Saturday, April 17, 2010

Monetary Disorder

4/17/10 Monetary Disorder

Regulators on Friday shut down eight banks -- three in Florida, two in
California, and one each in Massachusetts, Michigan and Washington -- putting
the number of U.S. bank failures this year at 50.

Doug Noland: "Almost $50 billion exited money market funds the past week alone, boosting the 15-week outflow to $380 billion. Money Fund assets are down an incredible $900
billion in just 12 months, a historic wall of finance unleashed upon global risk
markets....The Morgan Stanley Retail index closed yesterday above its previous all-time
high set all the way back in April, 2007. From its low of 68.41 in November of
2008, the Morgan Stanley Retail index has tripled in price. While down almost
3% today, the S&P500 Regional Bank index sports a 2010 gain of 34.8%.
During the height of the Credit crisis, I wrote that I believed the U.S. economy
was heading into a depression. I was wrong.... Massive government Credit inflation has, at least for now, sustained the
existing economic structure – buy retailers, regional banks, homebuilders,
restaurants, etc. It’s back to Bubble Economy business as usual.... It is quite amazing how quickly Trust has been restored. A new bull market is
celebrated, while another bout of Monetary Disorder has unfathomable amounts of
“money” sloshing around for the taking.
At the center of it all,
policymaking at home and abroad has distorted market perceptions and market
pricing mechanisms. The unsuspecting again have little notion of the underlying
risks they are accepting. Fleeing zero rates and chasing inflating securities
prices, investors have been left again dangerously exposed to another financial
Bubble and a postponed economic restructuring. It may never be called “fraud”
or “misrepresentation. The outcome will be about the same. At the end of the
day, markets are made or broken on Trust."

Bloomberg: “China’s State Council ordered minimum 30% down payments for
purchases of first homes larger than 90 square meters…”

The Monetary Authority of Singapore said it will seek a ‘modest and gradual
appreciation’ in the local dollar and shift to a stronger range for currency
fluctuations… The trade ministry said the $182 billion economy will expand as
much as 9% in 2010, compared with a previous outlook of 6.5%.

Chinese investment in Australian farms increased 10-fold in the past six months,
real estate agents said.

Mike Burk: "The market is overbought.

By my way of counting where all of the major indices must be down to count the week as down, there has not had a down week in the past 10 weeks.

Most of the indicators confirmed Thursday's highs, NYSE volume is the exception. I do not know of any volume indicators that generate buy and sell signals. There is usually a nebulous pattern of volume increasing when the market is rising and volume decreasing when the market is falling. I think of it as a matter of interest. That is, a rising market generates more interest which is reflected in rising volume. Over the past 13 months we have witnesses one of the greatest bull markets in history and it has not generated any interest.
The chart below covers the past 8 years showing the S&P 500 (SPX) in orange and a 5% trend (39 day EMA) of NYSE total volume in grey. Dashed vertical lines have been drawn on the 1st trading day of each year.
NYSE Volume has fallen to an 8 year low."

Friday, April 16, 2010

Better Late......

4/16/10 Better Late.....

The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of
interest in mortgage investments it sold as the housing market was
The Securities and Exchange Commission said in a civil
complaint Friday that Goldman failed to disclose that one of its
clients helped create -- and then bet against -- subprime mortgage
securities that Goldman sold to investors.
Goldman Sachs denied the allegations. In a statement, it called the SEC's charges
"completely unfounded in law and fact" and said it will contest them.
charges are a blow to the reputation of the most powerful firm on Wall
Street, which earned a record $4.79 billion last quarter and has long
profited from high-octane trading.
The allegations come as
lawmakers seek to crack down on Wall Street practices that helped cause
the financial crisis. Among proposals Congress is weighing are tougher
rules for complex investments like those involved in the alleged
Goldman fraud.
The Goldman client implicated in the fraud is one
of the world's largest hedge funds, Paulson & Co., which paid
Goldman roughly $15 million for structuring the deals in 2007.
Goldman Sachs shares fell more than 13 percent after the SEC announcement, which also
caused shares of other financial companies to sink. The Dow Jones
industrial average fell more than 140 points in midday trading.
Congress is sending President Barack Obama an $18 billion bill to restore unemployment benefits for people who have been out of a job for months and resume full Medicare payments to doctors threatened by a 21 percent cut.
House cleared the bill Thursday night by a 289-112 tally taken just two
hours after it emerged from the Senate on a 59-38 vote that capped an
unusually partisan debate. Republicans largely chose to take a stand
against the legislation for adding to the $12.8 trillion national
despite backing it by wide margins in December and again recently.

European finance ministers discussed Greece's debt crisis on Friday
but said Athens was seeking to clarify how an emergency aid mechanism
would work, rather than requesting it.
Greek Prime Minister
George Papandreou told parliament that any request to activate the
40-45 billion euro ($56-$63 billion) financial aid package announced by
euro zone governments would be made in the country's best interest if
needed."We are taking all the preparatory actions required," said Papandreou.

Brett Steenbarger: "If you're not seeing the market well,
step back and reassess your views. If you're not trading well, step
back and reassess yourself. The capacity to flexibly engage markets and
disengage from them is an important component of career longevity."

GE's orders for big-ticket equipment and services fell 8% in Q1 to $17.1B. That's below the $18B GE reported in Q2 2009, which CEO Jeff Immelt at the time described as the potential low point for new orders amid the broad economic downturn. CEO Jeff Immelt: "We saw encouraging economic signs, including
increases in airline passenger miles and freight loadings, declines in
receivables delinquencies, and growth in local advertising markets."

The share of America's jobless out of work for 27 weeks or more reached a new record of 44.1% in March.

Wholesale prices in China for the month were up 5.9% year-on-year, compared to a 5.4% rise in February.
"There are signs of overheating," said Stephen Green, Standard Chartered's head of Greater China research in Shanghai.

Mar. Housing Starts: +1.6% to 626K vs. 610K expected and 616K last month (revised). Permits +7.5% to 685K vs. 634K expected and 637K last month (revised).

The Association of American Railroads (AAR) today reported that U.S. freight railroads saw a 7.5 percent rise in carloads during March compared with the same month last year, and a decline of 11.5 percent compared with the same month in 2008.

Millions of Americans are not only upside down on their mortgage,
they also appear to be shunning that monthly payment in favor of
meeting their everyday expenses.
In the state of California, for
example, more than 10% of credit card-carrying consumers were choosing
to pay that bill rather than their mortgage as of last fall, according
to a recent study published by the credit reporting agency TransUnion.

Exports rise 15.8% and 10.9%, respectively, helped by the dollar's
weakness. Imports rise 10.8% at Long Beach but fall 2.9% at Los Angeles
compared with March 2009.

Continental Airlines is again discussing a merger with United Airlines,
two years after the Houston-based carrier abandoned similar talks and
declared its desire to stay independent.

ZeroHedge: "PDMA Chief Petros Christodoulou was quoted as saying in an interview
with Japan's Jiji news agency published Friday. Greece is now
effectively a Lehman Brothers, whose busted balance sheet is entirely
dependent on the "discount window" of the IMF's benevolence. Should
there be a hiccup in ultra-short term debt availability, the country
will default overnight."

It's mid-April and gas is $3+ a gallon and the peak driving season has not begun. How much is left on credit cards for gas and then for shopping? The brick wall is approaching our economy.

"Something isn't sitting well with
small business owners," Bill Dunkelberg, chief economist of the
National Federation of Independent Business, said in a written
statement accompanying the latest edition of his organization's monthly
"Small Business Optimism" report. "Poor sales and uncertainty continue
to overwhelm any other good news about the economy." Capital
expenditures remain near record lows, sales are still weak, and credit
lines are hard to find, according to the around 950 business owners
NFIB surveyed in March. While job cuts have slowed, few businesses say
they plan to hire new workers within the next three months. NFIB's
findings dovetail with those from American Express, which recently
polled owners of firms with 100 or fewer employees. One in five
businesses said their companies are "sinking ships," while more than
half said they were merely "staying afloat." Just 21% reported that
their business was healthy or growing.

Washington-based trade group The
American Petroleum Institute said Thursday U.S. gasoline production in
March was the highest ever level on record. At 9.3 million barrels per
day, it was 7.5% above March 2009. Domestic crude production, at 5.5
million barrels a day, remained at a five-year high, the API said in
releasing its monthly statistics. Crude imports fell in March compared
to last year, the API said.

U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index fell
to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch
had been expecting the sentiment index to hit 75 in April. While the
economy has been picking up, consumers remain worried about jobs and
their personal finances. The index hit a 28-year low of 55.3 in
November 2008.

Schork Report: "Therefore, it goes without saying, once Exxon et al. master the shale
learning curve, producers will not be so keen to sell into a $6 market,
especially when No.6 oil is trading at an equivalent $12."

Three bank failures in Florida and one in Massachusetts brought the year's tally to 47, according to the Federal Deposit Insurance Corp. Friday. In Florida, TD Bank took over the deposits and assets of AmericanFirst Bank, First Federal Bank of North Florida and Riverside National Bank of Florida, for a total of $3.9 billion in assets and $3.17 billion in deposits. Massachusetts' Butler Bank had its $268 million in assets and $233.2 million in deposits taken over by People's United Bank of Bridgeport, Conn. Earlier in the day, the FDIC announced another bank failure in Michigan.

Bernstein Research analyst Brad Hintz said Friday that Goldman Sachs could face a maximum liability of $706.5 million stemming from securities fraud charges filed against the investment bank by the Securities and Exchange Commission.

The Dow Jones industrials fell 126 points, or 1.1%, to 11,019. The Standard & Poor's 500 Index was off 20 points, 1.6%, to 1,192. And the Nasdaq Composite Index was off 34 points, 1.4%, to 2,481. The declines for the three indexes were the biggest since Feb. 4.

Thursday, April 15, 2010


4/15/10 Taxes

April 9 was Tax Freedom Day, the day on which Americans have earned
enough to pay their federal, state and local taxes, as calculated by
the Tax Foundation, a non-partisan tax research group in Washington.

Analysts surveyed by Platts saw an increase in natural gas storage by 76 to 80 billion cubic feet in the week ended April 9.
Natural gas for May delivery
declined 11 cents, or 2.6%, to $4.09 per million British thermal units.
The Energy Information Administration reported an increase of 87
billion cubic feet in the week ended April 9.

Euro Will Drop to $1.19 by Next Year on Greece Crisis, BNP Says.

Apache Corp said Thursday it will buy deepwater exploration firm Mariner Energy Inc.
in a deal valued at nearly $4 billion in cash, stock and debt. Mariner
Energy shareholders will receive 0.17043 of a share of Apache common
stock and $7.80 in cash for each share for a total of $2.7 billion.

Capital One Financial Corp's U.S. credit-card defaults rose in March in a sign that consumers may still be under stress.
a regulatory filing, Capital One said the annualized net charge-off
rate -- debts the company believes it will never collect -- for U.S.
credit cards rose to 10.87 percent in March from 10.19 percent in

The Fortune 500 largest U.S. companies slashed
a record 821,000 jobs last year, even as their collective profit soared
more than three-fold to $391 billion, according to the business
magazine, which issued the annual ranking on Thursday.
companies suffered an 8.7 percent drop in 2009 sales as the recession,
the sharpest decline since 1983, took its toll and spared few
industries last year, but the cost cutting, including the job cuts,
more than offset that.

Existing tax preferences for fossil fuels give gas, oil and coal an
advantage, while suppressing investment in clean energy technologies,
Assistant Treasury Secretary Michael Mundaca said.

The number of people applying for unemployment benefits jumped 24,000
in the latest week, but the increase appeared to stem largely from the
Easter holiday and other onetime factors that distorted the data.
Initial claims rose to a seasonally adjusted 484,000 in the week ended
April 10, the Labor Department said Thursday. The four-week average of
initial claims -- a better gauge of employment trends than the volatile
weekly number - increased 7,500 to 457,750. Economists surveyed by
MarketWatch had forecast claims to drop to 430,000. Continuing claims
in the week of April 3 climbed 73,000 to 4.64 million.

U.S. April Empire State index 31.9 vs 22.9 March.

"Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Manufacturing output rose 0.9 percent in March, led by widespread gains among durable goods industries. Factory production was likely held down in February by the winter storms but nonetheless rose at an annual rate of 6.6 percent for the first quarter as a whole. The output of mines increased 2.3 percent in March. Utilities output dropped 6.4 percent; after a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels. At 101.6 percent of its 2002 average, industrial output in March was 4.0 percent above its year-earlier level. Capacity utilization for total industry advanced 0.2 percentage point to 73.2 percent, a rate 7.4 percentage points below its average from 1972 to 2009, but 3.7 percentage points above the rate from a year earlier.

The Philly Fed index rose to 20.2 in April from 18.9 in March, slightly better than expectations of an increase to 20.0.

UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February.

The NAHB/Wells Fargo housing
market index rose 4 points to 19 in April, reversing a fall in March.
This is the highest level of the index since last September.

The Dow Jones Industrial Average ended up 21.46 points, or 0.2%, at 11,144.57, a fresh closing high for the year. The S&P 500 index rose 1.02 point, or 0.1%, to 1,211.67, and the Nasdaq Composite gained 10.83, or 0.4%, to 2,515.69, with both average also ending at 2010 closing highs.

Google Inc. said Thursday its first-quarter net income rose to $1.96 billion, or $6.06 a share, from $1.42 billion, or $4.49 a share in the same period last year. Net revenue for the period ended in March came in at $5.06 billion. Excluding special items, Google said earnings for the quarter were $6.76 a share. Wall Street analysts polled by Thomson Reuters had expected Google to post first-quarter earnings excluding items of $6.60 a share, and $4.95 billion in net revenue.

Wednesday, April 14, 2010

Inflation Muted

4/14/10 Inflation Muted

U.S. retail gasoline demand dropped 3.6 percent in the week to April 9, according to a MasterCard SpendingPulse report released on Tuesday.
Gasoline demand averaged 9.298 million barrels per day last week, the weekly survey showed. Gasoline demand fell 1.1 percent from the same period last year, SpendingPulse showed.

Israel issued an "urgent" warning Tuesday to its citizens to leave
Egypt's Sinai Peninsula immediately citing "concrete evidence of an
expected terrorist attempt to kidnap Israelis in Sinai."

Magnitude 7.1 earthquake hits southwest China.

China's currency is undervalued
and the Chinese government should move to let the market value it,
President Barack Obama said Tuesday. Obama said it's in China's
interest to let the market determine the value of the yuan, but also
said he won't hold Beijing to a deadline for action. "I have no
timetable," Obama said at a press conference following a nuclear

Washington-based trade group
The American Petroleum Institute reported Tuesday an increase in U.S.
oil stockpiles of 1.4 million barrels in the week ended April 9.
Analysts polled by Platts expected an increase of 1.6 million barrels.
Distillates increased by 1.7 million barrels, below the Platts analyst
survey's expectations, which stood at 1 million barrels. Gasoline
stocks rose to 1.6 million, whereas the analysts Platts surveyed
projected it to decline by 1.26 million barrels on the week.

Roubini: "And for now, there is more deflation than inflation."

Goldman Sachs, J.P. Morgan, and Morgan Stanley have launched a
last-ditch effort in Congress to fight changes to financial regulation
that would squeeze their derivatives-trading businesses.

The Market Oracle: "Taking an average achievable growth rate of 1.5% per annum for the
next 4 years implies that Britain will grow GDP by a total of £213
billion. However to achieve this growth and based on the governments
own figures, Britain will borrow an additional £478 billion. So Britain
is in effect borrowing more than £2 for every £1 of extra economic
growth. If that does not illustrate a country that is on the road
towards bankruptcy then nothing will. Labour ignited the debt fuelled
boom during mid 2009 which I covered at length in articles such as - 03
Jun 2009 - UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election, and analysed at length in the Inflation Mega-Trend Ebook (FREE Download)
Nothing has changed as the Labour government looks set to deliver the forecast scorched earth economy to the next Government, something that Britain will have to suffer the
consequences of for at least the next 5 years as the country looks set
to enter into a prolonged period of stagflation as the government
attempts to inflate some of the debt and interest burden away.
Britain Will Eventually Go Bankrupt
Britain will at some point default on its debts to foreigners (as it
has done at least twice before), this is INEVITABLE because ALL
countries eventually DEFAULT on their debts, it is only a question of
when i.e. in the next few years or delay bankruptcy for many decades
and therefore results in the relative risks of default which the market
prices. INFLATION is a symptom of the trend towards bankruptcy as it is
a measure of the continuous COMPOUNDING loss of purchasing power of the
currency. The best that governments such as Britain have been able to
achieve is the slow stealth trend towards bankruptcy where people don't
realise the loss of purchasing and wage earning power over time.
However with government debt heading towards 100% of GDP, Britain looks
set to leave the stealth trend towards bankruptcy behind and about to
accelerate a few notches higher which risks igniting a wage price
spiral that ultimately ends in a hyper-inflationary bust."

The Monetary Authority of Singapore tightened its policy Wednesday,
saying it will revalue upward its undisclosed targeted trading band for
the Singapore dollar and aim for a "modest and gradual appreciation"
against a basket of currencies

The volatility index fell to its lowest level since June 2007 this
week. The VIX is at 15 today…light-years from the 80-90s suffered
during Lehman’s collapse..

Reports showed retail sales rose 1.6% last month, more than expected, while consumer prices rose 0.1%.

China to increase gasoline and diesel prices by as much as 4.6 percent starting today.

The U.S. Energy Information
Administration on Wednesday said crude-oil stockpiles decreased by 2.2
million barrels in the week ended April 9, contrary to market
expectations of another build. Total motor gasoline inventories
decreased by 1.1 million barrels, the agency said. Distillates stocks
increased by 1.1 million barrels.

In the first quarter of 2010, the rate of personal bankruptcy filings
in a dozen states increased by double-digit percentages over 2009's
monthly averages. "What is surprising is that there are still hefty
increases in states like Arizona, California and Florida," says AACER
president Mike Bickford, referring to the fact that it might seem that
the worst would be over in states hard-hit by the housing bubble.
"Intuitively, you would think there might be some leveling off in these
states, but that is not the case. In addition, there were large
increases in bankruptcy filings in the Midwest, especially Michigan and

The Dow Jones industrials added 104 points, or 0.9%, to 11,123. It was the best finish for the
blue chips since September 2008 and their first gain of 100 points or
more since March 23.

The Standard & Poor's 500 Index closed up 13 points, or 1.1%, to 1,211, its first close above 1,200 since Sept. 26, 2008. The Nasdaq Composite Index jumped 39 points, or 1.6%, to 2,505, its best finish since June 5, 2008.

Australia's benchmark index
broke above the psychologically important 5,000 level Thursday for the
first time since September 2008.

Tuesday, April 13, 2010


4/13/10 Overbought

US small business owners have little confidence in the economy and are
in no rush to hire or expand, despite signs the recovery is picking up,
a survey released Tuesday showed.
Small U.S. business owners were more pessimistic in March than in February, according to a monthly survey of companies released Tuesday by the National Federation of
Independent Businesses. The NFIB index fell to 86.8 from 88, with only
one of 10 components improving. "Something isn't sitting well with
small business owners," said Bill Dunkelberg, chief economist for the
small-business lobbying group. "Poor sales and uncertainty continue to
overwhelm any other good news about the economy." Most owners think
business conditions will not improve in the next six months, few are
hiring, and fewer than usual are investing in their business. Price
reductions are widespread.

Prices of goods imported into
the United States increased 0.7% in March, after two months of
declines, the Labor Department reported Tuesday. Fuel prices rose 2.9%
in March. Import prices are up 11.4% in the past year, driven by a
63.3% rise in imported fuel prices. Non-fuel prices rose 0.2% in March
and were up 2.7% in the past year. Export prices increased 0.7% in
March, including a 2.1% increase in agricultural export prices. Prices
of imported capital goods fell 0.3%. Prices of imports from China
dropped 0.1%.

The U.S.
trade deficit widened by 7.4% in February to $39.7 billion, the
Commerce Department said Tuesday. The trade deficit was above the
consensus forecast of Wall Street economists of a deficit of $38.5
billion. Imports rose faster than exports in February. The U.S. trade
deficit with China widened to $16.5 billion in compared with $14.2
billion in the same month last year. This is the smallest deficit since
last March.

The International Energy Agency
revised up by 30,000 barrels a day its forecast for global oil demand
in 2010, citing higher-than-expected data from North America and the
Pacific, as well as non-OECD Asia and the Middle East. Oil demand is
now estimated to grow by 1.7 million barrels a day to 86.6 million
barrels a day in 2010, the Paris-based IEA said Tuesday in its monthly
oil report. "It is worth noting that six large non-OECD countries -
China, Saudi Arabia, Russia, Brazil, Iran and India - are expected to
account for almost three-quarters of global oil demand growth in 2010,"
the IEA said.

Dialogue, not sanctions, is the best way to handle negotiations with
Iran over its nuclear program, China's Foreign Ministry said Tuesday.

Real personal income for Americans - excluding government payouts such
as Social Security - has fallen by 3.2 percent since President Obama
took office in January 2009, according to the Commerce Department's
Bureau of Economic Analysis.
For comparison, real personal income during the first 15 months
in office for President George W. Bush, who inherited a milder
recession from his predecessor, dropped 0.4 percent. Income excluding
government payouts increased 12.7 percent during Mr. Bush's eight years
in office.

Recovery in the world's biggest economies could be jeopardized if crude
oil prices stay over $80 per barrel, the International Energy Agency
said today.

Mish: "Large corporations are abandoning the US. I work for IBM. Here is a snapshot of IBM's US headcount:

2005 133,789
2006 127,000
2007 121,000
2008 115,000
2009 105,000
2010 98,000 estimate

These are all good paying jobs that can support a family and pay taxes.

75% of the total headcount is overseas. The overseas revenue is 65%.
The company reported record profits last year. IBM decided to stop
reporting their US headcount this year."

China's biggest banks face $70B capital shortfall, ICBC's Yang says.

ZeroHedge: "The Tax Policy Center calculates, that for a
return to economic normalcy, or deficits at a "mere" 2% of GDP,
households earnings more than $200/250k would see their tax rates going
up to a stunning 91%. If the economic underperformance target is
reduced to more palatable deficits at 3% of GDP, then the top earners
would be hit with "only" 77% taxes."

St. Petersburg Times:
Washington Will Spend $31,406 Per Household This Year. Taxpayers filing their 1040s are likely wondering just where all their hard-earned tax dollars are going, anyway. Washington
will spend $31,406 per household in 2010 — the highest level in
American history (adjusted for inflation). It will collect $18,276 per
household in taxes. The remaining $13,130 represents this year's
staggering budget deficit per household, which, along with all prior
government debt, will be dumped in the laps of our children. Government
spending has increased by $5,000 per household since 2008, and nearly
$10,000 per household over the past decade. Yet there is no free lunch:
If spending is not reined in, then eventually taxes must also rise by
$10,000 per household.

John Hussman: "When you don't require the reported value of
assets to have a clear and tangible link to the value that the assets
would have in liquidation, bad things happen. Yet this is what
regulatory and accounting rules are allowing for the banking system at
present...Presently, a normalization of valuations, not to extreme undervaluation
but simply a reversion to post-war, non-bubble norms, would imply an
average annual return for the S&P 500 of just 2.97% over the coming
5 year period...I suspect that the secular bear market that began at the valuation peak
of 2000 is incomplete. As of last week, the S&P 500 remained
strenuously overvalued on the basis of normalized fundamentals. From
that perspective, even if the trough we observed in March 2009 was the
ultimate price low of the secular bear market since 2000, it's not likely to represent the ultimate valuation trough...Again, at this point it does not matter whether we anticipate further
credit strains or not. Wholly on the basis of current valuations,
stocks are priced to deliver unsatisfactory returns in the coming years
- a situation that is worsened by strenuous overbought conditions and
upward yield pressures here."

The U.S. economy is the world’s largest and requires a huge amount of
energy. In 2009, during the deepest recession in 80 years, the U.S.
still imported about 12 million barrels of oil a day.
About 70 percent of that is used as the principal transportation fuel
for America’s 250 million cars and light trucks, and 8.5 million heavy
China’s economy, the world’s second-largest in terms of purchasing
power, is about half the size of the U.S. gross domestic product.
According to its central bank, China’s economy grew at an annual rate
of 10.7 percent in the fourth quarter of 2009.
To keep its economy growing at that rate, China needs about 8 million barrels of oil a day. It imports about half of that. In sum, China has locked in about 5.2 billion barrels of oil to import.
Five billion barrels is the amount the United States must import (at
current levels) between now and 2023. But China has a big advantage
because its state-owned oil company is financed by its state-owned bank.

China has imposed duties on imports from the U.S. and Russia of a
common type of electrical steel used in the power sector, following a
final decision on its countervailing and antidumping investigation, the
nation's Ministry of Commerce said Tuesday.
The duties took effect Sunday and are valid for five years, the
ministry stated on its Web site. In December, China had made a
preliminary ruling and required importers to pay deposits ahead of a
final decision on the matter.
Tuesday's announcement by China's commerce ministry comes after last
week's decision issued by the U.S. commerce department to impose
antidumping duties of up to 99.14% on imports of steel pipes from
In the probe against U.S. companies, the ministry said it will levy
countervailing duties of as much as 44.6% and antidumping duties of as
much as 64.8% on imports of the electrical steel from the U.S.
The investigation into Russian companies has resulted in antidumping
duties of as much as 25% on the same type of products, the ministry
said in its statement. Companies that responded to the investigation—AK
Steel Corp. and Allegheny Ludlum Corp. of the U.S. as well as Russian
company Novolipetsk Steel, or NLMK, and its affiliate VIZ-Stal
Ltd.—will face lower duties, it said.

The Dow Jones industrial average was up 0.68 point, or 0.01 percent, at 11,006.65. The Standard & Poor's 500 Index was down 1.84 points, or 0.15 percent, at 1,194.64. The Nasdaq Composite Index was up 1.06 points, or 0.04 percent, at 2,458.93.

Monday, April 12, 2010

Insider Selling

4/12/10 Insider Selling

Finance ministers of the 16 euro nations on Sunday discussed details
of a financial lifeline for Greece, whose debt crisis has hiked
borrowing costs for the Athens government and slammed Europe's common
ministers held an emergency video conference hoping "to finalize
technical details" of a deal letting Greece borrow at below-market
interest rates, said an official who asked not to be identified given
the sensitive nature of the negotiations.
"It is hoped that the
finance ministers can make a very strong statement (of support for
Greece) before financial markets open Monday," said the official.
European governments put together a
30 billion-euro ($41 billion) loan package for debt-burdened
Greece, trying to stamp out its fiscal crisis and restore
confidence in the euro. The interest rate is reported at 5%.

Mike Burk: "The market is overbought. There has not had a down week in the past 9 weeks.
The NASDAQ composite (OTC) hit a recovery high Friday logging 181 new highs which was nearly 100 short of the 280 new highs recorded on March 17.
I expect the major averages to be lower on Friday April 16 than they were on Thursday April 9. Last weeks negative forecast was a miss."

Palm (PALM) is seeking buyers and has retained two investment banks (Bloomberg).

California Kitchen Pizza (CPKI) is on the block. (WSJ).

Fully 44 percent of the nation's 15 million unemployed have been out of work for more than six months.

Japanese bank lending in March fell at its sharpest pace since August
2005 after a steep increase in loans a year earlier and weak corporate
demand for funds.

Power generators Mirant and RRI Energy plan to merge in an all-stock
deal in a bid to cut costs and strengthen their financial standing amid
challenging wholesale power markets.

DynCorp International (DCP)
will go private in a $1.5B transaction with private investment firm
Cerberus Capital Management. Under the agreement, Cerberus will pay
$17.55 per share in cash, a 49% premium over Friday's closing price.

Insider buying cratered in the week ending April 9th as corporate
executives refused to buy into the rally after the recent surge in
stocks. Buying has been consistently light since the rally started last
March, but was particularly light this week. Total purchases of just
$2.1MM was the lowest level during the entire 75% equity rally though
the weekly average has ticked slightly higher over the last 8 weeks.
Meanwhile, the heavy stream of insider selling continued as insiders
unloaded $824mm onto the market.

Michael Panzner: " Professor Robert Shiller, and neither of the following two articles
citing his work and perspectives paints an especially positive picture
for asset prices in the period ahead:
"So, How Are Stock Prices Now That We're Back At DOW 11,000? They're 30% Overvalued"(Business Insider's The Money Game)
So, how do look now that the DOW is back to 11,000?
Not outrageous. But certainly not cheap.
using our favorite valuation technique, Professor Shiller's cyclically
adjusted PE analysis, the S&P 500 has a PE of 22X. The long-term
average (1880-2010) is about 16X. The current level is actually close
to the big peaks of the past--with the exception of the gigantic one
that peaked in 2000."

Robert McHugh: "While the rally from March 2009 through April 2010 has been impressive, there are big picture, huge Head & Shoulders top patterns that are warning this is simply a Bear Market rally, the eye of the storm, a temporary respite. The rally from March 2009 has not been as long time-wise, or as strong as the decline that preceded it. So far, it has retraced approximately a Fibonacci 60 percent of the 2007 to 2009 decline. It is a Bear Market rally. Because we are in a huge Grand Supercycle degree Bear Market, rallies or bounces can seem large and long. But big picture patterns suggest all the borrowing and spending, and monetary printing by the Central Planners will only produce a temporary Bear Market Bounce at great cost to the Federal Budget Deficit. Another leg lower is likely over the next several years, and the Central Planners cannot prevent it. When it starts is the question."

The U.S. Commerce Department approved duties of about 30 percent and 99
percent on imports of Chinese steel pipes used in oil and gas wells,
acting on a complaint by American producers including U.S. Steel
Corp(X). The final ruling affects $1.1 billion of annual imports, the
U.S. said in a statement yesterday. Thirty-eight companies including
Tianjin Pipe International Economic and Trading Corp. must pay a 29.94
percent rate, while Jiangsu Changbao Steel Tube Co. and remaining
producers are charged 99.14 percent.

"Drastic Measures" Needed to Curb Public Debt, Says BIS. Economists
at the Bank for International Settlements have warned the fiscal
problems facing industrial economies are more serious than official
figures suggest, and that proposed measures for tackling public debt
could prove insufficient.

Goldman Sachs on Monday lowered its 2010 forecast for gold prices to $1,165 an ounce and its 2011 forecast to $1,350 an ounce.

China Petroleum & Chemical Corp.,
Asia’s biggest refiner, plans to buy ConocoPhillips’s stake in
oil-sands producer Syncrude Canada Ltd. in a deal that may be
worth about $4 billion, a person familiar with the matter said.

The Dow Jones industrials ($INDU) closed above 11,000 for the first time in 18 months today.
The blue chip index closed up 9 points to 11,006, its first close above 11,000 since
Sept. 26, 2008. The index had briefly dropped under 11,000 with about 15 minutes to go in trading.

The Standard & Poor's 500 Index hit a new post-crash high, up 2 points to 1,196, but it failed to top 1,200, which it hasn't passed in more than 18 months. The Nasdaq Composite Index, meanwhile, was up 4 points to 2,458.

Analysts polled by Platts expect an 11th consecutive increase in U.S. crude-oil inventories. The analysts surveyed forecast stockpiles will be up by 1.60 million barrels, while gasoline stocks will be down by 1.26 million barrels. Distillates stocks, which include heating oil and diesel, will be up by 1 million barrels.

The U.S. government ran a $65 billion budget deficit in March, the Treasury Department reported Monday, far lower than the year-ago number due partly to a revision of the projected cost of the government's program to bail out banks. Income was $153 billion in March, the Treasury said, 19% over the total recorded last March. Spending was $219 billion. A year ago in March, the deficit was $192 billion.