6 in February. Economists surveyed by
MarketWatch had been expecting the sentiment index to hit 74 in March.

John Dalt: "Natural gas burns clean and is the
preferred fuel for industrial use. Transportation is as simple as
hooking up to the underground line running down most streets in
America. Natural gas is also used for demand load electrical
generation. Natural gas electrical plants are inexpensive and can be
built quickly. At present prices, electricity produced with natural
gas is cheaper than from coal.
Natural gas storage was down 111 billion
cubic feet (Bcf) last week. Storage is below last year's level dropping
6.4% in the last week. Last year storage dropped 4.2% and the five year
average shows a 1.2% build during the same week. Traders seem stuck in
a view that gas will reappear as UNG fell today after the storage
report was released. Your editor owns UNG, or as I like to call it

Repo 105 Accounting Policy document, according to the report:
"Repos generally cannot be treated as sales in the United
>States because lawyers cannot provide a true sale opinion under U.S.

The closures of Florida's Old Southern Bank and Louisiana's Statewide Bank on Friday brought the tally of bank failures for the year to 30, according to the Federal Deposit Insurance Corp. Centennial Bank of Conway, Ark., will assume all the $319.7 million in deposits of Old Southern Bank, and buy its $315.6 million in assets. Home Bank of Lafayette, La., will assume Statewide's $208.8 million in deposits and buy its $243.2 million in assets.

New York City's Park Avenue Bank became the 28th bank failure of 2010, according to the Federal Deposit Insurance Corp. Valley National Bank of Wayne, N.J., will assume the $494.5 million in deposits and buy the bank's $520.1 million in assets. The cost to FDIC's Deposit Insurance Fund is estimated at $50.7 million.

The Dow Jones Industrial Average rose 12.85 points to 10,624.69, leaving it 0.6% higher from the week-ago close. The S&P 500 Index fell a quarter of 1 point to 1,149.99, a level that translates into a 1% gain on the week, while the Nasdaq Composite Index fell nearly 1 point to finish at 2,367.66, up 1.8% from the week-ago close.

Thursday, March 11, 2010

Debt Accumulation

3/11/10 Debt Accumulation

Tom Walters, president of gas and power marketing for Exxon Mobil Corp., said ever increasing demand will create a "supply gap."

ZeroHedge: "How is it possible that unprecedented debt accumulation can result in ever declining interest rates, and Treasury auctions, such as today's 10 Year reopening, in which the Bid To Cover hit an all time high? One answer: The Federal Reserve, which through complete domination of the entire capital market courtesy of ZIRP and QE has now turned market logic upside down by 180 degrees. In a normal world, the more money you borrow, the greater the associated risk, and the greater the interest payments on this debt. Not in America though. So can we assume that the Fed can forever keep rates on debt at record low levels? No. Which begs the question: what happens when interest rates do finally start going up? "

The number of people applying
for unemployment benefits fell by 6,000 in the latest week, the second
decline in a row. In the week ended March 6, initial claims fell to a
seasonally adjusted 462,000 from a revised 468,000 in the prior week,
the Labor Department reported Thursday. Economists surveyed by
MarketWatch were expecting claims to dip to 460,000. The four-week
average of initial claims rose by 5,000 to 475,500, the highest rate
since November. The number of people continuing to receive regular
unemployment checks climbed 37,000 in the week of Feb. 27 to a
seasonally adjusted 4.56 million. The number of people receiving
extended federal benefits fell 159,000 to 5.53 million, not seasonally
adjusted, in the week of Feb. 20. All told, 11.36 million people were
collecting some type of unemployment benefits in the week of Feb. 20,
not seasonally adjusted.

The U.S. trade deficit narrowed
by 6.6% in January to $37.29 billion, the Commerce Department said
Thursday. The decline in the trade deficit caught economists by
surprise. The consensus forecast of Wall Street economists of a deficit
of $41.0 billion. Both imports and exports fell in January. Imports
fell at a faster pace. The U.S. trade deficit with China narrowed to
$18.30 billion in compared with $20.57 billion in the same month last
year. The government also revised the deficit in December to $39.9
billion from $40.2 billion.

BP Plc has agreed to buy Brazilian, Azeri and Gulf of Mexico fields
from Devon Energy Corp for $7 billion. Devon shares up 2.3 percent to
$73.35 in premarket trading.

Foreclosure filings -- including mortgage default notices, house
auctions and home repossessions by banks -- were reported on 308,524
properties in February, down 2 percent from January, but still up 6
percent from the year-ago month, real estate data firm RealtyTrac said.
6 percent year-over-year increase we saw in February was the smallest
annual increase we've seen since January 2006, when we began
calculating year-over-year increases, but it still marked the 50th
consecutive month of year-over-year increases in foreclosure activity,"
said James J. Saccacio, chief executive officer of RealtyTrac, in a

The Energy Department on Thursday is expected to report a draw of 108
billion to 112 billion cubic feet of natural gas storage inventories
for the week ended March 5, according to a survey of analysts by
Platts, the energy information arm of McGraw-Hill Cos.If the storage estimate is correct, inventories as of March 5 will
total 1.629 trillion cubic feet, 1.4% above the five-year average and
4% below last year's level.

Natural gas supplies down 111 Bcf -- EIA

China’s inflation reached a 16-
month high, industrial output climbed and new loans exceeded
forecasts, adding to the case for the government to pare back
stimulus measures.
Consumer prices rose 2.7 percent in February from a year
earlier, the National Bureau of Statistics said in Beijing today,
compared with the 2.5 percent median estimate of 29 economists
surveyed by Bloomberg News. Seasonal factors stemming from a
weeklong holiday may have boosted prices. Production rose 20.7
percent in the first two months of 2010, the most in more than
five years.
Premier Wen Jiabao aims to hold full-year inflation around
3 percent after banks flooded the financial system with money to
drive a rebound from the global recession. Gross domestic
product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including
the yuan’s peg to the dollar, must end “sooner or later.”

Facing potential bankruptcy, the board that governs the once
flush-with-cash Kansas City school district is taking the unusual and
contentious step of shuttering almost half its schools.

Chinese property prices were 10.7% higher than a year earlier in February: Govt agency.

Business Week: "Icelandic journalist Iris Erlingsdottir wrote in the Huffington Post,
"While we have been endlessly debating IceSave, our unemployment rate
has continued to climb, the number of insolvencies has continued to
increase, and the number of public services has continued to decrease.
Other scandals of comparable magnitude and abuse of taxpayer money --
but involving only Icelanders -- are being ignored by the Icelandic
media." Change a few nouns -- health care, Citigroup (C, Fortune 500) -- and Erlingsdottir is writing about Washington as Reykjavik.
Just because the crisis has been "managed" doesn't mean it's over. As economist Simon Johnson writes,
"The true fiscal cost arising from our recent financial excesses is the
increase in net government debt held by the private sector. This will
likely amount to around 40 percentage points of GDP." Servicing that
debt will likely affect our promise as a nation, not for years, but decades."

For the second straight year, more hedge funds closed than were
launched in 2009, according to data released today by Hedge Fund
Research. Last year, 1,023 hedge funds closed, compared to 784 that started.
In 2008, 1,471 funds closed while 659 were launched, according to HFR’s
March hedge fund report, which provided analysis of the hedge fund
researcher’s year-end 2009 data.

For the second straight week, just 25% of U.S. voters say the
country is heading in the right direction, according to the latest
Rasmussen Reports national telephone survey. Last week’s finding marked
the lowest level of voter confidence since just before President Obama
took office in January 2009. A
sizable majority (71%) believe the nation is heading down the wrong
track, the highest level of pessimism measured in 14 months.

The Congressional Budget Office is also slated to release its cost assessment of the White House health care bill any day, which could alter the dynamics.
Late Wednesday night, Democrats emerged from a closed door meeting and
said they were close to an agreement on a compromise bill that could
pass both the House and the Senate.

Exxon, the world’s second-largest company, plans to
start 12 new gas and crude projects in the next two years, according to
a presentation the Irving, Texas-based company delivered to analysts
today in New York. Capital spending on wells, floating platforms,
gas-export plants and refineries will rise 3.4 percent this year to $28
billion, according to the presentation.
Chief Executive Officer Rex Tillerson is counting on
a $28.8 billion acquisition of Fort Worth, Texas-based gas producer XTO
Energy Inc. as well as new gas developments from the South Pacific to
the Celtic Sea to counter a 6.7 percent drop in output in the past five

“Everyone would like to find more oil,” says Richard Herbert, an
executive at Talisman Energy, a Canadian firm using a conventional
North Sea oil business to finance heavy investment in North American
shale. “The problem is, where do you go? It’s either in deep water or
in countries that aren’t accessible.” This is forcing big oil companies
to get gassier.

Natural gas for April delivery
was last down 9 cents, or 2%, at $4.47 per million British thermal
units in electronic trade. It earlier rose as high as $4.59 per million
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states dropped by 111 billion cubic feet to about 1.63 trillion cubic feet for the week ended March 5.
The inventory level was 1.2 percent above the five-year average of about 1.61 trillion cubic feet, and 4.2 percent below last year's storage level of about 1.7 trillion cubic feet, according to government data.
Natural gas lost 8.8 cents at $4.471 per 1,000 cubic feet on the New York Mercantile Exchange.

The Dow Jones Industrial Average added 44.51 points, or 0.4%, to 10,611.84. The S&P 500 Index gained 4.63 points, or 0.4%, to 1,150.24. The Nasdaq Composite Index rose 9.51 points, or 0.4%, to 2,368.46.

Wednesday, March 10, 2010


3/10/10 OPEC

The Organization of the
Petroleum Exporting Countries said Wednesday it raised its forecast for
global oil demand this year. In its monthly oil report, OPEC said it
now expects world oil demand to grow by 900,000 barrels a day in 2010.
This represents an upward revision of 100,000 barrels a day from the
previous assessment.

The survey of over 70 economists suggests U.S. gross domestic
product will grow at a 2.6 percent annualized rate between January and
March, less than half the pace of the fourth quarter of 2009, when it
expanded at a 5.9 percent rate.
For all of 2009, the world's
biggest economy contracted by 2.4 percent, but the poll predicts it
will grow by 2.9 percent in 2010 on an annual basis.

The Oil Drum: "If employment is inversely proportional to oil prices (it is), and oil
prices are only going to trend up…then employment by necessity is going
down. Because oil is so fundamental to our economy, oil price increases
ripple through the entire economy."

Poor economic data in the US coupled with Europe's debt crisis are
contributing to an increase of the risk of the US economy going through
a double-dip recession, Nouriel Roubini, who predicted the 2007
financial crisis, wrote in a research paper.

China's trade surplus with the United
States in the January-February period shrank by 27 percent to $20.9
billion. The gap with the 27-nation European Union, China's biggest
trading partner, extended by 34 percent to $22.3 billion.

China' s commerce minister, Chen Deming, cautioned Saturday that
despite stronger recent trade, it will be two to three years before
China's exports return to pre-crisis levels.

In 2007, the number of people employed in the US is listed at 146,047,000. In the latest month, the number of people working was 138,641,000. You do the math.

Iron ore shipments from Australia’s Port Hedland, the world’s largest
bulk exporting port, dropped to 13.05 million metric tons in February
from 15.1 million tons in January. Shipments
to China fell to 8.7 million tons, the Port Hedland Authority said on
its Web-site, compared with 11 million tons in the previous month.

Diana Olick: "The problem is prices. Home prices have fallen so far in the hardest
hit areas, the areas where the bulk of the troubled loans are, that
banks would have to write down principal 30 to 50 percent to put
borrowers back in the green. Accounting rules require that banks write
down the value of those loans on their books, and experts tell me that if banks really accounted for all the losses in the home loan market, they'd all be insolvent. "

Japan's Jan machinery orders fall 3.7%; business spending revival may be slow.

Manufacturing in U.K. unexpectedly plunges as it sees `fragile' economy.

John Dizard: " Policy should be based on material reality, which is that
maintaining, let alone increasing, US use of natural gas will require a
very substantial increase in prices over the present spot and futures
levels. On that point, the shale gas industry people and I are in
agreement. One set of data points might turn out to be revealing. Look
up the “balancing item” in the “natural gas navigator” on the US Energy
Information Administration’s website. This is how the difference
between reported gas storage, and the net of production and
consumption, is explained. For the last report, in December, the
“item”, or unexplained error, is about 100bn cu ft. That is a whole
bunch of gas, as they say out there.
The “item” has been
increasing steadily from the middle of last year. So production is
likely lower, or consumption much higher, than the EIA has been able to
count. Given that production is calculated from a sample of producers
that is probably overweighted to large companies with access to capital
markets, it is probably the case that production is lower than
Washington, or most of Wall Street, thinks. Smaller gas producers,
which are probably under-sampled, will have had their access to debt or
equity proportionately much more restricted than was the case in the
boom years.
If that analysis is correct, the US will run short of low priced gas sooner rather than later.
their credit, gas prophets such as Aubrey McClendon, chief executive of
Chesapeake Energy Corp, have been saying that gas at $5 per thousand
cubic foot is not sustainable. In their laudable enthusiasm for their
business, though, they may have understated just how unsustainable the
price is.
Ben Dell, of Bernstein Research in New York, who has,
so to speak, done some of the deepest drilling into the shale gas
industry numbers, believes that the full cost of finding, developing, and operating shale gas wells, and paying an average return on capital to investors, requires a spot gas price of $7.50 to $8 a thousand cubic foot.
As Mr Dell points out, the horizontal drilling rigs that are needed
to drill shale gas wells are in relatively short supply. “We think
there will be a 15 per cent to 20 per cent increase in costs from last
year to this year. That includes the costs of drilling and fracking
[hydraulic fracturing of rock layers holding gas].”
the producers partially insulated themselves from gas price weakness
over the past year with hedges that are gradually running off. New
hedges have to be put on at lower prices. So revenues will be declining
while costs are increasing. Shale gas is not magic. Production
costs are high, and probably underestimated. An even more gas-dependent
policy will accelerate the coming price rise. For the producers’ sake,
it better."

"Gas will come full circle and we will need to prepare for a
tight market," he said.
Eni is addressing that future need in part by diversifying gas
transit routes, particularly after a dispute between Ukraine and
Russia caused interruptions serious enough to bring Eastern Europe
"to its knees," he said. Eni is the biggest western buyer of
Russian gas.
Eni is a partner of Russian gas giant Gazprom in the
South Stream gas pipeline project, which will transport up to 6
billion cubic feet per day of Russian and central Asian gas under
the Black Sea to the European Union.

Total wholesale inventories slipped 0.2 percent, smaller than the
revised 1 percent drop in December, the department said. December
inventories were previously reported as having dropped 0.8 percent.

The U.S. faces an extended recovery
from the recession even after the government infusion of cash
into stimulus programs and the banking system, said Andrew
Michael Spence, a Nobel laureate in economics.
“Right now the expectations are that somehow the
government can magically restore the economy to balance,”
Spence said in an interview today on Bloomberg Radio. “A more
realistic view is it’s going to take several years.”

The number of openings in January rose about 7.6 percent, to 2.7
million, compared with December, the Labor Department said. That's the
highest total since February 2009.
The report is a sign that the
economy is soon likely to generate consistent job gains. Some
economists expect employers to add up to a net 300,000 jobs in March,
though as many as a third of them could be temporary hiring for the
2010 Census. There are now about 5.5 unemployed people, on average, competing for
each opening. That's still far more than the 1.7 people who were
competing for each opening when the recession began. But it's down from
just over 6 people per opening in December 2009.
Job openings in information technology are also rising. Scot
Melland, CEO of Dice Holdings, said postings on its job board
for IT professionals rose 7 percent as of March 1 compared with a year
"We're not seeing a huge rebound," Melland said. "What we're seeing is a nice steady increase in recruiting activity."

A bill that would extend unemployment benefits and health-care subsidies passed the Senate on Wednesday, and now moves on to the House. The vote was 62-36. The bill would extend through the end of the year jobless benefits for the long-term unemployed. It would also extend through Dec. 31 a 65% subsidy of health-insurance premiums for jobless workers.

The U.S. government recorded a budget deficit of $221 billion in February, the Treasury Department reported Wednesday, even as receipts posted a big increase for the month. Receipts totaled $107.5 billion in February, a 23% increase over last February's total, and marking the first monthly year-over-year increase since April 2008. Outlays were $328 billion in February, up 17% year over year. February was the 17th consecutive month that the government recorded a deficit.

The Dow Jones industrial average edged up 2.95 points, or 0.03 percent, to end at 10,567.33. The Standard & Poor's 500 Index rose 5.16 points, or 0.45 percent, to 1,145.61. The Nasdaq Composite Index gained 18.27 points, or 0.78 percent, to 2,358.95.

The benchmark S&P 500 Index extended its year-long advance and is now up 69.3 percent from its 12-year closing low hit a year ago on March 9.


Tuesday, March 09, 2010

One Year Anniversary

3/9/10 One Year Anniversary

An index measuring small-business optimism fell 1.3 points to 88.0 in February,
erasing January's gain, according to a monthly survey released Tuesday
by the National Association of Independent businesses. The index is far
below its average, but has gained from 81.0 in March 2009, the
second-lowest reading ever. Small businesses were cutting workers and
prices in an effort to increase sales, the survey said. Fewer
businesses reported problems getting credit, with 9% of firms saying
they couldn't find the credit they need.

Chevron Corp. said it plans to cut 2,000 jobs this year as part of an effort to save
costs in its refining business. First-quarter 2010 charges for
severance are currently estimated to be in the range of $150 million to
$200 million on an after-tax basis. Staff reductions will occur through
2011. Chevron plans to solicit bids for operations in Europe, including
its Pembroke refinery, the Caribbean and select Central America
markets. It's also reviewing operations in Hawaii and Africa, outside
of South Africa.

The 12 year low was set one year ago this week.

George Ure: " The release of the Wizard of Oz came just about 10-years after the 1929 market peak...and here we are, just about smack-dab at the 10-year mark after the Year 2000 market peak and what comes out? Alive in Wonderland.

Not that history replays or repeats precisely, but it does rhyme often enough that a serious student of the market might be asking "Gee, where are things in the great blender of time?"

The Oil Drum: "To the Mexican people, one of the great achievements in their history
was the day their president kicked out foreign oil companies in 1938.
Thus, they celebrate March 18 as a civic holiday.
Yet today, that 72-year-old act has put Mexico in a straitjacket,
one that threatens both the welfare of the country and the oil supply
of the United States.
The national oil company created after the 1938 seizure, Pemex,
is entering a period of turmoil. Oil production in its aging fields is
sagging so rapidly that Mexico, long one of the world’s top
oil-exporting countries, could begin importing oil within the decade.
Mexico is among the three leading foreign suppliers of oil to
the United States, along with Canada and Saudi Arabia. Mexican barrels
can be replaced, but at a cost. It means greater American dependence on
unfriendly countries like Venezuela, unstable countries like Nigeria
and Iraq, and on the oil sands of Canada, an environmentally
destructive form of oil production.
“As you lose Mexican oil, you lose a critical supply,” said
Jeremy M. Martin, director of the energy program at the Institute of
the Americas at the University of California, San Diego. “It’s not just
about energy security but national security, because our neighbor’s
economic and political well-being is largely linked to its capacity to
produce and export oil.”

U.S. employers have toned down their hiring expectations mildly, according to Manpower's Q2 Employment Outlook (.pdf). A net 5% of employers expect to hire in Q2, down from 6% last
quarter, but an improvement from the net -2% reading a year ago.

Bloomberg Reports Roubini Says Cautious China to Limit Yuan Gain to 4%

A sovereign default within the euro zone is possible, Fitch Ratings said on Tuesday.
Coulton, managing director and head of Europe, Middle East and Africa
sovereigns at Fitch Ratings, said it was possible to have a sovereign
default within the euro currency bloc, but that would not necessarily
mean the break up of the euro zone.

“An index measuring wholesale prices of lentils, rice, vegetables and
other food articles compiled by the commerce ministry rose 17.87
percent in the week ended Feb. 20 from a year earlier, following a
17.58 percent gain the previous week, according to a statement in New
Delhi today.

Another sign of the shifting dynamics in the natural gas world emerged
Monday with the $3.4 billion US joint bid by PetroChina and Royal Dutch
Shell for Australia's Arrow Energy. The prize? Billions of cubic feet
of coal bed methane to be produced, converted to liquefied natural gas
and shipped to Asia.

The Dow Jones Industrial Average rose 11.86 points, or 0.1%, to end at 10,564.38. Up nearly 69% from the year-ago close, the S&P 500 added 1.95 points, or 0.2%, to end at 1,140.45. The Nasdaq rose 8.47 points, or 0.4%, to 2,340.68.

Monday, March 08, 2010


3/8/10 Hussman

McDonald's Corp.
said Monday that its February comparable sales, or sales at all
restaurants open at least 13 months, rose 4.8%. McDonald's was expected
to see sales gains of 2.1%, according to the average estimate of two
analysts surveyed by FactSet. Same-store sales rose 0.6% in the U.S.,
increased 5.4% in Europe and surged 10.5% in Asia, Middle East and
Africa. Systemwide sales rose 11.2%, or 6.4% excluding the impact of
currency translations.

MetLife Inc. said that it has signed a
definitive agreement to acquire American Life Insurance Co. from American International Group
for around $15.5 billion. The consideration will consist of $6.8
billion in cash and approximately $8.7 billion in MetLife equity
securities, subject to closing adjustments. MetLife expects the cash
portion of the purchase price to be financed through issuing senior
debt and common stock as well as cash on hand. MetLife expects the
transaction to increase its 2011 operating earnings per share by
approximately 45 cents to 55 cents a share. The operating earnings per
share estimate does not include transition and other one-time expenses
estimated at 12 cents a share.

China should step up efforts to build up state reserves of crude oil
and refined fuel to enhance the country's energy security, state media
cited lawmakers as saying.
National crude demand would exceed 550 million tonnes by 2020,
compared with about 400 million tonnes in 2009, National People's
Congress member Chen Geng told the China Energy News in an interview
published on Monday.

John Hussman: "Although the 2010
peak in the Alt-A / Option-ARM reset schedule doesn't occur until July,
with a much larger peak in mid-2011, a small initial round of resets is
already in progress, having started about November of last year. I
would expect that if we are indeed at risk of a second wave of mortgage
defaults and credit strains, it will show up first as a surprising jump
in 30-day mortgage delinquencies in the data we see over the next 2-4
months. I do not expect quarters upon quarters of uncertainty. It may
take longer to observe the full effect of continued mortgage
delinquencies and foreclosures, but we are at about the point where the
data would depart from the market's "all clear" expectations if credit
pressures are likely to resume with force."

Mike Burk: "Last weeks run up was a little too much of a good thing and the market is overbought. However, if you are going to have a strong rally the action last week shows how it should be done with the secondaries leading, new highs expanding and no new lows.
I expect the major averages to be higher on Friday March 12 than they were on Friday March 5."

Nearly 25% of mortgage defaults are due to people who choose to give up their home because they're under water.

Iran said it has started a new production line of highly accurate,
short-range cruise missiles, which would add a new element to the
country's arsenal.
Gen. Ahmad Vahidi told Iranian state TV
Sunday that the cruise missile, called Nasr 1, would be capable of
destroying targets up to 3,000 tons in size.

Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009,
leaving managers with $172 billion in the quickest decrease since 1991,
Investment Company Institute data show. The last time stock managers
held such a small proportion was September 2007, a month before the
S&P 500 began a 57 percent drop, according to data compiled by

The Australian dollar is being
overtaken by the Canadian dollar among commodity currencies as
the safety of Canada’s banking system and ties with the U.S.
economy spur investors to buy the loonie.
Options show demand for the right to sell the so-called
Aussie and buy the Canadian dollar reached the highest last
month in almost a year. A measure of traders’ expectations for
price fluctuations indicates the loonie is the most secure bet
relative to the Australian dollar since July as the global
recovery shows signs of wavering.

The Dow Jones Industrial Average fell 13.68 points, or 0.1%, to 10,552.52. After six sessions of gains, the S&P 500 Index lost less than 1 point to end at 1,138.5. The Nasdaq Composite rose 5.86 points, or 0.3%, to 2,332.21.