6/12/07 Bay Area Housing
It should come as no surprise that the housing market in and around the Bay Area has been one of the strongest in the U.S. and possibly the entire world. Things have begun to change for the worst. The trend is not favorable. Do not be fooled by the median price of a home here. A group of homes for selling over $8 million can skew the numbers. In the Bay Area, new home sales are down 59% for April compared with a year earlier. During the last two years it's taken much more time to sell the median single home here-- from 35.9 days in April 2005 to 48.8 days in April 2007. The unsold index was 1.6 months in April 2005. That number is now 3.5 months.
Nucor expects second-quarter net income of $1.05-$1.15 share, compared to the forecast of $1.42 a share in a survey of analysts by Thomson Financial. The company said results are being affected by lower shipments from its Bar Mill Group. The company sees improved Bar shipments in the second half of the year.
The New Zealand dollar, or the kiwi dollar, tumbled early Monday after the country's central bank confirmed that it had sold the currency to weaken it. "We regard current levels of the exchange rate as exceptional and unjustified in terms of the economic fundamentals," said Alan Bollard, Reserve Bank governor, in a statement posted on the central bank's web site. The kiwi was last down 1.8% against the U.S. dollar and down 1.6% against the Australian dollar.
IBM will pay $745 million to buy Telelogic AB, which is traded on the Nordic Exchange, at a price of 21 Swedish Kronor a share, for an aggregate purchase price of approximately 5.2 billion Swedish Kronor, or approximately $745 million. Telelogic is a provider of software with more than 1,100 employees and operations in 22 countries worldwide.
Insurance holding company James River Group Inc. said Monday it agreed to be purchased by global investment management company D.E. Shaw Group for about $575 million in cash.
Under the deal, a Bermuda-based holding company organized by D.E. Shaw will give James River stockholders $34.50 in cash for each share held. That price represents a discount of 1.9 percent to James River's closing price Friday of $35.18.
OPEC said oil prices are “reasonable” on an inflation-adjusted basis and world crude markets are “adequately supplied.” Saudi Arabia will keep OPEC supply curbs in place through July. However, Saudi Aramco, the world's largest state oil company, will cut supplies of its Arab Light and Arab Heavy crude to refiners in Japan, China and South Korea by between 9.5 percent and 10 percent below their contracted volume, officials said.
The national average price for gasoline dropped 7 cents in the last three weeks, according to a nationwide survey released Sunday that marked the first decline since January. The U.S. average for self-serve, regular-grade gasoline was $3.11 per gallon as of Wednesday, down from $3.18 in the last national survey May 18, oil industry analyst Trilby Lundberg said.
China's trade surplus rose a bigger- than-estimated 73 percent in May from a year earlier, increasing pressure on the government to allow faster currency gains. The gap widened to $22.45 billion, the customs bureau said on its Web site. The median estimate of 18 economists surveyed by Bloomberg News was for a $19.5 billion surplus. For the first five months, the surplus grew 84 percent to $85.72 billion.
Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve will keep interest rates steady until inflation declines. As long as the Fed tries to monetize the debt, inflation will not decline. Rather it will continue to trend higher.
The Iraq Parliament voted Monday in a closed session to remove the speaker after a series of scandals involving the controversial lawmaker, legislators said. Mahmoud al-Mashhadani will be replaced by another Sunni Arab, they said.
The U.S. military said three American soldiers were killed and six were wounded, along with an interpreter, Sunday when a suicide car bomber brought down a section bridge south of Baghdad on Iraq's main north-south artery.
The Oil Drum: "There are several reasons why gasoline prices are rising. The underlying reason is that world oil extraction is peaking. The oil companies know this. That is why they have not been building more refineries; they know that there will be less oil to refine in the years ahead."
ThyssenKrupp in Europe denied market rumors and reports that it was in talks to acquire U.S. Steel.
Ford hired Morgan Stanley and Goldman Sachs to sell its Range Rover and Jaguar brands.
John Hussman: " The market is currently in an unusual position – On one hand, I expect that a decline of just 2-3% further should be enough to “clear” our measures of “overbought” and “overbullish” conditions. On the other hand, the damage we're observing in our measures of market action would be compounded even by a 2-3% market decline, most probably enough to remove even the speculative basis for accepting market risk here."
“I think we have to be prepared to take aggressive military action against the Iranians to stop them from killing Americans in Iraq,” Lieberman said. Host Bob Schieffer followed-up: “Let’s just stop right there. Because I think you probably made some news here, Senator Lieberman. You’re saying that if the Iranians don’t let up, that the United States should take military action?” “I am,” Lieberman responded. Obviously, some have not learned from the lessons of Iraq. Possibly, Lieberman would think differently if a loved one had been a casualty in Iraq. It's easy to talk tough on the blood of others.
Meanwhile, the U.S. increased its criticism of Iran's stonewalling of nuclear inspectors, and the United Nations atomic agency's chief warned of a ``brewing confrontation'' over the Islamic Republic's uranium enrichment program. ``I am increasingly disturbed by the current stalemate and the brewing confrontation -- a stalemate that urgently needs to be broken, and a confrontation that must be defused,'' International Atomic Energy Agency Director General Mohamed ElBaradei told diplomats today at the IAEA's Vienna offices.
30-year Treasury bond yields have risen to 5.25%. "The fact that the 10-year did trade close to 5.25% makes you nervous," said Frank Cappiello, managing director at Montgomery Brothers. "Five and a half percent would get me worried, but I don't think we're going to hit 5 1/2 anytime soon." Right now the 10-year yields 5.14%.
Gas for delivery this week at the National Balancing Point, the U.K. trading hub, rose 0.5 percent to 22.35 pence a therm at 11:55 a.m. in London, according to broker ICAP Plc. That equals $4.39 a million British thermal units. A therm is 100,000 Btus. ConocoPhillips said a J-Block gas facility in the central North Sea was shut yesterday for 14 days of planned maintenance. The J-Block comprises gas and condensate fields Judy, Joanne and Jade. Gas prices in Britain can jump because of disruptions to North Sea supplies.
``It's reaching the point where the central bank must take rate action,'' says Hiromichi Shirakawa, a former Bank of Japan official and now chief economist at Credit Suisse Group in Tokyo. ``Capital is flowing out of Japan too quickly, making the economy vulnerable to currency fluctuations.''
Such a shock occurred in 1998, when the yen jumped 20 percent in less than two months following Russia's debt default. The yen's sudden snapback deepened Japan's second recession since its bubble economy burst in the early 1990s. The global reassessment of risk that followed helped trigger the collapse of Long Term Capital Management LP, then one of the world's biggest hedge funds. A similar jump now, damaging Japan's export-based economy, might crimp the wage growth and consumer spending that the Bank of Japan is counting upon to keep the nation's longest postwar expansion going. The economy grew an annual 3.3 percent in the first quarter.
UBS AG said H & R Block may receive a leveraged buyout bid.
Crude for July delivery closed up $1.21, or 2%, at $65.97 a barrel on the New York Mercantile Exchange. July reformulated gasoline ended up 2.42 cents, or 1%, at $2.1513 a gallon and July heating oil rose 3.03 cents, or 1.6%, at $1.9291 a gallon. In contrast, July natural gas fell 5.50 cents to $7.608 per million British thermal units. Crude remains sharply below Brent crude prices.
Gold for August delivery closed up $8.70 at $659.0 an ounce on the New York Mercantile Exchange. Other metals prices also posted gains. July silver rose 23.50 cents, or 2%, at $13.275 an ounce, July platinum rose $11.20 at $1,298.0 an ounce and September palladium rose $2.40 at $373.0 an ounce. July copper rallied $9.85, or 3%, to $3.3560 a pound.
Monday, June 11, 2007
Recall
6/11/07 Recall
A meat supplier has greatly expanded a ground beef recall, which now includes about 5.7 million pounds of fresh and frozen meat that may be contaminated with E. coli. David Goldman, acting administrator of the USDA Food Safety and Inspection Service, announced on Saturday that the recall would be expanded to include products with sell-by dates from April 6-April 20. The beef, sold in 11 Western states, was distributed by California-based United Food Group LLC. When the recall moves from meat to our flimsy dollar, then you'll know the s-it has hit the fan.
Russian president Vladimir Putin called on Sunday for a radical overhaul of the world’s financial and trade institutions to reflect the growing economic power of emerging market countries – including Russia. Mr Putin said the world needed to create a new international financial architecture to replace an existing model that had become “archaic, undemocratic and unwieldy”.
China is considering halting efforts to make oil from coal due to concerns about the expense and energy demands, a state news agency on Sunday quoted an official as saying.
Mike Burk: "On Thursday the ratio of downside volume to upside volume was 6.7 to 1 on the NASDAQ and 17 to 1 on the NYSE the most extreme that we have seen since February 27...There are long standing rules of thumb about new lows that say there is little need for concern until there have been several consecutive days of more than 40 new lows on the NYSE and 70 on the NASDAQ. The NYSE exceeded its threshold on the last three days of last week while the NASDAQ exceeded its threshold on the last two days of last week...Next week is the week prior to the 3rd Friday in June during the 3rd year of the Presidential Cycle. The OTC has been up 82% of the time while the SPX has been up 77% of the time. Both have had average returns well over 1% for week. Over all years both indices have been up about half the time with slightly negative average returns...Last weeks sell off probably took out most traders that were interested in selling and we are going into a week that has been seasonally very strong. I expect the major indices to be higher on Friday June 15 than they were on Friday June 8."
Paul Kasriel: "I will, however, add one fundamental factor that may have played a smaller role in this week's bond market selloff - foreign official holdings of U.S. Treasury and Agency securities. As the chart below shows, in the week ended Wednesday, June 6, there was a relatively large $12.5 billion reduction in these custody holdings."
Clif Droke: "We now arrive at the conundrum of the day, viz. how will Americans be able to pay the next round of tax increases in 2009 and beyond if they've been tapped dry by the onerous "tax" of high gas prices? The answer is obvious: the bull market will be allowed to continue but with a twist. This time the average retail investor will be invited along to participate fully without being beaten over the head by the big stick of fear the mainstream press has been using against him since 2004. The return of the retail investor will be accomplished by way of a much needed priming of the money and credit pump, among other things. Once the banks have done their part to fully re-liquify the monetary system, Americans will use the massive infusions of cash as an opportunity to participate in building up another speculative bubble, which will be bolstered by increases in productivity, job growth and the next wave in the technology revolution. Bubbles are products of forethought by the insiders, however, and this one will be used to increase America's collective bank account for the next round of taxes in 2009 and beyond."
A meat supplier has greatly expanded a ground beef recall, which now includes about 5.7 million pounds of fresh and frozen meat that may be contaminated with E. coli. David Goldman, acting administrator of the USDA Food Safety and Inspection Service, announced on Saturday that the recall would be expanded to include products with sell-by dates from April 6-April 20. The beef, sold in 11 Western states, was distributed by California-based United Food Group LLC. When the recall moves from meat to our flimsy dollar, then you'll know the s-it has hit the fan.
Russian president Vladimir Putin called on Sunday for a radical overhaul of the world’s financial and trade institutions to reflect the growing economic power of emerging market countries – including Russia. Mr Putin said the world needed to create a new international financial architecture to replace an existing model that had become “archaic, undemocratic and unwieldy”.
China is considering halting efforts to make oil from coal due to concerns about the expense and energy demands, a state news agency on Sunday quoted an official as saying.
Mike Burk: "On Thursday the ratio of downside volume to upside volume was 6.7 to 1 on the NASDAQ and 17 to 1 on the NYSE the most extreme that we have seen since February 27...There are long standing rules of thumb about new lows that say there is little need for concern until there have been several consecutive days of more than 40 new lows on the NYSE and 70 on the NASDAQ. The NYSE exceeded its threshold on the last three days of last week while the NASDAQ exceeded its threshold on the last two days of last week...Next week is the week prior to the 3rd Friday in June during the 3rd year of the Presidential Cycle. The OTC has been up 82% of the time while the SPX has been up 77% of the time. Both have had average returns well over 1% for week. Over all years both indices have been up about half the time with slightly negative average returns...Last weeks sell off probably took out most traders that were interested in selling and we are going into a week that has been seasonally very strong. I expect the major indices to be higher on Friday June 15 than they were on Friday June 8."
Paul Kasriel: "I will, however, add one fundamental factor that may have played a smaller role in this week's bond market selloff - foreign official holdings of U.S. Treasury and Agency securities. As the chart below shows, in the week ended Wednesday, June 6, there was a relatively large $12.5 billion reduction in these custody holdings."
Clif Droke: "We now arrive at the conundrum of the day, viz. how will Americans be able to pay the next round of tax increases in 2009 and beyond if they've been tapped dry by the onerous "tax" of high gas prices? The answer is obvious: the bull market will be allowed to continue but with a twist. This time the average retail investor will be invited along to participate fully without being beaten over the head by the big stick of fear the mainstream press has been using against him since 2004. The return of the retail investor will be accomplished by way of a much needed priming of the money and credit pump, among other things. Once the banks have done their part to fully re-liquify the monetary system, Americans will use the massive infusions of cash as an opportunity to participate in building up another speculative bubble, which will be bolstered by increases in productivity, job growth and the next wave in the technology revolution. Bubbles are products of forethought by the insiders, however, and this one will be used to increase America's collective bank account for the next round of taxes in 2009 and beyond."
Recall
6/11/07 Recall
A meat supplier has greatly expanded a ground beef recall, which now includes about 5.7 million pounds of fresh and frozen meat that may be contaminated with E. coli. David Goldman, acting administrator of the USDA Food Safety and Inspection Service, announced on Saturday that the recall would be expanded to include products with sell-by dates from April 6-April 20. The beef, sold in 11 Western states, was distributed by California-based United Food Group LLC. When the recall moves from meat to our flimsy dollar, then you'll know the s-it has hit the fan.
Russian president Vladimir Putin called on Sunday for a radical overhaul of the world’s financial and trade institutions to reflect the growing economic power of emerging market countries – including Russia. Mr Putin said the world needed to create a new international financial architecture to replace an existing model that had become “archaic, undemocratic and unwieldy”.
China is considering halting efforts to make oil from coal due to concerns about the expense and energy demands, a state news agency on Sunday quoted an official as saying.
Mike Burk: "On Thursday the ratio of downside volume to upside volume was 6.7 to 1 on the NASDAQ and 17 to 1 on the NYSE the most extreme that we have seen since February 27...There are long standing rules of thumb about new lows that say there is little need for concern until there have been several consecutive days of more than 40 new lows on the NYSE and 70 on the NASDAQ. The NYSE exceeded its threshold on the last three days of last week while the NASDAQ exceeded its threshold on the last two days of last week...Next week is the week prior to the 3rd Friday in June during the 3rd year of the Presidential Cycle. The OTC has been up 82% of the time while the SPX has been up 77% of the time. Both have had average returns well over 1% for week. Over all years both indices have been up about half the time with slightly negative average returns...Last weeks sell off probably took out most traders that were interested in selling and we are going into a week that has been seasonally very strong. I expect the major indices to be higher on Friday June 15 than they were on Friday June 8."
Paul Kasriel: "I will, however, add one fundamental factor that may have played a smaller role in this week's bond market selloff - foreign official holdings of U.S. Treasury and Agency securities. As the chart below shows, in the week ended Wednesday, June 6, there was a relatively large $12.5 billion reduction in these custody holdings."
Clif Droke: "We now arrive at the conundrum of the day, viz. how will Americans be able to pay the next round of tax increases in 2009 and beyond if they've been tapped dry by the onerous "tax" of high gas prices? The answer is obvious: the bull market will be allowed to continue but with a twist. This time the average retail investor will be invited along to participate fully without being beaten over the head by the big stick of fear the mainstream press has been using against him since 2004. The return of the retail investor will be accomplished by way of a much needed priming of the money and credit pump, among other things. Once the banks have done their part to fully re-liquify the monetary system, Americans will use the massive infusions of cash as an opportunity to participate in building up another speculative bubble, which will be bolstered by increases in productivity, job growth and the next wave in the technology revolution. Bubbles are products of forethought by the insiders, however, and this one will be used to increase America's collective bank account for the next round of taxes in 2009 and beyond."
A meat supplier has greatly expanded a ground beef recall, which now includes about 5.7 million pounds of fresh and frozen meat that may be contaminated with E. coli. David Goldman, acting administrator of the USDA Food Safety and Inspection Service, announced on Saturday that the recall would be expanded to include products with sell-by dates from April 6-April 20. The beef, sold in 11 Western states, was distributed by California-based United Food Group LLC. When the recall moves from meat to our flimsy dollar, then you'll know the s-it has hit the fan.
Russian president Vladimir Putin called on Sunday for a radical overhaul of the world’s financial and trade institutions to reflect the growing economic power of emerging market countries – including Russia. Mr Putin said the world needed to create a new international financial architecture to replace an existing model that had become “archaic, undemocratic and unwieldy”.
China is considering halting efforts to make oil from coal due to concerns about the expense and energy demands, a state news agency on Sunday quoted an official as saying.
Mike Burk: "On Thursday the ratio of downside volume to upside volume was 6.7 to 1 on the NASDAQ and 17 to 1 on the NYSE the most extreme that we have seen since February 27...There are long standing rules of thumb about new lows that say there is little need for concern until there have been several consecutive days of more than 40 new lows on the NYSE and 70 on the NASDAQ. The NYSE exceeded its threshold on the last three days of last week while the NASDAQ exceeded its threshold on the last two days of last week...Next week is the week prior to the 3rd Friday in June during the 3rd year of the Presidential Cycle. The OTC has been up 82% of the time while the SPX has been up 77% of the time. Both have had average returns well over 1% for week. Over all years both indices have been up about half the time with slightly negative average returns...Last weeks sell off probably took out most traders that were interested in selling and we are going into a week that has been seasonally very strong. I expect the major indices to be higher on Friday June 15 than they were on Friday June 8."
Paul Kasriel: "I will, however, add one fundamental factor that may have played a smaller role in this week's bond market selloff - foreign official holdings of U.S. Treasury and Agency securities. As the chart below shows, in the week ended Wednesday, June 6, there was a relatively large $12.5 billion reduction in these custody holdings."
Clif Droke: "We now arrive at the conundrum of the day, viz. how will Americans be able to pay the next round of tax increases in 2009 and beyond if they've been tapped dry by the onerous "tax" of high gas prices? The answer is obvious: the bull market will be allowed to continue but with a twist. This time the average retail investor will be invited along to participate fully without being beaten over the head by the big stick of fear the mainstream press has been using against him since 2004. The return of the retail investor will be accomplished by way of a much needed priming of the money and credit pump, among other things. Once the banks have done their part to fully re-liquify the monetary system, Americans will use the massive infusions of cash as an opportunity to participate in building up another speculative bubble, which will be bolstered by increases in productivity, job growth and the next wave in the technology revolution. Bubbles are products of forethought by the insiders, however, and this one will be used to increase America's collective bank account for the next round of taxes in 2009 and beyond."
Saturday, June 09, 2007
Online Ads
6/10/07 Online Ads
Michael Santoli:"If, as now seems likely, that epochal downtrend in rates is now reversing-- in whatever halting and saw-toothed pattern it follows-- then the same 5%-ish level becomes a headwind."
Kopin Tan: "Since 2004, there have been two other occasions when the Dow has fallen by more than 80 points for three straight days. Both times, the Dow has bounced back resoundingly." At the same time, these rebounds did not take place with the 10-year Treasury yielding 5.12%.
What would the tech sector performance look like for the past 2 weeks with out Google, Apple, and Amazon? One might consider going long Google and shorting Amazon. This is not for the faint of heart.
Online ad spending increased 17% last year to $9.8 billion, and that was versus only 5% growth for television. Zenith Optimedia predicts that online ad spending will grow 28% in 2007 while the rest of the market will grow only 4%. Gary Carter is president of creative networks at Fremantle Media, the company that brought us American Idol and other hit shows. He observes "thirty-second commercials are dead. Television is dead. Everybody is dead except for Google, and iTunes, and YouTube."
Doug Noland: "The latest Federal Reserve Z.1 Report provides its usual interesting and illuminating “read”. At $3.607, Total SAAR (Seasonally-Adjusted and Annualized Rates) Credit Market Borrowings remain enormous - although somewhat slower than Q4’s SAAR $3.820 TN growth. For perspective, 2004 was the first year total borrowings surpassed $3.0 Trillion, with total borrowings averaging $2.292 TN annually during the decade 1996 to 2005. Total borrowings increased $3.706 TN during 2006, $3.463 TN in ’05, $3.232 TN in ’04, $2.896 TN in ’03, $2.495 TN in ’02, and $2.263 TN in ‘03. The trend of accelerating Credit expansion is unmistakable and, despite the housing slowdown, there’s a legitimate possibility it runs through 2007...
For the quarter, Household Assets increased $725bn (4.2% annualized) to $69.608 TN. Real Estate Assets increased $212bn (a 3.7% rate) and Financial Assets jumped $463bn (4.4% rate) to $42.522 TN. And with Liabilities increasing “only” $137bn during the quarter, Household Net Worth rose a respectable $587bn to $56.176 TN. For the year, Household Asset gains of $3.914 TN (6.0%) were offset by Liability increases of $1.002 TN (8.1%), leaving a $2.912 TN (5.5%) rise in Net Worth. Over four years, Assets inflated $21.157 TN (44%); Liabilities $4.604 TN (52%); and Net Worth $16.552 TN (42%). We should not understate the ongoing influence on consumer behavior from the spectacular (4-year plus) inflationary windfall.
The windfall is also lining government coffers. Federal Government first quarter Receipts were up 6.9% from the year ago period, with State & Local Receipts gaining 4.6%. First quarter spending was up a robust 6.0% at the federal level and 7.6% locally. Despite booming tax receipts, federal government borrowings increased at a 6.6% rate during the quarter (after growing 3.9% during 2006). State & Local debt expanded at an 8.6% rate (after 2006’s 8.2%).
The ongoing excesses confirmed in the Q1 2007 Flow of Funds leave little confusion with regard to surging global bond yields. It’s just surprising bonds ignored rampant global liquidity excess for so long. The abrupt nature of the yield spike is surely problematic for those highly leveraged players (and curve speculators) caught on the wrong side of the market. Clearly, scores of players had positioned for the imminent start of a Fed easing cycle. It’s never a smooth process when the crowd rushes to the exit an unsuccessful “crowded trade.” But to what extent this unwind impacts liquidity (reduces gross excess) is difficult to assess at this point. The near-term market assumption will likely be that the jump in market yields is sufficient to keep the economy and inflationary pressures in check – holding the Fed at bay...The enormous ongoing cost of national security and the global “war on terror” are brushed off as if they are inconsequential. But, then again, inflating financial markets create their own rationalizations, spin and reality. The latest round of bullish propaganda has really pushed the envelope, setting the stage for major disappointment and disillusionment. If history is any guide, expect a period of wild volatility leading to a financial accident."
Water is becoming scarcer. Due to lack of rainfall throughout California, there is a high fire risk for the summer. If the troops in Iraq were not having enough trouble with the insurgents, now they must contend with on-going water shortages.
Looking to buy a new condo in and around the Bay Area? Expect no HOA costs for the first 2 years and an additional $25,000+ in free incentives.
According to the WSJ, the U.S. Department of Labor has launched a national program to make sure refineries are following safety regulations, including stepped-up inspections in the next two years.
Chuck Butler: "Investors are using the dollar as a parking spot while they are waiting to see where to invest next. Europe and Asia continue to grow at a better pace than the United States, so I believe investors will be returning to these markets."
Michael Santoli:"If, as now seems likely, that epochal downtrend in rates is now reversing-- in whatever halting and saw-toothed pattern it follows-- then the same 5%-ish level becomes a headwind."
Kopin Tan: "Since 2004, there have been two other occasions when the Dow has fallen by more than 80 points for three straight days. Both times, the Dow has bounced back resoundingly." At the same time, these rebounds did not take place with the 10-year Treasury yielding 5.12%.
What would the tech sector performance look like for the past 2 weeks with out Google, Apple, and Amazon? One might consider going long Google and shorting Amazon. This is not for the faint of heart.
Online ad spending increased 17% last year to $9.8 billion, and that was versus only 5% growth for television. Zenith Optimedia predicts that online ad spending will grow 28% in 2007 while the rest of the market will grow only 4%. Gary Carter is president of creative networks at Fremantle Media, the company that brought us American Idol and other hit shows. He observes "thirty-second commercials are dead. Television is dead. Everybody is dead except for Google, and iTunes, and YouTube."
Doug Noland: "The latest Federal Reserve Z.1 Report provides its usual interesting and illuminating “read”. At $3.607, Total SAAR (Seasonally-Adjusted and Annualized Rates) Credit Market Borrowings remain enormous - although somewhat slower than Q4’s SAAR $3.820 TN growth. For perspective, 2004 was the first year total borrowings surpassed $3.0 Trillion, with total borrowings averaging $2.292 TN annually during the decade 1996 to 2005. Total borrowings increased $3.706 TN during 2006, $3.463 TN in ’05, $3.232 TN in ’04, $2.896 TN in ’03, $2.495 TN in ’02, and $2.263 TN in ‘03. The trend of accelerating Credit expansion is unmistakable and, despite the housing slowdown, there’s a legitimate possibility it runs through 2007...
For the quarter, Household Assets increased $725bn (4.2% annualized) to $69.608 TN. Real Estate Assets increased $212bn (a 3.7% rate) and Financial Assets jumped $463bn (4.4% rate) to $42.522 TN. And with Liabilities increasing “only” $137bn during the quarter, Household Net Worth rose a respectable $587bn to $56.176 TN. For the year, Household Asset gains of $3.914 TN (6.0%) were offset by Liability increases of $1.002 TN (8.1%), leaving a $2.912 TN (5.5%) rise in Net Worth. Over four years, Assets inflated $21.157 TN (44%); Liabilities $4.604 TN (52%); and Net Worth $16.552 TN (42%). We should not understate the ongoing influence on consumer behavior from the spectacular (4-year plus) inflationary windfall.
The windfall is also lining government coffers. Federal Government first quarter Receipts were up 6.9% from the year ago period, with State & Local Receipts gaining 4.6%. First quarter spending was up a robust 6.0% at the federal level and 7.6% locally. Despite booming tax receipts, federal government borrowings increased at a 6.6% rate during the quarter (after growing 3.9% during 2006). State & Local debt expanded at an 8.6% rate (after 2006’s 8.2%).
The ongoing excesses confirmed in the Q1 2007 Flow of Funds leave little confusion with regard to surging global bond yields. It’s just surprising bonds ignored rampant global liquidity excess for so long. The abrupt nature of the yield spike is surely problematic for those highly leveraged players (and curve speculators) caught on the wrong side of the market. Clearly, scores of players had positioned for the imminent start of a Fed easing cycle. It’s never a smooth process when the crowd rushes to the exit an unsuccessful “crowded trade.” But to what extent this unwind impacts liquidity (reduces gross excess) is difficult to assess at this point. The near-term market assumption will likely be that the jump in market yields is sufficient to keep the economy and inflationary pressures in check – holding the Fed at bay...The enormous ongoing cost of national security and the global “war on terror” are brushed off as if they are inconsequential. But, then again, inflating financial markets create their own rationalizations, spin and reality. The latest round of bullish propaganda has really pushed the envelope, setting the stage for major disappointment and disillusionment. If history is any guide, expect a period of wild volatility leading to a financial accident."
Water is becoming scarcer. Due to lack of rainfall throughout California, there is a high fire risk for the summer. If the troops in Iraq were not having enough trouble with the insurgents, now they must contend with on-going water shortages.
Looking to buy a new condo in and around the Bay Area? Expect no HOA costs for the first 2 years and an additional $25,000+ in free incentives.
According to the WSJ, the U.S. Department of Labor has launched a national program to make sure refineries are following safety regulations, including stepped-up inspections in the next two years.
Chuck Butler: "Investors are using the dollar as a parking spot while they are waiting to see where to invest next. Europe and Asia continue to grow at a better pace than the United States, so I believe investors will be returning to these markets."
Friday, June 08, 2007
The Friday Rebound
6/9/07 The Friday Rebound
Between The Hedges: "We are still very close to eclipsing the peak in bearish sentiment during the 2000-03 market meltdown, which is astonishing considering the macro backdrop now and then."
China plans to spend $196 billion over the next 13 years to increase the use of renewable energy sources to account for 16% of total supply.
Interfax said ThyssenKrupp AG is in talks to buy U.S. Steel.
China’s inflation rate rose 3.6%, and that was more than a two-year high last month.
The Trade Deficit for April shrank to -$58.5 billion versus estimates of -$63.5 billion and a downwardly revised -$62.4 billion in March.
Chinese exports to India jumped to US$14.5 billion from just under US$9 billion in 2005 and US$6 billion in 2004. This growth propelled bilateral trade to US$25 billion in 2006, up from US$13.6 billion in 2004 and a paltry US$1 billion in 1995. India's exports to China - which totaled US$10.2 billion in 2006 - are dominated by iron ore for steel, processed cotton and yarn, plastic, precious stones and minerals. China takes these raw materials and sends back machinery, organic chemicals that feed India's generic pharmaceuticals industry, steel and fuel.
The Dow Jones Industrial Average and the S&P 500 each saw gains of more than 1.1% while the Nasdaq Composite rose 1.2% on strength in chip stocks. It was the twelfth straight week the Dow has closed Friday higher. Friday's positive action helped stem weekly losses in the major indexes. The Dow posted a weekly decline of 1.8%, the S&P 500 fell 1.9% and the Nasdaq declined 1.5%.
Crude for July delivery closed down $2.17, or over 3%, at $64.76 a barrel on the New York Mercantile Exchange. The contract has lost 32 cents this week. July reformulated gasoline fell 6.56 cents, or 3%, to $2.1271 a gallon. July heating oil fell 7.76 cents, or nearly 4%, at $1.8988 a gallon. July natural gas fell 16.20 cents, or nearly 2%, to $7.663 per million British thermal units.
Gold for August delivery closed down $14.90 at $650.30 an ounce on the New York Mercantile Exchange, marking a five-session losing streak. The contract has tumbled $26.60 this week. July silver fell 44 cents, or about 3%, to close at $13.040 an ounce, while July copper fell 11.95 cents, or more than 3%, to $3.2575 a pound. July platinum tumbled $8.70 to $1,286.80 an ounce. September palladium fell $1.85 to $370.60 an ounce.
McDonald's Corp. said its global same-restaurant sales rose 8.7% in May.
Between The Hedges: "We are still very close to eclipsing the peak in bearish sentiment during the 2000-03 market meltdown, which is astonishing considering the macro backdrop now and then."
China plans to spend $196 billion over the next 13 years to increase the use of renewable energy sources to account for 16% of total supply.
Interfax said ThyssenKrupp AG is in talks to buy U.S. Steel.
China’s inflation rate rose 3.6%, and that was more than a two-year high last month.
The Trade Deficit for April shrank to -$58.5 billion versus estimates of -$63.5 billion and a downwardly revised -$62.4 billion in March.
Chinese exports to India jumped to US$14.5 billion from just under US$9 billion in 2005 and US$6 billion in 2004. This growth propelled bilateral trade to US$25 billion in 2006, up from US$13.6 billion in 2004 and a paltry US$1 billion in 1995. India's exports to China - which totaled US$10.2 billion in 2006 - are dominated by iron ore for steel, processed cotton and yarn, plastic, precious stones and minerals. China takes these raw materials and sends back machinery, organic chemicals that feed India's generic pharmaceuticals industry, steel and fuel.
The Dow Jones Industrial Average and the S&P 500 each saw gains of more than 1.1% while the Nasdaq Composite rose 1.2% on strength in chip stocks. It was the twelfth straight week the Dow has closed Friday higher. Friday's positive action helped stem weekly losses in the major indexes. The Dow posted a weekly decline of 1.8%, the S&P 500 fell 1.9% and the Nasdaq declined 1.5%.
Crude for July delivery closed down $2.17, or over 3%, at $64.76 a barrel on the New York Mercantile Exchange. The contract has lost 32 cents this week. July reformulated gasoline fell 6.56 cents, or 3%, to $2.1271 a gallon. July heating oil fell 7.76 cents, or nearly 4%, at $1.8988 a gallon. July natural gas fell 16.20 cents, or nearly 2%, to $7.663 per million British thermal units.
Gold for August delivery closed down $14.90 at $650.30 an ounce on the New York Mercantile Exchange, marking a five-session losing streak. The contract has tumbled $26.60 this week. July silver fell 44 cents, or about 3%, to close at $13.040 an ounce, while July copper fell 11.95 cents, or more than 3%, to $3.2575 a pound. July platinum tumbled $8.70 to $1,286.80 an ounce. September palladium fell $1.85 to $370.60 an ounce.
McDonald's Corp. said its global same-restaurant sales rose 8.7% in May.
Thursday, June 07, 2007
On The Skids
6/8/07 On The Skids
August gold dropped $9.40, or 1.4%, to close at $665.20 an ounce Thursday. July silver fell 23.7 cents to close at $13.48 an ounce and July copper lost 2.7 cents to end at $3.377 a pound.
Households slowed the growth of debt to a 6% annualized rate, the slowest pace in nine years. Mortgage debt increased at a 6.2% pace, the slowest in eight years, the Fed said. Household net worth increased by $587.4 billion to a record $56.18 trillion, a 4.3% annual growth rate. Homeowners withdrew an estimated $151 billion at an annual rate from their home equity, the slowest equity withdrawal in six years.
Natural-gas inventories rose by 110 billion cubic feet for the week ended June 1, the Energy Department said Thursday.
The benchmark 30-year fixed rate mortgage average rose in the week ending Thursday, to 6.53% from 6.42% last week, according to Freddie Mac.
Inventories at U.S. wholesalers rose by 0.3% in April, led mostly by a 6.3% gain in petroleum inventories, the Commerce Department reported Thursday. The April inventory gain follows a revised increase of 0.4% in March. Wholesale inventories are up 7.1% from a year ago. At the same time, wholesale sales rose by 1.3% in April, with petroleum sales again leading the way.
The Energy Department reported Wednesday that refinery utilization fell to 89.6% of capacity last week, from 91.1% a week earlier, renewing concerns about gasoline production during the summer driving season.
The Australian dollar rallied to an 18-year high against the U.S. dollar, extending its recent gains after a report showed Australia's unemployment rate in April fell to a multi-decade low.
The number of Americans receiving state jobless benefits rose 72,000 to 2.54 million in the week ending May 26. The four-week moving average of continuing claims fell 4,000 to 2.50 million, the lowest since the week ended Jan. 27.
J.C. Penney Company Inc. said May same-store sales fell 2% at its department stores, compared to the forecast for a rise of 0.3% in a survey of analysts by Thomson Financial. Looking ahead, the company expects June same-store sales to fall in the low single-digit percentage range.
Biomet Inc.agreed to be acquired for $46 a share, or $11.4 billion, by a private-equity group. The group members are Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and TPG.
BHP Billiton could be in line for a bid from the recently-formed Chinese State Investment Company, according to a report in the Herald Sun newspaper. The report, which cited Peter Quinton, chief of research at Australian stockbroker Bell Potter, said the Chinese fund's recent investment in U.S. private equity firm Blackstone could be a precursor to other deals.
New Zealand's central bank Thursday surprised markets by raising its key interest rate a quarter-point to a record 8%. The benchmark 10-year U.S. Treasury note fell the most in more than three years after New Zealand unexpectedly raised interest rates, igniting concern other central banks will respond to faster global growth. The 10-year Treasury yield jumped to 5.10%.
Putin suggested a joint plan to base part of the system at a former Soviet radar station in Azerbaijan.
Costco Wholesale Corp. reported that in May, total sales rose 11% to $5.14 billion while same-store sales rose 7%.
Brent crude has traded above $72 a barrel, and that's in excess of $5 above NYMEX crude.
TheOilDrum: "As of noon on 6/7, this is the Gonu post of record. The final models from Chuck Watson of KAC/UCF are in and they are forecasting, based on their damage models, that:
* Qalhat (Sur) LNG terminal: 18 days down time
* Mina al Fahal oil terminal: 14 days down time
(NB: These final damage estimates decreased a bit from initial runs but have been close to these numbers all along--all assume US construction standards.)"
Lieutenant General Douglas Lute, a skeptic of the troop increase in Iraq and President George W. Bush's choice to oversee the war, said withdrawing troops may pressure the Iraqi government to make needed changes. Under questioning from Senate Armed Services Chairman Carl Levin, Lute said the Michigan Democrat may be correct in his long-held assertion that the Iraqi government will only work to end sectarian strife if it has to. A withdrawal ``ought to be considered,'' Lute, 54, said during the committee's hearing in Washington on his nomination as a coordinator of war operations in Iraq and Afghanistan.
Trading in the Russian Export Blend Crude Oil (REBCO) futures will move from the New York Mercantile Exchange to a new commodity market in St. Petersburg, a deputy economics minister said Tuesday.
Zman: "Petroleo Brasileiro S.A. (PBR) union workers threaten five day strike. This can really rally crude. This is not a "warning strike," as it has the specific purpose of cutting oil production. The problem is wages (again), talks have "broken down", and the strike, while not a certainty, will take some time to get off the ground -- giving CNBC plenty of time to call your attention to it. The last time they did this was 2001, and Brazil was forced to import extra oil at the time. Brazil is the 8th largest oil consumer in the world, and currently consumes all it can get out of the ground and a little bit more. Obviously, the threat of this strike will be supportive of crude, and to a lesser extent gasoline prices into the weekend."
The four-year death toll for American forces in Iraq rose to 3,501, according to an Associated Press tally.
The Dow Jones industrials plunged about 199 points, 1.5%, to just under 13,267. The Standard & Poor's 500 Index fell nearly 27 points, 1.3%, to 1,490, and the Nasdaq Composite Index tumbled 46 points, 1.8%, to 2,541.
In three days, the Dow has dropped about 409 points, the biggest three-day loss since it fell nearly 470 points over Feb. 23, Feb. 26 and Feb. 27.
SAIC Inc. on Wednesday blamed lower interest income and a higher tax rate for a 25 percent decline in fiscal first-quarter profits, triggering a sell-off of its shares.
The government contractor earned $80 million, or 19 cents a share, during the three months ended April 30, down from $106 million, or 31 cents a share, in the same period last year. Revenue grew 6 percent to $2.07 billion from $1.95 billion. The CEO reaffirmed financial estimates for the 2008 fiscal year: per-share earnings between 83 and 88 cents a share from continuing operations and revenue between $8.7 billion and $9 billion.
August gold dropped $9.40, or 1.4%, to close at $665.20 an ounce Thursday. July silver fell 23.7 cents to close at $13.48 an ounce and July copper lost 2.7 cents to end at $3.377 a pound.
Households slowed the growth of debt to a 6% annualized rate, the slowest pace in nine years. Mortgage debt increased at a 6.2% pace, the slowest in eight years, the Fed said. Household net worth increased by $587.4 billion to a record $56.18 trillion, a 4.3% annual growth rate. Homeowners withdrew an estimated $151 billion at an annual rate from their home equity, the slowest equity withdrawal in six years.
Natural-gas inventories rose by 110 billion cubic feet for the week ended June 1, the Energy Department said Thursday.
The benchmark 30-year fixed rate mortgage average rose in the week ending Thursday, to 6.53% from 6.42% last week, according to Freddie Mac.
Inventories at U.S. wholesalers rose by 0.3% in April, led mostly by a 6.3% gain in petroleum inventories, the Commerce Department reported Thursday. The April inventory gain follows a revised increase of 0.4% in March. Wholesale inventories are up 7.1% from a year ago. At the same time, wholesale sales rose by 1.3% in April, with petroleum sales again leading the way.
The Energy Department reported Wednesday that refinery utilization fell to 89.6% of capacity last week, from 91.1% a week earlier, renewing concerns about gasoline production during the summer driving season.
The Australian dollar rallied to an 18-year high against the U.S. dollar, extending its recent gains after a report showed Australia's unemployment rate in April fell to a multi-decade low.
The number of Americans receiving state jobless benefits rose 72,000 to 2.54 million in the week ending May 26. The four-week moving average of continuing claims fell 4,000 to 2.50 million, the lowest since the week ended Jan. 27.
J.C. Penney Company Inc. said May same-store sales fell 2% at its department stores, compared to the forecast for a rise of 0.3% in a survey of analysts by Thomson Financial. Looking ahead, the company expects June same-store sales to fall in the low single-digit percentage range.
Biomet Inc.agreed to be acquired for $46 a share, or $11.4 billion, by a private-equity group. The group members are Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and TPG.
BHP Billiton could be in line for a bid from the recently-formed Chinese State Investment Company, according to a report in the Herald Sun newspaper. The report, which cited Peter Quinton, chief of research at Australian stockbroker Bell Potter, said the Chinese fund's recent investment in U.S. private equity firm Blackstone could be a precursor to other deals.
New Zealand's central bank Thursday surprised markets by raising its key interest rate a quarter-point to a record 8%. The benchmark 10-year U.S. Treasury note fell the most in more than three years after New Zealand unexpectedly raised interest rates, igniting concern other central banks will respond to faster global growth. The 10-year Treasury yield jumped to 5.10%.
Putin suggested a joint plan to base part of the system at a former Soviet radar station in Azerbaijan.
Costco Wholesale Corp. reported that in May, total sales rose 11% to $5.14 billion while same-store sales rose 7%.
Brent crude has traded above $72 a barrel, and that's in excess of $5 above NYMEX crude.
TheOilDrum: "As of noon on 6/7, this is the Gonu post of record. The final models from Chuck Watson of KAC/UCF are in and they are forecasting, based on their damage models, that:
* Qalhat (Sur) LNG terminal: 18 days down time
* Mina al Fahal oil terminal: 14 days down time
(NB: These final damage estimates decreased a bit from initial runs but have been close to these numbers all along--all assume US construction standards.)"
Lieutenant General Douglas Lute, a skeptic of the troop increase in Iraq and President George W. Bush's choice to oversee the war, said withdrawing troops may pressure the Iraqi government to make needed changes. Under questioning from Senate Armed Services Chairman Carl Levin, Lute said the Michigan Democrat may be correct in his long-held assertion that the Iraqi government will only work to end sectarian strife if it has to. A withdrawal ``ought to be considered,'' Lute, 54, said during the committee's hearing in Washington on his nomination as a coordinator of war operations in Iraq and Afghanistan.
Trading in the Russian Export Blend Crude Oil (REBCO) futures will move from the New York Mercantile Exchange to a new commodity market in St. Petersburg, a deputy economics minister said Tuesday.
Zman: "Petroleo Brasileiro S.A. (PBR) union workers threaten five day strike. This can really rally crude. This is not a "warning strike," as it has the specific purpose of cutting oil production. The problem is wages (again), talks have "broken down", and the strike, while not a certainty, will take some time to get off the ground -- giving CNBC plenty of time to call your attention to it. The last time they did this was 2001, and Brazil was forced to import extra oil at the time. Brazil is the 8th largest oil consumer in the world, and currently consumes all it can get out of the ground and a little bit more. Obviously, the threat of this strike will be supportive of crude, and to a lesser extent gasoline prices into the weekend."
The four-year death toll for American forces in Iraq rose to 3,501, according to an Associated Press tally.
The Dow Jones industrials plunged about 199 points, 1.5%, to just under 13,267. The Standard & Poor's 500 Index fell nearly 27 points, 1.3%, to 1,490, and the Nasdaq Composite Index tumbled 46 points, 1.8%, to 2,541.
In three days, the Dow has dropped about 409 points, the biggest three-day loss since it fell nearly 470 points over Feb. 23, Feb. 26 and Feb. 27.
SAIC Inc. on Wednesday blamed lower interest income and a higher tax rate for a 25 percent decline in fiscal first-quarter profits, triggering a sell-off of its shares.
The government contractor earned $80 million, or 19 cents a share, during the three months ended April 30, down from $106 million, or 31 cents a share, in the same period last year. Revenue grew 6 percent to $2.07 billion from $1.95 billion. The CEO reaffirmed financial estimates for the 2008 fiscal year: per-share earnings between 83 and 88 cents a share from continuing operations and revenue between $8.7 billion and $9 billion.
Wednesday, June 06, 2007
Oil And Gas News
6/7/07 Oil And Gas News
Valero Energy, the largest US refiner, said it shut fluid catalytic cracking units for maintenance at refineries in Houston and Louisiana. The unit at the Houston plant will be shut for “approximately two weeks.” Gasoline production will drop by 40,000 barrels a day in Houston and 25,000 barrels a day at Krotz Springs during the maintenance period.
Private investment firm Colony Capital LLC has agreed to pay 4 billion euros ($5.4 billion) for Libya's European oil company Tamoil and Oilinvest.Tamoil owns and operates more than 3,000 service stations in Europe, concentrated in Italy, and has oil refineries in Italy, Switzerland, Spain and Germany, Colony said.
TD Ameritrade Holding Corp. has been "talking to people in the industry all along and will continue to do that," its chief executive said in an interview with CNBC television on Wednesday.
Productivity in the non-farm business sector increased at an annual rate of 1% in the quarter, revised down from 1.7% reported a month ago. Productivity is up just 1% in the past four quarters. Unit labor costs - a key gauge of inflationary pressures - was revised higher to 1.8% annualized from 0.6% earlier. Output rose 0.6% annualized in the first quarter, hours worked fell 0.4% and real hourly compensation fell by 1%.
The European Central Bank has raised its main interest rate by another quarter percentage point to 4 per cent – the highest since August 2001.
Morgan Stanley has issued a "full house sell signal" as of Monday, saying three of its leading indicators - bond yields, Institute for Supply Management new orders, as well as valuation and risk - showed it was time to sell. "Such a full house sell signal across these three indicators is rare, and has occurred only five times since 1980," said analyst Teun Draaisma in a European strategy research report. "Equities have always been down in the next 6 months, on average by 15%.
Prudential Financial said it's discontinuing all its institutional equity research, sales and trading businesses. The decision affects 420 employees.
Russ Berrie & Co. said it received an unsolicited offer to acquire the company for $18 a share, but said the proposal undervalues the company.
Due to both this comparable sales target revision and these margin pressures, Panera Bread is issuing a revised second quarter 2007 earnings per diluted share target of $0.38 to $0.40. Analysts polled by Thomson Financial expected second-quarter earnings per share of 49 cents.
More than 4 million Iraqis have been forced from their homes by violence and the refugee crisis will probably worsen, the United Nations said. That's part of they price for delivering a democratic society!
The center of the cyclone is now expected to hit land in southeastern Iran over the next 36 hours. Gonu had disrupted Oman's oil and gas exports, closed its stock exchange as well as private and public institutions until Saturday, while national carrier Oman Air had halted all flights.
Iran's meteorological department in a statement has warned people in other coastal areas and islands in the Oman Sea and Strait of Hormuz to keep a distance from the waters and avoid any sea transport.
It also said that height of the waves would reach to 5.5 meters (18 feet), a rare record in the area.
WCI Communities, Inc. announced that an affiliate of Carl Icahn has signed a confidentiality agreement and has entered WCI's sales process as a bidder.
Alon USA President and Chief Executive Officer Jeff Morris told the Reuters Global Energy Summit in New York that his company would be interested in buying certain refineries, citing those in the Rockies and the Midwest. Morris also said refineries that processed the cheaper priced heavy crudes were more appealing than those that ran the lighter, sweeter -- and more expensive -- grades.
Abdalla el-Badri said in an interview that members of the Organization of Petroleum Exporting Countries, which supplies about 40% of global petroleum output, need to invest as much as $500 billion by 2020 to satisfy rising global demand for crude. He acknowledged some of that must come from foreign sources, like Western oil majors, and not just from state-run national oil producers.
BJ Tubular Services is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group’s most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
The National Association of Realtors has lowered its forecasts for key housing indicators for this year and next. Sales of existing homes are now expected to fall 4.6% to a seasonally adjusted annual rate of 6.18 million. A month ago, the real estate trade group was expecting sales to fall 2.9%. Sales of new homes are expected to fall 18.2% to 860,000 and housing starts are expected to fall 20.4% to 1.43 million. For 2008, sales of existing homes are expected to rise 3.7%, sales of new homes should rise 4.8% and starts should rise 3.6%. NAR senior economist Lawrence Yun said sales would "gradually trend upward with improving activity by the end of the year."
The U.S. economy should slow this year to 2.3% growth, but the job market should remain healthy with a jobless rate of 4.5%, the White House said Wednesday in its semiannual economic forecast. Inflation should spike higher to 3.2% on increased energy costs, but core inflation should stay at moderate levels, according to the combined forecast of the Council of Economic Advisers, the Treasury Department and the Office of Management and Budget.
Wu Xiaoling, a deputy governor of the People's Bank of China, said recent volatility in share prices would not damage the world's fourth-largest economy as long as the market did not turn "unhealthy"."China's economic fundamentals are good, and the intention of the Chinese government's macro controls is very clear. That is, to ensure a healthy, rising market," Wu told reporters on the sidelines of a conference in the northern port city of Tianjin.
The Dow Jones industrials was down about 131 points at 12,465 at its unofficial close. The S&P 500 fell 13.55 points to 1,517.40 and the Nasdaq Composite dropped 24.05 points to 2,587.18.
July crude climbed 35 cents to close at $65.96 a barrel Wednesday, but July reformulated gasoline fell by 1.69 cents to close at $2.1904 a gallon, the contract's lowest closing level since early May. July natural gas closed at $8.08 per million British thermal units, up 1.6 cents for the session.
August gold fell 50 cents to close at $674.60 an ounce Wednesday. July silver fell 9.5 cents to close at $13.717 an ounce, while July copper closed at $3.404 a pound, down 1.1%, or 3.75 cents.
The American Petroleum Institute reported a fall of 5.7 million barrels in crude supplies for the week ended June 1. The Energy Department had reported a climb of 100,000 barrels. Motor gasoline supplies were up 7.2 million barrels, the API said. The government reported a rise of 3.5 million. Distillate supplies climbed 3.5 million barrels, the API said. The government posted a 1.9 million-barrel rise.
Harry Truman: "I never give 'em hell. I just tell them the truth and they think it's hell."
Valero Energy, the largest US refiner, said it shut fluid catalytic cracking units for maintenance at refineries in Houston and Louisiana. The unit at the Houston plant will be shut for “approximately two weeks.” Gasoline production will drop by 40,000 barrels a day in Houston and 25,000 barrels a day at Krotz Springs during the maintenance period.
Private investment firm Colony Capital LLC has agreed to pay 4 billion euros ($5.4 billion) for Libya's European oil company Tamoil and Oilinvest.Tamoil owns and operates more than 3,000 service stations in Europe, concentrated in Italy, and has oil refineries in Italy, Switzerland, Spain and Germany, Colony said.
TD Ameritrade Holding Corp. has been "talking to people in the industry all along and will continue to do that," its chief executive said in an interview with CNBC television on Wednesday.
Productivity in the non-farm business sector increased at an annual rate of 1% in the quarter, revised down from 1.7% reported a month ago. Productivity is up just 1% in the past four quarters. Unit labor costs - a key gauge of inflationary pressures - was revised higher to 1.8% annualized from 0.6% earlier. Output rose 0.6% annualized in the first quarter, hours worked fell 0.4% and real hourly compensation fell by 1%.
The European Central Bank has raised its main interest rate by another quarter percentage point to 4 per cent – the highest since August 2001.
Morgan Stanley has issued a "full house sell signal" as of Monday, saying three of its leading indicators - bond yields, Institute for Supply Management new orders, as well as valuation and risk - showed it was time to sell. "Such a full house sell signal across these three indicators is rare, and has occurred only five times since 1980," said analyst Teun Draaisma in a European strategy research report. "Equities have always been down in the next 6 months, on average by 15%.
Prudential Financial said it's discontinuing all its institutional equity research, sales and trading businesses. The decision affects 420 employees.
Russ Berrie & Co. said it received an unsolicited offer to acquire the company for $18 a share, but said the proposal undervalues the company.
Due to both this comparable sales target revision and these margin pressures, Panera Bread is issuing a revised second quarter 2007 earnings per diluted share target of $0.38 to $0.40. Analysts polled by Thomson Financial expected second-quarter earnings per share of 49 cents.
More than 4 million Iraqis have been forced from their homes by violence and the refugee crisis will probably worsen, the United Nations said. That's part of they price for delivering a democratic society!
The center of the cyclone is now expected to hit land in southeastern Iran over the next 36 hours. Gonu had disrupted Oman's oil and gas exports, closed its stock exchange as well as private and public institutions until Saturday, while national carrier Oman Air had halted all flights.
Iran's meteorological department in a statement has warned people in other coastal areas and islands in the Oman Sea and Strait of Hormuz to keep a distance from the waters and avoid any sea transport.
It also said that height of the waves would reach to 5.5 meters (18 feet), a rare record in the area.
WCI Communities, Inc. announced that an affiliate of Carl Icahn has signed a confidentiality agreement and has entered WCI's sales process as a bidder.
Alon USA President and Chief Executive Officer Jeff Morris told the Reuters Global Energy Summit in New York that his company would be interested in buying certain refineries, citing those in the Rockies and the Midwest. Morris also said refineries that processed the cheaper priced heavy crudes were more appealing than those that ran the lighter, sweeter -- and more expensive -- grades.
Abdalla el-Badri said in an interview that members of the Organization of Petroleum Exporting Countries, which supplies about 40% of global petroleum output, need to invest as much as $500 billion by 2020 to satisfy rising global demand for crude. He acknowledged some of that must come from foreign sources, like Western oil majors, and not just from state-run national oil producers.
BJ Tubular Services is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group’s most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
The National Association of Realtors has lowered its forecasts for key housing indicators for this year and next. Sales of existing homes are now expected to fall 4.6% to a seasonally adjusted annual rate of 6.18 million. A month ago, the real estate trade group was expecting sales to fall 2.9%. Sales of new homes are expected to fall 18.2% to 860,000 and housing starts are expected to fall 20.4% to 1.43 million. For 2008, sales of existing homes are expected to rise 3.7%, sales of new homes should rise 4.8% and starts should rise 3.6%. NAR senior economist Lawrence Yun said sales would "gradually trend upward with improving activity by the end of the year."
The U.S. economy should slow this year to 2.3% growth, but the job market should remain healthy with a jobless rate of 4.5%, the White House said Wednesday in its semiannual economic forecast. Inflation should spike higher to 3.2% on increased energy costs, but core inflation should stay at moderate levels, according to the combined forecast of the Council of Economic Advisers, the Treasury Department and the Office of Management and Budget.
Wu Xiaoling, a deputy governor of the People's Bank of China, said recent volatility in share prices would not damage the world's fourth-largest economy as long as the market did not turn "unhealthy"."China's economic fundamentals are good, and the intention of the Chinese government's macro controls is very clear. That is, to ensure a healthy, rising market," Wu told reporters on the sidelines of a conference in the northern port city of Tianjin.
The Dow Jones industrials was down about 131 points at 12,465 at its unofficial close. The S&P 500 fell 13.55 points to 1,517.40 and the Nasdaq Composite dropped 24.05 points to 2,587.18.
July crude climbed 35 cents to close at $65.96 a barrel Wednesday, but July reformulated gasoline fell by 1.69 cents to close at $2.1904 a gallon, the contract's lowest closing level since early May. July natural gas closed at $8.08 per million British thermal units, up 1.6 cents for the session.
August gold fell 50 cents to close at $674.60 an ounce Wednesday. July silver fell 9.5 cents to close at $13.717 an ounce, while July copper closed at $3.404 a pound, down 1.1%, or 3.75 cents.
The American Petroleum Institute reported a fall of 5.7 million barrels in crude supplies for the week ended June 1. The Energy Department had reported a climb of 100,000 barrels. Motor gasoline supplies were up 7.2 million barrels, the API said. The government reported a rise of 3.5 million. Distillate supplies climbed 3.5 million barrels, the API said. The government posted a 1.9 million-barrel rise.
Harry Truman: "I never give 'em hell. I just tell them the truth and they think it's hell."
Tuesday, June 05, 2007
Special Posting
6/6/07 Special Posting
The Oil Drum: "This is an unprecedented event. NO CYCLONE has ever entered the Gulf of Oman. And there are no custom 'storm surge' models available for that area. This forecast is based on my experience and subjective analysis of the seabed slope and storm surge interaction with the sea floor. Considering the region has never experienced a hurricane, let alone a strong one it is highly unlikely the loading facilities or platforms were constructed to withstand the forces - both wave action and wind force - that they will experience. Significant, damage will occur. How much long term damage, and the volumes associated with it - can not be determined at this time.
Special update at 8PM on Cyclone GONU: "KAC/UCF and Chuck Watson are forecasting, based on their damage models, that the Qalhat (Sur) LNG terminal will be out for 25-30 days and the Mina al Fahal oil terminal will be down for 15-20 days--all of this assuming they are built to US standards."
Oman matters in this because it produces 743,000 bbl/day; Oman is also a net exporter, non-OPEC.
The Oil Drum: "This is an unprecedented event. NO CYCLONE has ever entered the Gulf of Oman. And there are no custom 'storm surge' models available for that area. This forecast is based on my experience and subjective analysis of the seabed slope and storm surge interaction with the sea floor. Considering the region has never experienced a hurricane, let alone a strong one it is highly unlikely the loading facilities or platforms were constructed to withstand the forces - both wave action and wind force - that they will experience. Significant, damage will occur. How much long term damage, and the volumes associated with it - can not be determined at this time.
Special update at 8PM on Cyclone GONU: "KAC/UCF and Chuck Watson are forecasting, based on their damage models, that the Qalhat (Sur) LNG terminal will be out for 25-30 days and the Mina al Fahal oil terminal will be down for 15-20 days--all of this assuming they are built to US standards."
Oman matters in this because it produces 743,000 bbl/day; Oman is also a net exporter, non-OPEC.
More Action
6/6/07 More Action
Laureate Education Inc. said Monday that it has agreed to go private for $3.82 billion in cash from a group led by the higher education company's chairman and chief executive officer. The sweetened offer of $62 per share tops the investor group's earlier bid of $60.50 per share, a deal that some of Laureate's major investors said was too low. A tender offer for Laureate's shares is scheduled to begin Friday.
The ISM non-manufacturing index rose to 59.7% from 56% in April. It's the highest since April 2006. Twelve of 15 industries were expanding in May.
Bed Bath & Beyond fell 5.7% after the retailer issued a profit warning, prompting Goldman Sachs to downgrade the stock to neutral from buy.
Enbridge Inc.and ExxonMobil agreed to jointly assess the commercial development of a new pipeline project to transport crude oil from Patoka, Illinois, to Beaumont, Texas, and onward to Houston.
Avaya has agreed to a buyout offer of $8.2 billion in cash, or $17.50 a share, from private equity firms TPG Capital and Silver Lake.
Federal Reserve Chairman Ben Bernanke said Tuesday that the current "benign" risk environment in global financial markets might not persist forever, which could prove problematic should some disruptive event occur.
Barry Ritholtz: "it isn't too hard to imagine some point in the future where Oil or even Gold is priced in Euros - THATS a situation with grave consequences." I have been talking about this point for over one year. It will happen sooner rather than later.
Nouriel Roubini: " By now it is estimated that credit derivatives alone are $26 trillion, increasingly issued and traded by a variety of highly leveraged institutions, including hedge funds. The systemic risk implications of the operations of hedge funds, high global liquidity, releveraging of investors and greater complacency in risk management practices is something regulators are starting to worry. These concerns are partly triggered by the fact that the degree of leverage at the micro level - that of individual investors or institutions - may be much smaller than the macro aggregate level of leverage that could be the source of systemic risk. The following example shows how leverage can pile up in a "debt house of cards"...
Richard Daughty: "Up to now, the price inflation was the "fun" kind, as it went into stocks, bonds, housing, and more and bigger government programs giving research money, grant money, stipend money, program money, entitlement money, block transfer money, bribe money, and more money, money, money to more and more people. The real, underlying tragedy is that the economy mutated from one that makes goods and services that people want to buy, into one that produces goods and services that the government buys. Now inflation is showing up in the "not fun" category, namely food and stuff you have to buy just to stay alive."
Ron Burkle has joined a union representing Dow Jones & Co. Inc. employees to try to formulate a counter-offer to a $5 billion bid for the company from Rupert Murdoch's News Corp., a union official said on Tuesday. Burkle has told the union that he's interested in working with it to put together an offer, said Steven Yount, a representative for the Independent Association of Publishers' Employees (IAPE), which represents 2,000 Dow Jones workers.
Bank of Japan governor Toshihiko Fukui said the central bank intended to adjust interest rates "gradually" as the economic fundamentals improve. "These adjustments assume no pre-set time frame," Fukui said in a speech to a bankers' conference in Cape Town, South Africa.
A powerful cyclone hit Oman and briefly disrupted exports from the Gulf energy producer. The storm, the worst to hit Oman in 30 years, forced thousands of people from Masirah Island in the Arabian Sea and temporarily closed a terminal shipping 650,000 barrels a day of crude. Supplies from top oil exporter Saudi Arabia, Oman's western neighbor, were expected to escape disruption.
The European Energy Exchange, the region's biggest bourse for power trading, will offer contracts in certified emission reduction credits this year, as greenhouse gas trading expands. Buying and selling CER credits, which are approved by the United Nations and derived from projects that curb greenhouse gases in developing nations, will ``be launched in the course of this year,'' EEX said.
BCE Inc.said late Tuesday another group is entering into discussions to explore the possibility of taking the company private. Montreal-based BCE, which owns Bell Canada, said the consortium includes Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan and Providence Equity Partners Inc.
The benchmark 10-year Treasury note fell 11/32 to close at 96-10/32 with a yield of 4.974%. The yield on the 2-year note broke through the 5% level for the first time since August.
July crude fell 60 cents to close at $65.61 a barrel in New York Tuesday. July natural gas fell by 1.6%, or 12.7 cents, to end at $8.064 per million British thermal units.
August gold fell $1.20 to close at $675.10 an ounce Tuesday. July silver rose 6.7 cents to close at $13.812 an ounce, but July copper fell 2.65 cents to end at $3.4415 a pound.
Two hedge funds took an 8.4% stake in TD Ameritrade Holding and sent the online brokerage a letter urging it to merge with either E*Trade Financial or Charles Schwab. TD Ameritrade expressed willingness to consider such an offer.
Laureate Education Inc. said Monday that it has agreed to go private for $3.82 billion in cash from a group led by the higher education company's chairman and chief executive officer. The sweetened offer of $62 per share tops the investor group's earlier bid of $60.50 per share, a deal that some of Laureate's major investors said was too low. A tender offer for Laureate's shares is scheduled to begin Friday.
The ISM non-manufacturing index rose to 59.7% from 56% in April. It's the highest since April 2006. Twelve of 15 industries were expanding in May.
Bed Bath & Beyond fell 5.7% after the retailer issued a profit warning, prompting Goldman Sachs to downgrade the stock to neutral from buy.
Enbridge Inc.and ExxonMobil agreed to jointly assess the commercial development of a new pipeline project to transport crude oil from Patoka, Illinois, to Beaumont, Texas, and onward to Houston.
Avaya has agreed to a buyout offer of $8.2 billion in cash, or $17.50 a share, from private equity firms TPG Capital and Silver Lake.
Federal Reserve Chairman Ben Bernanke said Tuesday that the current "benign" risk environment in global financial markets might not persist forever, which could prove problematic should some disruptive event occur.
Barry Ritholtz: "it isn't too hard to imagine some point in the future where Oil or even Gold is priced in Euros - THATS a situation with grave consequences." I have been talking about this point for over one year. It will happen sooner rather than later.
Nouriel Roubini: " By now it is estimated that credit derivatives alone are $26 trillion, increasingly issued and traded by a variety of highly leveraged institutions, including hedge funds. The systemic risk implications of the operations of hedge funds, high global liquidity, releveraging of investors and greater complacency in risk management practices is something regulators are starting to worry. These concerns are partly triggered by the fact that the degree of leverage at the micro level - that of individual investors or institutions - may be much smaller than the macro aggregate level of leverage that could be the source of systemic risk. The following example shows how leverage can pile up in a "debt house of cards"...
Richard Daughty: "Up to now, the price inflation was the "fun" kind, as it went into stocks, bonds, housing, and more and bigger government programs giving research money, grant money, stipend money, program money, entitlement money, block transfer money, bribe money, and more money, money, money to more and more people. The real, underlying tragedy is that the economy mutated from one that makes goods and services that people want to buy, into one that produces goods and services that the government buys. Now inflation is showing up in the "not fun" category, namely food and stuff you have to buy just to stay alive."
Ron Burkle has joined a union representing Dow Jones & Co. Inc. employees to try to formulate a counter-offer to a $5 billion bid for the company from Rupert Murdoch's News Corp., a union official said on Tuesday. Burkle has told the union that he's interested in working with it to put together an offer, said Steven Yount, a representative for the Independent Association of Publishers' Employees (IAPE), which represents 2,000 Dow Jones workers.
Bank of Japan governor Toshihiko Fukui said the central bank intended to adjust interest rates "gradually" as the economic fundamentals improve. "These adjustments assume no pre-set time frame," Fukui said in a speech to a bankers' conference in Cape Town, South Africa.
A powerful cyclone hit Oman and briefly disrupted exports from the Gulf energy producer. The storm, the worst to hit Oman in 30 years, forced thousands of people from Masirah Island in the Arabian Sea and temporarily closed a terminal shipping 650,000 barrels a day of crude. Supplies from top oil exporter Saudi Arabia, Oman's western neighbor, were expected to escape disruption.
The European Energy Exchange, the region's biggest bourse for power trading, will offer contracts in certified emission reduction credits this year, as greenhouse gas trading expands. Buying and selling CER credits, which are approved by the United Nations and derived from projects that curb greenhouse gases in developing nations, will ``be launched in the course of this year,'' EEX said.
BCE Inc.said late Tuesday another group is entering into discussions to explore the possibility of taking the company private. Montreal-based BCE, which owns Bell Canada, said the consortium includes Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan and Providence Equity Partners Inc.
The benchmark 10-year Treasury note fell 11/32 to close at 96-10/32 with a yield of 4.974%. The yield on the 2-year note broke through the 5% level for the first time since August.
July crude fell 60 cents to close at $65.61 a barrel in New York Tuesday. July natural gas fell by 1.6%, or 12.7 cents, to end at $8.064 per million British thermal units.
August gold fell $1.20 to close at $675.10 an ounce Tuesday. July silver rose 6.7 cents to close at $13.812 an ounce, but July copper fell 2.65 cents to end at $3.4415 a pound.
Two hedge funds took an 8.4% stake in TD Ameritrade Holding and sent the online brokerage a letter urging it to merge with either E*Trade Financial or Charles Schwab. TD Ameritrade expressed willingness to consider such an offer.
Monday, June 04, 2007
More Deals
6/5/07 More Deals
Dominion agreed to sell most of its U.S. onshore natural gas and oil exploration and production operations in two separate transactions for a total of approximately $6.5 billion. These operations include 3.51 trillion cubic feet equivalent of proved natural gas and oil reserves as of Dec. 31, 2006. Loews Corp is buying Dominion's Permian Basin, Mich. and Alabama operations for $4.025 billion and XTO Energy is buying Dominion's operations in the Rocky Mountains, Gulf Coast, San Juan Basin and South Louisiana for $2.5 billion.
Flextronics International Ltd. agreed to acquire Solectron Corp. Shareholders of Solectron will receive total consideration valued at about $3.6 billion, based on the Friday closing price of Singapore-based Flextronics' ordinary shares. The buyout price represents a premium of some 20% over Solectron's closing price of $3.37 on June 1. Stockholders of Milpitas, Calif.-based Solectron can receive 0.3450 share of Flextronics or a cash payment of $3.89 for each of their shares, with a limit of 70% pegged on the aggregate amount of Solectron shares that can be converted into Flextronics stock.
Palm Inc. said it would recapitalize by selling 25% of the company for $325 million to the Menlo Park, Calif., private-equity firm Elevation Partners. Existing shareholders, whose stake in Palm drops to 75%, will get a distribution of $9 a share, Palm said.
Avaya Inc. may have two top suitors: TPG Capital and Silver Lake Partners were closing in on an about $17-a-share deal for the Basking Ridge, N.J., telecom-solutions provider, people familiar with the matter told The Wall Street Journal. The deal isn't certain: Nortel Networks or another rival could yet step in and grab Avaya, the Journal reported.
Atlas Pipeline Partners L.P. agreed to acquire control of Anadarko Petroleum Corp.'s interests in the Chaney Dell and Midkiff/Benedum natural-gas-gathering and -processing systems for $1.85 billion. Atlas Pipeline's board has approved the deal and the company expects to close it around July 11. Atlas America Inc. holds owns 17.5 million units, or 83% of the limited-partner interest, in Atlas Pipeline Holdings LP. Atlas Pipeline Holdings, in turn, controls the general-partner interest in Atlas Pipeline Partners. Atlas America also controls 80% of the common units and holds certain other interests in Atlas Energy Resources. As a result of the deal, Atlas Pipeline plans a distribution of $3.80 to $4 per limited-partner unit in 2008.
Cadence Design Systems, a maker of software for designing microchips, is in talks with at least two buyout firms about a possible sale, the New York Times reported in its online edition on Monday.
Orders placed with American factories rose less than forecast in April, suggesting businesses may still be working inventories down before restocking. Bookings increased 0.3 percent, following a 4.1 percent gain in March, the Commerce Department said in Washington. Excluding transportation equipment, bookings rose 0.7 percent after a 2.4 percent gain in March.
China's benchmark stock index plunged 7.7 percent after the government's main business newspaper signaled officials won't try to halt a slump that's erased more than $350 billion of market value in four days.
John Hussman: "For our part, we aren't taking significant risks here – bullish or bearish. Essentially, my investment view is that the market is in a speculative blowoff that may continue to grind marginally higher, but is also vulnerable to abrupt, possibly spectacular losses. Overall, based on prevailing conditions, market risk is not worth taking (as usual, nearly every dollar of my net worth is invested in the Hussman Funds, so I am far from a passive observer).Currently, the Strategic Growth Fund is fully hedged – not relying on a continued advance, nor relying on a plunge (though the current overvalued, overbought, overbullish, rising-yield conditions strongly suggest that a market plunge shouldn't be ruled out)."
The iPhone will be available June 29.
There's a $4.75 a barrel spread between Brent crude and Nymex crude.
World-wide chip sales hit $19.9 billion in April, edging up 1.6% from $19.6 billion a year earlier, but slipping 2.1% from $20.3 billion the previous month, according to the Semiconductor Industry Association, the chip industry's trade group.
BP declared a "force majeure" on Canadian crude supply to its Whiting, Ind., plant Friday, meaning that the company cannot meet its contract requirements to purchase oil from Canadian suppliers to the refinery.
Orders for core capital equipment goods rose 2.1% in April, revised up from 1.2% reported two weeks ago, the government said. Shipments of core capital goods - which exclude both defense goods and civilian aircraft - increased 1%, ahead of the 0.7% previously reported. Total factory orders rose 0.3% in April, below the 0.8% expected by economists.
Early Monday, Doral Financial said a private bank called FBOP Corp. offered to buy an 80 percent stake in the company for $610 million. FBOP also offered to lend Doral Financial $150 million. Doral Financial needs the money because it will owe $625 million to its bondholders on July 20 and also faces legal expenses.
Gas for July delivery rose 33.2 cents, or 4.2 percent, to $8.21 per million British thermal units to settle at 2:44 p.m. on the New York Mercantile Exchange. The settle was the highest price since December 1, 2006, when gas closed at $8.422.
Iran's Supreme Leader Ayatollah Ali Khamenei said Iran, the world's fourth biggest oil exporter, would not retreat from the "field of danger" to protect its right to develop nuclear technology. Plans by the US to install a missile defense system in eastern Europe to defend NATO allies are "the joke of the year," Iranian envoy Ali Larijani said Monday.
There was word that a cyclone was headed towards the oil-producing Arabian peninsula with a potential to disrupt shipping and output.
Crude for July delivery closed up $1.13 at $66.21 a barrel on the New York Mercantile Exchange. July natural gas rose 31.3 cents, or 4%, at $8.191 per million British thermal units. July heating oil closed up 4.18 cents, or 2%, at $1.9646 a gallon. July reformulated-gasoline fell 0.66 cent to $2.2380 a gallon.
Gold for June delivery closed down 50 cents at $670.70 an ounce on the New York Mercantile Exchange. July silver edged up 5 cents at $13.745 an ounce. July platinum closed up $7.40 at $1,303.0 an ounce. September palladium closed up 5 cents at $377.50 an ounce. July copper rallied 6.35 cents at $3.4680 a pound.
Winston Churchill: "The power of the Executive to cast a man into prison without formulating any charge known to the law, and particularly to deny him the judgment of his peers, is in the highest degree odious and is the foundation of all totalitarian governments whether Nazi or Communist."
Openwave Systems Inc. said its board is rejecting the unsolicited partial tender offer from Harbinger Capital Partners to purchase 49% of the company's outstanding stock for $8.30 per share in cash. Openwave called the offer "inadequate," and recommended that the company's shareholders not tender their shares. The company also declared a $100 million, or $1.20 per share, special cash dividend, and said it plans to cut 20% of its workforce, generating annual cost savings of $50 million a year.
Chittenden Corp. has agreed to acquire Community Bank & Trust Co. for about $124.1 million in a cash-and-stock deal. Under the terms of the agreement, Community shareholders can elect to receive $33.37 a share in cash, with total cash consideration of about $33.4 million, or 1.1293 shares of Chittenden common stock for each share of Community stock they own, Chittenden said.
The Chandler Trusts now hold about 17 percent of Tribune's outstanding shares, down from about 20 percent before the tender offer. The Chandler Trusts have agreed to sell all remaining Tribune shares through a block trade underwritten by Goldman, Sachs & Co., Tribune said.
Susan George: "Much of what is called investment is actually nothing more than mergers and acquisitions, and of course mergers and acquisitions are generally accompanied by downsizing."
Dominion agreed to sell most of its U.S. onshore natural gas and oil exploration and production operations in two separate transactions for a total of approximately $6.5 billion. These operations include 3.51 trillion cubic feet equivalent of proved natural gas and oil reserves as of Dec. 31, 2006. Loews Corp is buying Dominion's Permian Basin, Mich. and Alabama operations for $4.025 billion and XTO Energy is buying Dominion's operations in the Rocky Mountains, Gulf Coast, San Juan Basin and South Louisiana for $2.5 billion.
Flextronics International Ltd. agreed to acquire Solectron Corp. Shareholders of Solectron will receive total consideration valued at about $3.6 billion, based on the Friday closing price of Singapore-based Flextronics' ordinary shares. The buyout price represents a premium of some 20% over Solectron's closing price of $3.37 on June 1. Stockholders of Milpitas, Calif.-based Solectron can receive 0.3450 share of Flextronics or a cash payment of $3.89 for each of their shares, with a limit of 70% pegged on the aggregate amount of Solectron shares that can be converted into Flextronics stock.
Palm Inc. said it would recapitalize by selling 25% of the company for $325 million to the Menlo Park, Calif., private-equity firm Elevation Partners. Existing shareholders, whose stake in Palm drops to 75%, will get a distribution of $9 a share, Palm said.
Avaya Inc. may have two top suitors: TPG Capital and Silver Lake Partners were closing in on an about $17-a-share deal for the Basking Ridge, N.J., telecom-solutions provider, people familiar with the matter told The Wall Street Journal. The deal isn't certain: Nortel Networks or another rival could yet step in and grab Avaya, the Journal reported.
Atlas Pipeline Partners L.P. agreed to acquire control of Anadarko Petroleum Corp.'s interests in the Chaney Dell and Midkiff/Benedum natural-gas-gathering and -processing systems for $1.85 billion. Atlas Pipeline's board has approved the deal and the company expects to close it around July 11. Atlas America Inc. holds owns 17.5 million units, or 83% of the limited-partner interest, in Atlas Pipeline Holdings LP. Atlas Pipeline Holdings, in turn, controls the general-partner interest in Atlas Pipeline Partners. Atlas America also controls 80% of the common units and holds certain other interests in Atlas Energy Resources. As a result of the deal, Atlas Pipeline plans a distribution of $3.80 to $4 per limited-partner unit in 2008.
Cadence Design Systems, a maker of software for designing microchips, is in talks with at least two buyout firms about a possible sale, the New York Times reported in its online edition on Monday.
Orders placed with American factories rose less than forecast in April, suggesting businesses may still be working inventories down before restocking. Bookings increased 0.3 percent, following a 4.1 percent gain in March, the Commerce Department said in Washington. Excluding transportation equipment, bookings rose 0.7 percent after a 2.4 percent gain in March.
China's benchmark stock index plunged 7.7 percent after the government's main business newspaper signaled officials won't try to halt a slump that's erased more than $350 billion of market value in four days.
John Hussman: "For our part, we aren't taking significant risks here – bullish or bearish. Essentially, my investment view is that the market is in a speculative blowoff that may continue to grind marginally higher, but is also vulnerable to abrupt, possibly spectacular losses. Overall, based on prevailing conditions, market risk is not worth taking (as usual, nearly every dollar of my net worth is invested in the Hussman Funds, so I am far from a passive observer).Currently, the Strategic Growth Fund is fully hedged – not relying on a continued advance, nor relying on a plunge (though the current overvalued, overbought, overbullish, rising-yield conditions strongly suggest that a market plunge shouldn't be ruled out)."
The iPhone will be available June 29.
There's a $4.75 a barrel spread between Brent crude and Nymex crude.
World-wide chip sales hit $19.9 billion in April, edging up 1.6% from $19.6 billion a year earlier, but slipping 2.1% from $20.3 billion the previous month, according to the Semiconductor Industry Association, the chip industry's trade group.
BP declared a "force majeure" on Canadian crude supply to its Whiting, Ind., plant Friday, meaning that the company cannot meet its contract requirements to purchase oil from Canadian suppliers to the refinery.
Orders for core capital equipment goods rose 2.1% in April, revised up from 1.2% reported two weeks ago, the government said. Shipments of core capital goods - which exclude both defense goods and civilian aircraft - increased 1%, ahead of the 0.7% previously reported. Total factory orders rose 0.3% in April, below the 0.8% expected by economists.
Early Monday, Doral Financial said a private bank called FBOP Corp. offered to buy an 80 percent stake in the company for $610 million. FBOP also offered to lend Doral Financial $150 million. Doral Financial needs the money because it will owe $625 million to its bondholders on July 20 and also faces legal expenses.
Gas for July delivery rose 33.2 cents, or 4.2 percent, to $8.21 per million British thermal units to settle at 2:44 p.m. on the New York Mercantile Exchange. The settle was the highest price since December 1, 2006, when gas closed at $8.422.
Iran's Supreme Leader Ayatollah Ali Khamenei said Iran, the world's fourth biggest oil exporter, would not retreat from the "field of danger" to protect its right to develop nuclear technology. Plans by the US to install a missile defense system in eastern Europe to defend NATO allies are "the joke of the year," Iranian envoy Ali Larijani said Monday.
There was word that a cyclone was headed towards the oil-producing Arabian peninsula with a potential to disrupt shipping and output.
Crude for July delivery closed up $1.13 at $66.21 a barrel on the New York Mercantile Exchange. July natural gas rose 31.3 cents, or 4%, at $8.191 per million British thermal units. July heating oil closed up 4.18 cents, or 2%, at $1.9646 a gallon. July reformulated-gasoline fell 0.66 cent to $2.2380 a gallon.
Gold for June delivery closed down 50 cents at $670.70 an ounce on the New York Mercantile Exchange. July silver edged up 5 cents at $13.745 an ounce. July platinum closed up $7.40 at $1,303.0 an ounce. September palladium closed up 5 cents at $377.50 an ounce. July copper rallied 6.35 cents at $3.4680 a pound.
Winston Churchill: "The power of the Executive to cast a man into prison without formulating any charge known to the law, and particularly to deny him the judgment of his peers, is in the highest degree odious and is the foundation of all totalitarian governments whether Nazi or Communist."
Openwave Systems Inc. said its board is rejecting the unsolicited partial tender offer from Harbinger Capital Partners to purchase 49% of the company's outstanding stock for $8.30 per share in cash. Openwave called the offer "inadequate," and recommended that the company's shareholders not tender their shares. The company also declared a $100 million, or $1.20 per share, special cash dividend, and said it plans to cut 20% of its workforce, generating annual cost savings of $50 million a year.
Chittenden Corp. has agreed to acquire Community Bank & Trust Co. for about $124.1 million in a cash-and-stock deal. Under the terms of the agreement, Community shareholders can elect to receive $33.37 a share in cash, with total cash consideration of about $33.4 million, or 1.1293 shares of Chittenden common stock for each share of Community stock they own, Chittenden said.
The Chandler Trusts now hold about 17 percent of Tribune's outstanding shares, down from about 20 percent before the tender offer. The Chandler Trusts have agreed to sell all remaining Tribune shares through a block trade underwritten by Goldman, Sachs & Co., Tribune said.
Susan George: "Much of what is called investment is actually nothing more than mergers and acquisitions, and of course mergers and acquisitions are generally accompanied by downsizing."
Sunday, June 03, 2007
The Killing Surge
6/4/07 The Killing Surge
Fourteen American soldiers were killed in three deadly days in Iraq, the U.S. military said Sunday, including four in a single roadside bombing and one who was struck by a suicide bomber while on a foot patrol southwest of the capital.
Russian President Putin warned that U.S. plans to build a missile defense system in Eastern Europe would force Moscow to target its weapons against Europe.
Qiagen NV , a maker of genetic testing equipment, said on Sunday it will acquire Digene Corp. for $1.6 billion in cash and stock, to expand into testing for cervical cancer and sexually transmitted diseases. The deal values Digene shares at $61.25, a 37 percent premium to its closing price on the Nasdaq on Friday, the companies said in a joint statement.
The European Central Bank is poised this week to raise its 2007 forecasts for eurozone inflation and growth, heightening the chances that further interest rate rises will follow an increase likely to be announced on Wednesday.
Blackstone will buy Alliant Insurance Services for about $1 billion.
Tata Motors is on schedule to launch its Rs100,000 ($2,467) car by the third quarter of 2008 and may unveil it at next January’s Auto Expo in Delhi, Ravi Kant, its managing director, told the Financial Times.
Mike Burk: "Since 1963 the OTC has been up 55% of the time in June with an average gain of 0.5%. During the 3rd year of the Presidential Cycle the OTC has been up 82% of the time with an average gain of 3.1%...Since 1928 the SPX has been up 55% of the time in June with an average gain of 1.0%. During the 3rd year of the Presidential Cycle the SPX has been up 68% of the time with an average gain of 2.8%...The first week of June during the 3rd year of the Presidential Cycle is the strongest part of a strong month. I expect the major indices to be higher on Friday June 8 than they were on Friday June 1."
Fourteen American soldiers were killed in three deadly days in Iraq, the U.S. military said Sunday, including four in a single roadside bombing and one who was struck by a suicide bomber while on a foot patrol southwest of the capital.
Russian President Putin warned that U.S. plans to build a missile defense system in Eastern Europe would force Moscow to target its weapons against Europe.
Qiagen NV , a maker of genetic testing equipment, said on Sunday it will acquire Digene Corp. for $1.6 billion in cash and stock, to expand into testing for cervical cancer and sexually transmitted diseases. The deal values Digene shares at $61.25, a 37 percent premium to its closing price on the Nasdaq on Friday, the companies said in a joint statement.
The European Central Bank is poised this week to raise its 2007 forecasts for eurozone inflation and growth, heightening the chances that further interest rate rises will follow an increase likely to be announced on Wednesday.
Blackstone will buy Alliant Insurance Services for about $1 billion.
Tata Motors is on schedule to launch its Rs100,000 ($2,467) car by the third quarter of 2008 and may unveil it at next January’s Auto Expo in Delhi, Ravi Kant, its managing director, told the Financial Times.
Mike Burk: "Since 1963 the OTC has been up 55% of the time in June with an average gain of 0.5%. During the 3rd year of the Presidential Cycle the OTC has been up 82% of the time with an average gain of 3.1%...Since 1928 the SPX has been up 55% of the time in June with an average gain of 1.0%. During the 3rd year of the Presidential Cycle the SPX has been up 68% of the time with an average gain of 2.8%...The first week of June during the 3rd year of the Presidential Cycle is the strongest part of a strong month. I expect the major indices to be higher on Friday June 8 than they were on Friday June 1."
Saturday, June 02, 2007
What Else Is New?
6/3/07 What Else Is New?
Gunmen disguised as riot police have abducted four foreign workers from the residential compound of oil services giant Schlumberger in Nigeria's oil city Port Harcourt, authorities said on Saturday.
The number of civilians killed in Iraq jumped to nearly 2,000 in May, the highest monthly toll since the start of a U.S.-backed security crackdown in February, according to figures released on Saturday.
NASA scientists reading signals from a satellite in orbit, and flying aboard a low-flying plane over Greenland, are finding fresh evidence of melting snows and thinning glaciers in vast areas of Greenland.
Genentech Inc. said adding its Avastin to a chemotherapy combination slowed the growth of lung tumors at both high and low doses in a study.
Google announced that it has purchased Feedburner. This will allow Google to embed its ads in RSS feeds. Feedburner works extensively with blog sites.
Pending Home Sales for April fell -3.2% versus estimates of a .3% gain and a -4.5% decline in March.
Nouriel Roubini: "Today instead we are presumed to believe that $157 jobs were created in May and that employment change in construction was close to zero in spite of the fact that housing starts have fallen over 30% from peak, in spite of the fact that the housing recession is worsening and, in spite of the fact that numerous studies suggest that a good third of all construction jobs are undocumented. Based on the historical correlation between housing starts and construction employment we should be observing now at least 50K job losses per month in construction alone. Add to those the dozens of thousands of workers being fired as about forty sub-prime lenders are closing shop; add to those the dozens of thousands of mortgage brokers, mortgage lenders employees, real estate brokers and agents that are now losing their jobs. Do these job losses appear anywhere in the employment report? Not even the shadow if it: in May the BLS reported that “real estate” related employees in financial institutions were actually up 1.4K? Does anyone believe that? "
International investors own $672 billion of the $835.4 billion Treasuries due in three to 10 years, according to…Lawrence Dyer, strategist at HSBC Securities USA Inc.
Doug Noland: "As I’ve noted in previous analyses, the aggressive financial sector expansion in the face of slowing Non-Financial Debt was the notable 2006 development. From the Fed’s Z.1 report, nominal Non-Financial Debt growth slowed to $2.100 TN from 2005’s $2.279 TN. Yet at the same time Financial Sector Credit Market Borrowings (that exclude some categories of financial sector borrowings, i.e. deposit growth) increased a record $1.200 TN, up significantly from 2005’s $1.040 TN. Remarkably, Broker/Dealer assets surged 29% last year to $2.742 TN.
The slowdown in Non-financial debt growth has been consistent with moderating nominal GDP (as one should expect). What has caught many analysts by surprise, however, is the acceleration of Income Growth and overly abundant marketplace liquidity (with booming global stock markets). In both cases, the rapid expansion of Financial Sector debt has played the prevailing role...It has become rather obvious that financial sector Credit expansion is financing much of the acquisitions boom.
Deals are driving record debt issuance, and each acquisition completed with debt adds additional “liquidity” into the system. Some of this new liquidity flows to the sellers, where it will be used to purchase other assets or financial instruments. Some of this newly created liquidity is enjoyed by the acquirer through the currently popular private-equity “special dividend.” Some of the new financial Credit becomes Revenues and Income for the various financial intermediaries and their accountant and attorneys...Clearly, the massive expansion of Financial Credit is boosting Income, gains on assets sales, foreign flows recycled back into the U.S. economy and confidence generally. As such, it today requires less – and perhaps significantly less – household, corporate and government debt growth to sustain the U.S. Bubble than would normally be the case...I’ve argued for too long that the U.S. Credit Bubble is acutely vulnerable to a spike in interest rates. With the booming U.S. financial sector and global financial and economic Bubbles as a backdrop, we might now be only a growth spurt and a negative inflation surprise from testing this thesis. Deleveraging and the unwinding of speculative positions – and the associated reversal of today’s key sources and flows of liquidity - would be especially debilitating for our unstable financial sector and economy. And that’s, as they say, The Other Side to the Story."
Gunmen disguised as riot police have abducted four foreign workers from the residential compound of oil services giant Schlumberger in Nigeria's oil city Port Harcourt, authorities said on Saturday.
The number of civilians killed in Iraq jumped to nearly 2,000 in May, the highest monthly toll since the start of a U.S.-backed security crackdown in February, according to figures released on Saturday.
NASA scientists reading signals from a satellite in orbit, and flying aboard a low-flying plane over Greenland, are finding fresh evidence of melting snows and thinning glaciers in vast areas of Greenland.
Genentech Inc. said adding its Avastin to a chemotherapy combination slowed the growth of lung tumors at both high and low doses in a study.
Google announced that it has purchased Feedburner. This will allow Google to embed its ads in RSS feeds. Feedburner works extensively with blog sites.
Pending Home Sales for April fell -3.2% versus estimates of a .3% gain and a -4.5% decline in March.
Nouriel Roubini: "Today instead we are presumed to believe that $157 jobs were created in May and that employment change in construction was close to zero in spite of the fact that housing starts have fallen over 30% from peak, in spite of the fact that the housing recession is worsening and, in spite of the fact that numerous studies suggest that a good third of all construction jobs are undocumented. Based on the historical correlation between housing starts and construction employment we should be observing now at least 50K job losses per month in construction alone. Add to those the dozens of thousands of workers being fired as about forty sub-prime lenders are closing shop; add to those the dozens of thousands of mortgage brokers, mortgage lenders employees, real estate brokers and agents that are now losing their jobs. Do these job losses appear anywhere in the employment report? Not even the shadow if it: in May the BLS reported that “real estate” related employees in financial institutions were actually up 1.4K? Does anyone believe that? "
International investors own $672 billion of the $835.4 billion Treasuries due in three to 10 years, according to…Lawrence Dyer, strategist at HSBC Securities USA Inc.
Doug Noland: "As I’ve noted in previous analyses, the aggressive financial sector expansion in the face of slowing Non-Financial Debt was the notable 2006 development. From the Fed’s Z.1 report, nominal Non-Financial Debt growth slowed to $2.100 TN from 2005’s $2.279 TN. Yet at the same time Financial Sector Credit Market Borrowings (that exclude some categories of financial sector borrowings, i.e. deposit growth) increased a record $1.200 TN, up significantly from 2005’s $1.040 TN. Remarkably, Broker/Dealer assets surged 29% last year to $2.742 TN.
The slowdown in Non-financial debt growth has been consistent with moderating nominal GDP (as one should expect). What has caught many analysts by surprise, however, is the acceleration of Income Growth and overly abundant marketplace liquidity (with booming global stock markets). In both cases, the rapid expansion of Financial Sector debt has played the prevailing role...It has become rather obvious that financial sector Credit expansion is financing much of the acquisitions boom.
Deals are driving record debt issuance, and each acquisition completed with debt adds additional “liquidity” into the system. Some of this new liquidity flows to the sellers, where it will be used to purchase other assets or financial instruments. Some of this newly created liquidity is enjoyed by the acquirer through the currently popular private-equity “special dividend.” Some of the new financial Credit becomes Revenues and Income for the various financial intermediaries and their accountant and attorneys...Clearly, the massive expansion of Financial Credit is boosting Income, gains on assets sales, foreign flows recycled back into the U.S. economy and confidence generally. As such, it today requires less – and perhaps significantly less – household, corporate and government debt growth to sustain the U.S. Bubble than would normally be the case...I’ve argued for too long that the U.S. Credit Bubble is acutely vulnerable to a spike in interest rates. With the booming U.S. financial sector and global financial and economic Bubbles as a backdrop, we might now be only a growth spurt and a negative inflation surprise from testing this thesis. Deleveraging and the unwinding of speculative positions – and the associated reversal of today’s key sources and flows of liquidity - would be especially debilitating for our unstable financial sector and economy. And that’s, as they say, The Other Side to the Story."
Friday, June 01, 2007
More Government Data
6/2/07 More Government Data
Here's the data. Believe it at your own risk
Core consumer price inflation increased just 0.1% in April, bringing the year-over-year increase down to 2%, just inside the Federal Reserve's target, the Commerce Department reported Friday. It's the first time in 14 months that core prices have been inside the Fed's unofficial target zone of 1% to 2%. Personal incomes unexpectedly fell 0.1% in April, after hefty bonuses were paid in the first quarter. Real disposable incomes (after accounting for taxes and inflation) fell 0.4%, the first decline in a year. Consumer spending, meanwhile, rose a larger-than-expected 0.5% in April in nominal terms. After adjusting for a 0.3% rise in consumer prices, real spending increased 0.2%.
Nonfarm payrolls expanded by 157,000 in May. The unemployment rate held steady at 4.5%, in line with expectations. Average hourly earnings increased 6 cents, or 0.3% to $17.30. Earnings are up 3.8% in the past year. The average workweek rose slightly to 33.9 hours from 33.8 hours in April.
Basically, the hours worked each week remain at a low level and wages cannot seem to get a push above inflation. Of course, if you eat or fill up your car, you might find that wages trail real inflation by a great deal.
Late Thursday, Dow Jones said it would meet with News Corp. to address Rupert Murdoch's $5 billion bid for Dow Jones. The Bancroft family, which controls 64% of the company's voting power, said it would consider other bidders and options. It appears likely the company will be sold, but at what level above $61? How does one actually get a reasonable return at let's say $67?
The benchmark 10-year Treasury note finished down 16/32 at 96 15/32, yielding 4.956%, up from 4.892% late Thursday. In intraday trade, the yield traded as high as 4.956%; it last was this high on Aug. 15. The 2-year note ended down 3/32 at 99 26/32, with a yield of 4.975%, keeping the yield curve inverted.
July crude closed at $65.08 a barrel Friday, up 1.7%, or $1.07. July reformulated gasoline rose by 1.9% to close at $2.2446 a gallon. Still, July crude finished 12 cents lower for the week and July reformulated gas lost almost 7 cents. July natural gas fell 5.7 cents to close at $7.878 per million British thermal units, though it was up 1.1% for the week.
June gold closed at $671.20 an ounce and August gold closed at $676.90. Both contracts gained $10.20 for the session and ended the week more than 2% higher. July closed at $13.74 an ounce, up 2% for the day and up 5.7% for the week. July copper gained 0.95 cent to end at $3.405 a pound, up 2.5% for the week.
Wal-Mart Stores Inc. announced a new $15 billion stock buyback program and plans to slow the growth of its supercenters in the United States and reduce capital expenditures. The Bentonville, Ark.-based retailing giant now expects to open between 190 and 200 new U.S. supercenters during the current fiscal year and roughly 170 each year for the next three fiscal years. The company had previously said it expected to open 265 to 270 supercenters in the U.S. in the current fiscal year.
The ISM index rose to 55% from 54.7% in April. The new-orders index rose to 59.6% from 58.5% in April. The production index rose to 58.3% from 57.3% in April. The employment index fell to 51.9% from 53.1% in April. The prices-paid index fell to 71% from 73% in April.
I found it particularly interesting that the dollar did not hold a rally with interest rates rising and closing in on 5%. In addition, the despite the stronger ISM, the dollar could not keep even a little strength.
Here's the data. Believe it at your own risk
Core consumer price inflation increased just 0.1% in April, bringing the year-over-year increase down to 2%, just inside the Federal Reserve's target, the Commerce Department reported Friday. It's the first time in 14 months that core prices have been inside the Fed's unofficial target zone of 1% to 2%. Personal incomes unexpectedly fell 0.1% in April, after hefty bonuses were paid in the first quarter. Real disposable incomes (after accounting for taxes and inflation) fell 0.4%, the first decline in a year. Consumer spending, meanwhile, rose a larger-than-expected 0.5% in April in nominal terms. After adjusting for a 0.3% rise in consumer prices, real spending increased 0.2%.
Nonfarm payrolls expanded by 157,000 in May. The unemployment rate held steady at 4.5%, in line with expectations. Average hourly earnings increased 6 cents, or 0.3% to $17.30. Earnings are up 3.8% in the past year. The average workweek rose slightly to 33.9 hours from 33.8 hours in April.
Basically, the hours worked each week remain at a low level and wages cannot seem to get a push above inflation. Of course, if you eat or fill up your car, you might find that wages trail real inflation by a great deal.
Late Thursday, Dow Jones said it would meet with News Corp. to address Rupert Murdoch's $5 billion bid for Dow Jones. The Bancroft family, which controls 64% of the company's voting power, said it would consider other bidders and options. It appears likely the company will be sold, but at what level above $61? How does one actually get a reasonable return at let's say $67?
The benchmark 10-year Treasury note finished down 16/32 at 96 15/32, yielding 4.956%, up from 4.892% late Thursday. In intraday trade, the yield traded as high as 4.956%; it last was this high on Aug. 15. The 2-year note ended down 3/32 at 99 26/32, with a yield of 4.975%, keeping the yield curve inverted.
July crude closed at $65.08 a barrel Friday, up 1.7%, or $1.07. July reformulated gasoline rose by 1.9% to close at $2.2446 a gallon. Still, July crude finished 12 cents lower for the week and July reformulated gas lost almost 7 cents. July natural gas fell 5.7 cents to close at $7.878 per million British thermal units, though it was up 1.1% for the week.
June gold closed at $671.20 an ounce and August gold closed at $676.90. Both contracts gained $10.20 for the session and ended the week more than 2% higher. July closed at $13.74 an ounce, up 2% for the day and up 5.7% for the week. July copper gained 0.95 cent to end at $3.405 a pound, up 2.5% for the week.
Wal-Mart Stores Inc. announced a new $15 billion stock buyback program and plans to slow the growth of its supercenters in the United States and reduce capital expenditures. The Bentonville, Ark.-based retailing giant now expects to open between 190 and 200 new U.S. supercenters during the current fiscal year and roughly 170 each year for the next three fiscal years. The company had previously said it expected to open 265 to 270 supercenters in the U.S. in the current fiscal year.
The ISM index rose to 55% from 54.7% in April. The new-orders index rose to 59.6% from 58.5% in April. The production index rose to 58.3% from 57.3% in April. The employment index fell to 51.9% from 53.1% in April. The prices-paid index fell to 71% from 73% in April.
I found it particularly interesting that the dollar did not hold a rally with interest rates rising and closing in on 5%. In addition, the despite the stronger ISM, the dollar could not keep even a little strength.
Thursday, May 31, 2007
More Data
6/1/07 More Data
Hovnanian said it has withdrawn its prior estimates for 2007 earnings and will not provide an updated outlook at this time. However, Hovnanian said it expects to deliver between 13,200 and 14,200 homes in fiscal 2007, excluding deliveries from unconsolidated joint ventures. The contract backlog as of April 30, excluding unconsolidated joint ventures, was 7,766 homes with a sales value of $2.7 billion, down 33% by number of homes, compared with a contract backlog of 11,587 homes with a $4 billion sales value, a year ago, the company said.
Dell Inc. reported preliminary fiscal first-quarter earnings of $759 million, or 34 cents a share, down slightly from the $762 million or 33 cents a share, the PC giant reported a year ago. Revenue rose 3% to $14.62 billion from last year's first-quarter sales of $14.22 billion. Dell said it also plans on cutting 10% of its workforce, or about 8,800 jobs, over the next year in an effort to cut costs.
July crude closed at $64.01 a barrel, up 52 cents for the day, but down 4.8% for the month. Crude supplies fell for the first time in six weeks. July natural gas fell 0.06 cent to end at $7.935 per million British thermal units, down 1% for the month.
June gold climbed $7.90 to close at $661 an ounce Thursday, but still suffered a loss of $22.50, or 3.3%, for the month of May. July silver closed at $13.47 an ounce, up 25 cents for the session, down 0.8% for the month. July copper tacked on 9.2 cents, or 2.8%, for the day to close at $3.3955 a pound, down 4.6% for the month.
Tribune said it has accepted for payment 126 million of the 218.1 million shares tendered in the offer, at a price of $34 a share. The shares tendered represent about 90% of shares outstanding, and the shares that Tribune will buy back represent about 52% of shares outstanding, the company said. Following the repurchase, Tribune said it will have about 117 million shares outstanding. The company said it will begin payment for the shares no later than June 5.
The American Petroleum Institute reported a climb of 3.1 million barrels in crude supplies for the week ended May 25. The Energy Department had reported a decline of 2 million barrels for the latest week. Motor gasoline supplies were up 2.3 million barrels, the API said. The government reported a rise of 1.3 million barrels. Distillate supplies climbed 1.9 million barrels, the API said. The government posted a 100,000-barrel rise.
Natural-gas inventories rose by 107 billion cubic feet for the week ended May 25, the Energy Department said Thursday. Total stocks now stand at 2.053 trillion cubic feet, down 179 billion cubic feet from the year-ago level, but 355 billion cubic feet above the five-year average, the government data said.
The volume of help-wanted ads in major U.S. newspapers was unchanged in April, the Conference Board said Thursday. The help-wanted index stayed at 29 in April; it was 34 a year earlier. Data suggests that the labor market may continue to open new jobs at a pace of 120,000 to 130,000 per month this summer, about the same pace as in the spring, according to Ken Goldstein, a labor economist with the Conference Board.
The Chicago purchasing-managers' index rose to 61.7% in May from 52.9% in April, the Chicago NAPM reported. The employment index rose to 57.3% from 50.5%. The prices paid index rose to 70.2% from 64.9% in April. The new orders index rose to 71.1% from 56.5%.
Initial jobless claims fell by 4,000 to a seasonally adjusted 310,000 in the week ending May 26, the Labor Department reported Thursday. The four-week average of initial claims, considered a better gauge of underlying labor market strength because it smoothes out often-volatile data, rose by 1,000 to 304,500, the highest since May 12. The number of people collecting unemployment checks fell by 52,000 to a seasonally adjusted 2.47 million in the week ending May 19. The four-week average of continuing claims fell by 4,500 to 2.50 million.
The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002. Economy-wide inflation surged at the fastest pace in 16 years.
Genesco Inc. said its board has authorized the shoe and hat retailer and its advisors to explore strategic alternatives, including the possible sale of the company.
Monster Worldwide Inc. said Thursday that its employment index rose three points in May to 189.
Wachovia Corp. has agreed to acquire A.G. Edwards Inc. for the equivalent of $89.50 a share in cash and stock, the companies said. The deal carries a buyout premium of 16% over the Wednesday closing price on A.G. Edwards shares. Terms call for stockholders of St. Louis-based A.G. Edwards to get 0.9844 of a share of Wachovia common stock and $35.80 in cash for each of their common shares. The merger's expected to close in the fourth quarter.
Dendreon said Thursday the U.S. Food and Drug Administration has decided that positive interim or final survival data from an ongoing trial of its Provenge cancer vaccine will satisfy the agency's earlier request for more data, sending its shares soaring."We anticipate completing enrollment in the ... study this year and anticipate interim survival results in 2008," Dendreon said in a statement. Provenge is a so-called therapeutic vaccine against prostate cancer, meaning it is meant to stimulate the immune system to fight existing tumors.
Hovnanian said it has withdrawn its prior estimates for 2007 earnings and will not provide an updated outlook at this time. However, Hovnanian said it expects to deliver between 13,200 and 14,200 homes in fiscal 2007, excluding deliveries from unconsolidated joint ventures. The contract backlog as of April 30, excluding unconsolidated joint ventures, was 7,766 homes with a sales value of $2.7 billion, down 33% by number of homes, compared with a contract backlog of 11,587 homes with a $4 billion sales value, a year ago, the company said.
Dell Inc. reported preliminary fiscal first-quarter earnings of $759 million, or 34 cents a share, down slightly from the $762 million or 33 cents a share, the PC giant reported a year ago. Revenue rose 3% to $14.62 billion from last year's first-quarter sales of $14.22 billion. Dell said it also plans on cutting 10% of its workforce, or about 8,800 jobs, over the next year in an effort to cut costs.
July crude closed at $64.01 a barrel, up 52 cents for the day, but down 4.8% for the month. Crude supplies fell for the first time in six weeks. July natural gas fell 0.06 cent to end at $7.935 per million British thermal units, down 1% for the month.
June gold climbed $7.90 to close at $661 an ounce Thursday, but still suffered a loss of $22.50, or 3.3%, for the month of May. July silver closed at $13.47 an ounce, up 25 cents for the session, down 0.8% for the month. July copper tacked on 9.2 cents, or 2.8%, for the day to close at $3.3955 a pound, down 4.6% for the month.
Tribune said it has accepted for payment 126 million of the 218.1 million shares tendered in the offer, at a price of $34 a share. The shares tendered represent about 90% of shares outstanding, and the shares that Tribune will buy back represent about 52% of shares outstanding, the company said. Following the repurchase, Tribune said it will have about 117 million shares outstanding. The company said it will begin payment for the shares no later than June 5.
The American Petroleum Institute reported a climb of 3.1 million barrels in crude supplies for the week ended May 25. The Energy Department had reported a decline of 2 million barrels for the latest week. Motor gasoline supplies were up 2.3 million barrels, the API said. The government reported a rise of 1.3 million barrels. Distillate supplies climbed 1.9 million barrels, the API said. The government posted a 100,000-barrel rise.
Natural-gas inventories rose by 107 billion cubic feet for the week ended May 25, the Energy Department said Thursday. Total stocks now stand at 2.053 trillion cubic feet, down 179 billion cubic feet from the year-ago level, but 355 billion cubic feet above the five-year average, the government data said.
The volume of help-wanted ads in major U.S. newspapers was unchanged in April, the Conference Board said Thursday. The help-wanted index stayed at 29 in April; it was 34 a year earlier. Data suggests that the labor market may continue to open new jobs at a pace of 120,000 to 130,000 per month this summer, about the same pace as in the spring, according to Ken Goldstein, a labor economist with the Conference Board.
The Chicago purchasing-managers' index rose to 61.7% in May from 52.9% in April, the Chicago NAPM reported. The employment index rose to 57.3% from 50.5%. The prices paid index rose to 70.2% from 64.9% in April. The new orders index rose to 71.1% from 56.5%.
Initial jobless claims fell by 4,000 to a seasonally adjusted 310,000 in the week ending May 26, the Labor Department reported Thursday. The four-week average of initial claims, considered a better gauge of underlying labor market strength because it smoothes out often-volatile data, rose by 1,000 to 304,500, the highest since May 12. The number of people collecting unemployment checks fell by 52,000 to a seasonally adjusted 2.47 million in the week ending May 19. The four-week average of continuing claims fell by 4,500 to 2.50 million.
The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002. Economy-wide inflation surged at the fastest pace in 16 years.
Genesco Inc. said its board has authorized the shoe and hat retailer and its advisors to explore strategic alternatives, including the possible sale of the company.
Monster Worldwide Inc. said Thursday that its employment index rose three points in May to 189.
Wachovia Corp. has agreed to acquire A.G. Edwards Inc. for the equivalent of $89.50 a share in cash and stock, the companies said. The deal carries a buyout premium of 16% over the Wednesday closing price on A.G. Edwards shares. Terms call for stockholders of St. Louis-based A.G. Edwards to get 0.9844 of a share of Wachovia common stock and $35.80 in cash for each of their common shares. The merger's expected to close in the fourth quarter.
Dendreon said Thursday the U.S. Food and Drug Administration has decided that positive interim or final survival data from an ongoing trial of its Provenge cancer vaccine will satisfy the agency's earlier request for more data, sending its shares soaring."We anticipate completing enrollment in the ... study this year and anticipate interim survival results in 2008," Dendreon said in a statement. Provenge is a so-called therapeutic vaccine against prostate cancer, meaning it is meant to stimulate the immune system to fight existing tumors.
Wednesday, May 30, 2007
Surging
5/31/07 Surging
So far, 112 US soldiers and marines have been killed this month. It is the fourth highest fatality count since the 2003 invasion. April was also unusually bloody, with 104 reported killed. You might call it a killing surge.
Steve Moyer: "Now, as sales have slowed by up to 40% in many markets, foreclosures and contract cancellations have become rampant, lenders are pulling in their horns and values have begun their decline, we have already crossed the threshold into real estate/credit bubble deflation. I expect the average value of real estate to drop at least 70% from peak values in the coming decade."
For the fiscal year, Polo Ralph Lauren expects to earn $3.70 to $3.80 a share, including 27 cents a share in items. Analysts polled by Thomson Financial expect it to earn $4.13 a share for the year, on average.
Qatar Airways Wednesday said it's signed a memorandum of understanding to buy 80 Airbus A350XWBs, beating out Boeing Co.'s 787 Dreamliner.
For the year, Williams-Sonoma expects an adjusted profit of $1.76 to $1.84 versus Thomson's estimate of $1.80.
While Joy Global said the U.S. coal market has been soft, the company said it remains optimistic about its prospects, with revenue of $2.8 billion to $3 billion and earnings of $3.25 a share to $3.50 a share over the next 12 months.
The shareholder-advisory service Institutional Shareholder Services urged Biomet Inc. holders to reject a $10.9 billion private-equity deal for the company, The Wall Street Journal reported.
The World Bank raised its forecast for China's gross domestic product growth in the current year to 10.4% from 9.6%, with the revision based on stronger-than-expected first-quarter economic data. The new estimate suggests China's economy will grow above 10% for the fourth straight year, according to data presented in the World Bank's Quarterly Update.
CDW Corp. will be acquired by Madison Dearborn Partners for $7.3 billion. The deal calls for Madison Dearborn, a private-equity firm, to pay $87.75 a share for CDW, a 16.1% premium over CDW's May 25 closing price of $75.56 a share. CDW said it expects the deal to close early during the fourth quarter of this year.
China's stocks tumbled 6.8%, the most in three months, after the government tripled the tax on securities transactions in an effort to cool a rally that's drawing more than 300,000 new investors a day. Some 22 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the China Securities Depository & Clearing Corp. Investors on May 28 opened 455,111 accounts, a daily record.
Pulte Homes is cutting about 16% of its workforce, and that amounts to roughly 2000 jobs.
International Business Machines Corp. laid off 1,570 people Wednesday, primarily from an ongoing overhaul of operations in its giant technology services unit. The company carried out a similar level of job cuts at the beginning of the month, for a total of 3,023 in this quarter and 3,720 for the year, according to IBM spokesman Edward Barbini.
Gold supply will exceed demand by 250 metric tons this year, a bigger surplus than forecast in October, as increased prices deter jewelry buyers, London-based research company Virtual Metals said. Jewelry consumption will decline 2.5% to 2,218 tons, a second annual drop, Virtual Metals said.
A new attack on a Nigerian pipeline illustrated the uphill task the new president faces to restore lost output in the world's eighth biggest crude exporter.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended May 25 dropped 7.3% to 636.4.
A Ford Motor official predicts that his company's overall U.S. sales will drop in May, but its retail sales to individual buyers will show a year-over-year monthly increase for the first time since October of 2006.
"Rather than buying oil companies, we will look for more oil and gas assets, in terms of mergers and acquisitions, in the future," Fu Chengyu, CNOOC's chairman, told China Daily yesterday. By 2010, CNOOC is determined to raise its energy supply to the local market to 100 million tons of oil equivalent, up from the 40 million tons today. CNOOC's China production is estimated to reach 50 million tons of oil equivalent by 2010, while current overseas reserves are expected to contribute 20 to 25 million tons by 2010, depending on engineering capacity and construction speed, Fu said. "We plan to bridge the gap by purchasing more oil and gas reserves from overseas markets and importing more liquified natural gas (LNG)," he added.
Ghassan Abdallah: " Fireworks in a region that possesses 65% of the world�s oil reserves and accounts for 35% of the world�s total exports have in no way been discounted into the price of petroleum products by the global oil markets."
Paul J. Nolte: "Given the markets dependency upon low interest rates (and the anticipation of even lower) any backup toward the 5% level could create a problem for stocks."
Some of the nation's largest farming operations are paying rock-bottom rates for the electricity they use to pump federally subsidized water to their fields. About 7,000 giants of California farming get their water from the Central Valley Project, a vast irrigation system that pumps water from mountain rivers through canals spanning the state's fertile interior. But the system only charges irrigators about a penny per kilowatt-hour to move the water to their fields, a rate subsidized each year by about $100 million in taxpayer funds, according to a study released Wednesday by the Environmental Working Group. In comparison, farmers that rely on a state-run irrigation system paid about 22 cents per kilowatt hour for wholesale electricity last year, Department of Water Resources officials said.
Addison Wiggin: "It takes more dollars to buy the same thing (in other words, prices are higher) but incomes have not risen to meet that price inflation. That's what happens when the value of the dollar declines...The Fed has lent money below inflation. Fed lending rates have been far below inflation (even as measured by the consumer price index, not to mention any real inflationary measurements). In a very real sense, the Fed has lost money on these loans. When inflation is higher than the lending rate, it is a loss. Just as a business cannot stay open when it sells goods below cost, the Fed cannot continue to hold the view that it isn't real money. The point is, the money lent out at bargain rates is real credit, and that is corrupted when it is given away cheaply...The low interest rates have created the mortgage bubble without any corresponding investment...The mortgage bubble has inflated the housing market in an exaggerated fashion, creating the illusion of equity. All of that cheap money has created two troubling changes in housing. First is higher demand for owner-occupied housing based on the low cost of borrowed money rather than on any real market forces. Second is the resulting equity buildup from rapid expansion of market value in residential property. But it is as fake as the low interest rates...As rates on variable mortgages begin to rise right up to their cap rates, we'll see many of those marginal loans go into default...At some point, when the bubble bursts, everyone will realize that too many homes were built too quickly, and the anticipated demand simply isn't there. The result: those skyrocketing market values will disappear...For those who enter into the housing market when prices are inflated, the day arrives when they realize that real equity is below zero...In such a severe condition, marginal buyers are going to simply walk away from their properties. Why stay when there is no equity - or worse, minus equity?"
James Picerno: "Consider the fact that the real yield on the 10-year TIPS, which closed last Friday at 2.51%, is now the highest since last October. We can debate the causes and the consequences, and whether or not the trend has legs, but there's no doubt that interest rates are taking flight once more."
Antal E. Fekete: "Paper wealth in the world is presently being destroyed at the rate greater than that of the annual gold production, approx. $2.8 billion gold dollars (equivalent to about $55 billion paper dollars at today's gold price), but this earthquake-style destruction is allowed to go unnoticed by academia and the financial media. They are satisfied that paper wealth so destroyed will not be missed. The U.S. Federal Reserve banks are dutifully replacing these real assets, and more, by printing paper assets. "See no evil, hear no evil." "What you can't see won't hurt you." Nobody is pointing out that this newly created paper wealth facing, as it is, an equivalent amount of wealth in solid gold, is quite hollow. Nobody asks whether the large quantities of gold vanishing into private hoards could cause a crisis when its size reaches and exceeds critical mass. Be that as it may, thinking people ought to realize that, the official 'propaganda of silence' notwithstanding, the disappearance of such inordinate quantities of gold cannot help but, in the fullness of time, have an untoward effect on their lives, and on their children's lives. Fifty percent of all the gold in existence has been produced since 1960. The same fifty percent has been withdrawn from the public domain during the same period of time and disappeared in private hoards. There is no way to account for this gold. We do not know the location, the identity of owners, nor their intentions what they wanted to do with it. This is a sea change portending a still greater sea change to come. This is a situation comparable to the disappearance of the gold and silver coinage of ancient Rome portending the fall of the Empire. For this sea change the public is totally unprepared. It is left in complete ignorance, due to the deep silence of the media and academia."
News Corp.'s Fox Interactive Media unit will acquire online photo/video services Photobucket and Flektor, for an undisclosed sum, the media conglomerate said Wednesday. Photobucket is a photo- and video-sharing service while Flektor offers various Web-based tools that help users transform photos and videos into slideshows, postcards and interactive presentations.
Dollar Tree Stores raised its earnings guidance to between $2.00 and $2.12 per share from a previous outlook of earnings between $1.96 and $2.10 per share. Yearly sales are projected at $4.28 billion to $4.38 billion, up from previous guidance of $4.22 billion to $4.33 billion.
Bloomberg reported Kuwait Petroleum Corp., the Middle East's biggest exporter of oil products, cut crude processing at the Shuaiba refinery by 20 percent because of mechanical faults at two units, said four people familiar with the plant's operations. The refiner will halt spot market sales of naphtha and middle distillate fuels including diesel and kerosene, the people said, asking not to be identified because of company policy. Repairs to the units that turn residual fuel into oil products may take as long as five weeks, they said. Kuwait Petroleum may lower exports of liquefied petroleum gas and naphtha to customers with annual supply contracts, the people said.
The extra yield investors demand to own junk bonds instead of Treasuries narrowed to 2.42 percentage points on average yesterday, based on Merrill Lynch & Co.'s high-yield index, which tracks yield premiums since the end of 1996. The spread is half the average of about 5 percentage points over the past five years, and is down from more than 10 percentage points in 2002. For patient investors, one might consider selling this spread. In other words, my belief is that this spread will widen. Part of my thinking is that the yield on Treasury bonds will increase, and higher rates will generate the widening spread.
U.S. stocks rallied on Wednesday, sending both the Dow Jones Industrial Average and the S&P 500 to a record close, as the market bounced back from initial weakness after an overnight sell-off in the Shanghai stock market.
July crude climbed 34 cents to close at $63.49 a barrel and July natural gas gained 21 cents, or 2.7%, to finish at $7.941 per million British thermal units.
The minutes from the Federal Open Market Committee's last interest-rate meeting reiterated that the predominant concern for Fed officials was inflation. Although readings to core inflation had been favorable, nearly all FOMC members were not convinced that price pressures were on a downward trend, the minutes showed. Meanwhile, FOMC members said the slow growth in the first quarter probably exaggerated the weakness in demand, and remained optimistic that growth would pickup as the year unfolds.
June gold fell $4.10 to close at $653.10 an ounce Wednesday. July silver closed at $13.22 an ounce, down 0.3 cent and July copper lost 1.65 cents to end at $3.3035 a pound.
So far, 112 US soldiers and marines have been killed this month. It is the fourth highest fatality count since the 2003 invasion. April was also unusually bloody, with 104 reported killed. You might call it a killing surge.
Steve Moyer: "Now, as sales have slowed by up to 40% in many markets, foreclosures and contract cancellations have become rampant, lenders are pulling in their horns and values have begun their decline, we have already crossed the threshold into real estate/credit bubble deflation. I expect the average value of real estate to drop at least 70% from peak values in the coming decade."
For the fiscal year, Polo Ralph Lauren expects to earn $3.70 to $3.80 a share, including 27 cents a share in items. Analysts polled by Thomson Financial expect it to earn $4.13 a share for the year, on average.
Qatar Airways Wednesday said it's signed a memorandum of understanding to buy 80 Airbus A350XWBs, beating out Boeing Co.'s 787 Dreamliner.
For the year, Williams-Sonoma expects an adjusted profit of $1.76 to $1.84 versus Thomson's estimate of $1.80.
While Joy Global said the U.S. coal market has been soft, the company said it remains optimistic about its prospects, with revenue of $2.8 billion to $3 billion and earnings of $3.25 a share to $3.50 a share over the next 12 months.
The shareholder-advisory service Institutional Shareholder Services urged Biomet Inc. holders to reject a $10.9 billion private-equity deal for the company, The Wall Street Journal reported.
The World Bank raised its forecast for China's gross domestic product growth in the current year to 10.4% from 9.6%, with the revision based on stronger-than-expected first-quarter economic data. The new estimate suggests China's economy will grow above 10% for the fourth straight year, according to data presented in the World Bank's Quarterly Update.
CDW Corp. will be acquired by Madison Dearborn Partners for $7.3 billion. The deal calls for Madison Dearborn, a private-equity firm, to pay $87.75 a share for CDW, a 16.1% premium over CDW's May 25 closing price of $75.56 a share. CDW said it expects the deal to close early during the fourth quarter of this year.
China's stocks tumbled 6.8%, the most in three months, after the government tripled the tax on securities transactions in an effort to cool a rally that's drawing more than 300,000 new investors a day. Some 22 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the China Securities Depository & Clearing Corp. Investors on May 28 opened 455,111 accounts, a daily record.
Pulte Homes is cutting about 16% of its workforce, and that amounts to roughly 2000 jobs.
International Business Machines Corp. laid off 1,570 people Wednesday, primarily from an ongoing overhaul of operations in its giant technology services unit. The company carried out a similar level of job cuts at the beginning of the month, for a total of 3,023 in this quarter and 3,720 for the year, according to IBM spokesman Edward Barbini.
Gold supply will exceed demand by 250 metric tons this year, a bigger surplus than forecast in October, as increased prices deter jewelry buyers, London-based research company Virtual Metals said. Jewelry consumption will decline 2.5% to 2,218 tons, a second annual drop, Virtual Metals said.
A new attack on a Nigerian pipeline illustrated the uphill task the new president faces to restore lost output in the world's eighth biggest crude exporter.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended May 25 dropped 7.3% to 636.4.
A Ford Motor official predicts that his company's overall U.S. sales will drop in May, but its retail sales to individual buyers will show a year-over-year monthly increase for the first time since October of 2006.
"Rather than buying oil companies, we will look for more oil and gas assets, in terms of mergers and acquisitions, in the future," Fu Chengyu, CNOOC's chairman, told China Daily yesterday. By 2010, CNOOC is determined to raise its energy supply to the local market to 100 million tons of oil equivalent, up from the 40 million tons today. CNOOC's China production is estimated to reach 50 million tons of oil equivalent by 2010, while current overseas reserves are expected to contribute 20 to 25 million tons by 2010, depending on engineering capacity and construction speed, Fu said. "We plan to bridge the gap by purchasing more oil and gas reserves from overseas markets and importing more liquified natural gas (LNG)," he added.
Ghassan Abdallah: " Fireworks in a region that possesses 65% of the world�s oil reserves and accounts for 35% of the world�s total exports have in no way been discounted into the price of petroleum products by the global oil markets."
Paul J. Nolte: "Given the markets dependency upon low interest rates (and the anticipation of even lower) any backup toward the 5% level could create a problem for stocks."
Some of the nation's largest farming operations are paying rock-bottom rates for the electricity they use to pump federally subsidized water to their fields. About 7,000 giants of California farming get their water from the Central Valley Project, a vast irrigation system that pumps water from mountain rivers through canals spanning the state's fertile interior. But the system only charges irrigators about a penny per kilowatt-hour to move the water to their fields, a rate subsidized each year by about $100 million in taxpayer funds, according to a study released Wednesday by the Environmental Working Group. In comparison, farmers that rely on a state-run irrigation system paid about 22 cents per kilowatt hour for wholesale electricity last year, Department of Water Resources officials said.
Addison Wiggin: "It takes more dollars to buy the same thing (in other words, prices are higher) but incomes have not risen to meet that price inflation. That's what happens when the value of the dollar declines...The Fed has lent money below inflation. Fed lending rates have been far below inflation (even as measured by the consumer price index, not to mention any real inflationary measurements). In a very real sense, the Fed has lost money on these loans. When inflation is higher than the lending rate, it is a loss. Just as a business cannot stay open when it sells goods below cost, the Fed cannot continue to hold the view that it isn't real money. The point is, the money lent out at bargain rates is real credit, and that is corrupted when it is given away cheaply...The low interest rates have created the mortgage bubble without any corresponding investment...The mortgage bubble has inflated the housing market in an exaggerated fashion, creating the illusion of equity. All of that cheap money has created two troubling changes in housing. First is higher demand for owner-occupied housing based on the low cost of borrowed money rather than on any real market forces. Second is the resulting equity buildup from rapid expansion of market value in residential property. But it is as fake as the low interest rates...As rates on variable mortgages begin to rise right up to their cap rates, we'll see many of those marginal loans go into default...At some point, when the bubble bursts, everyone will realize that too many homes were built too quickly, and the anticipated demand simply isn't there. The result: those skyrocketing market values will disappear...For those who enter into the housing market when prices are inflated, the day arrives when they realize that real equity is below zero...In such a severe condition, marginal buyers are going to simply walk away from their properties. Why stay when there is no equity - or worse, minus equity?"
James Picerno: "Consider the fact that the real yield on the 10-year TIPS, which closed last Friday at 2.51%, is now the highest since last October. We can debate the causes and the consequences, and whether or not the trend has legs, but there's no doubt that interest rates are taking flight once more."
Antal E. Fekete: "Paper wealth in the world is presently being destroyed at the rate greater than that of the annual gold production, approx. $2.8 billion gold dollars (equivalent to about $55 billion paper dollars at today's gold price), but this earthquake-style destruction is allowed to go unnoticed by academia and the financial media. They are satisfied that paper wealth so destroyed will not be missed. The U.S. Federal Reserve banks are dutifully replacing these real assets, and more, by printing paper assets. "See no evil, hear no evil." "What you can't see won't hurt you." Nobody is pointing out that this newly created paper wealth facing, as it is, an equivalent amount of wealth in solid gold, is quite hollow. Nobody asks whether the large quantities of gold vanishing into private hoards could cause a crisis when its size reaches and exceeds critical mass. Be that as it may, thinking people ought to realize that, the official 'propaganda of silence' notwithstanding, the disappearance of such inordinate quantities of gold cannot help but, in the fullness of time, have an untoward effect on their lives, and on their children's lives. Fifty percent of all the gold in existence has been produced since 1960. The same fifty percent has been withdrawn from the public domain during the same period of time and disappeared in private hoards. There is no way to account for this gold. We do not know the location, the identity of owners, nor their intentions what they wanted to do with it. This is a sea change portending a still greater sea change to come. This is a situation comparable to the disappearance of the gold and silver coinage of ancient Rome portending the fall of the Empire. For this sea change the public is totally unprepared. It is left in complete ignorance, due to the deep silence of the media and academia."
News Corp.'s Fox Interactive Media unit will acquire online photo/video services Photobucket and Flektor, for an undisclosed sum, the media conglomerate said Wednesday. Photobucket is a photo- and video-sharing service while Flektor offers various Web-based tools that help users transform photos and videos into slideshows, postcards and interactive presentations.
Dollar Tree Stores raised its earnings guidance to between $2.00 and $2.12 per share from a previous outlook of earnings between $1.96 and $2.10 per share. Yearly sales are projected at $4.28 billion to $4.38 billion, up from previous guidance of $4.22 billion to $4.33 billion.
Bloomberg reported Kuwait Petroleum Corp., the Middle East's biggest exporter of oil products, cut crude processing at the Shuaiba refinery by 20 percent because of mechanical faults at two units, said four people familiar with the plant's operations. The refiner will halt spot market sales of naphtha and middle distillate fuels including diesel and kerosene, the people said, asking not to be identified because of company policy. Repairs to the units that turn residual fuel into oil products may take as long as five weeks, they said. Kuwait Petroleum may lower exports of liquefied petroleum gas and naphtha to customers with annual supply contracts, the people said.
The extra yield investors demand to own junk bonds instead of Treasuries narrowed to 2.42 percentage points on average yesterday, based on Merrill Lynch & Co.'s high-yield index, which tracks yield premiums since the end of 1996. The spread is half the average of about 5 percentage points over the past five years, and is down from more than 10 percentage points in 2002. For patient investors, one might consider selling this spread. In other words, my belief is that this spread will widen. Part of my thinking is that the yield on Treasury bonds will increase, and higher rates will generate the widening spread.
U.S. stocks rallied on Wednesday, sending both the Dow Jones Industrial Average and the S&P 500 to a record close, as the market bounced back from initial weakness after an overnight sell-off in the Shanghai stock market.
July crude climbed 34 cents to close at $63.49 a barrel and July natural gas gained 21 cents, or 2.7%, to finish at $7.941 per million British thermal units.
The minutes from the Federal Open Market Committee's last interest-rate meeting reiterated that the predominant concern for Fed officials was inflation. Although readings to core inflation had been favorable, nearly all FOMC members were not convinced that price pressures were on a downward trend, the minutes showed. Meanwhile, FOMC members said the slow growth in the first quarter probably exaggerated the weakness in demand, and remained optimistic that growth would pickup as the year unfolds.
June gold fell $4.10 to close at $653.10 an ounce Wednesday. July silver closed at $13.22 an ounce, down 0.3 cent and July copper lost 1.65 cents to end at $3.3035 a pound.
Tuesday, May 29, 2007
More And More
5/30/07 More And More
At least eight U.S. soldiers were killed in Diyala province north of Baghdad on Memorial Day. Also, a parked minibus packed with explosives blew up Tuesday in a busy section of central Baghdad, killing 23 people and injuring 68, police said. A second car bombing in the western part of the capital killed 15 others.
Liz Claiborne may announce in the next few weeks that it's going to cut 10% of its 17,000-person workforce, according to a report in The New York Post.
Tuesday's data showed a drop in Japan's jobless rate and a 1.1% increase in household spending there.
Israel stocks rose to records. In addition, there was a quarter-point interest-rate cut from the Bank of Israel on Monday evening. That put the country's benchmark interest rate at 3.5% for June, 1.75 percentage points below the U.S. federal-funds rate.
LionOre Mining said Tuesday that an increased offer from Russia's Norilsk Nickel constitutes a "superior proposal" compared to Swiss mining firm Xstrata's last offer.
The Financial Times and the Swedish daily Goteborgs Posten both reported BMW's interest in purchasing Volvo from Ford.
A group led by Royal Bank of Scotland published a long-awaited takeover proposal for ABN Amro, with the deal valued at 38.4 euros ($51.59) a share, or 71.1 billion euros ($95.52 billion).
URS Corp. signed an agreement to acquire Washington Group in a stock-and-cash deal valued at $2.6 billion. Two two engineering and construction companies' combined 2006 revenues would have been $7.6 billion, the fourth highest among U.S. publicly-traded engineering and construction companies, according to a joint statement. Based on previously issued forecasts, the companies would have combined 2007 revenues of approximately $8.6 billion. The combined company would have projects in more than 50 countries and more than 54,000 employees. Under the terms of the deal, which has been unanimously approved by the boards of directors of both companies, Washington Group stockholders will receive $43.80 in cash and 0.772 shares of URS common stock for each Washington Group share. Based on the closing price of URS' stock on May 25, the consideration is valued at $80 per Washington Group share, with an implied consideration mix of 55% in cash and 45% in stock.
New federal statistics show that food prices rose 3.9 percent nationally in April.Food prices in 2007 are increasing at their highest rate in years. "We are going to see grocery store prices to show one of the most rapid increases in the last 15 years or so," said Patrick Jackman, an economist at the U.S. Bureau of Labor Statistics. Michael Swanson, an agricultural economist at Wells Fargo & Co., said corn is the culprit for his estimate that food inflation will reach the 4 to 4.5 percent range this year, the highest since 1990. That's because corn is the building block for much of the American food supply.
The N.Y. Times reported Tishman Speyer Properties has joined with Lehman Brothers buy Archstone-Smith Trust, the second-largest public apartment owner in terms of market cap and asset value. The partnership will acquire the shares of the apartment real estate investment trust for $60.75 a share in cash.
The N.Y.Times also reported Avaya is in negotiations to sell a part or all of itself, in what may be the latest round of deal making in its industry, executives briefed on the negotiations said last night. The company, based in Basking Ridge, N.J. and valued at $6.1 billion, has retained the investment bank Credit Suisse as an adviser, the executives said. Among those interested are two rivals — Cisco Systems and Nortel Networks — and the equity buyout firm Silver Lake Partners.
In 2005, almost one-quarter of mortgages in the Vallejo-Fairfield metropolitan area were subprime loans, according to the Center for Responsible Lending's analysis of Home Mortgage Disclosure Act data. The Center's report predicted "that 23.8 percent of subprimes there will end in foreclosure," said Paul Leonard, director of the center's office in Oakland.
Vallejo home prices fell 8.5 percent from November to March, according to DataQuick Information Services.
Rio Tinto, the world's second-largest mining group, on Tuesday dismissed talk that it was lining up a bid for Canadian aluminum maker Alcan as speculation, but did not to deny the rumor outright.
Private equity firms are in talks for a buyout of CDW, a technology retailer with a market capitalization of about $6 billion, The Wall Street Journal reported on its Web site Tuesday. Madison Dearborn Partners is considered in the lead to buy the company, the Journal reported, citing unnamed sources.
Nouriel Roubini: "An increase of 16% in new home sales looks huge until you notice the following points: new home sales are still 29% down from their July 2005 peak; the inventory figures for new homes exclude cancellations. We know that cancellations are massive, in the 20 to 30% range based on data provided by the two largest home builders in the US (DR Horton and Toll Brothers). Therefore, the actual stock of unsold new homes is much larger, at least 20% higher than the reported figures.
More importantly, new home sales surged in April but the median price of a home fell – in one month – by 11% to $229k. Now think about Economics 101: higher equilibrium sales and lower equilibrium prices. How can you get that? The answer is simple: the increase in sales cannot be driven by an exogenous increase in the demand for homes as such increase would have led to higher sales and higher prices. The only way you get higher sales and lower prices is if the home supply function – at any price level – has increased so that in equilibrium the excess of unsold homes leads to more demand at a lower price. I.e. the April data are consistent with only with the view that home builders – desperate with a massive and record stock of unsold new homes – decided to start slashing prices to reduce this overhang."
Brad Setser: "Russia’s reserves just topped $394b – and that is for the middle of May. On current trends, Russia’s reserves will top $400b by the end of the month.That is an increase of almost $100b from the $304b Russia had in the bank at the end of 2006."
U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle.
Genzyme and Bioenvision, Inc. have reached an agreement under which Genzyme will acquire Bioenvision in an all cash transaction valued at $5.60 per outstanding
common share, or approximately $345 million, representing a premium of
approximately 50 percent over the last twenty trading day average. The
transaction is expected to be approximately six cents dilutive in 2007,
slightly dilutive to break-even in 2008, and accretive in 2009.
According to Bloomberg,Iran expects to sign a multi-billion dollar agreement with a foreign partner next month to produce liquefied natural gas, or LNG, from the South Pars field, the world's biggest gas reservoir.
Zman: "I don’t see a serious break of $7.50 in the near future unless: 1) Canadian imports pick up to the extent that someone in the press takes notice, 2) the recent rising heat moderates considerably, and/or 3) Congress passes a bill outlawing storms in the Gulf."
The Conference Board said its index of consumer sentiment climbed toll to 108.0 in May versus April's upwardly adjusted 106.3. Consumers' expectations for the inflation rate for 12 months were 5.5 percent in May versus a downwardly revised 5.1 percent in April and 5.6 percent a year ago. The present situation index rose to 136.1 in May from an upwardly revised 133.5 in April, while its expectations index increased to 89.2 in May from an upwardly adjusted 88.2 in April.
July natural gas will become the front-month contract at the Tuesday session close.
New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.
CT Communications agreed to be acquired by Windstream Corp. for $585 million in cash.
Crude oil prices are 12 percent lower than a year ago.
John Hussman: "On normalized earnings, the S&P 500 continues to be priced at the highest multiple in history except for the late 1990's bubble and the beginning of the subsequent plunge...Presently, the year-over-year average of core and overall CPI inflation remains higher than it was 6 months ago, as are Treasury bond yields. Given rich valuations, these trends produce fairly pointed risks."
IBM said it repurchased 118.8 million shares, or 8% of its outstanding stock, for an initial price of $105.18 each, under the company's $15 billion share repurchase authorization. The shares were acquired from three banks using $1 billion in cash and $11.5 billion borrowed through a loan agreement with a number of financial institutions, the company said. IBM also said it expects 2007 earnings per share growth of 13% to 14%, up from its previous estimate of 11%. The new forecast reflects the benefit of two to three points of growth, or roughly 14 cents to 17 cents of a share, from the accelerated share repurchases.
July crude dropped 3.1%, or $2.05, to close at $63.15 a barrel. June reformulated gasoline fell 4.4% to end at near a 3-week low of $2.2979 a gallon. June natural gas fell 4.9 cents to close at $7.591 per million British thermal units. July natural gas, which became the front-month contract at the close, closed down 6.4 cents at $7.731.
China will triple its stamp tax on equity trading to 0.3% from 0.1%, effective Wednesday.
June gold climbed $1.90 to close at $657.20 an ounce Tuesday. July silver gained 22.3 cents to close at $13.223 an ounce, but July copper closed nearly flat, down 0.05 cent at $3.32 a pound.
InfoSpace Inc.shares jumped 20% to $24.81 in Tuesday afternoon trade after a Spanish newspaper reported that LaNetro Zed SA is preparing an offer to buy the company for 800 million euros ($1.08 billion).
At least eight U.S. soldiers were killed in Diyala province north of Baghdad on Memorial Day. Also, a parked minibus packed with explosives blew up Tuesday in a busy section of central Baghdad, killing 23 people and injuring 68, police said. A second car bombing in the western part of the capital killed 15 others.
Liz Claiborne may announce in the next few weeks that it's going to cut 10% of its 17,000-person workforce, according to a report in The New York Post.
Tuesday's data showed a drop in Japan's jobless rate and a 1.1% increase in household spending there.
Israel stocks rose to records. In addition, there was a quarter-point interest-rate cut from the Bank of Israel on Monday evening. That put the country's benchmark interest rate at 3.5% for June, 1.75 percentage points below the U.S. federal-funds rate.
LionOre Mining said Tuesday that an increased offer from Russia's Norilsk Nickel constitutes a "superior proposal" compared to Swiss mining firm Xstrata's last offer.
The Financial Times and the Swedish daily Goteborgs Posten both reported BMW's interest in purchasing Volvo from Ford.
A group led by Royal Bank of Scotland published a long-awaited takeover proposal for ABN Amro, with the deal valued at 38.4 euros ($51.59) a share, or 71.1 billion euros ($95.52 billion).
URS Corp. signed an agreement to acquire Washington Group in a stock-and-cash deal valued at $2.6 billion. Two two engineering and construction companies' combined 2006 revenues would have been $7.6 billion, the fourth highest among U.S. publicly-traded engineering and construction companies, according to a joint statement. Based on previously issued forecasts, the companies would have combined 2007 revenues of approximately $8.6 billion. The combined company would have projects in more than 50 countries and more than 54,000 employees. Under the terms of the deal, which has been unanimously approved by the boards of directors of both companies, Washington Group stockholders will receive $43.80 in cash and 0.772 shares of URS common stock for each Washington Group share. Based on the closing price of URS' stock on May 25, the consideration is valued at $80 per Washington Group share, with an implied consideration mix of 55% in cash and 45% in stock.
New federal statistics show that food prices rose 3.9 percent nationally in April.Food prices in 2007 are increasing at their highest rate in years. "We are going to see grocery store prices to show one of the most rapid increases in the last 15 years or so," said Patrick Jackman, an economist at the U.S. Bureau of Labor Statistics. Michael Swanson, an agricultural economist at Wells Fargo & Co., said corn is the culprit for his estimate that food inflation will reach the 4 to 4.5 percent range this year, the highest since 1990. That's because corn is the building block for much of the American food supply.
The N.Y. Times reported Tishman Speyer Properties has joined with Lehman Brothers buy Archstone-Smith Trust, the second-largest public apartment owner in terms of market cap and asset value. The partnership will acquire the shares of the apartment real estate investment trust for $60.75 a share in cash.
The N.Y.Times also reported Avaya is in negotiations to sell a part or all of itself, in what may be the latest round of deal making in its industry, executives briefed on the negotiations said last night. The company, based in Basking Ridge, N.J. and valued at $6.1 billion, has retained the investment bank Credit Suisse as an adviser, the executives said. Among those interested are two rivals — Cisco Systems and Nortel Networks — and the equity buyout firm Silver Lake Partners.
In 2005, almost one-quarter of mortgages in the Vallejo-Fairfield metropolitan area were subprime loans, according to the Center for Responsible Lending's analysis of Home Mortgage Disclosure Act data. The Center's report predicted "that 23.8 percent of subprimes there will end in foreclosure," said Paul Leonard, director of the center's office in Oakland.
Vallejo home prices fell 8.5 percent from November to March, according to DataQuick Information Services.
Rio Tinto, the world's second-largest mining group, on Tuesday dismissed talk that it was lining up a bid for Canadian aluminum maker Alcan as speculation, but did not to deny the rumor outright.
Private equity firms are in talks for a buyout of CDW, a technology retailer with a market capitalization of about $6 billion, The Wall Street Journal reported on its Web site Tuesday. Madison Dearborn Partners is considered in the lead to buy the company, the Journal reported, citing unnamed sources.
Nouriel Roubini: "An increase of 16% in new home sales looks huge until you notice the following points: new home sales are still 29% down from their July 2005 peak; the inventory figures for new homes exclude cancellations. We know that cancellations are massive, in the 20 to 30% range based on data provided by the two largest home builders in the US (DR Horton and Toll Brothers). Therefore, the actual stock of unsold new homes is much larger, at least 20% higher than the reported figures.
More importantly, new home sales surged in April but the median price of a home fell – in one month – by 11% to $229k. Now think about Economics 101: higher equilibrium sales and lower equilibrium prices. How can you get that? The answer is simple: the increase in sales cannot be driven by an exogenous increase in the demand for homes as such increase would have led to higher sales and higher prices. The only way you get higher sales and lower prices is if the home supply function – at any price level – has increased so that in equilibrium the excess of unsold homes leads to more demand at a lower price. I.e. the April data are consistent with only with the view that home builders – desperate with a massive and record stock of unsold new homes – decided to start slashing prices to reduce this overhang."
Brad Setser: "Russia’s reserves just topped $394b – and that is for the middle of May. On current trends, Russia’s reserves will top $400b by the end of the month.That is an increase of almost $100b from the $304b Russia had in the bank at the end of 2006."
U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle.
Genzyme and Bioenvision, Inc. have reached an agreement under which Genzyme will acquire Bioenvision in an all cash transaction valued at $5.60 per outstanding
common share, or approximately $345 million, representing a premium of
approximately 50 percent over the last twenty trading day average. The
transaction is expected to be approximately six cents dilutive in 2007,
slightly dilutive to break-even in 2008, and accretive in 2009.
According to Bloomberg,Iran expects to sign a multi-billion dollar agreement with a foreign partner next month to produce liquefied natural gas, or LNG, from the South Pars field, the world's biggest gas reservoir.
Zman: "I don’t see a serious break of $7.50 in the near future unless: 1) Canadian imports pick up to the extent that someone in the press takes notice, 2) the recent rising heat moderates considerably, and/or 3) Congress passes a bill outlawing storms in the Gulf."
The Conference Board said its index of consumer sentiment climbed toll to 108.0 in May versus April's upwardly adjusted 106.3. Consumers' expectations for the inflation rate for 12 months were 5.5 percent in May versus a downwardly revised 5.1 percent in April and 5.6 percent a year ago. The present situation index rose to 136.1 in May from an upwardly revised 133.5 in April, while its expectations index increased to 89.2 in May from an upwardly adjusted 88.2 in April.
July natural gas will become the front-month contract at the Tuesday session close.
New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.
CT Communications agreed to be acquired by Windstream Corp. for $585 million in cash.
Crude oil prices are 12 percent lower than a year ago.
John Hussman: "On normalized earnings, the S&P 500 continues to be priced at the highest multiple in history except for the late 1990's bubble and the beginning of the subsequent plunge...Presently, the year-over-year average of core and overall CPI inflation remains higher than it was 6 months ago, as are Treasury bond yields. Given rich valuations, these trends produce fairly pointed risks."
IBM said it repurchased 118.8 million shares, or 8% of its outstanding stock, for an initial price of $105.18 each, under the company's $15 billion share repurchase authorization. The shares were acquired from three banks using $1 billion in cash and $11.5 billion borrowed through a loan agreement with a number of financial institutions, the company said. IBM also said it expects 2007 earnings per share growth of 13% to 14%, up from its previous estimate of 11%. The new forecast reflects the benefit of two to three points of growth, or roughly 14 cents to 17 cents of a share, from the accelerated share repurchases.
July crude dropped 3.1%, or $2.05, to close at $63.15 a barrel. June reformulated gasoline fell 4.4% to end at near a 3-week low of $2.2979 a gallon. June natural gas fell 4.9 cents to close at $7.591 per million British thermal units. July natural gas, which became the front-month contract at the close, closed down 6.4 cents at $7.731.
China will triple its stamp tax on equity trading to 0.3% from 0.1%, effective Wednesday.
June gold climbed $1.90 to close at $657.20 an ounce Tuesday. July silver gained 22.3 cents to close at $13.223 an ounce, but July copper closed nearly flat, down 0.05 cent at $3.32 a pound.
InfoSpace Inc.shares jumped 20% to $24.81 in Tuesday afternoon trade after a Spanish newspaper reported that LaNetro Zed SA is preparing an offer to buy the company for 800 million euros ($1.08 billion).
Monday, May 28, 2007
More Bids For Alcan?
5/29/07 More Bids For Alcan?
Rio Tinto Ltd. Plc has hired Deutsche Bank to advise it on a possible bid for Canadian aluminum producer Alcan Inc., the Sydney Morning Herald newspaper reported on Monday. Separately, Canada's Globe and Mail newspaper, citing a banker close to Alcan, said on Monday that Norway's Norsk Hydro was also gearing up for a run at Alcan.
24/7WallSt: "If Rio Tinto does buy Alcan, investors may have a problem. A merger of two companies with shares that are sky high is often a prelude to a disaster."
The Nigerian oil workers ended their strike, and that placed some pressure on the price of crude.
China's market surged to an all-time high and South Korea also hit a record, as a rally in metals prices lifted miners and a stronger dollar boosted shares in Japanese exporters.
Jas Jain: Headline: "C.A.R. [California Association of Realtors] reports sales decrease 27.8 percent in April, median price of a home in California at $597,640, up 6.2 percent from year ago." Then we also read, "Throughout the state inventory levels have increased to their highest levels in recent years..." Price increase in the climate of declining sales and rising inventory? Something doesn't add up.The report does provide some clue: "Although the median price of a home in California continues to rise, this reflects the fall-off in sales in the lower-priced markets of the state..." I will endeavor to show that there are three factors that result in overstatement of the median price of resale homes because the characteristics of the median priced home are not the same as the median priced home sold a year, or two years, ago:
1. The size of the homes being sold recently is larger compared to those sold last year.
2. The area mixture of the homes sold recently is significantly different from those of the year ago whether we look within the state or within the counties where the median price shows YoY gains. The rapidly increasing gap between the Haves and Have-nots in the US shows up very clearly in the latest California home sales data.
3. The modernization (or home improvements in layman's term) of the homes sold recently is significantly greater than that of year, or two years, ago.
This conclusion does not preclude the probability that there are some zip codes where there is some real home price appreciation. I would estimate the number of these zip codes to be no more than 50 for the state, or to less than 5% of the zip codes."
Brett Steenbarger: "The Energy, Industrials, and Materials stocks continue to lead the inflows; the two sectors with below average inflows are Financials and Consumer Staples. In short, I don't think this rally will be derailed until we see investors give up on these large cap/physical capital sectors.
What would derail such a rally? My hunch is that it might be a firming dollar that dampens ardor for physical assets. That, in turn, might result from higher U.S. interest rates. Note that ten-year rates have been on a tear lately, rising from a low around 4.61% to over 4.8% in the past two weeks. As long as there is lots of liquidity around and an implicit weak dollar policy by the Fed, I see no reason for capital to not seek "things" that will appreciate relative to the dollar and companies that stand to benefit from the trade benefits of a weak dollar...In the big picture, I view this market as most like the post 1994 market, in which a low volatility market made a relatively flat correction and then took off to the upside. Our four-year flat correction ended in mid-2006, and we now see a fresh bull market in the broad buying of global equities. Interest rate, currency, and money flow trends will need to shift markedly to put an end to this market strength."
Iraq has the third-largest proven oil reserves after Saudi Arabia and Iran but only 10% of the country has been explored, according to the U.S. Energy Information Administration.
George Ure: "The president's recent seizure of power "Executive Order" in event of a "national emergency" is nothing more than icing on the cake after stealing the election, packing the Supreme Court with corporate-friendly justices, (need I mention the corporate wars here?) and CONgress going along with the corporate agenda for whatever they can charge in the way of campaign contributions, votes, and favors. Corporations and lobbyists live on "access" and all the talk about lobbying reform has faded into the background since the Abramoff scandal and more recently, the DC Madam list of 10,000+ people on the take (any way you want to interpret that) are all being quietly pushed under the rug. We have a single part in America: democorp/republicorp and all supported by corpmedia."
Rio Tinto Ltd. Plc has hired Deutsche Bank to advise it on a possible bid for Canadian aluminum producer Alcan Inc., the Sydney Morning Herald newspaper reported on Monday. Separately, Canada's Globe and Mail newspaper, citing a banker close to Alcan, said on Monday that Norway's Norsk Hydro was also gearing up for a run at Alcan.
24/7WallSt: "If Rio Tinto does buy Alcan, investors may have a problem. A merger of two companies with shares that are sky high is often a prelude to a disaster."
The Nigerian oil workers ended their strike, and that placed some pressure on the price of crude.
China's market surged to an all-time high and South Korea also hit a record, as a rally in metals prices lifted miners and a stronger dollar boosted shares in Japanese exporters.
Jas Jain: Headline: "C.A.R. [California Association of Realtors] reports sales decrease 27.8 percent in April, median price of a home in California at $597,640, up 6.2 percent from year ago." Then we also read, "Throughout the state inventory levels have increased to their highest levels in recent years..." Price increase in the climate of declining sales and rising inventory? Something doesn't add up.The report does provide some clue: "Although the median price of a home in California continues to rise, this reflects the fall-off in sales in the lower-priced markets of the state..." I will endeavor to show that there are three factors that result in overstatement of the median price of resale homes because the characteristics of the median priced home are not the same as the median priced home sold a year, or two years, ago:
1. The size of the homes being sold recently is larger compared to those sold last year.
2. The area mixture of the homes sold recently is significantly different from those of the year ago whether we look within the state or within the counties where the median price shows YoY gains. The rapidly increasing gap between the Haves and Have-nots in the US shows up very clearly in the latest California home sales data.
3. The modernization (or home improvements in layman's term) of the homes sold recently is significantly greater than that of year, or two years, ago.
This conclusion does not preclude the probability that there are some zip codes where there is some real home price appreciation. I would estimate the number of these zip codes to be no more than 50 for the state, or to less than 5% of the zip codes."
Brett Steenbarger: "The Energy, Industrials, and Materials stocks continue to lead the inflows; the two sectors with below average inflows are Financials and Consumer Staples. In short, I don't think this rally will be derailed until we see investors give up on these large cap/physical capital sectors.
What would derail such a rally? My hunch is that it might be a firming dollar that dampens ardor for physical assets. That, in turn, might result from higher U.S. interest rates. Note that ten-year rates have been on a tear lately, rising from a low around 4.61% to over 4.8% in the past two weeks. As long as there is lots of liquidity around and an implicit weak dollar policy by the Fed, I see no reason for capital to not seek "things" that will appreciate relative to the dollar and companies that stand to benefit from the trade benefits of a weak dollar...In the big picture, I view this market as most like the post 1994 market, in which a low volatility market made a relatively flat correction and then took off to the upside. Our four-year flat correction ended in mid-2006, and we now see a fresh bull market in the broad buying of global equities. Interest rate, currency, and money flow trends will need to shift markedly to put an end to this market strength."
Iraq has the third-largest proven oil reserves after Saudi Arabia and Iran but only 10% of the country has been explored, according to the U.S. Energy Information Administration.
George Ure: "The president's recent seizure of power "Executive Order" in event of a "national emergency" is nothing more than icing on the cake after stealing the election, packing the Supreme Court with corporate-friendly justices, (need I mention the corporate wars here?) and CONgress going along with the corporate agenda for whatever they can charge in the way of campaign contributions, votes, and favors. Corporations and lobbyists live on "access" and all the talk about lobbying reform has faded into the background since the Abramoff scandal and more recently, the DC Madam list of 10,000+ people on the take (any way you want to interpret that) are all being quietly pushed under the rug. We have a single part in America: democorp/republicorp and all supported by corpmedia."
Sunday, May 27, 2007
Statistics
5/27/07 Statistics
Chris Mayer: "The official numbers tell us inflation is less than 3%. Yet, when calculating inflation using the same methods that were used before Clinton took office, Williams (Shadow Government Statistics) gets inflation closer to 6%!"
Williams maintains "We are in an inflationary recession now."
Fitzgerald asked U.S. District Judge Reggie Walton to send Libby to prison for between 30 and 37 months. Sentencing is due on June 5.
Thucydides: "The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out to meet it."
George Ure: "By the way, I wasn't particularly angry this week - just frustrated, I guess. Millions of patriotic Americans voted for change in the last election, and yet the war goes on, same as before, government is still selling off prime real estate (like highways) to private interests, and private militaries are on the rise. And more power is being seized by the elites."
Now that Cleveland Cliffs has risen 100% in price over the past 11 months, the rumor of Rio Tinto buying the company surfaced this week.
N.Y. Times: "Never mind how badly the war is going in Iraq. President Bush has been swaggering around like a victorious general because he cowed a wobbly coalition of Democrats into dropping their attempt to impose a time limit on his disastrous misadventure. By week’s end, Mr. Bush was acting as though that bit of parliamentary strong-arming had left him free to ignore not just the Democrats, but also the vast majority of Americans, who want him to stop chasing illusions of victory and concentrate on how to stop the sacrifice of young Americans’ lives. And, ever faithful to his illusions, Mr. Bush was insisting that he was the only person who understood the true enemy."
The U.S. military on Saturday announced the deaths of eight U.S. troops: Five died earlier in the day; one died Friday and two were killed Wednesday. Since the start of the war, 3,445 U.S. military personnel and seven military contract employees have died in Iraq. The total for May is 101.
Avaya Inc. delayed a meeting with analysts scheduled for next week amid speculation the world's largest maker of corporate phone equipment will be bought. Avaya competes with San Jose, California-based Cisco Systems Inc. in the $5 billion market for Internet-based phone equipment. The company is debt free, making it a ``perfect'' candidate for a leveraged buyout, according to a May 21 note from Merrill analyst Tal Liani. He said Avaya may fetch a 20 percent premium to its current stock price.
Bill Gates' investment firm reported its first sale of shares in Pacific Ethanol since the Microsoft chairman invested $84 million in the California company in April 2006. His original purchase was priced at a discounted $8 per common share (though the stock he actually bought was Cumulative Redeemable Convertible Preferred. By spring 2006 Pacific Ethanol shares had spiked to $42, only to quickly plummet into the teens. When Gates' Cascade Investment sold 1,000 shares last week, the price was $14.28 each.
The Oil Drum: "In order for nuclear power to replace the burning of natural gas to power the extraction of oil from the oilsands involves about 4.4 GW of nuclear power per million barrels per day of oil extracted (according to Wayne Henuset,director of Energy Alberta Corporation. estimate of a 2.2 GW reactor separating 500,000 bpd). 10 million bpd would take about twenty 2.2 GW twin reactors. A detailed analysis is provided from the Nuclear Energy journal. It was written by Atomic Energy Canada and Canadian Energy Research Institute scientists."
Mike Burk: "The small cap indices gained modestly last week breaking their relative underperformance to the blue chips and seasonally next week has been modestly positive. I expect the major indices to be higher on Friday June 1 than they were on Friday May 25."
Jeremy Grantham: “The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you.”
Chris Mayer: "The official numbers tell us inflation is less than 3%. Yet, when calculating inflation using the same methods that were used before Clinton took office, Williams (Shadow Government Statistics) gets inflation closer to 6%!"
Williams maintains "We are in an inflationary recession now."
Fitzgerald asked U.S. District Judge Reggie Walton to send Libby to prison for between 30 and 37 months. Sentencing is due on June 5.
Thucydides: "The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out to meet it."
George Ure: "By the way, I wasn't particularly angry this week - just frustrated, I guess. Millions of patriotic Americans voted for change in the last election, and yet the war goes on, same as before, government is still selling off prime real estate (like highways) to private interests, and private militaries are on the rise. And more power is being seized by the elites."
Now that Cleveland Cliffs has risen 100% in price over the past 11 months, the rumor of Rio Tinto buying the company surfaced this week.
N.Y. Times: "Never mind how badly the war is going in Iraq. President Bush has been swaggering around like a victorious general because he cowed a wobbly coalition of Democrats into dropping their attempt to impose a time limit on his disastrous misadventure. By week’s end, Mr. Bush was acting as though that bit of parliamentary strong-arming had left him free to ignore not just the Democrats, but also the vast majority of Americans, who want him to stop chasing illusions of victory and concentrate on how to stop the sacrifice of young Americans’ lives. And, ever faithful to his illusions, Mr. Bush was insisting that he was the only person who understood the true enemy."
The U.S. military on Saturday announced the deaths of eight U.S. troops: Five died earlier in the day; one died Friday and two were killed Wednesday. Since the start of the war, 3,445 U.S. military personnel and seven military contract employees have died in Iraq. The total for May is 101.
Avaya Inc. delayed a meeting with analysts scheduled for next week amid speculation the world's largest maker of corporate phone equipment will be bought. Avaya competes with San Jose, California-based Cisco Systems Inc. in the $5 billion market for Internet-based phone equipment. The company is debt free, making it a ``perfect'' candidate for a leveraged buyout, according to a May 21 note from Merrill analyst Tal Liani. He said Avaya may fetch a 20 percent premium to its current stock price.
Bill Gates' investment firm reported its first sale of shares in Pacific Ethanol since the Microsoft chairman invested $84 million in the California company in April 2006. His original purchase was priced at a discounted $8 per common share (though the stock he actually bought was Cumulative Redeemable Convertible Preferred. By spring 2006 Pacific Ethanol shares had spiked to $42, only to quickly plummet into the teens. When Gates' Cascade Investment sold 1,000 shares last week, the price was $14.28 each.
The Oil Drum: "In order for nuclear power to replace the burning of natural gas to power the extraction of oil from the oilsands involves about 4.4 GW of nuclear power per million barrels per day of oil extracted (according to Wayne Henuset,director of Energy Alberta Corporation. estimate of a 2.2 GW reactor separating 500,000 bpd). 10 million bpd would take about twenty 2.2 GW twin reactors. A detailed analysis is provided from the Nuclear Energy journal. It was written by Atomic Energy Canada and Canadian Energy Research Institute scientists."
Mike Burk: "The small cap indices gained modestly last week breaking their relative underperformance to the blue chips and seasonally next week has been modestly positive. I expect the major indices to be higher on Friday June 1 than they were on Friday May 25."
Jeremy Grantham: “The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you.”
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