Saturday, November 27, 2010

Small Business Saturday

11/27/10 Small Business Saturday

"Small Business Saturday recognizes the importance of small businesses to the overall economy and local communities," the American Express website says. "It's a day to support the small, independently owned businesses we can't live without."
According to Civic Economics, for every $100 spent at local small businesses, $68 returns to the community. This return on investment makes it a win-win situation. Small business also provide half of all private sector jobs and represent 97 percent of all employer firms, according to the Small Business Administration. About 60 to 80 percent of jobs created each year for the last decade are attributed to small businesses.
American Express is offering their card members a $25 statement on their credit for a purchase of $25 made at a locally owned independent small business that accepts their credit card on Nov. 27. To redeem the offer register your card here.

The Department of Justice has filed a civil suit against Transocean, saying the drilling giant refuses to turn over documents requested as part of the investigation into the Deepwater Horizon accident.

DeMaurice Smith, the executive director of the National Football League players union, speaking in an interview on Bloomberg Television’s “Political Capital With Al Hunt” airing this weekend, said a player lockout next season is a “near certainty” and it would cost the U.S. economy an estimated $5 billion in lost wages, taxes and other revenue if the entire season is canceled.

The Internal Revenue Service's frequently misunderstood wash-sale rule, which is important for year-end tax planning, is on Nov. 30.
THE RULE DICTATES HOW INVESTORS who are long-term bulls on a specific stock, but have lost money on it, can sell the shares to realize a loss on their current year's taxes, yet also maintain the investment. The loss is disallowed if you buy the shares back before 31 days have passed.

Tim W. Wood: "I continue to believe, based on the evidence at hand, that the rally out the March 2009 low is a large scale bear market rally that should ultimately prove to separate Phase I from Phase II of the much larger and ongoing secular bear market. But, just as I told my subscribers before that low was even made, the longer this rally holds up, the more dangerous it becomes. Reason being, it becomes more and more convincing....As for interest rates, my interest rate model is currently telling me that the bias is to the upside in spite of the efforts to keep rates low. I suspect that the natural forces of the bond markets will also have their way over the manipulative efforts. In doing so, this too will have less than desirable impact on the economy. It may be that what my interest rate model is picking up on is the liquidity induced inflation as a result of QE2. Or, on the other hand, perhaps the model is picking up on the ultimate failure of the manipulative campaign. Regardless, until this model changes, the tidal forces for interest rates are now up and I do not see how that is positive for the engineered recovery." Speaking for myself, I continue to believe the best trade for next year is staying short 2-year Treasury bonds. I truly believe the low rate of 0.33% has been seen. It's time to be patient and let reality set in.

A 19-year-old has been arrested in connection with a plot to detonate a vehicle bomb at an annual Christmas tree lighting ceremony in Portland, Oregon, on Friday evening, the Justice Department announced.

Naked Capitalism: "Iceland has the world’s 112th biggest economy, Ireland the 38th, and Portugal the 36th. In contrast, Spain has the world’s 9th biggest economy, Italy the 7th and the UK the 6th. A failure by one of the latter 3 would be devastating for the world economy....Germany and France – the world’s 4th and 5th largest economies – have the greatest exposure to Portuguese and Spanish debt."

South Korea's Marine commander on Saturday vowed "thousand-fold" revenge for a North Korean attack that killed two servicemen and two civilians and prompted an unusual expression of regret from North Korea.

Shoppers who skipped the crowds on Black Friday gave online merchants a 16 percent spike in revenue, according to data released Saturday.
Online shoppers also spent more on the traditional opening day of the holiday shopping season, according to Web research company Coremetrics. The average order rose to $190,80. That's a 12 percent increase over $170.19 on the same day last year.
The solid increase adds to a 33 percent spending increase on Thanksgiving and signs of big crowds in stores.
Shopping on cell phones remained a small piece of the pie. Coremetrics says about 5.6 percent of people logged onto a retailer's website using a mobile device.

ZeroHedge: "A rather indicative poll released by Rasmussen earlier this week finds that a majority of Americans (44%) now believe that the government operates outside the confines of the Constitution, compared to just 39% who believe government does not take liberties with the precepts laid out by the founding fathers (and 17% were busy watching dancing with the stars to have an opinion either way). Some other unflattering findings on US democracy: "Earlier surveys have shown that just one-in-five voters believe that the government today has the consent of the governed. Forty-eight percent (48%) see the government as a threat to individual rights. According to the Declaration of Independence, governments are formed to protect certain inalienable rights." Not surprisingly, politicians are shown to not only be usurping and incompetent despots but biased as well: "As is often the case, there’s a wide gap between the perceptions of the Political Class and those of Mainstream voters when it comes to the federal government. Eighty-three percent (83%) of Political Class voters say the government now operates within constitutional limits, but 62% of those in the Mainstream don’t share that view." Most worryingly, "nearly two-out-of-three voters (65%) are at least somewhat angry at the current policies of the federal government, including 40% who are Very Angry." That's 65% with not even a whiff of austerity on the horizon.."

Friday, November 26, 2010

Black Friday

11/26/10 Black Friday

The US needs to take urgent action to cut its debt in order to prevent the next
financial crisis, which may start in Washington, Sheila Bair, chair of the
Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington

Del Monte Foodsagreed to be bought for $19 a share, or about $4 billion in cash,
by a group led byKohlberg Kravis Roberts, in one of the biggest private equity
deals of the year.

The euro zone's sovereign debt crisis escalated as the market homed in on Spain

as another potential weak spot, leaving officials scrambling to quell
investors' fears.

Rob Hanna: "Thanksgiving week has had some very bullish tendencies on both
Wednesday and Friday. Interesting about the current week is that both Monday

and Tuesday have closed down in the SPX. Going back to 1961 I looked at
performance on Wed through Fri after Mon and Tues were lower. There were only
eight other instances." Wednesday was strong but Friday is very weak in the
pre-opening market. China's Hang Seng was down more than 3/4th's of one percent,

Japan was down 4-10th's of a percent and Jakarta was down a fair bit
of red in Asia. the UK was down almost 1.6%, France was down more than 1 3/4%
and even those thrifty Germans were down 1.3 percent.

North Korea warned Friday that U.S.-South Korean plans for military maneuvers
put the peninsula on the brink of war, and appeared to launch its own artillery

drills within sight of an island it showered with a deadly barrage this week.

Bullish sentiment, expectations that stock prices will rise over the next six
months, rose 7.4 percentage points to 47.4%. This was the 12th consecutive week

that bullish sentiment has been above its historical average of 39%.
Neutral sentiment, expectations that stock prices will remain essentially flat
over the next six months, edged up 0.4 percentage points to 27.9%. This was the

16th consecutive week that neutral sentiment has been below its historical
average of 31%.
Bearish sentiment, expectations that stock prices will fall over the next six
months, fell 7.8 percentage points to 24.7%. This is a four-week low for
bearish sentiment. The historical average is 30%.

Stock markets will close at 10 a.m. PST. Bond markets will close at 11 a.m. PST.

According to the London-based daily al-Hayat, the WikiLeaks release includes
documents that show Turkey has helped al-Qaeda in Iraq -- and that the United
States has supported the PKK, a Kurdish rebel organization that has been waging

a separatist war against Turkey since 1984, the Washington Post reported.

China's Dalian Commodity and Shanghai Futures Exchanges will hike margins on
virtually every single commodity traded in China.

China foreign minister meets North Korean ambassador, urges calm and dialogue
with South Korea - Chinese foreign minister.

Anglo Irish Bank Corp. had its long- term counterparty credit rating lowered to
below investment grade by Standard & Poor’s, which cited concerns about
sovereign support for the bank.

S&P lowered the Dublin-based lender’s rating six levels to B, or junk, from BBB,

it said in a statement today. The bank remains on CreditWatch with “negative
implications,” S&P said.

Seeking Alpha: "Sources say the first Chrome OS netbooks will ship in the next
few weeks, and they'll be Google-branded but built by a third-party hardware
maker. The Chrome netbook will be so fast it's expected to boot up in seconds,
making it the 'Mario Andretti' of the field."

An estimated 138M shoppers descend on stores this weekend - up 4M from 2009.

New accounting rules in Spain may cause a tripling of foreclosed homes next
year. Banks must now make provisions for bad loans after 12 months instead of
as long as 72 months, making it more likely they will try to unload
non-performing assets.

U.S. stock indexes fell about 1 percent at the open on Friday and weakness
continued on this shortened market. The Dow Jones Industrial Average fell 110.15 points, or 1%, to 11,077.13, with all but one of its 30 components trading lower. The S&P 500 index dropped 9 points, or 0.8%, to 1,189.56, weighed down the most by the materials sector. The Nasdaq Composite lost 12.25, or 0.5%, to 2,531.07.

FrontPoint Partners, a $7.5 billion hedge fund currently embroiled in the U.S. government's fast-moving insider trading probe, has been asked to return $3 billion to its investors.

Gold for December delivery fell $10.60, or 0.8%, to end at $1,362.40 an ounce. Among other metals, December silver fell 83 cents to $26.70 an ounce, while copper for delivery the same month ended down 1 cent at $3.75 a pound.

Thursday, November 25, 2010

Happy Thanksgiving

11/25/10 Happy Thanksgiving

(Bloomberg) -- South Korean Defense Minister Kim Tae Young resigned two days after North Korea fired artillery onto the South’s territory for the first time in half a century, as the country vowed to stiffen its defenses.
His resignation was accepted by President Lee Myung Bak and a replacement will probably be announced tomorrow, according to a statement on the website of the presidential office. Kim had offered to resign in May after the sinking of the South Korean warship Cheonan in March, according to the statement.

European Central Bank council member Axel Weber said governments can increase the size of the European Union-led bailout fund if necessary to restore confidence in the euro.
“Seven hundred and fifty billion should be enough to assure the markets,” Weber said at the German embassy in Paris late yesterday. “If not, it will have to be increased.”

BEIJING/SINGAPORE (Reuters) - China's crude oil imports from Saudi Arabia will likely rise 11 percent next year to hit one million barrels per day, a pace slightly faster than 2010 but off the heady increases in previous years, industry officials told Reuters.
China's refining expansion is expected to moderate next year and rising competition of mostly Russian oil via a Siberian pipeline means import growth for the high-sulphur Saudi oil would be limited, they said.

The U.S. Energy Information Administration reported that natural gas inventories fell by 6 billion cubic feet last week, more than the consensus estimate of a withdrawal of one billion cubic feet.
"Seeing a negative sign next to that number" was enough to send the market higher, said Cameron Horwitz, an analyst with Canaccord Genuity. Some traders have been counting on winter's withdrawals from storage lifting the market, which has been shackled by ample supplies for much of the year.
Working gas in storage was 3,837 Bcf as of Friday, November 19, 2010, according to EIA estimates. This represents a net decline of 6 Bcf from the previous week. Stocks were 2 Bcf higher than last year at this time and 334 Bcf above the 5-year average of 3,503 Bcf. In the East Region, stocks were 74 Bcf above the 5-year average following net withdrawals of 10 Bcf. Stocks in the Producing Region were 217 Bcf above the 5-year average of 1,032 Bcf after a net injection of 3 Bcf. Stocks in the West Region were 43 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,837 Bcf, total working gas is above the 5-year historical range.

For each new morning with its light,
For rest and shelter of the night,
For health and food, for love and friends,
For everything Thy goodness sends.
~Ralph Waldo Emerson


11/24/10 Ireland

A final figure for Ireland's proposed aid package from the European Union and
International Monetary Fund hasn't been determined, but a figure of around 85
billion euros ($113.8 billion) has been discussed, Irish Prime Minister Brian
Cowen told parliament on Wednesday, according to Reuters. "Negotiations are
continuing. These talks are proceeding as quickly as possible but we have to
see how it can be finalized before government can consider the matter further,"
Cowen said.

The Irish press was abuzz with reports Wednesday morning that the country's
government, fresh off its request for a bailout from the European Union, would
take control of Bank of Ireland, the last large Irish lender to stay outside
government control thus far.
The government already owns a 36 percent stake in Bank of Ireland, and The Irish
Independent, the daily with the largest circulation, said that the government
could act within 72 hours to take a majority stake.
Likewise, the state's controlling stake in Allied Irish Bank, the other of the
two large banks, may rise as high as 99.9 percent. The Irish finance ministry
was not immediately available for comment, while The Bank of Ireland declined
to say anything on what it called speculation, although stockbrokers in Dublin
confirmed the likelihood of the takeover to DealBook.

Ireland’s debt rating was lowered two steps by Standard & Poor’s and may be cut
again as the government prepares to unveil a four-year deficit-cutting plan and
contagion spread through the rest of the euro region.

Industrial new orders in the 16-nation euro zone fell 3.8% in September, the
European Union statistics agency Eurostat reported Wednesday. Compared to the
same month last year, orders were up 13.5%. Economists had forecast a 3%
monthly fall and a 15% year-on-year rise. The decline follows a
downwardly-revised 5.1% monthly gain in orders in August. Eurostat had
initially estimated a 5.3% rise in August orders.

Sales of new single-family homes fell 8.1% in October to a seasonally adjusted
annual rate of 283,000, according to data released Wednesday by the Census
Bureau and the Department of Housing and Urban Development. Economists polled
by MarketWatch had expected an annual rate of 310,000. The government
estimated that there was an 8.6-month supply of homes at the current sales
rate. The median sales price fell a record 14%, hitting $194,900 in October,
the lowest level since 2003. Sales fell in most regions, declining 23.9% in the
West, 20.4% in the Midwest and 12.1% in the Northeast. In the South sales
gained 3.1%.
U.S. house prices fell 0.7% on a seasonally adjusted basis from August to
September, reported the Federal Housing Finance Agency on Wednesday. The FHFA's
House Price Index for the July-to-August period was revised from an initial
estimate of an increase 0.4% to 0.0% or flat. U.S. house prices fell 1.6% in
the third quarter of 2010 from the second quarter, according to the FHFA's
purchase-only house price index. The HPI, calculated from home sales price
information from Fannie Mae and Freddie Mac-acquired mortgages, fell 3.2% from
the third quarter of 2009 to the third quarter of 2010.

The cost of insuring Spanish and Portuguese government debt against default
hit record levels Wednesday, while the cost of protecting Irish debt neared
levels seen ahead of Dublin's decision last weekend to seek a bailout. The
spread on five-year Portuguese credit default swaps, or CDS, widened 21 basis
points to 510 basis points, according to data provider Markit. That means it
would cost $510,000 annually to insure $10 million of Portuguese debt against
default, up from $489,000 on Tuesday. The Spanish CDS spread widened to 312
basis points from 310, Markit reported, while the Irish CDS spread widened 16
basis points to 595. The Belgian CDS spread also hit a record, widening to 155
basis points from 147.

The Ifo Institute's German business-climate index posted an unexpected jump in
November to 109.3 from a reading of 107.6 in October, news reports said.
Economists had forecast the reading to remain unchanged from October.

China and Russia will stop using the U.S. dollar to settle bilateral trade and
instead use the ruble or the yuan, though the move is not meant to signal a
challenge to the dollar, according to reports Wednesday. China's Premier Wen
Jiabao and Russian President Vladamir Putin made reference to the new currency
trade pact late Tuesday, following meetings in St. Petersburg that also saw the
signing of bilateral trade and energy-cooperation agreements, according to a
report in the state-run China Daily. "About trade settlement, we have decided
to use our own currencies," Putin told reporters, according to the report.

The Commerce Department reported year-over-year inflation rose 0.9% in
October. For September, the year-over-year rate for these core personal
consumption expenditures, which exclude food and energy, gained 1.2%. The
Commerce Department also reported Wednesday that personal income rose 0.5% in
October, compared with 0.3% as expected by economists polled by MarketWatch.
Spending gained 0.4%, matching, Wall Street's expectations. Real disposable
incomes rose 0.3% in October. The personal consumption expenditure price index
rose 0.2% in October, after a gain of 0.1% gain in September. This inflation is
up 1.3% in the past year. There was no change in the core PCE index for
October, as expected by economists.

U.S. online spending this holiday is now expected to rise by 11 percent over
last year, comScore said on Tuesday, marking the second time the analytics
firm has raised its closely watched view.

Today is the busiest day of the entire year for traveling.

Tiffany & Co's third-quarter results handily beat Wall Street's sales and
profit forecasts, benefiting from strong overseas growth and surging U.S.
luxury spending, and the upscale jeweler raised its full- year outlook, saying
it expects strong holiday sales.

The Mortgage Bankers Association's seasonally adjusted purchase applications
index jumped 14.4 percent to 205.0 in the week ended Nov. 19, the highest since
the week ending May 7, the MBA said on Wednesday. The refinancing index slumped
1 percent to 3,793.6.

The composite index, which includes loans for home purchases and refinancings,
increased 2.1 percent to 728.8, the MBA said.

"The increase in purchase applications last week aligns with other incoming
data suggesting that consumers are feeling somewhat more confident with their
financial situation," Michael Fratantoni, the MBA's vice president of research
and economics, said in a statement.

The number of workers who filed new claims for unemployment benefits dropped
34,000 last week to 407,000, the lowest level since July 2008, the U.S. Labor
Department reported Wednesday. There were no special factors or unusual events,
a Labor spokesman said. Economists polled by MarketWatch had expected claims to
fall to a seasonally adjusted 435,000 in the week ended Nov. 20. Before the
latest data claims in 2010 had ranged from a high of 504,000 to a low of
427,000. The four-week average of initial claims decreased by 7,500 to 436,000,
also a two-year low. The moving average smoothes out quirks in the weekly data
and is considered a more accurate gauge of employment trends. Continuing
claims, which reflect workers already receiving benefits, declined 142,000 to
4.18 million in the week ended Nov. 13. Altogether, 8.53 million people were
getting some kind of state or federal benefit in the week ended Nov. 6, the
latest data available. That was down 316,400 from the prior week.
However, non-seasonally adjusted claims increased by 45k.

Orders for U.S.-made durable goods fell 3.3% in October -- the largest decline
since January of 2009 -- as transportation orders fell, the Commerce Department
reported Wednesday. Economists polled by MarketWatch had expected a decline of
0.2%. Excluding transportation, new orders fell 2.7% in October - the largest
decline since March of 2009. Core durable-goods orders, which are orders for
capital goods excluding defense and aircraft, fell 4.5% in October after a 1.9%
rise in September. Shipments of durable goods fell 0.9% in October, while
inventories rose 0.4%. Durable-goods orders in September were revised higher to
a gain of 5%, compared with a prior estimate of a 3.5% increase. Durable goods
are expensive items designed to last three years or longer, and while the data
is volatile from month to month, analysts see a trend in orders as a valuable
leading economic indicator.
"Inventories of manufactured durable goods in October, up ten consecutive
months, increased $1.3 billion or 0.4 percent to $316.7 billion. This followed
a 0.7 percent September increase."

ZeroHedge: "the admission by the IEA that we will not be achieving past levels
of energy growth should be the most gigantic red flag in history, at least to
those who might care that their money or other paper-based forms of wealth be
worth something in the future. What if that future growth does not emerge?
What happens when the collateral for a loan goes sour? The IEA report
indicates an enormous set of risks for an over-leveraged world reliant on
constant growth.
The bottom lines are these:
* The IEA now admits that conventional crude oil peaked in 2006.
Permanently. Any gains from here are due to contributions from unconventional
oil and natural gas-to-liquids.
* Under no scenario envisioned will future growth in fossil fuel supplies be
equal prior rates of growth.
* Energy from here on out is going to be (much) more expensive.
I cannot state this strongly enough: The WEO 2010 report is an official
admission that Peak Oil is not only real, but it's already here."
Today is the busiest day of the entire year for traveling.

Jessie's Cafe American: "These markets are riddled with control frauds, but they
are the works of men. So while they can be oppressive, they are hardly
omnipotent. "

Ed Harrison: "Dan Alpert, managing partner at Westwood Capital, thinks that
banks are under-reserving and that this will come back to haunt them when house
prices fall in "the final leg down" of the housing crisis. That is the right
view if you read between the lines of the last post from Annaly Capital
Management. I am in full agreement here that loan loss provisioning is
artificially boosting earnings (and bonuses) when more prudence would be
warranted. In an environment of permanent zero (PZ), this means trouble."

The IMF’s Strauss-Kahn warned that only half of bank losses have been
recognized and that many banks were undercapitalized. As of Sept, the IMF had
estimated that banks held $1.5 trillion in toxic assets.

Housing inventory decreased from September 2010 to October 2010, but inventory
increased 8.4% YoY in October. This is the largest YoY increase in inventory
since early 2008.

The nuclear-powered USS George Washington, which carries 75 warplanes and has a
crew of over 6,000, left a naval base south of Tokyo and would join exercises
with South Korea from Sunday to the following Wednesday, U.S. officials in
Seoul said.
"This exercise is defensive in nature," U.S. Forces Korea said in a statement.
"While planned well before yesterday's unprovoked artillery attack, it
demonstrates the strength of the ROK (South Korea)-U.S. alliance and our
commitment to regional stability through deterrence."
North Korea said the South was driving the peninsula to the "brink of war"
with "reckless military provocation" and by postponing humanitarian aid, the
North's official KCNA news agency said. The dispatch did not refer to the
planned military drills.

The University of Michigan/Reuters consumer sentiment index rose to 71.6 in
November from 67.7 in October.

Market talk of takeover speculation at Cliffs Natural Resources. We've had a
nice gain from the Spring of 2009. That was my top risk/reward/value at $15.
That was about a $105 drop in price at that point. Hard to believe.

Portugal will be forced to take a bailout, and then Spain will become a target,
as there's "little to stop the contagion" in the eurozone, says Morgan Stanley
economist Joachim Fels. It reaches a point where "governments will say ‘enough
is enough, and we will rather borrow from the EFSF at a sensible rate.'"

The ECRI's Weekly Leading Index rose to a 27-week high of 126.4, from 124.2.
Annualized growth rose to -3.1% from -4.5% last week.

China's current-account surplus widened in the third-quarter to slightly more than double its year-earlier level, the country's foreign-exchange regulator reportedly said in a statement Thursday. The July-September surplus totaled $102.3 billion, up 103% from the third quarter of 2009, according to several reports citing the State Administration of Foreign Exchange statement. The stated surplus represented 7.2% of gross domestic product, according to Dow Jones Newswires, and compared to the second-quarter surplus of $72.9 billion, which marked a 35% year-on-year rise.

North Korea on Thursday refused a proposal to hold military-to-military talks in the wake of Tuesday's artillery attack that left two civilians and two South Korean marines dead, according to a report from South Korea's Yonhap news agency. The proposal came Wednesday from the U.S.-led United Nations Command in South Korea.

North Korea warned Thursday it would launch more attacks on South Korea if its southern neighbor makes more "reckless military provocations," according to a Reuters report citing North Korean state media. The report quoted a statement from the North Korean military as saying Pyongyang "will wage second and even third rounds of attacks without any hesitation, if warmongers in South Korea make reckless military provocations again." South Korea and the U.S. are due to begin a long-planned military exercise on Sunday. The statement came as South Korean President Lee Myung Bak ordered more forces be deployed to five islands near the western border where North Korea's artillery attack occurred earlier in the week, according to the Kyodo news agency.

The Dow Jones Industrial Average jumped 150.91 points, or 1.4%, to end at 11,187.28. The S&P 500 index gained 17.62 points, or 1.5%, to 1,198.35, led by a 2% gain in industrials and consumer discretionary shares. The Nasdaq Composite rose 48.17 points, or 1.9%, to end at 2,543.12.

Tuesday, November 23, 2010


11/23/10 Korea

North and South Korea exchanged artillery fire on Tuesday after dozens of shells
fired from the North struck a South Korean island near the countries’ disputed
maritime border, South Korean military officials said. Two South Korean
soldiers were killed, 15 were wounded and three civilians were injured, said
Kiyheon Kwon, an official at the Defense Ministry. The South Korean military
went to “crisis status,” and fighter planes were put on alert but did not take

In Asia, the Hang Seng index fell 1.8%, extending a 1% opening fall. The
Shanghai Composite index was off 2.5%, with markets in broad retreat and banks
and housing-related stocks sharply lower. European markets also got off to a
weaker start.

National Economic Committee Deputy Director Diana Farrell and Treasury
Department Assistant Secretary for Financial Institutions Michael Barr are
planning on leaving their posts "within weeks." The departures would follow
those of Office of Management and Budget Director Peter Orszag and National
Economic Committee Director Lawrence Summers, who is slated to leave next

J. Crew Group Inc. is on the verge of a takeover by private equity firms TPG
Capital and Leonard Green & Partners at $43.50 per share, or about $3 billion,

the Wall Street Journal reported late Monday. TPG is expected to acquire 75% of

the firm, with the rest to be held by Leonard Green, according to the report
which cited people familiar with the mater. A deal could be announced later in
the day, the report said. Shares of J. Crew closed at $37.65 Monday, but rose
to $38.00 in after-hours trade. The deal also includes a "go-shop" provision
where J. Crew can solicit higher offers through Jan. 15 beyond the holiday

Hewlett-Packard Co raised fiscal 2011 results forecasts.

(Bloomberg) -- China’s biggest banks are close to reaching annual lending quotas

and plan to stop expanding their loan books to avoid exceeding the limits,
according to four people with knowledge of the matter.

Ireland's banks are effectively up for sale, central bank Governor Patrick
Honohan said on Tuesday as Dublin sought aid from the European Union and
International Monetary Fund to prop up its lenders.

Falling profits and tighter margins will prompt banks to close 5,000 branches
nationwide in the next 18 months, says Meredith Whitney, or roughly 6% of the
country's branches.

Premier Wen Jiabao’s cabinet last week announced it will sell grain, cooking-oil

and sugar reserves, ordered an end to tolls on trucks carrying produce and
threatened price controls to rein in a 10 percent inflation rate for food.
Because the measures would do nothing to counter the 54 percent surge in money
supply over the past two years, the risk is they will prove insufficient to cope

with the challenge.

“They are just not addressing the fundamental problem at all,” said Patrick
Chovanec, an associate professor at Beijing’s Tsinghua University. With the
expansion of credit and cash in the economy stemming from China’s response to
the global crisis, “you’re sitting on a volcano,” said Chovanec.

The Automatic Earth: "The leverage of a credit expansion creates excess claims
to underlying real wealth, and that means we are all playing a giant game of
musical chairs, with perhaps one chair for every hundred people. Extend and
pretend is the period of time when the music is still playing and everyone is
frantically dancing, even those who understand the game, as many of them are
arrogant enough to think they will be able to get out at a top. This will prove

not to be true for many, hence even many very wealthy people are going to be
ruined, as they were in the Great Depression. To use another analogy, cashing
out at a top bears some resemblance to a fire in a theatre, where everyone is
trying to get out at once through a small exit.
This is not going to play out slowly, although the build up can be tortuously
slow. People should be thinking of the extra time they have had as a result of
an extended rally as a precious gift, not as a reason for complaint.
Deleveraging will come soon enough, and when it does it will be devastating.

should appreciate every day we get before it begins in earnest, as an
opportunity to put our houses in order rather than to wring another ounce of
profit out of a dying system by continuing to play the game. We need to walk
calmly away from the game before the music stops in order to minimize the
consequences of being wrong. Early is fine, but late is not."

China is banning the hoarding of oil, coal and other key commodities, seeking
to ensure supplies and cool prices that have surged to politically volatile
levels despite repeated moves to curb inflation.

Ireland’s plan to seek a European rescue risks escalating, rather than
alleviating, the sovereign debt crisis as investors turn their focus to the
high budget- deficit nations of southern Europe.

China's Rare Earth Exports Dropped 77% in October After Export Quota Cut. Rare
earth exports from China, the world’s biggest supplier, dropped 77 percent in
October from a month earlier, the General Administration of Customs said.

"Spanish 3-month bill auction fail - debt agency sells €3.26bn vs €4-5bn
indicated, at avg yield of 1.743% vs 0.951% prior"

The Oil Drum: "In September the state of California hit a new high in food

benefits, crossing the 6 billion dollar mark on an annualized basis. Over the
past year in California alone the total number recipients of the federal SNAP
program (supplemental nutritional assistance program) rose by 16.3%. In many of

the big counties of California however, food stamp usage rose even faster.
As previous readers of this blog understand, it’s useful to look at the car
dependent regions of southern California as they are emblematic of the state’s
post peak-oil, economic breakdown. After all the food stamp program is really a

food and energy program, which frees up household cash for gasoline. In San
Bernardino County, for example, with its population of two million the number
of SNAP recipients has now crossed the 300,000 level. Yes, a full 15% of that
county is now on food stamps."

Submitted by Gonzalo Lira on Mon, 22 Nov 2010
In the United States, if a policeman stops you for a traffic violation, and you

offer him a $20 bill to forget about the whole thing, you’ll likely end up in
But if you leave your Federal government job and go work as a consultant to the

very industry you used to regulate, you won’t go to jail—you’ll grow
rich.Very rich.

Bernanke: “As currently constituted, the international monetary system has a
structural flaw: It lacks a mechanism, market based or otherwise, to induce
needed adjustments by surplus countries, which can result in persistent

Gross domestic product growth was revised up to an annualized rate of 2.5
percent from 2.0 percent as exports, and consumer and government spending were
stronger than initially thought, the Commerce Department said in its second
Economists had expected GDP growth, which measures total goods and services
output within U.S. borders, to be revised up to a 2.4 percent pace. The
economy expanded at a 1.7 percent rate in the second quarter. BLS: "The
acceleration in real GDP in the third quarter primarily reflected a sharp
deceleration in imports and accelerations in private inventory investment and
in PCE that were partly offset by a downturn in residential fixed investment
and decelerations in nonresidential fixed investment and in exports."

China started allowing the yuan to trade against the Russian rouble in the
interbank market from Monday as policymakers promote the currency's use in
global trade and finance.

Irish PM said the government will resign after passing the country’s
budget. German Chancellor Angela Merkel on Tuesday said the European single
currency faces a difficult challenge in the wake of Ireland's financial crisis,

news reports said. "We're in an extraordinarily serious situation, as far as
the situation of the euro is concerned," Merkel said.

The Markit euro-zone composite purchasing managers index rose to a three-month
high of 55.4 from 53.8 in October, topping expectations for a reading of 53.9.

Sales of existing homes fell 2.2% in October, according to a report released
Tuesday, with activity remaining mired near record lows as worries over prices,

a glut of foreclosed properties, restrictive credit and high unemployment
combine to weigh on the market. The National Association of Realtors reported
that sales fell to a seasonally-adjusted annualized rate of 4.43 million after
a 10% pick-up in September. Year-over-year, sales fell 25.9%. The number wasn't

a surprise as pending-home sales data suggested such a decrease; economists
polled by MarketWatch expected a pace of 4.45 million units in October.
“With high unemployment and falling home prices, there will likely continue to
be a large number of homeowners falling into default,” Michelle Meyer, a senior
U.S. economist at Bank of America Merrill Lynch Global Research in New York,
said before the report. “It will take years to equilibrate the housing market.”

Oct. Mass Layoffs: 1,651 mass layoff events (at least 50 workers), resulting in
148K job losses - up 121 layoff events from September. Associated initial
claims increased 9,389.

The nation’s workers may be struggling, but American companies just had their
best quarter ever.

American businesses earned profits of $1.66 trillion at an annual rate in the
third quarter, according to a Commerce Department report released Tuesday. That

is the highest figure recorded since the government began keeping track over 60

years ago, at least in nominal or non-inflation-adjusted terms.
The move will help "facilitate bilateral trade between China and Russia and
help develop yuan trade settlements," according to a statement published on the
website of the China Foreign Exchange Trade System (CFETS), a subsidiary of
the People's Bank of China.

Brazil's Bovespa index (BVSP) dropped 2.2%, facing its biggest percentage
decline since mid-October. Mexico's IPC (IPC) fell 0.9% and Chile's IPSA (IPSA)
lost 0.8%. Argentina's 14-stock Merval index (MERV) fell 2.5%. Trading in
Argentina was closed on Monday.

Doug Kass thinks terrorists send investors scrambling – not with guns or bombs
but using the Internet as a weapon. He tells the desk “I believe cyber crime is
going to explode exponentially next year as the web is invaded by hackers.”And
he thinks they target the foundation of capitalism.
”I think we see a specific attack on the NYSE,” he says. “The aftermath will
have a profound impact and cause a week-long hiatus in trading as well as a
slowdown in travel.” Yup, you read that right – a week long hiatus in trading.
How do you prepare for something like that?
”I’d make sure to have a large amount of cash in my portfolio,” he says.

St. Louis Fed's Track the GDP charts tell an interesting story: The current
expansion, which began in Q2 2009, is significantly weaker than average, mostly
due to massive cutbacks in consumption. The only real strength seems to be
coming from exports - likely thanks to a weak dollar.

Crude-oil inventories for the week ended Nov. 19 rose 5.2 million barrels, the American Petroleum Institute said late Tuesday. Inventories of gasoline declined 499,000 barrels, while stockpiles of distillates declined 311,000 barrels. The trade group data comes ahead of the more closely watched government report due Wednesday. Analysts polled by Dow Jones Newswires expect a 1.8 million-barrel decline for crude inventories, a drop of 1 million barrels for gasoline supplies, and a decline of 1.5 million barrels for inventories of distillates. Crude ended the day off 0.6% at $81.25 a barrel.

The Dow Jones Industrial Average fell 142.21 points, or 1.3%, to 11,036.37. The S&P 500 index dropped 17.11 points, or 1.4%, to 1,180.73, weighed down by its energy and materials sectors. The Nasdaq Composite fell 37.07 points, or 1.5%, to 2,494.95.

The Federal Reserve's governors and regional presidents have grown more sour on growth and unemployment, with some saying it could take more than six years for the jobless rate to return to normal levels, according to a summary of projections released Tuesday. Their "central tendency" is for the economy to grow 2.4% to 2.5% this year, down from expectations of 3% to 3.5% in June. Next year, they see the economy accelerating to 3% to 3.6% growth, followed by 3.6% to 4.5% growth in 2011 and 3.5% to 4.6% growth in 2013. The 2011 forecast is notably slower than the 3.5% to 4.2% prediction they made in June. And this muted growth won't do much to alter the unemployment rate. The Fed members see the jobless rate between 9.5% and 9.7% this year, 8.9% to 9.1% in 2011, 7.7% to 8.2% in 2012, and a still-elevated 6.9% to 7.4% in 2013. That compares to June projections of 9.2% to 9.5% unemployment in 2010, an 8.3% to 8.7% unemployment rate in 2011 and a 7.1% to 7.5% projection for 2012.

Monday, November 22, 2010


11/22/10 China

China is seeking to curb rising coal prices through cooperation with coal
producers and by stopping provincial restrictions on coal shipments, according
to a state media report Monday. The National Development and Reform Commission,

China's economic planning body, called on the miners to "boost
self-discipline," according to a Xinhua news agency report. Local governments,
meanwhile, were told to allow the free sale of coal, as some had restricted
coal sales in an effort to integrate resources, or had even required those
shipping coal out of their province to apply for permission to do so, the
report said. "Domestic coal prices are now higher than the international price
due to the high profits of domestic coal producers. Some power-generators had
to import coal," the report quoted an unnamed NDRC source as saying.

China on Monday added the Russian ruble to the currencies traded against the
yuan in its onshore markets, according to reports. The Russian currency joined
the U.S. and Hong Kong dollars, the euro, yen, British pound and Malaysian
ringgit as units offered on the central bank's China Foreign Exchange Trade
System. Chinese officials said yuan/ruble forwards and swaps may be offered in
the future, according to Dow Jones Newswires. The yuan will be allowed to move
5% on either side of a daily parity rate with the ruble, the same limit as the
Chinese currency's moves against the U.S. dollar. The yuan changed hands at
4.6711 rubles in early Monday trading, according to Reuters.

Novell Inc. said on Monday that it has agreed to sell itself to Attachmate
Corp. for $6.10 a share, or about $2.2 billion in an all cash transaction. At
the same time, Novell said it will sell certain intellectual property assets to

CPTN Holdings LLC, a consortium of technology companies organized by Microsoft
Corp for $450 million in cash, "which cash payment is reflected in the merger
consideration to be paid by Attachmate," Novell said in a press release
unveiling the deal. The $6.10 a share buyout price is a 9% premium to Friday's
closing price and a 28% premium to the company's closing price ahead of a rival

buyout offer made on March 2, 2010, by Elliott Associates, L.P.

Rob Hanna: "Monday and Tuesday before Thanksgiving don’t seem to carry a

edge. Monday’s total return was actually negative until 2008 when it posted a
gain of over 6%. Wednesday and Friday surrounding Thanksgiving have shown
strong upside tendencies and the Monday after has shown a sizable downside

John Hussman: "Investors have failed to recognize the wrong lesson that they
learned. With the exception of the market bubble that took the relationship
between yields and subsequent returns outside the oval, the historical evidence

is very consistent that low yields (elevated valuations) are accompanied by
dismal subsequent returns. At present, the yield on the S&P 500 is just 1.95%.
This level can be expected to be followed with S&P 500 total returns of about
2.2% annually over the coming decade, with a confidence interval that easily
includes zero. Based on normalized earnings, our projections are somewhat
better, at about 4.8%. Meanwhile, our estimate based on forward operating
earnings (see Valuing the S&P 500 Using Forward Operating Earnings) gives a
10-year total return projection of about 4.7% annually. Again, this is not
simply a dividend story."

Google is in advanced talks to buy coupon site Groupon for around $2.5
billion, The Post has learned. “It will probably happen in the next month,” a
source close to the talks said.

Chinese central bank adviser Xia Bin said the nation should further tighten
monetary policy next year because of pressure of excess liquidity at home and
abroad. China should also tighten capital control and change real interest
rates to positive from negative at an appropriate time, Xia said.

Chinese inflation may reach 6.3% sometime next year, citing Tao Dong, a Credit
Suisse Group AG economist in Hong Kong. China may raise interest rates and the
reserve requirement ratio by at least 150 basis points each over the next year
to fight inflation, Tao said.

Wal-Mart Stores Inc said it will match rivals' prices on "Black Friday,"
upping the ante in the battle to win sales on what is considered to be the
kick-off to the U.S. holiday shopping season and a gauge of how overall holiday
retail sales will shape up.

RealtyTrac: "The potential liability of the GSEs is a matter of debate but
there's little doubt that the final total will be enormous.”

China's Finance Ministry to Sell $1.2 Billion of Yuan Bonds in Hong Kong.

The Dow Jones Industrial Average fell 24.97 points, or 0.2%, to 11,178.58. Shares of Hewlett-Packard, up 1.8%, led the gain among blue-chips, ahead of the computer maker's earnings afer the close. The S&P 500 fell 1.89 points, or 0.2%, to 1,197.84. The Nasdaq Composite rose 13.90 points, or 0.6%, to 2,532.02.

ZeroHedge: "Overall, selling by S&P500 insiders was 8,279.5x times greater than buying (per Bloomberg). There were 5 insider buys for a total of $150,673, and 117 sales for a total of $1,247,500,249.

Sunday, November 21, 2010


11/21/10 Ireland

Doug Noland: "I find it embarrassing - to blame our trade partners and Creditors
for our predicament. Worse yet, it is frightening that there is obviously no
plan of attack for dealing with our nation's structural issues. The
Geithner/Bernanke "global rebalancing" gimmick is to have China and the
"developing" economies inflate domestic demand and stimulate imports. In the
meantime, we stay the course with massive deficits, monetization and near-zero
interest rates. This approach has no chance of rectifying our deep structural
impairment nor resolving global imbalances. It does, however, increase the
odds of a crisis of confidence in our debt markets and currency....It is my
view that a world financial apparatus dominated by marketable debt instruments
is inherently unstable. Implement a monetary policy regime to manage
marketplace liquidity and asset prices at your own peril. Be prepared for market
dependency and ever-increasing liquidity injection requirements. Such a regime
will reward the savviest speculators and ensure acute systemic vulnerability.
To be sure, recent notions of perpetual QE inflated global markets
indiscriminately. The "liquidity trade" threw caution to the wind. Liquidity
overabundance also pushed inflationary forces in China and throughout Asia
into the danger zone....Our policymakers are acting to the detriment of our
Creditors. They speak in a tone that does not inspire confidence and may
likely antagonize. The Chinese, in particular, can be counted on to act in
what they perceive as their own best interest. They today confront serious
inflation, "hot money" and overheating issues. As such, what has appeared as
favorable prospects for continued global liquidity overabundance now look a
lot less certain. Global yields were on the rise again this week, with
heightened attention to structural debt issues. U.S. municipal bonds were
hammered. My premise has been that the markets will inevitably discipline
Washington. This may occur after it works its way up the food chain."

Traffic to the huge social network, with 500 million users worldwide, now
accounts for nearly 25% of all internet pages viewed in the United States.
According to online research firm Hitwise,
The amount of content consumption taking place on the popular social network
has also grown substantially where nearly 1 in 4 page views in the US took
place on for the week ending November 13, 2010
>The market share of page views for was 24.27% last week, 3.8x the
>volume of the 2nd ranked website with 6.93%. More than one of ten
>internet visits are to Facebook which demonstrates the huge number of pages
>viewed by each visitor. The numbers do not include mobile traffic.
>Anthony Ha: "Looks like it isn’t just employees who are cashing out on their
>Facebook shares. TechCrunch reported earlier today that Accel Partners sold
>“very significant chunks” of its stake in the company (while also holding on to
>the vast majority of its shares), and I’ve confirmed the news with a source.
>My source said that Accel sold its shares at a $34 billion valuation and that
>those shares added up to less than 20 percent of Accel’s total stake. Contrary
>to TechCrunch’s report, my source told me that Accel remains the largest
>venture shareholder in Facebook.
>I couldn’t get any information on who was doing the buying. TechCrunch doesn’t
>sound too sure about the details, but says it heard that Technology Crossover
>Ventures bought $200 million worth of shares, while Andreessen Horowitz bought
>$80 million."
>NATO endorsed a plan on Saturday to hand control of security in Afghanistan to
>Afghan forces by the end of 2014 and the alliance's leader said he expected
>foreign troops to cease combat operations by then.

The International Monetary Fund, European Union and European Central Bank are preparing a 120-billion-euro ($164 billion) bailout of Ireland, requiring the country to raise taxes and nationalize more banks, the Sunday Times of London reported.

Mike Burk: "On average Thanksgiving week begins weak and ends strong on very low volume. We have an ideal setup for an average week. Last week ended with 3 consecutive up days so the market is a little overbought. Monday and Tuesday could easily be down working off the overbought condition setting up for a seasonal rally Wednesday and Friday.
I expect the major averages to be higher on Friday November 26 than they were on Friday November 19."

How is it possible for the economy improving with 43 million Americans on food stamps?

Zachary A. Goldfarb and Jerry Markon
Washington Post Staff Writers
Sunday, November 21, 2010
Federal prosecutors in New York are in the advanced stages of an extensive insider-trading investigation that could lead to criminal charges against Wall Street traders and executives, federal law enforcement officials said Saturday.
Authorities had been preparing to file charges in the probe within weeks, but that timetable could be accelerated after an article about the investigation appeared in the Wall Street Journal on Saturday, the officials said.
The investigation, conducted by the U.S. Attorney's Office in Manhattan and the FBI, has been underway for several years and extends far beyond Wall Street to financial offices across the country, the paper reported. Officials would not discuss specific companies or individuals under scrutiny or provide further details. The Securities and Exchange Commission is conducting a parallel civil probe, officials said.