12/5/08 Payrolls
U.S. nonfarm payrolls contracted by 533,000 in November, the worst job loss in 34 years, the Labor Department reported Friday. It's only the fourth time in the past 58 years that payrolls have fallen by more than 500,000 in a month. The unemployment rate rose from 6.5% in October to 6.7% in November, the highest jobless rate since October 1993. Revisions for September and October increased job losses by 199,000. The 11th consecutive drop in payrolls brought the number of jobs eliminated so far this year to 1.91 million. service-sector employment plunged 370,000. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers reached 12.5% last month, up 0.7 percentage point from October.Among the unemployed, the number of persons who lost their job and did not expect to be recalled to work increased by 298,000 to 4.7 million in November. Over the past 12 months, the size of this group has increased by 2.0 million. Average hourly earnings, meanwhile, increased $0.07, or 0.4%, to $18.30, and that was up just 3.7% from a year earlier, suggesting the economic downturn is making it harder for workers to demand higher wages, further restraining household spending.The average workweek fell 0.1 hour to 33.5 hours I had thought the Nov. number would reach 500,000, and I was low.
Off more than 100 points ahead of the data, futures for the Dow Jones Industrial Average were off 152 points in the wake of the data, at 8,250. Futures for the S&P 500 declined 21.3 points to 826.2, while Nasdaq 100 futures shed 28 points to 1,107.
In another depressing note, the government added 7,000 jobs in November. Private sector jobs are getting crushed and the government hires. This is nuts. It's almost as crazy as the bubble in U.S. government bonds and the ridiculously high level for the dollar in the face of economic quicksand.
The job reductions were the most since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession. Dec. 1974 was the month the Dow bottomed at 574. The difference is we have not hit the low point in unemployment. The rate will most likely rise to 9% or more.
Canadian employment fell by the most since 1982 in November, led by manufacturing, a sign the world’s eighth-largest economy is falling victim to a global recession.
Employers shed a net 70,600 workers, almost three times as many as economists anticipated, after a gain of 9,500 in October. The unemployment rate rose to a two-year high of 6.3 percent from 6.2 percent the month before.
General Electric Co.'s media and theme park subsidiary, NBC Universal, this week laid off about 500 employees -- about 3 percent of its work force of 15,000 -- as part of a plan to trim $500 million next year, a person familiar with the situation said Thursday.
The percentage of auto loans that were past due 60 days or more rose 15.9 percent in the third quarter compared to last year, according to credit reporting agency TransUnion.
The rate rose to 0.80 percent of outstanding loans, from 0.69 percent in 2007's third quarter.
There were 3,448 oil and natural-gas drilling rigs operating worldwide in November, down 70 from October but up 287 from November of last year, oil-services firm Baker Hughes reported Friday. The November U.S. rig count was 1,935, down 41 from October and up 137 from November 2007. Canadian rigs totaled 417, down 29 from October and a rise of 46 from November 2007.
The U.K. FTSE 100 index fell 1% to 4,121.72, the German DAX 30 index dropped 1.1% to 4,515.84 and the French CAC-40 index declined 1.3% to 3,120.16. Australia's S&P/ASX 200 was down 0.5% at 3,515.10, Japan's Nikkei 225 was up 0.4% at 7,955.62, South Korea's Kospi added 0.6% at 1,012.02 and New Zealand NZSX-50 eased 0.2%% to 2,726.52.
Morgan Stanley widened its fourth-quarter loss estimate on Goldman Sachs Group Inc , citing a fall in equity, credit and real-estate asset values in November, and rising negative marks on the firm's illiquid asset and principal investment portfolios.
Morgan Stanley's Patrick Pinschmidt now expects Goldman to report a loss of $4.45 a share for the quarter, compared with his prior view of a loss of $1.09.
According to the WSJ, Boeing may push back first deliveries of its flagship 787 Dreamliner by at least six more months after the recent strike by union machinists, as well as other snags.
The International Council of Shopping Centers, an industry group, described November’s figures as the weakest in more than 35 years. Declines were recorded in every retail segment the group tracks, with the biggest coming from department stores, with sales down 13.3 percent compared with November a year ago, and specialty apparel retailers, down 10.4 percent.
According to Bloomberg, California, the world’s eighth largest economy, may pay vendors with IOUs for only the second time since the Great Depression, State Finance Director Mike Genest said. In a letter to legislative leaders Dec. 2, Genest said the state “will begin delaying payments or paying in registered warrants in March” unless an $11.2 billion deficit is closed or reduced. California, which approved its budget less than three months ago, may run out of cash by March, state officials say.
Russia weakened its defense of the ruble for a fourth time in a month, pushing the currency near a three-year low against the dollar, as the price of the nation’s crude oil fell by a record this week to less than $40 a barrel.
The currency slid as much as 1.2 percent to 28.1344 per dollar and dropped 1 percent to 31.5971 against the central bank’s target basket of euros and dollars. “The corridor has been widened,” a Bank Rossii official who declined to be identified said in a phone interview from Moscow today.
OPEC, the supplier of more than 40 percent of the world’s oil, will reduce production if crude prices remain below $60 a barrel, said the group’s president, Chakib Khelil.
“If prices remain at the current low level, OPEC will decide an important reduction,” Khelil said in an overnight interview with Algerian television, cited by the state-owned Algerie Presse Service. “If prices go above $60, it is possible that the reduction will be less important.”
According to AMG Data Services, in the week ended Dec.3, Equity Fund Inflows $284 Mil; Taxable Bond Fund Inflows $513 Mil
xETFs - Equity Fund Outflows -$2.5 Bil; Taxable Bond Fund Outflows -$1.4 Bil.
Cummins to cut at least 500 jobs or 3.5% of workforce.
Through October, shipments from RV companies to dealers for the year fell 27 percent from the comparable period in 2007, according to RVIA. The downturn is expected to stretch into 2009, when shipments are forecast at 186,800 units, about 25 percent lower than this year's projected total of 248,000, according to the association, citing statistics from Richard Curtin, director of consumer surveys at the University of Michigan.
"This industry is in the middle of a three-year downturn, and you can really probably even date it farther back than that," said Kathryn Thompson, who follows RV companies for Avondale Partners.
At the height of the industry's upturn this decade, shipments totaled 390,500 units in 2006. But those are now fond memories for manufacturers and dealers feeling the economic pinch.
Dollar demand for gold in Q3 was a record US$32 billion, 45% higher than the previous record, set in 2Q2008. At the same time that demand is setting records, supply has been unable to keep pace, falling 9.7% from year-earlier levels, the WGC reported.Yet, the spot price of gold has fallen more than 20% from its all-time high, reached in March of 2008.
Germany's economics ministry reported a large drop in October manufacturing orders.
The price of high-yield, high-risk Asian corporate dollar-denominated bonds plunged more than 45 percent this year to 52.9 cents on the dollar, pushing yields to a record 28.1 percentage points above benchmark rates yesterday, Merrill Lynch & Co. indexes show.
In an effort to retain top executives, apparel maker and retailer Liz Claiborne Inc. approved new severance agreements and pushed up a portion of their equity grants by three months.
The move, disclosed in a Securities and Exchange Commission filing Thursday, makes Claiborne the first major retailer to speed up equity grants.
Dick Arms: "The huge Arms Index on Monday may have had a very meaningful significance. It was obviously a selling panic, with the down stocks getting 10 times their share of the volume. The effect was to eliminate a number of very nervous sellers. Since then we have noticed that the markets do not seem to be as sensitive to negative news. There have been a number of excuses in the economic news for big selloffs since then that did not materialize. It gives one the impression the markets may, at this time, resemble a tightly compressed spring. Any sign of hope could lead to a sudden dramatic rebound."
The Arms Index is an indicator that uses advancing and declining stocks and their volume to measure intra-day market supply and demand and can be applied over short or longer time periods. The Arms Index is named after its creator Richard W. Arms and is also know as the "TRIN" index The formula is simple and can be applied to any index for which the data is available. It is simply (Advancing issues/Declining issues) / (Advancing volume/ Declining volume). If more volume goes into advancing issues than declining issues the Arms Index falls below 1.0. If more volume goes into declining stocks than advancing stocks the Arms Index rises above 1.0.
At 48, Potash Corp made another 52 week low. The high was 241. Not exactly for the faint of heart.
Mohamed El-Erian, the chief executive of bond giant Pacific Investment Management Co., or Pimco, said the 533,000 drop in U.S. non-farm payrolls in November points to a contraction of gross domestic product of 4 or 5 percent in the fourth quarter.
You don't need to be a rocket scientist to reach this conclusion.
BMC Software Cutting 350 Jobs.
Of the Dow stocks, the two standouts are McDonald's and Wal-Mart. Their prospects still seem pretty good in this dismal environment.
The VIX is at the 66 level with the Dow down 185 points after 90 minutes of trading.
Nearly 7% of all U.S. mortgages delinquent in third quarter. Why do I believe the real number is worse than that? More than 19.5% of all subprime loans were seriously delinquent in the quarter, meaning they were more than 30 days past due.
General Motors Corp. says it will lay off about 2,000 more factory workers early next year as the U.S. auto sales slump continues to wreak havoc on domestic automakers.
Spokesman Chris Lee says the company will cut shifts at car factories in Lordstown, Ohio; Orion Township, Mich.; and Oshawa, Ontario, in February due to slowing demand for their products.
Lee says the company plans to lay off 890 workers at the Lordstown, Ohio, plant and 390 jobs on Feb. 2 at Orion Township. Another 700 workers will be laid off in Oshawa on Feb. 9.
Lordstown makes the Chevrolet Cobalt and Pontiac G5 small chars. The Orion plant makes the Chevrolet Malibu and Pontiac G6 sedans and Oshawa makes the Chevrolet Impala.
Although concerned there is "some government giveaway" happening, Nouriel Roubini's big worry is the TARP funds are not being dispersed quickly enough to recapitalize the banks, which he forecasts will ultimately suffer credit losses approaching $3 trillion. This is a "massive destruction of capital," says Roubini."If you don't recapitalize the banks, the credit crunch will be much, much worse."
Randall W. Forsyth: "The benchmark 10-year Treasury note yield has moved decisively below 3%, under 2.70% at one point, the lowest in a half century. That followed another event that hadn't happened in 50 years: the 10-year Treasury yield falling below the dividend yield on Standard & Poor's 500."
During testimony later Friday, New York University Professor Edward Altman will say that GM’s request for $18 billion in government funds will likely fail to turnaround the company and the struggling automaker could ask for more.
Altman, director of the credit and debt markets research program at NYU, is just one of the people scheduled to testify in the second and last day of congressional hearings on the bailout of the Big Three auto makers.
In prepared remarks obtained by FOX Business Network, Altman will warn that GM could fall into bankruptcy once the initial funds are used.
“GM’s cash burn of perhaps $2 billion a month or more will reduce the assets of GM even further and be exhausted in six to nine months based on current conditions,” Altman will say.
Altman predicts the global automobile industry is facing a “severe economic recession” that could last another two years. He will call for GM and Chrysler to file for bankruptcy protection as soon as possible.
Legg Mason Inc., the Baltimore-based fund manager that has lost three-quarters of its market value this year, will cut about 200 jobs, or 8 percent of its workforce, as it seeks to lower annual expenses by $120 million.
Big Lots Inc. fell 10 percent to $14.58, and slid as much as 16 percent, the steepest intraday decline since Nov. 6. The largest U.S. seller of discontinued goods, which had gained 1.8 percent this year in New York trading, lowered its earnings forecast for the current fiscal year and the quarter ending in January after posting a decline in third-quarter sales.
The broad and deep November job losses make one thing painfully clear, says Diane Swonk, the chief economist of Mesirow Financial. "It's not a blue collar recession, it's not a white collar recession. This recession runs from Wall Street to Main Street, coast to coast," Swonk says. We're approaching 2 million job losses this year alone, and Swonk expects the next several months to be bad as well. It'll be too easy, she says, to lose another 1.5 million jobs next year, "which is very scary."
Feb. gold ends down $13.30, or 1.7%, at $752.20 an ounce. Crude oil for January delivery ended down $2.85, or 6.5%, at $40.81 a barrel on the New York Mercantile Exchange, the lowest closing level since December 2004.
I find it interesting that over the past 2 hours the Dow had gone from -220 points to +10 points and the VIX has hardly budged at 65.
Worthington Industries Inc.will cut 300 jobs, or about 4% of its workforce. The company said the cuts will come from its steel processing and metal framing businesses, following the closure of three plants early in 2009. Worthington estimates about $17 million a year in savings from the cuts, and expects to take a charge of $5 million.
The Dow Jones Industrial Average gained 259.18 points, or 3.1%, to end at 8,635.42, leaving the blue-chip index down 2.2% for the week. The S&P 500 rose 30.85 points, or 3.7%, to 876.07, off 2.3% from last Friday's close. The Nasdaq Composite climbed 63.75 points, or 4.4%, to 1,509.31, down 1.7% for the week.
Tightening credit and recession fears have led U.S. consumers to reduce their debt in October for the second time in the past three months. Total seasonally adjusted consumer debt decreased by $3.54 billion, or a 1.6% annual rate, in October to $2.58 trillion, the Federal Reserve reported Friday. Consumer credit rose at a 3.1 % pace in September after dropping a record 3.0% in August. Non-revolving credit - such as auto loans, personal loans and student loans - had the biggest drop in October, falling by $3.3 billion, or 2.5%, to $1.60 trillion. Credit-card debt fell by a slim $181 million, or 0.2%, in October to $976 million.
Saturday, December 06, 2008
Thursday, December 04, 2008
More Layoffs
12/4/08 More Layoffs
Shares of Nippon Oil and Nippon Mining Holdings jumped 10% and 12.9% after the firms said they were holding merger talks, a move that reportedly woudld create the world's eighth largest oil company. Shares of Sanyo Electric were down 12.4% after the Nikkei newspaper reported Panasonic Corp had lifted its buyout offer per share by less than 10%.
AT&T Inc.said Thursday it'll take a $600 million charge in its fiscal fourth quarter as part of a plan to cut 12,000 jobs, or 4% of the Dallas-based telecommunication giant's work force.
DuPont to lay off 2,500 employees, cut 4,000 contractors, and warns of a loss.
Abercrombie & Fitch Nov. same-store sales down 28%.
Wal-Mart Stores Inc.said Thursday its November sales at U.S. stores open at least one year, including its Sam's Club outlets, rose 3.4%, excluding the impact of fuel. With fuel, the figure was 3.0%.
The European Central Bank made a record rates cut today, lowering the key interest rate to 2.5% from 3.25%.
According to the FT, "The Markit iTraxx Crossover index rose above 1,000 basis points for the first time since it was created in 2004, implying a record number of companies are on the verge of default because of deepening financial problems."
"The index, which measures the cost of protecting junk-grade companies against default, has risen sharply in the past month as sentiment has worsened because of gloomy numbers on the global economy and worries over whether companies will be able to refinance their debt."
Nordstrom Inc.said Thursday its November sales at stores open at least one year fell 15.9%.
For 2009, Merck estimates GAAP earnings per share of $3.15 to $3.30, excluding certain items and a 2009 GAAP EPS range of $2.95 to $3.17.
The Bank of England's rate-setting Monetary Policy Committee on Thursday cut the central bank's key lending rate to 2% from 3%.
As a result of lower demand and decreasing visibility, Nokia said it can no longer vouch that its market share will remain stable at 38% in the quarter. Nokia added that lower demand from consumers would lead operators and retail distribution channels to go through a period of destocking. It expects 2009 industry mobile device volumes to fall 5% or more from 2008 levels.
General Motors and Chrysler might accept a deal in which they'd file prepackaged bankruptcy-reorganization plans in return for the government providing a multibillion-dollar bailout, a person familiar with the companies' internal discussions told Bloomberg News.
Toll Brothers Inc., the Horsham, Pa., home builder, narrowed its fiscal fourth-quarter loss on 40% lower revenue. The company declined to forecast earnings for fiscal 2009, citing "numerous uncertainties," but said revenue should drop significantly from fiscal 2008's total of $3.16 billion.
British house prices saw a seasonally-adjusted monthly decline of 2.6% in November, leaving the average price 14.9% below the level seen in same month last year, mortgage lender Halifax reported Thursday.
Costco Wholesale Corp. reported that in November, comparable-store sales fell 5%. Total sales fell 3% to $5.55 billion from $5.72 billion in the year-earlier period. Same-store sales -- revenue from stores open at least a year, to eliminate the effects of new and closed stores -- were off 2% in the U.S. and 15% internationally, Costco said on Thursday.
Belden Inc., the St. Louis producer of signal-transmission solutions for automation, data networks and electronics applications, said it will cut 1,800, or 20%, of its jobs and consolidate manufacturing operations. In a statement late on Wednesday.
AbitibiBowater to lay off about 1,100 employees.
Indonesia's central bank cut interest rates a quarter-point Thursday, lowering its key rate to 9.25%. It said the impact of the global financial crisis is "taking increasing hold" of the economy. In a statement accompanying the rate-cut announcement, Bank Indonesia said domestic inflationary pressures are easing, with inflation expected to fall to its 6.5% to 7.5% target range in 2009.
Initial Jobless Claims of 509,000, down 21K from last week, were less than the 540,000 economists expected - the second week in a row forecasts have overshot. The 4-week moving average moved up 6,250 to 524,500. Meanwhile, the number of Americans receiving state jobless benefits rose 89,000 to 4.09 million in the week ending Nov. 22. This is also the highest level since December 1982.
Credit Suisse will cut 5,300 jobs, or around 11% of its workforce, after making a loss of roughly 3 billion Swiss francs ($2.5 billion) in the first two months of the fourth quarter.
Viacom Inc.said it would book a charge of $400 million to $450 million, or 42-48 cents a share, in its fourth quarter as it lays off about 850 employees or 7% of its work force.
Target Corp.said Thursday that sales at stores open for at least a year fell 10.4% in November.
Toyota Motor will close its plant in Hokkaido, Japan.
The factory, which makes engine transmissions, will suspend all production for the first time in fifteen years. On Wednesday, Toyota said it will suspend production of Lexus luxury models at its Tahara plant, and output of all vehicles at its Miyata plant for two days in December. Both plants are located in Japan.
The frenzied pace of development in Dubai and elsewhere in the United Arab Emirates is grinding to a halt and the over-the-top extravagance on full display late last month at places like the new Atlantis, at the tip of one of Dubai's three man-made, palm-tree shaped island archipelagos, may soon be a thing of the past.
The global financial crisis has brought construction to a stop as developers put projects on hold, lay off workers, and scale back several high-profile ventures.
U.S. auto sales fell for the 13th consecutive month in November, led by a 47 percent sales drop at Chrysler and a 41 percent decline at General Motors Corp , and major automakers said there was no sign that demand would rebound in the next six months in the world's largest vehicle market.
Industrywide auto sales in November were down nearly 37 percent to a seasonally adjusted annual sales rate of around 10.2 million, the lowest in 26 years, according to preliminary results released by the automakers on Tuesday.
With automobile sales dropping, payrolls plunging and manufacturing contracting, economists from across the political spectrum are raising the ante on how much the government should lay out. Some are now calling for at least a $1 trillion boost.
Riksbank (Sweden's central bank) slashed the repo rate a greater-than-expected 175bp to 2.0%.
U.S. natural gas inventories fall 64 Bcf last week: EIA. Stocks were 107 bcf less than last year at this time and 69 bcf above the five-year average, the EIA said. January natural gas futures fell 3.3% after the report to trade at $6.138 per million British thermal units.
New orders for manufactured goods fell 5.1% in October, the biggest decline since 2000, the Commerce Department reported Thursday, as new orders for transportation equipment dropped. Action Economics analysts had expected overall new orders to fall 5%. New orders for durable goods fell a revised 6.9%, compared with 6.2% estimated last week. October's drop in overall orders is the third consecutive months of declines, following drops of 3.1% in September and 4.3% in August. Nondurable goods orders in October fell 3.4%. Core capital equipment orders fell 5%.
Before the market opened, AMD said it expects its fourth-quarter revenue from continuing operations to fall about 25% from its third-quarter level of $1.59 billion.
Microsoft's currently toasting Xbox 360's biggest sales month in its six-year European history. And it wants you to know all about it.
According to sales data from stat-cruncher GfK-ChartTrack, 360 sales during November were up 124 percent over the same period last year, compared to a 43 percent rise in Wii sales and a three percent gain in the number of PS3s shifted.
Starbucks Chief Financial Officer Troy Alstead said Thursday the coffee-shop chain is facing deteriorating comparable store-sales and the company won't meet Wall Street's profit target for the current quarter of 21 cents a share. Speaking to analysts in New York, Alstead didn't indicate what Starbucks will earn for the December quarter. He said sales at stores open at least one year have fallen 9% since the quarter began Sept. 29. While store traffic had perked up in October, sales weakened in November, he explained. The CFO said it was "too early" to predict fiscal first-quarter sales.
William Greider: “The US financial position is rapidly deteriorating, due mainly to America's persistent and growing trade deficit. US ambitions to run the world, in other words, are heavily mortgaged. Like any debtor who borrows more year after year with no plausible way to reverse the trend, a nation sinking deeper into debt enters into an adverse power relationship with its creditors -- greater and greater dependency.”
Oil tumbled below $44 a barrel Thursday and the average gallon of gasoline is now less than $1.80 nationally, both four year lows. Crude for January delivery ended down $3.12, or 6.7%, at $43.67 on the New York Mercantile Exchange, the lowest closing level since January 2005.
Constellation Energy Group will cut about 8% of its workforce, or about 800 jobs, mostly in its commodities trading group, Reuters reported Thursday.
Car rental company Avis Budget Group Inc. said Thursday that it has cut more than 2,200 jobs and taken other steps to meet its goal of reducing annual costs by $150 million to $200 million by the middle of 2009.
The Dow Jones industrial average dropped 215.45 points, or 2.51 percent, to end at 8,376.24. The Standard & Poor's 500 Index fell 25.52 points, or 2.93 percent, to 845.22. The Nasdaq Composite Index slumped 46.82 points, or 3.14 percent, to close at 1,445.56. There were about three times as many stocks down as up and on the NYSE there were 3 new highs and 81 new lows.
Sotheby’s suffered about $53 million in losses from guarantees at recent auctions that it extended to sellers as prices fell short of presale estimates. It is “developing additional global cost reduction proposals,” the filing said. Sotheby’s fired employees this week as demand for high-priced art follows real estate and financial markets south.
Sotheby’s spokeswoman Diana Phillips declined to say how many jobs were eliminated. The company said in a filing that the board’s three-man executive committee approved cuts reducing salaries and other related costs by $7 million in 2009. Sotheby’s will also take a fourth-quarter “restructuring” charge, for severance, of $5 million.
Rival Christie’s is “reviewing our strategic plans in light of the current global economic environment and our sale results for this autumn,” it said in a statement.
Shares of Nippon Oil and Nippon Mining Holdings jumped 10% and 12.9% after the firms said they were holding merger talks, a move that reportedly woudld create the world's eighth largest oil company. Shares of Sanyo Electric were down 12.4% after the Nikkei newspaper reported Panasonic Corp had lifted its buyout offer per share by less than 10%.
AT&T Inc.said Thursday it'll take a $600 million charge in its fiscal fourth quarter as part of a plan to cut 12,000 jobs, or 4% of the Dallas-based telecommunication giant's work force.
DuPont to lay off 2,500 employees, cut 4,000 contractors, and warns of a loss.
Abercrombie & Fitch Nov. same-store sales down 28%.
Wal-Mart Stores Inc.said Thursday its November sales at U.S. stores open at least one year, including its Sam's Club outlets, rose 3.4%, excluding the impact of fuel. With fuel, the figure was 3.0%.
The European Central Bank made a record rates cut today, lowering the key interest rate to 2.5% from 3.25%.
According to the FT, "The Markit iTraxx Crossover index rose above 1,000 basis points for the first time since it was created in 2004, implying a record number of companies are on the verge of default because of deepening financial problems."
"The index, which measures the cost of protecting junk-grade companies against default, has risen sharply in the past month as sentiment has worsened because of gloomy numbers on the global economy and worries over whether companies will be able to refinance their debt."
Nordstrom Inc.said Thursday its November sales at stores open at least one year fell 15.9%.
For 2009, Merck estimates GAAP earnings per share of $3.15 to $3.30, excluding certain items and a 2009 GAAP EPS range of $2.95 to $3.17.
The Bank of England's rate-setting Monetary Policy Committee on Thursday cut the central bank's key lending rate to 2% from 3%.
As a result of lower demand and decreasing visibility, Nokia said it can no longer vouch that its market share will remain stable at 38% in the quarter. Nokia added that lower demand from consumers would lead operators and retail distribution channels to go through a period of destocking. It expects 2009 industry mobile device volumes to fall 5% or more from 2008 levels.
General Motors and Chrysler might accept a deal in which they'd file prepackaged bankruptcy-reorganization plans in return for the government providing a multibillion-dollar bailout, a person familiar with the companies' internal discussions told Bloomberg News.
Toll Brothers Inc., the Horsham, Pa., home builder, narrowed its fiscal fourth-quarter loss on 40% lower revenue. The company declined to forecast earnings for fiscal 2009, citing "numerous uncertainties," but said revenue should drop significantly from fiscal 2008's total of $3.16 billion.
British house prices saw a seasonally-adjusted monthly decline of 2.6% in November, leaving the average price 14.9% below the level seen in same month last year, mortgage lender Halifax reported Thursday.
Costco Wholesale Corp. reported that in November, comparable-store sales fell 5%. Total sales fell 3% to $5.55 billion from $5.72 billion in the year-earlier period. Same-store sales -- revenue from stores open at least a year, to eliminate the effects of new and closed stores -- were off 2% in the U.S. and 15% internationally, Costco said on Thursday.
Belden Inc., the St. Louis producer of signal-transmission solutions for automation, data networks and electronics applications, said it will cut 1,800, or 20%, of its jobs and consolidate manufacturing operations. In a statement late on Wednesday.
AbitibiBowater to lay off about 1,100 employees.
Indonesia's central bank cut interest rates a quarter-point Thursday, lowering its key rate to 9.25%. It said the impact of the global financial crisis is "taking increasing hold" of the economy. In a statement accompanying the rate-cut announcement, Bank Indonesia said domestic inflationary pressures are easing, with inflation expected to fall to its 6.5% to 7.5% target range in 2009.
Initial Jobless Claims of 509,000, down 21K from last week, were less than the 540,000 economists expected - the second week in a row forecasts have overshot. The 4-week moving average moved up 6,250 to 524,500. Meanwhile, the number of Americans receiving state jobless benefits rose 89,000 to 4.09 million in the week ending Nov. 22. This is also the highest level since December 1982.
Credit Suisse will cut 5,300 jobs, or around 11% of its workforce, after making a loss of roughly 3 billion Swiss francs ($2.5 billion) in the first two months of the fourth quarter.
Viacom Inc.said it would book a charge of $400 million to $450 million, or 42-48 cents a share, in its fourth quarter as it lays off about 850 employees or 7% of its work force.
Target Corp.said Thursday that sales at stores open for at least a year fell 10.4% in November.
Toyota Motor will close its plant in Hokkaido, Japan.
The factory, which makes engine transmissions, will suspend all production for the first time in fifteen years. On Wednesday, Toyota said it will suspend production of Lexus luxury models at its Tahara plant, and output of all vehicles at its Miyata plant for two days in December. Both plants are located in Japan.
The frenzied pace of development in Dubai and elsewhere in the United Arab Emirates is grinding to a halt and the over-the-top extravagance on full display late last month at places like the new Atlantis, at the tip of one of Dubai's three man-made, palm-tree shaped island archipelagos, may soon be a thing of the past.
The global financial crisis has brought construction to a stop as developers put projects on hold, lay off workers, and scale back several high-profile ventures.
U.S. auto sales fell for the 13th consecutive month in November, led by a 47 percent sales drop at Chrysler and a 41 percent decline at General Motors Corp , and major automakers said there was no sign that demand would rebound in the next six months in the world's largest vehicle market.
Industrywide auto sales in November were down nearly 37 percent to a seasonally adjusted annual sales rate of around 10.2 million, the lowest in 26 years, according to preliminary results released by the automakers on Tuesday.
With automobile sales dropping, payrolls plunging and manufacturing contracting, economists from across the political spectrum are raising the ante on how much the government should lay out. Some are now calling for at least a $1 trillion boost.
Riksbank (Sweden's central bank) slashed the repo rate a greater-than-expected 175bp to 2.0%.
U.S. natural gas inventories fall 64 Bcf last week: EIA. Stocks were 107 bcf less than last year at this time and 69 bcf above the five-year average, the EIA said. January natural gas futures fell 3.3% after the report to trade at $6.138 per million British thermal units.
New orders for manufactured goods fell 5.1% in October, the biggest decline since 2000, the Commerce Department reported Thursday, as new orders for transportation equipment dropped. Action Economics analysts had expected overall new orders to fall 5%. New orders for durable goods fell a revised 6.9%, compared with 6.2% estimated last week. October's drop in overall orders is the third consecutive months of declines, following drops of 3.1% in September and 4.3% in August. Nondurable goods orders in October fell 3.4%. Core capital equipment orders fell 5%.
Before the market opened, AMD said it expects its fourth-quarter revenue from continuing operations to fall about 25% from its third-quarter level of $1.59 billion.
Microsoft's currently toasting Xbox 360's biggest sales month in its six-year European history. And it wants you to know all about it.
According to sales data from stat-cruncher GfK-ChartTrack, 360 sales during November were up 124 percent over the same period last year, compared to a 43 percent rise in Wii sales and a three percent gain in the number of PS3s shifted.
Starbucks Chief Financial Officer Troy Alstead said Thursday the coffee-shop chain is facing deteriorating comparable store-sales and the company won't meet Wall Street's profit target for the current quarter of 21 cents a share. Speaking to analysts in New York, Alstead didn't indicate what Starbucks will earn for the December quarter. He said sales at stores open at least one year have fallen 9% since the quarter began Sept. 29. While store traffic had perked up in October, sales weakened in November, he explained. The CFO said it was "too early" to predict fiscal first-quarter sales.
William Greider: “The US financial position is rapidly deteriorating, due mainly to America's persistent and growing trade deficit. US ambitions to run the world, in other words, are heavily mortgaged. Like any debtor who borrows more year after year with no plausible way to reverse the trend, a nation sinking deeper into debt enters into an adverse power relationship with its creditors -- greater and greater dependency.”
Oil tumbled below $44 a barrel Thursday and the average gallon of gasoline is now less than $1.80 nationally, both four year lows. Crude for January delivery ended down $3.12, or 6.7%, at $43.67 on the New York Mercantile Exchange, the lowest closing level since January 2005.
Constellation Energy Group will cut about 8% of its workforce, or about 800 jobs, mostly in its commodities trading group, Reuters reported Thursday.
Car rental company Avis Budget Group Inc. said Thursday that it has cut more than 2,200 jobs and taken other steps to meet its goal of reducing annual costs by $150 million to $200 million by the middle of 2009.
The Dow Jones industrial average dropped 215.45 points, or 2.51 percent, to end at 8,376.24. The Standard & Poor's 500 Index fell 25.52 points, or 2.93 percent, to 845.22. The Nasdaq Composite Index slumped 46.82 points, or 3.14 percent, to close at 1,445.56. There were about three times as many stocks down as up and on the NYSE there were 3 new highs and 81 new lows.
Sotheby’s suffered about $53 million in losses from guarantees at recent auctions that it extended to sellers as prices fell short of presale estimates. It is “developing additional global cost reduction proposals,” the filing said. Sotheby’s fired employees this week as demand for high-priced art follows real estate and financial markets south.
Sotheby’s spokeswoman Diana Phillips declined to say how many jobs were eliminated. The company said in a filing that the board’s three-man executive committee approved cuts reducing salaries and other related costs by $7 million in 2009. Sotheby’s will also take a fourth-quarter “restructuring” charge, for severance, of $5 million.
Rival Christie’s is “reviewing our strategic plans in light of the current global economic environment and our sale results for this autumn,” it said in a statement.
Wednesday, December 03, 2008
Will The Economic Numbers Worsen?
12/3/08 Will The Economic Numbers Worsen?
United States Steel Corp. will idle three plants over the next several weeks. The affected plants are in Keewatin, Minn.; near Detroit, Mich.; and near St. Louis, Mo. The company said it will consolidate production at other plants. About 3,500 employees will be affected by the idling.
Bed Bath & Beyond Inc. estimates third-quarter earnings of 31 cents to 35 cents a share. Analysts surveyed by FactSet Research estimate third-quarter earnings of 42 cents a share. Bed Bath & Beyond also estimates third-quarter sales to drop 0.7% from a year ago, and same-store sales to drop 5.6% for the quarter.
In early Wednesday trading, gold for February delivery fell $12.60, or 1.6%, to $770.70 an ounce. Crude oil for January delivery was down 15 cents to $46.79 a barrel in electronic trading on Globex.
The U.S. private sector shed 250,000 jobs in November, the biggest job loss in seven years, according to the ADP national employment index released Wednesday. Job losses rose to 158,000 in the goods-producing sector and to 92,000 in the services.
Labor tracking firm Challenger Gray & Christmas said on Wednesday that the financial sector cut 91,356 jobs in November, the second-worst month for industry layoffs since September 2001. In September 2001 the financial sector lost 96,333 jobs.
Freeport-McMoRan Copper & Gold Inc.will cut 2009 copper production by approximately 200 million pounds and cut 2010 production by approximately 500 million pounds from October 2008 estimates, principally due to reduced operating rates at several of FCX's North America operations. The firm will also suspend its dividend. "We are responding aggressively to the current market conditions which have weakened dramatically in recent weeks," said James Moffett, chairman.
Research in Motion Ltd., producer of the iconic BlackBerry mobile-communications system, cut its estimates of fiscal third-quarter earnings and sales. At the same time, "Initial sales of new products have been very positive," said Jim Balsillie, co-chief executive at RIMM. For the quarter ended Nov. 29, Research in Motion estimates net income of US$0.67 to US$0.71 a share, compared with its previous estimate of 89 cents to 97 cents. The latest adjusted earnings are seen at 81 cents to 83 cents. It expects to report revenue of US$2.75 billion to US$2.78 billion, compared with its previous view of $2.95 billion to $3.1 billion.
Beijing might need to devalue the yuan, thus making goods made in China cheaper, to help its exporters weather the global recession.
"Pushing for a rising yuan now will be a lose-lose move for both China and the U.S.," the China Daily cited Zhou Shijian, a researcher at Beijing's prestigious Tsinghua University, as saying.
He said China would prefer to see the high-level talks Thursday and Friday in Beijing, known as the Strategic Economic Dialogue, focus on cooperation in energy and the environment.
Kimball Hill Homes, the Rolling Meadows-based home builder that has operated under Chapter 11 bankruptcy protection since April, said late Tuesday that it would wind down its operations after failing to find a buyer. The 400-employee company, which has been a prominent player in the west and northwest suburban Chicago housing market, has a significant presence in California and four other states. Kimball pulled out of the troubled Florida market earlier this year. A year ago, it had 1,100 employees.
Toyota Motor Corp. said Wednesday it will suspend production of some vehicles in Japan for two days later this month to reduce output to grapple with slowing global demand.
Toyota will halt production of Lexus luxury models at the Tahara plant and output of all vehicles at the Miyata plant on Dec. 24 and 25, company spokesman Toshiaki Hori said.
In the past year, productivity has risen 2.1%, while unit labor costs are up 1.4%. Real hourly compensation fell 1.6%. In the nonfinancial corporate sector, productivity is up 3.5% in the past year, with unit labor costs up 0.2%, real hourly compensation down 1.2%, and unit profits down 6.7%.
Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill, three times as many cuts as previously estimated, CNBC television reported Wednesday, citing people familiar with the situation.
Chevron said it may sell some refineries in the face of lower gasoline margins.
Schlumberger said Wednesday the company's fiscal year profit for 2008 will be below analysts' consensus estimates due to the worldwide economic slowdown and its effect on oil and gas exploration and production. "We have been consistent in our view that our results would be affected in the event of a severe global economic downturn, which we are now facing," said Chairman and Chief Executive Officer Andrew Gould. "However, we still maintain that in the longer term, the fundamentals of our industry are sound."
Millie Munshi: "More than $31 trillion has been erased from the value of global equities as the collapse of the U.S. subprime mortgage market sparked financial turmoil that pushed economies worldwide into contraction."
Copper futures for March delivery sank 6.8 cents, or 4.2 percent, to $1.5325 a pound at 9:19 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest one-day drop since Nov. 11.
Lead dropped to a two-year low in London after Ivernia Inc., the former supplier of 3 percent of world output, was cleared to resume a shipment from Australia.
The Bank of Thailand reduced its one-day bond repurchase rate by 1 percentage point to 2.75 percent, it said today in Bangkok.
Nonmanufacturing sectors of the U.S. economy contracted at a record pace during November, the Institute for Supply Management reported Wednesday. The ISM nonmanufacturing index fell to 37.3% from 44.4% in October. The decline was broad-based with 17 out of 18 industries reported contraction. The business activity index fell to 33.0% in November from 44.2% in the previous month. New orders fell to 35.4% from 41.5%. The employment index fell to 31.3% from 41.5%. Inflation pressures eased. The price index plunged to 36.6% from 53.4% in the previous month.
Coal producer Alpha Natural Resources Inc. on Wednesday lowered its production and earnings estimates for the year, citing declining demand from steel producers and deferred customer orders. Its shares fell 17 percent.
The Abingdon, Va., mining company reduced its production estimate to 23.5 million to 23.8 million tons from a previous forecast of 24.5 million to 25 million tons.
The company said as demand for steel products have diminished, steel producers have reduced their raw-material requirements. On top of that, as customers face economic constraints they are deferring orders, resulting in an estimated 500,000 ton reduction of fourth-quarter metallurgical coal shipments for the company. The deteriorating steel market has even led one customer to seek to reopen 2009 contract negotiations, it said.
Crude stockpiles fell 400,000 barrels to 320.4 million in the week ended Nov. 28, U.S. Energy Information Administration reported. Gasoline supplies dipped by 1.6 million barrels in the latest week, while distillate stocks fell by 1.7 million barrels, the EIA reported. U.S. crude inventories fell by 2.3 million barrels to 317.4 million in the week ended Nov. 28, the American Petroleum Institute reported on Wednesday. Distillate stocks rose by 3.1 million barrels to 131.8 million in the same period, while gasoline stocks dropped by 416,000 barrels to 200.8 million.
After an initial triple-digit slide, the Dow Jones Industrial Average rallied to 8,523.75.37, up 104.66 points. The S&P 500 climbed 11.9 points to 860.71, while the Nasdaq Composite rose 29.76 points to 1,479.56.That was the scorecard after almost two hours of trading.
Online spending at U.S. retailers jumped 15 percent on Dec. 1 to $846 million, the second-biggest amount on record, as Internet sites lured customers with discounts on clothing and electronics, ComScore Inc. said.
Former AOL Chief Executive Jonathan Miller is trying to raise capital for Velocity Interactive Group, an investment firm focused on digital media where he is a partner, and not for buying Yahoo Inc, the New York Post reported.
Jet engine maker Pratt & Whitney laid off about 350 employees across the country on Wednesday.
The Treasury Department may float a plan to reduce mortgage rates on new mortgages to boost the housing market, The Wall Street Journal reported late Wednesday on its Web site, citing people familiar with the matter.
Crude for January delivery ended down 17 cents, or 0.4%, at $46.79 a barrel on the New York Mercantile Exchange.
New Zealand’s central bank cut its benchmark interest rate by a record 1.5 percentage points to 5 percent to help steer the economy out of it worst recession in 18 years. New Zealand’s central bank cut its benchmark interest rate by a record 1.5 percentage points to 5 percent to help steer the economy out of it worst recession in 18 years.
The Standard & Poor’s 500 Index climbed for the seventh time in eight days, rallying 2.6 percent to 870.72 after earlier sliding as much as 2.5 percent. The Dow Jones Industrial Average added 172.6, or 2.1 percent, to 8,591.69. The Nasdaq Composite increased 2.9 percent to 1,492.38. Almost three stocks rose for each that fell on the New York Stock Exchange.
Vale, the world's largest iron ore producer, has cut 2.1 percent of its work force because of slumping global demand for the raw ingredient used to make steel, the company confirmed Wednesday.
Companhia Vale Rio Doce SA said the cuts amount to 1,300 jobs from its global work force of about 62,000. An additional 5,500 workers are being idled with pay to slow production, and 1,200 are being retrained for new assignments.
Adobe Systems Inc.lowered its fourth-quarter revenue forecast to $912 million to $915 million from $925 million to $955 million, blaming the global economic crisis. However, it raised its fourth-quarter earnings outlook to 45 cents to 46 cents a share from 39 cents to 41 cents a share previously due to favorable tax items. On an adjusted basis, the company revised its view to 59 cents to 60 cents a share from 51 cents to 53 cents a share. Adobe will reduce its headcount by about 600 full-time positions globally.
State Street Corp will reduce its workforce by 6%, or by 1,600 to 1,800 jobs, to lower operating costs.
Carlyle Group is cutting 10% of its staff today, the first large U.S. private-equity firm to announce firmwide layoffs as the industry braces for leaner times.
The Washington, D.C., buyout shop will cut about 100 of its 1,000-person staff. It is the first firmwide layoff in Carlyle’s 20-year history. Other large firms are also considering cutbacks, according to two people familiar with discussions.
According to the WSJ, Google is ratcheting back spending and cutting new projects and employee perks as revenue growth has slowed dramatically over the past year.
According to the Fed Beige Book,"verall economic activity weakened across all Federal Reserve Districts since the last report. Districts generally reported decreases in retail sales, and vehicle sales were down significantly in most Districts. Tourism spending was subdued in a number of Districts. Reports on the service sector were generally negative. Manufacturing activity declined in most Districts, and new orders were soft. Nearly all Districts reported weak housing markets characterized by reduced selling prices and low, but stable, sales activity. Commercial real estate markets declined in most Districts. Lending contracted, with many Districts reporting reductions in residential, commercial and industrial lending and tightening lending standards. Agricultural conditions were mixed with a relatively good harvest but concerns about profitability. Mining and energy production and exploration started to soften due to lower output prices.
District reports generally described labor market conditions as weakening. Wage pressures were largely subdued. District reports characterized price pressures as easing in light of some decreases in retail prices and declines in input prices, particularly energy, fuel, and many raw materials and food products.
Consumer spending weakened during the reporting period. Retail sales were described as weak or down in the New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas and San Francisco Districts. In Kansas City, consumer spending slowed sharply."
Telecom Italia unveiled a plan to reduce debt and trim costs through 4,000 job cuts and disposals of noncore assets valued at as much as $3.8 billion.
United States Steel Corp. will idle three plants over the next several weeks. The affected plants are in Keewatin, Minn.; near Detroit, Mich.; and near St. Louis, Mo. The company said it will consolidate production at other plants. About 3,500 employees will be affected by the idling.
Bed Bath & Beyond Inc. estimates third-quarter earnings of 31 cents to 35 cents a share. Analysts surveyed by FactSet Research estimate third-quarter earnings of 42 cents a share. Bed Bath & Beyond also estimates third-quarter sales to drop 0.7% from a year ago, and same-store sales to drop 5.6% for the quarter.
In early Wednesday trading, gold for February delivery fell $12.60, or 1.6%, to $770.70 an ounce. Crude oil for January delivery was down 15 cents to $46.79 a barrel in electronic trading on Globex.
The U.S. private sector shed 250,000 jobs in November, the biggest job loss in seven years, according to the ADP national employment index released Wednesday. Job losses rose to 158,000 in the goods-producing sector and to 92,000 in the services.
Labor tracking firm Challenger Gray & Christmas said on Wednesday that the financial sector cut 91,356 jobs in November, the second-worst month for industry layoffs since September 2001. In September 2001 the financial sector lost 96,333 jobs.
Freeport-McMoRan Copper & Gold Inc.will cut 2009 copper production by approximately 200 million pounds and cut 2010 production by approximately 500 million pounds from October 2008 estimates, principally due to reduced operating rates at several of FCX's North America operations. The firm will also suspend its dividend. "We are responding aggressively to the current market conditions which have weakened dramatically in recent weeks," said James Moffett, chairman.
Research in Motion Ltd., producer of the iconic BlackBerry mobile-communications system, cut its estimates of fiscal third-quarter earnings and sales. At the same time, "Initial sales of new products have been very positive," said Jim Balsillie, co-chief executive at RIMM. For the quarter ended Nov. 29, Research in Motion estimates net income of US$0.67 to US$0.71 a share, compared with its previous estimate of 89 cents to 97 cents. The latest adjusted earnings are seen at 81 cents to 83 cents. It expects to report revenue of US$2.75 billion to US$2.78 billion, compared with its previous view of $2.95 billion to $3.1 billion.
Beijing might need to devalue the yuan, thus making goods made in China cheaper, to help its exporters weather the global recession.
"Pushing for a rising yuan now will be a lose-lose move for both China and the U.S.," the China Daily cited Zhou Shijian, a researcher at Beijing's prestigious Tsinghua University, as saying.
He said China would prefer to see the high-level talks Thursday and Friday in Beijing, known as the Strategic Economic Dialogue, focus on cooperation in energy and the environment.
Kimball Hill Homes, the Rolling Meadows-based home builder that has operated under Chapter 11 bankruptcy protection since April, said late Tuesday that it would wind down its operations after failing to find a buyer. The 400-employee company, which has been a prominent player in the west and northwest suburban Chicago housing market, has a significant presence in California and four other states. Kimball pulled out of the troubled Florida market earlier this year. A year ago, it had 1,100 employees.
Toyota Motor Corp. said Wednesday it will suspend production of some vehicles in Japan for two days later this month to reduce output to grapple with slowing global demand.
Toyota will halt production of Lexus luxury models at the Tahara plant and output of all vehicles at the Miyata plant on Dec. 24 and 25, company spokesman Toshiaki Hori said.
In the past year, productivity has risen 2.1%, while unit labor costs are up 1.4%. Real hourly compensation fell 1.6%. In the nonfinancial corporate sector, productivity is up 3.5% in the past year, with unit labor costs up 0.2%, real hourly compensation down 1.2%, and unit profits down 6.7%.
Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill, three times as many cuts as previously estimated, CNBC television reported Wednesday, citing people familiar with the situation.
Chevron said it may sell some refineries in the face of lower gasoline margins.
Schlumberger said Wednesday the company's fiscal year profit for 2008 will be below analysts' consensus estimates due to the worldwide economic slowdown and its effect on oil and gas exploration and production. "We have been consistent in our view that our results would be affected in the event of a severe global economic downturn, which we are now facing," said Chairman and Chief Executive Officer Andrew Gould. "However, we still maintain that in the longer term, the fundamentals of our industry are sound."
Millie Munshi: "More than $31 trillion has been erased from the value of global equities as the collapse of the U.S. subprime mortgage market sparked financial turmoil that pushed economies worldwide into contraction."
Copper futures for March delivery sank 6.8 cents, or 4.2 percent, to $1.5325 a pound at 9:19 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest one-day drop since Nov. 11.
Lead dropped to a two-year low in London after Ivernia Inc., the former supplier of 3 percent of world output, was cleared to resume a shipment from Australia.
The Bank of Thailand reduced its one-day bond repurchase rate by 1 percentage point to 2.75 percent, it said today in Bangkok.
Nonmanufacturing sectors of the U.S. economy contracted at a record pace during November, the Institute for Supply Management reported Wednesday. The ISM nonmanufacturing index fell to 37.3% from 44.4% in October. The decline was broad-based with 17 out of 18 industries reported contraction. The business activity index fell to 33.0% in November from 44.2% in the previous month. New orders fell to 35.4% from 41.5%. The employment index fell to 31.3% from 41.5%. Inflation pressures eased. The price index plunged to 36.6% from 53.4% in the previous month.
Coal producer Alpha Natural Resources Inc. on Wednesday lowered its production and earnings estimates for the year, citing declining demand from steel producers and deferred customer orders. Its shares fell 17 percent.
The Abingdon, Va., mining company reduced its production estimate to 23.5 million to 23.8 million tons from a previous forecast of 24.5 million to 25 million tons.
The company said as demand for steel products have diminished, steel producers have reduced their raw-material requirements. On top of that, as customers face economic constraints they are deferring orders, resulting in an estimated 500,000 ton reduction of fourth-quarter metallurgical coal shipments for the company. The deteriorating steel market has even led one customer to seek to reopen 2009 contract negotiations, it said.
Crude stockpiles fell 400,000 barrels to 320.4 million in the week ended Nov. 28, U.S. Energy Information Administration reported. Gasoline supplies dipped by 1.6 million barrels in the latest week, while distillate stocks fell by 1.7 million barrels, the EIA reported. U.S. crude inventories fell by 2.3 million barrels to 317.4 million in the week ended Nov. 28, the American Petroleum Institute reported on Wednesday. Distillate stocks rose by 3.1 million barrels to 131.8 million in the same period, while gasoline stocks dropped by 416,000 barrels to 200.8 million.
After an initial triple-digit slide, the Dow Jones Industrial Average rallied to 8,523.75.37, up 104.66 points. The S&P 500 climbed 11.9 points to 860.71, while the Nasdaq Composite rose 29.76 points to 1,479.56.That was the scorecard after almost two hours of trading.
Online spending at U.S. retailers jumped 15 percent on Dec. 1 to $846 million, the second-biggest amount on record, as Internet sites lured customers with discounts on clothing and electronics, ComScore Inc. said.
Former AOL Chief Executive Jonathan Miller is trying to raise capital for Velocity Interactive Group, an investment firm focused on digital media where he is a partner, and not for buying Yahoo Inc, the New York Post reported.
Jet engine maker Pratt & Whitney laid off about 350 employees across the country on Wednesday.
The Treasury Department may float a plan to reduce mortgage rates on new mortgages to boost the housing market, The Wall Street Journal reported late Wednesday on its Web site, citing people familiar with the matter.
Crude for January delivery ended down 17 cents, or 0.4%, at $46.79 a barrel on the New York Mercantile Exchange.
New Zealand’s central bank cut its benchmark interest rate by a record 1.5 percentage points to 5 percent to help steer the economy out of it worst recession in 18 years. New Zealand’s central bank cut its benchmark interest rate by a record 1.5 percentage points to 5 percent to help steer the economy out of it worst recession in 18 years.
The Standard & Poor’s 500 Index climbed for the seventh time in eight days, rallying 2.6 percent to 870.72 after earlier sliding as much as 2.5 percent. The Dow Jones Industrial Average added 172.6, or 2.1 percent, to 8,591.69. The Nasdaq Composite increased 2.9 percent to 1,492.38. Almost three stocks rose for each that fell on the New York Stock Exchange.
Vale, the world's largest iron ore producer, has cut 2.1 percent of its work force because of slumping global demand for the raw ingredient used to make steel, the company confirmed Wednesday.
Companhia Vale Rio Doce SA said the cuts amount to 1,300 jobs from its global work force of about 62,000. An additional 5,500 workers are being idled with pay to slow production, and 1,200 are being retrained for new assignments.
Adobe Systems Inc.lowered its fourth-quarter revenue forecast to $912 million to $915 million from $925 million to $955 million, blaming the global economic crisis. However, it raised its fourth-quarter earnings outlook to 45 cents to 46 cents a share from 39 cents to 41 cents a share previously due to favorable tax items. On an adjusted basis, the company revised its view to 59 cents to 60 cents a share from 51 cents to 53 cents a share. Adobe will reduce its headcount by about 600 full-time positions globally.
State Street Corp will reduce its workforce by 6%, or by 1,600 to 1,800 jobs, to lower operating costs.
Carlyle Group is cutting 10% of its staff today, the first large U.S. private-equity firm to announce firmwide layoffs as the industry braces for leaner times.
The Washington, D.C., buyout shop will cut about 100 of its 1,000-person staff. It is the first firmwide layoff in Carlyle’s 20-year history. Other large firms are also considering cutbacks, according to two people familiar with discussions.
According to the WSJ, Google is ratcheting back spending and cutting new projects and employee perks as revenue growth has slowed dramatically over the past year.
According to the Fed Beige Book,"verall economic activity weakened across all Federal Reserve Districts since the last report. Districts generally reported decreases in retail sales, and vehicle sales were down significantly in most Districts. Tourism spending was subdued in a number of Districts. Reports on the service sector were generally negative. Manufacturing activity declined in most Districts, and new orders were soft. Nearly all Districts reported weak housing markets characterized by reduced selling prices and low, but stable, sales activity. Commercial real estate markets declined in most Districts. Lending contracted, with many Districts reporting reductions in residential, commercial and industrial lending and tightening lending standards. Agricultural conditions were mixed with a relatively good harvest but concerns about profitability. Mining and energy production and exploration started to soften due to lower output prices.
District reports generally described labor market conditions as weakening. Wage pressures were largely subdued. District reports characterized price pressures as easing in light of some decreases in retail prices and declines in input prices, particularly energy, fuel, and many raw materials and food products.
Consumer spending weakened during the reporting period. Retail sales were described as weak or down in the New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas and San Francisco Districts. In Kansas City, consumer spending slowed sharply."
Telecom Italia unveiled a plan to reduce debt and trim costs through 4,000 job cuts and disposals of noncore assets valued at as much as $3.8 billion.
Tuesday, December 02, 2008
A Tight Spot
12/2/08 A Tight Spot
Rep. Ron Paul: "The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75% over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere - it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.
One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy."
For the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter.
"It's nothing short of staggering," said Ezra Becker, principal consultant in TransUnion's financial services group. Becker noted the rate had hovered at about 2 percent for years, until the second quarter 2007, when it started climbing.
Moreover, the climb is not likely going to slow, he said. "Our projections are that it's not only going to be increasing but it's increasing at a faster pace," he said. The fourth quarter of 2008 could see the percentage of mortgages past due jump as high as 4.6 to 4.7 percent, he said, an estimate that reflects the recession and rising unemployment rates. "This is more pessimistic than what we would have forecast a quarter ago," he acknowledged.
The highest delinquency rates continue to be in Florida, at 7.8 percent, Nevada, at 7.7 percent, California, at 5.8 percent and Arizona at 5.5 percent, TransUnion data showed. Mississippi is fifth, at 4.6 percent.
Sears Holdings Corp., parent of Sears and Kmart stores, swung to a third-quarter net loss from a year-earlier profit on 8.3% lower total sales and 9% lower domestic same-store sales. For the quarter ended Nov. 1, the loss was $146 million, or $1.16 a share, compared with net income of $4 million, or 3 cents, in the year-earlier period. Excluding special items, the adjusted loss for the latest quarter was 90 cents a share.
Beazer Homes USA Inc. reported a wider fiscal fourth-quarter net loss on 35% lower revenue. For the quarter ended Sept. 30, the loss widened to $473.9 million, or $12.29 a share, from $155.2 million, or $4.03, in the year-earlier period. Revenue fell to $712.6 million from $1.09 billion.The backlog at Sept. 30 was 1,358 homes, down 55% from the year-earlier 2,985. The sales value of the backlog was $326.6 million, down 61% from $838.8 million.
The Bank of Japan's policy board decided at an unscheduled meeting Tuesday to accept a broader range of collateral against the provision of liquidity, including loosened standards for the acceptance of corporate bonds, as it seeks to bolster funding available to companies ahead of the calendar and fiscal year end. The central bank said it will now accept BBB-rated corporate debt or higher as collateral, effectively watering down its previous qualifying standard of A-rated or higher, effective Dec. 9. The central bank also said it would provide unlimited funds collateralized by corporate debt at interest rates equal to its overnight call rate of 0.3%. The central said it would finalize the conditions for the new collateralized funding facility at its Dec. 18 to 19 policy meeting.
The Reserve Bank of Australia cut its main interest rate to 4.25% from 5.25% Tuesday, its lowest level since December 2001.
Tokyo's benchmark stock index led the region with a 6.4% drop, while Hong Kong shares fell 5% and Australian shares fell 4.2% despite a bigger-than-expected cut in interest rates there. South Korean shares fell 3.3%.
Futures on the Standard & Poor’s 500 Index added 1.9 percent to 831.30 at 1:04 p.m. in London, indicating the gauge will rebound from the worst selloff since October.
Demand for Treasuries has reached the ‘bubble” phase seen among technology stocks in 2000 and real estate six years later, according to David Rosenberg, chief North American economist at Merrill Lynch & Co.
“The 10-year note yield is now firmly below the 3 percent threshold and this next leg down in yield will undoubtedly represent the classic mania-turn-to-bubble phase that quite plausibly sees an overshoot to or even through the April 1954 lows of 2.3 percent,” New York-based Rosenberg said in a research note today.
“It’s pretty simple,” says John Siciliano, a managing partner at Grail Partners LLC, a merchant bank that serves asset management firms. “The number of hedge funds is going to be cut in half in the next two quarters. You’re going to see capital calls like you can’t believe.”
Peter Schiff: "But what if the root of our financial problem is that American consumers have already taken on too much debt? By trying to force feed even more credit down the throats of already overly indebted Americans, Paulson's plan will only weaken the economy further.
Building on the groundwork laid by Paulson, the massive stimuli that will likely be pushed through by Obama and an overly eager Democratic Congress will further impede any real recovery. By swallowing up all available capital, spending to create government jobs will destroy far more private sector jobs. Rather than expanding government and increasing the national debt, policy makers should be thinking about doing the opposite.
The brutal truth that no one in Washington dares acknowledge is that our systemic economic problems can only be solved by a reduction in consumer borrowing and an increase in savings. We must repair our national balance sheet and a painful recession is the only path to achieve this. By interfering with the market's attempts to bring this necessary change about, all the proposals currently coming from Washington or bubbling up from think tanks and Nobel prize-winning economists, will only exacerbate the imbalances and lay the foundation for even greater losses and a larger crisis."
General Electric Co. said profit at the GE Capital finance unit will decline to $8 billion this year, less than previously forecast, and to $5 billion in 2009. GE said it will take a charge to accelerate cost cutting and add to reserves.
Profit excluding charges at GE Capital will be about $9 billion, as forecast, while total fourth-quarter profit at the parent company will be 50 to 52 cents a share, the low end of its previous forecast, the Fairfield, Connecticut-based company said in a statement. Chief Financial Officer Keith Sherin repeated GE’s goal to keep the $1.24 a share dividend in 2009 and protect its AAA credit rating, the highest available.
The charge may be as much at $1.4 billion, GE said.
Goldman Sachs Group Inc is likely to report a net loss of as much as $2 billion for the fourth quarter, the Wall Street Journal said, citing industry insiders.
The quarterly loss, equivalent to about $5 a share, will be Goldman's first ever as a public company, as it faces writedowns on everything from private equity to commercial real estate, the paper said.
BofA to Cut 10,000 Investment Banking Jobs
Platinum is trading at its lowest price relative to gold in about 11 years, signaling investors should buy the silver metal and sell the yellow one, according to Dresdner Bank AG. “It is a very rare event for platinum to trade this close to or below gold,” Bayram Dincer, and analyst at Dresdner in Zurich , said. “You surely have to buy platinum and sell gold. The downside risk is very limited.” I prefer to buy platinum and add to long-term gold holdings.
Bernanke: "The Fed could purchase longer-term Treasury or agency securities on the open market in substantial quantities. This approach might influence the yields on these securities, thus helping to spur aggregate demand. Indeed, on No 25 the Fed announced plan to purchase $600bn in mortgage securities ($100bn agency debt, $500bn pass-throughs) in the open market over the next few quarters. It is encouraging that the announcement of that action was met by a fall in mortgage interest rates."
Dow starts the day up 1% to 8228. S&P +1.4% to 828. Nasdaq +1.35% to 1417.
Ryan Barnes: "Noting the “unprecedented global economic and credit downturn,” Mosaic reported phosphate volumes of just 1.3 million tonnes, down 800k sequentially. This is tracking much lower than the reduced estimate Mosaic put out just one month ago, when the company told us of planned production cuts of 1 million tonnes by the end of 2008. On the potash side, production was 1.7 million tonnes, down from 1.9m in the prior quarter.
Monday’s press release calls for a further 1m cut in 2009 phosphate production, depending on market conditions. Sales guidance for the current fiscal year has been completely taken off the table, for both phosphates and potash. At this point, a production level anywhere between 4m and 8m tonnes for phosphate seems plausible, but the company is still forecasting a strong spring planting season to boost results on the back end of the fiscal year."
Russia should abandon its defense of the ruble to kick-start economic growth by devaluing the currency 20 percent, according to Troika Dialog, the country’s oldest investment bank.
“The sooner they do it, the more chance that the economy will start to recover,” Evgeny Gavrilenkov, Troika’s chief economist, said in an interview in Moscow yesterday. “The exchange rate prevents growth.”
The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933.
“This may be referred to as the Great Recession,” because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey.
In the first hour of trading the Dow was up about 150 points. Research in Motion was down 3 points to a new 52 week low, Google could not muster a rally, Apple was down, and Potash was near a new 52-week low. These are all high growth companies selling at multiples not seen in a very long time. Would you rather buy a financial stock or Google at $263?
Crude has difficulty holding any kind of a rally.
Rob Kirby: "This past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange. The chart appended below shows that on Friday, 8,600 gold futures contracts @ 100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered. To try to give some perspective to these numbers the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards."
Top Japanese steelmakers are considering temporarily shutting down blast furnaces in response to sagging demand, particularly from automakers, the Nikkei reported Wednesday in its online edition. No major steelmaker has shut a blast furnace down to adjust production in about seven years, the daily said.
Ford's November sales down 31%, GM's down 41%, Chrysler's down 47%, and Toyota's down 34%. The U.S. automakers all want multi-billion dollar bridge loans from the taxpayers, the same taxpayers who have trouble getting car loans.
Auto club AAA, the Oil Price Information Service and Wright Express said prices fell 0.8 cents overnight to $1.812, down 62.4 cents in the past month and $1.249 in the past year.
Light, sweet crude for January delivery fell more than 4 percent, or $2.32 to settle at $46.96 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average gained 270 points, or 3.3%, to end at 8,419. The S&P 500 index gained 4% to 848, while the Nasdaq Composite rose 51 points, or 3.7%, to end at 1,449.
Rep. Ron Paul: "The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75% over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere - it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.
One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy."
For the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter.
"It's nothing short of staggering," said Ezra Becker, principal consultant in TransUnion's financial services group. Becker noted the rate had hovered at about 2 percent for years, until the second quarter 2007, when it started climbing.
Moreover, the climb is not likely going to slow, he said. "Our projections are that it's not only going to be increasing but it's increasing at a faster pace," he said. The fourth quarter of 2008 could see the percentage of mortgages past due jump as high as 4.6 to 4.7 percent, he said, an estimate that reflects the recession and rising unemployment rates. "This is more pessimistic than what we would have forecast a quarter ago," he acknowledged.
The highest delinquency rates continue to be in Florida, at 7.8 percent, Nevada, at 7.7 percent, California, at 5.8 percent and Arizona at 5.5 percent, TransUnion data showed. Mississippi is fifth, at 4.6 percent.
Sears Holdings Corp., parent of Sears and Kmart stores, swung to a third-quarter net loss from a year-earlier profit on 8.3% lower total sales and 9% lower domestic same-store sales. For the quarter ended Nov. 1, the loss was $146 million, or $1.16 a share, compared with net income of $4 million, or 3 cents, in the year-earlier period. Excluding special items, the adjusted loss for the latest quarter was 90 cents a share.
Beazer Homes USA Inc. reported a wider fiscal fourth-quarter net loss on 35% lower revenue. For the quarter ended Sept. 30, the loss widened to $473.9 million, or $12.29 a share, from $155.2 million, or $4.03, in the year-earlier period. Revenue fell to $712.6 million from $1.09 billion.The backlog at Sept. 30 was 1,358 homes, down 55% from the year-earlier 2,985. The sales value of the backlog was $326.6 million, down 61% from $838.8 million.
The Bank of Japan's policy board decided at an unscheduled meeting Tuesday to accept a broader range of collateral against the provision of liquidity, including loosened standards for the acceptance of corporate bonds, as it seeks to bolster funding available to companies ahead of the calendar and fiscal year end. The central bank said it will now accept BBB-rated corporate debt or higher as collateral, effectively watering down its previous qualifying standard of A-rated or higher, effective Dec. 9. The central bank also said it would provide unlimited funds collateralized by corporate debt at interest rates equal to its overnight call rate of 0.3%. The central said it would finalize the conditions for the new collateralized funding facility at its Dec. 18 to 19 policy meeting.
The Reserve Bank of Australia cut its main interest rate to 4.25% from 5.25% Tuesday, its lowest level since December 2001.
Tokyo's benchmark stock index led the region with a 6.4% drop, while Hong Kong shares fell 5% and Australian shares fell 4.2% despite a bigger-than-expected cut in interest rates there. South Korean shares fell 3.3%.
Futures on the Standard & Poor’s 500 Index added 1.9 percent to 831.30 at 1:04 p.m. in London, indicating the gauge will rebound from the worst selloff since October.
Demand for Treasuries has reached the ‘bubble” phase seen among technology stocks in 2000 and real estate six years later, according to David Rosenberg, chief North American economist at Merrill Lynch & Co.
“The 10-year note yield is now firmly below the 3 percent threshold and this next leg down in yield will undoubtedly represent the classic mania-turn-to-bubble phase that quite plausibly sees an overshoot to or even through the April 1954 lows of 2.3 percent,” New York-based Rosenberg said in a research note today.
“It’s pretty simple,” says John Siciliano, a managing partner at Grail Partners LLC, a merchant bank that serves asset management firms. “The number of hedge funds is going to be cut in half in the next two quarters. You’re going to see capital calls like you can’t believe.”
Peter Schiff: "But what if the root of our financial problem is that American consumers have already taken on too much debt? By trying to force feed even more credit down the throats of already overly indebted Americans, Paulson's plan will only weaken the economy further.
Building on the groundwork laid by Paulson, the massive stimuli that will likely be pushed through by Obama and an overly eager Democratic Congress will further impede any real recovery. By swallowing up all available capital, spending to create government jobs will destroy far more private sector jobs. Rather than expanding government and increasing the national debt, policy makers should be thinking about doing the opposite.
The brutal truth that no one in Washington dares acknowledge is that our systemic economic problems can only be solved by a reduction in consumer borrowing and an increase in savings. We must repair our national balance sheet and a painful recession is the only path to achieve this. By interfering with the market's attempts to bring this necessary change about, all the proposals currently coming from Washington or bubbling up from think tanks and Nobel prize-winning economists, will only exacerbate the imbalances and lay the foundation for even greater losses and a larger crisis."
General Electric Co. said profit at the GE Capital finance unit will decline to $8 billion this year, less than previously forecast, and to $5 billion in 2009. GE said it will take a charge to accelerate cost cutting and add to reserves.
Profit excluding charges at GE Capital will be about $9 billion, as forecast, while total fourth-quarter profit at the parent company will be 50 to 52 cents a share, the low end of its previous forecast, the Fairfield, Connecticut-based company said in a statement. Chief Financial Officer Keith Sherin repeated GE’s goal to keep the $1.24 a share dividend in 2009 and protect its AAA credit rating, the highest available.
The charge may be as much at $1.4 billion, GE said.
Goldman Sachs Group Inc is likely to report a net loss of as much as $2 billion for the fourth quarter, the Wall Street Journal said, citing industry insiders.
The quarterly loss, equivalent to about $5 a share, will be Goldman's first ever as a public company, as it faces writedowns on everything from private equity to commercial real estate, the paper said.
BofA to Cut 10,000 Investment Banking Jobs
Platinum is trading at its lowest price relative to gold in about 11 years, signaling investors should buy the silver metal and sell the yellow one, according to Dresdner Bank AG. “It is a very rare event for platinum to trade this close to or below gold,” Bayram Dincer, and analyst at Dresdner in Zurich , said. “You surely have to buy platinum and sell gold. The downside risk is very limited.” I prefer to buy platinum and add to long-term gold holdings.
Bernanke: "The Fed could purchase longer-term Treasury or agency securities on the open market in substantial quantities. This approach might influence the yields on these securities, thus helping to spur aggregate demand. Indeed, on No 25 the Fed announced plan to purchase $600bn in mortgage securities ($100bn agency debt, $500bn pass-throughs) in the open market over the next few quarters. It is encouraging that the announcement of that action was met by a fall in mortgage interest rates."
Dow starts the day up 1% to 8228. S&P +1.4% to 828. Nasdaq +1.35% to 1417.
Ryan Barnes: "Noting the “unprecedented global economic and credit downturn,” Mosaic reported phosphate volumes of just 1.3 million tonnes, down 800k sequentially. This is tracking much lower than the reduced estimate Mosaic put out just one month ago, when the company told us of planned production cuts of 1 million tonnes by the end of 2008. On the potash side, production was 1.7 million tonnes, down from 1.9m in the prior quarter.
Monday’s press release calls for a further 1m cut in 2009 phosphate production, depending on market conditions. Sales guidance for the current fiscal year has been completely taken off the table, for both phosphates and potash. At this point, a production level anywhere between 4m and 8m tonnes for phosphate seems plausible, but the company is still forecasting a strong spring planting season to boost results on the back end of the fiscal year."
Russia should abandon its defense of the ruble to kick-start economic growth by devaluing the currency 20 percent, according to Troika Dialog, the country’s oldest investment bank.
“The sooner they do it, the more chance that the economy will start to recover,” Evgeny Gavrilenkov, Troika’s chief economist, said in an interview in Moscow yesterday. “The exchange rate prevents growth.”
The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933.
“This may be referred to as the Great Recession,” because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey.
In the first hour of trading the Dow was up about 150 points. Research in Motion was down 3 points to a new 52 week low, Google could not muster a rally, Apple was down, and Potash was near a new 52-week low. These are all high growth companies selling at multiples not seen in a very long time. Would you rather buy a financial stock or Google at $263?
Crude has difficulty holding any kind of a rally.
Rob Kirby: "This past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange. The chart appended below shows that on Friday, 8,600 gold futures contracts @ 100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered. To try to give some perspective to these numbers the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards."
Top Japanese steelmakers are considering temporarily shutting down blast furnaces in response to sagging demand, particularly from automakers, the Nikkei reported Wednesday in its online edition. No major steelmaker has shut a blast furnace down to adjust production in about seven years, the daily said.
Ford's November sales down 31%, GM's down 41%, Chrysler's down 47%, and Toyota's down 34%. The U.S. automakers all want multi-billion dollar bridge loans from the taxpayers, the same taxpayers who have trouble getting car loans.
Auto club AAA, the Oil Price Information Service and Wright Express said prices fell 0.8 cents overnight to $1.812, down 62.4 cents in the past month and $1.249 in the past year.
Light, sweet crude for January delivery fell more than 4 percent, or $2.32 to settle at $46.96 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average gained 270 points, or 3.3%, to end at 8,419. The S&P 500 index gained 4% to 848, while the Nasdaq Composite rose 51 points, or 3.7%, to end at 1,449.
Monday, December 01, 2008
Bleak Monday
12/1/08 Bleak Monday
John Hussman: "With regard to the market as a whole, if the long-term record is clear on one point, it is that most of the fluctuaton in the stock market is due to changes in risk-premiums, not major variations in the long-term stream of cash flows delivered by U.S. corporations over time. Just as driving down the price of a bond raises the long-term yield to maturity on that bond, stock market plunges also increase the long-term return that stocks are priced to deliver. This was true even in the Great Depression....I expect that pressure is growing on short-sellers to cover their positions and for investors who abandoned stocks near the lows to re-evaluate their exit. On the other side, however, the market has not recovered enough for value-driven investors to have much eagerness to abandon their positions. All of that is why a combination of retreating risk aversion coupled with favorable valuations tends to produce quite strong risk-adjusted returns, on average. I wouldn't want to be net short here because there are few natural suppliers of stock in the event the shorts are forced to cover. The doomsday club is already out, value investors are in no hurry to sell, and the trend-followers aren't even in yet."
UnitedHealth Group will affirm its 2008 adjusted earnings estimate of $2.95 to $2.98 a share. For 2009 it sees revenue of $85 billion to $86 billion and earnings of $2.90 to $3.15 a share.
The purchasing managers index for U.K. manufacturing slumped to a worse-than-forecast 34.4 in November from 40.7 in October, according to news reports.
Manufacturing activity in the United States declined at the fastest pace in 27 years in November, the Institute for Supply Management reported Monday. The ISM index fell to 36.2% in November from 38.9% in October. It's the lowest since early 1982. The new orders index fell to 27.9%, the lowest since 1980. The prices paid index fell to 25.5%.
The U.K. FTSE 100 index dipped 0.6% to 4,263.43 while the German DAX 30 index fell 0.8% to 4,631.19. The Japanese Nikkei 225 was down 2% to 8,343.69, the Australian S&P/ASX 200 was off 1.6% at 3,681.20 and the South Korean Kospi fell 1.5% to 1,059.74. Singapore's Strait Times Index edged down 1.8% at 1,701.05 and the Taiwanese Taiex index was off 0.8% at 4,426.44. At 4:45 a.m. EST, S&P 500 futures were down 2 percent, Dow Jones futures were down 1.7 percent and Nasdaq 100 futures were down 1.9 percent.
Saks, the luxury department store chain, on Wednesday announced a “poison pill” defence against possible hostile suitors, after Carlos Slim, the Mexican billionaire, significantly raised his holding in the company.
Mr Slim invested $23.1m in Saks over four days last week, to give him 17.6 per cent of Saks outstanding shares, up from around 12 per cent at the end of October.
There are now more than 600 Bay Area properties priced below $100,000.
Iranian state TV is reporting that OPEC's Secretary-General says a daily oil production cut of between 1 million and 1.5 million barrels is likely in December.
Secretary-General Abdullah El-Badri was quoted Monday on the station's Web site saying that the Organization of Petroleum Exporting Countries is facing a very difficult situation and plans to "restore oil prices to $90 per barrel."
OPEC's next official meeting is in Algeria on Dec. 17.
The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."
Oil for January delivery fell $3.15, or 6%, to $51.34 a barrel in electronic trading on Globex.
Gold for February delivery dropped $28.30 to $790.50 an ounce in electronic trading on Globex. March silver futures tumbled 95 cents, or 9%, to $9.29 an ounce.
The Chinese government may tell its state-owned airlines to delay new aircraft deliveries because of slowing travel growth amid a global-wide economic downturn, the Associated Press reported, citing a weekend article in the China Morning Post newspaper.
Johnson & Johnson said Monday it would pay $1.07 billion in cash to buy Mentor Corp., a supplier of medical products for the aesthetic market. The deal values Mentor Corp. at $31 a share, a premium of $14.85, or 92% over its closing price of $16.15 a share on Friday.
"We take all of this into context and realize Black Friday is not going to save the holiday season," National Retail Federation spokeswoman Ellen Davis said. "Regardless of retail sales, retail profits are another matter. Everything they sold was at a razor-thin margin."
According to the NRF, shoppers spent an average of 7.2 percent more per person at nearly $373 during the four-day holiday weekend from U.S. Thanksgiving on Thursday through Sunday. Total spending was $41 billion.
Bank of Japan Governor Masaaki Shirakawa warned on Monday economic conditions were deteriorating fast, and Japanese firms were finding it increasingly hard to secure credit.
Porsche schedules 8 days of production stops at main plant
* Volkswagen may stop production in Wolfsburg for 3 weeks
* Audi says production halts are a precaution
* BMW says will cut further 400 temporary jobs in Leipzig
Dick Bove widens his 2008 loss forecast for Citigroup to $2.79 from $2.44, and now sees a 2009 lost of $0.05 vs. +$0.79.
Seeking Alpha: "Securing a $45B jumbo loan to buy the remaining 44% of Genentech seems increasingly unlikely for Roche."
Yahoo! Inc. isn't planning to sell its Internet search business to a group of investors backed by Microsoft Corp., people familiar with the situation said today, denying a report in the Sunday Times of London.
According to research by Morgan Stanley, hedge fund's assets under management are likely to sink to $900bn (€706.8m) by the end of 2009. The figure had been $1.93 trillion in the first half of 2008.
Warren Buffet's investment strategy of buying stocks to hold for a number of years is no longer viable due to the extreme levels of volatility, Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, told CNBC. "The Warren Buffett approach is dead and it's been dead for ten years and it's going to be dead for another ten years," Faber said Monday.
"We've moved into an environment of very high volatility where you will have up and down moves of like 20 percent all the time and that is a traders' market," Faber said.
For the four weeks of November through Friday the 28th, retail e-commerce dropped to $10.4 billion, down 4 percent from $10.8 billion for the same period in 2007, according to ComScore. For the full holiday season, ComScore predicted that for November and December, online sales will be flat compared with 2007, coming in again at $29.2 billion.
The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.
Gas prices slipped 0.5 cents to a national average of $1.82 a gallon, the cheapest price since January 2005, according to Monday's survey from motorist group AAA. That price is $1.24 less than what gas cost on the same day last year.
Lower gas prices help consumer pocketbooks but do not assist with counterbalancing growing job losses.
The Dow had been on a tear, gaining 1,276.75 points, or 16.9%, over the past five trading sessions, the biggest five-day consecutive point gain ever for the index. It was also the first five-day winning streak since the five-day period ending July 17, 2007. After 90 minutes of trading on Monday, the Dow had dropped 400 points. February gold was down $47.60, or 6%, to $771.40 an ounce. January crude was down $4.54, or 8.4%, to $49.90 a barrel.
By the end of the trading day, the Dow fell 680 points, or 7.7%, to 8,149. The S&P 500 was off 80 points, or 8.9%, to 816, and the Nasdaq Composite Index tumbled 138 points, or 9%, to 1,398. Crude oil for January delivery fell $5.15, or 9.4%, to end at $49.28 a barrel on the New York Mercantile Exchange. Gold for February delivery dropped $42.20 to end at $776.80 an ounce on the New York Mercantile Exchange.
Pilgrim's Pride Corp. filed for Chapter 11 bankruptcy protection to address short-term operational and liquidity challenges.
PMorgan Chase & Co on Monday said it will eliminate about 9,200 jobs at the former Washington Mutual Inc , which on Sept 25 became the largest U.S. bank to fail.
The cuts amount to more than 21 percent of the workforce at Washington Mutual, which ended June with 43,198 employees.
Gov. Arnold Schwarzenegger on Monday declared a fiscal emergency and called for a special session with lawmakers to address California's $11.2 billion deficit, the Associated Press reported. California's revenue gap is expected to reach $28 billion over the next 19 months and without immediate action, the state could run out of cash in February, according to the report.
Asian stocks traded sharply lower early Tuesday. Japan's Nikkei benchmark briefly tumbled below the 8,000 point level before recovering. Among regional indexes, the Nikkei 225 was down 3% at 8,144.27, South Korea's Kospi fell 4.1% at 1,014.90, Australia's S&P/ASX 200 was down 3.8% at 3,541.30 and New Zealand's NZSX-50 Composite shed 1.8% at 2,642.40.
The Bank of Japan decided to call an unscheduled monetary policy meeting Tuesday, the central bank said on its Web site.
Tata Steel unit Corus has applied for Dutch government financial aid to temporarily reduce the work hours of 4,600 workers to cope with the global economic slowdown, Dutch news agency ANP reported on Monday.
John Hussman: "With regard to the market as a whole, if the long-term record is clear on one point, it is that most of the fluctuaton in the stock market is due to changes in risk-premiums, not major variations in the long-term stream of cash flows delivered by U.S. corporations over time. Just as driving down the price of a bond raises the long-term yield to maturity on that bond, stock market plunges also increase the long-term return that stocks are priced to deliver. This was true even in the Great Depression....I expect that pressure is growing on short-sellers to cover their positions and for investors who abandoned stocks near the lows to re-evaluate their exit. On the other side, however, the market has not recovered enough for value-driven investors to have much eagerness to abandon their positions. All of that is why a combination of retreating risk aversion coupled with favorable valuations tends to produce quite strong risk-adjusted returns, on average. I wouldn't want to be net short here because there are few natural suppliers of stock in the event the shorts are forced to cover. The doomsday club is already out, value investors are in no hurry to sell, and the trend-followers aren't even in yet."
UnitedHealth Group will affirm its 2008 adjusted earnings estimate of $2.95 to $2.98 a share. For 2009 it sees revenue of $85 billion to $86 billion and earnings of $2.90 to $3.15 a share.
The purchasing managers index for U.K. manufacturing slumped to a worse-than-forecast 34.4 in November from 40.7 in October, according to news reports.
Manufacturing activity in the United States declined at the fastest pace in 27 years in November, the Institute for Supply Management reported Monday. The ISM index fell to 36.2% in November from 38.9% in October. It's the lowest since early 1982. The new orders index fell to 27.9%, the lowest since 1980. The prices paid index fell to 25.5%.
The U.K. FTSE 100 index dipped 0.6% to 4,263.43 while the German DAX 30 index fell 0.8% to 4,631.19. The Japanese Nikkei 225 was down 2% to 8,343.69, the Australian S&P/ASX 200 was off 1.6% at 3,681.20 and the South Korean Kospi fell 1.5% to 1,059.74. Singapore's Strait Times Index edged down 1.8% at 1,701.05 and the Taiwanese Taiex index was off 0.8% at 4,426.44. At 4:45 a.m. EST, S&P 500 futures were down 2 percent, Dow Jones futures were down 1.7 percent and Nasdaq 100 futures were down 1.9 percent.
Saks, the luxury department store chain, on Wednesday announced a “poison pill” defence against possible hostile suitors, after Carlos Slim, the Mexican billionaire, significantly raised his holding in the company.
Mr Slim invested $23.1m in Saks over four days last week, to give him 17.6 per cent of Saks outstanding shares, up from around 12 per cent at the end of October.
There are now more than 600 Bay Area properties priced below $100,000.
Iranian state TV is reporting that OPEC's Secretary-General says a daily oil production cut of between 1 million and 1.5 million barrels is likely in December.
Secretary-General Abdullah El-Badri was quoted Monday on the station's Web site saying that the Organization of Petroleum Exporting Countries is facing a very difficult situation and plans to "restore oil prices to $90 per barrel."
OPEC's next official meeting is in Algeria on Dec. 17.
The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."
Oil for January delivery fell $3.15, or 6%, to $51.34 a barrel in electronic trading on Globex.
Gold for February delivery dropped $28.30 to $790.50 an ounce in electronic trading on Globex. March silver futures tumbled 95 cents, or 9%, to $9.29 an ounce.
The Chinese government may tell its state-owned airlines to delay new aircraft deliveries because of slowing travel growth amid a global-wide economic downturn, the Associated Press reported, citing a weekend article in the China Morning Post newspaper.
Johnson & Johnson said Monday it would pay $1.07 billion in cash to buy Mentor Corp., a supplier of medical products for the aesthetic market. The deal values Mentor Corp. at $31 a share, a premium of $14.85, or 92% over its closing price of $16.15 a share on Friday.
"We take all of this into context and realize Black Friday is not going to save the holiday season," National Retail Federation spokeswoman Ellen Davis said. "Regardless of retail sales, retail profits are another matter. Everything they sold was at a razor-thin margin."
According to the NRF, shoppers spent an average of 7.2 percent more per person at nearly $373 during the four-day holiday weekend from U.S. Thanksgiving on Thursday through Sunday. Total spending was $41 billion.
Bank of Japan Governor Masaaki Shirakawa warned on Monday economic conditions were deteriorating fast, and Japanese firms were finding it increasingly hard to secure credit.
Porsche schedules 8 days of production stops at main plant
* Volkswagen may stop production in Wolfsburg for 3 weeks
* Audi says production halts are a precaution
* BMW says will cut further 400 temporary jobs in Leipzig
Dick Bove widens his 2008 loss forecast for Citigroup to $2.79 from $2.44, and now sees a 2009 lost of $0.05 vs. +$0.79.
Seeking Alpha: "Securing a $45B jumbo loan to buy the remaining 44% of Genentech seems increasingly unlikely for Roche."
Yahoo! Inc. isn't planning to sell its Internet search business to a group of investors backed by Microsoft Corp., people familiar with the situation said today, denying a report in the Sunday Times of London.
According to research by Morgan Stanley, hedge fund's assets under management are likely to sink to $900bn (€706.8m) by the end of 2009. The figure had been $1.93 trillion in the first half of 2008.
Warren Buffet's investment strategy of buying stocks to hold for a number of years is no longer viable due to the extreme levels of volatility, Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, told CNBC. "The Warren Buffett approach is dead and it's been dead for ten years and it's going to be dead for another ten years," Faber said Monday.
"We've moved into an environment of very high volatility where you will have up and down moves of like 20 percent all the time and that is a traders' market," Faber said.
For the four weeks of November through Friday the 28th, retail e-commerce dropped to $10.4 billion, down 4 percent from $10.8 billion for the same period in 2007, according to ComScore. For the full holiday season, ComScore predicted that for November and December, online sales will be flat compared with 2007, coming in again at $29.2 billion.
The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.
Gas prices slipped 0.5 cents to a national average of $1.82 a gallon, the cheapest price since January 2005, according to Monday's survey from motorist group AAA. That price is $1.24 less than what gas cost on the same day last year.
Lower gas prices help consumer pocketbooks but do not assist with counterbalancing growing job losses.
The Dow had been on a tear, gaining 1,276.75 points, or 16.9%, over the past five trading sessions, the biggest five-day consecutive point gain ever for the index. It was also the first five-day winning streak since the five-day period ending July 17, 2007. After 90 minutes of trading on Monday, the Dow had dropped 400 points. February gold was down $47.60, or 6%, to $771.40 an ounce. January crude was down $4.54, or 8.4%, to $49.90 a barrel.
By the end of the trading day, the Dow fell 680 points, or 7.7%, to 8,149. The S&P 500 was off 80 points, or 8.9%, to 816, and the Nasdaq Composite Index tumbled 138 points, or 9%, to 1,398. Crude oil for January delivery fell $5.15, or 9.4%, to end at $49.28 a barrel on the New York Mercantile Exchange. Gold for February delivery dropped $42.20 to end at $776.80 an ounce on the New York Mercantile Exchange.
Pilgrim's Pride Corp. filed for Chapter 11 bankruptcy protection to address short-term operational and liquidity challenges.
PMorgan Chase & Co on Monday said it will eliminate about 9,200 jobs at the former Washington Mutual Inc , which on Sept 25 became the largest U.S. bank to fail.
The cuts amount to more than 21 percent of the workforce at Washington Mutual, which ended June with 43,198 employees.
Gov. Arnold Schwarzenegger on Monday declared a fiscal emergency and called for a special session with lawmakers to address California's $11.2 billion deficit, the Associated Press reported. California's revenue gap is expected to reach $28 billion over the next 19 months and without immediate action, the state could run out of cash in February, according to the report.
Asian stocks traded sharply lower early Tuesday. Japan's Nikkei benchmark briefly tumbled below the 8,000 point level before recovering. Among regional indexes, the Nikkei 225 was down 3% at 8,144.27, South Korea's Kospi fell 4.1% at 1,014.90, Australia's S&P/ASX 200 was down 3.8% at 3,541.30 and New Zealand's NZSX-50 Composite shed 1.8% at 2,642.40.
The Bank of Japan decided to call an unscheduled monetary policy meeting Tuesday, the central bank said on its Web site.
Tata Steel unit Corus has applied for Dutch government financial aid to temporarily reduce the work hours of 4,600 workers to cope with the global economic slowdown, Dutch news agency ANP reported on Monday.
Sunday, November 30, 2008
Dow Theory
11/30/08 Dow Theory
The Oil Drum: "The long-term implications of declines in energy production are very serious. Research shows that standards of living are closely tied to energy consumption. With less energy available, standards of living are likely to decline."
"Every company is trying to secure as much cash as it can [to withstand] the longer-term effects of the credit crisis," says Stefano Rettore, general manager at CHS Brazil, a major grain-trading company. "That's leaving less cash available to finance Brazilian agriculture."
Mike Burk: "Since 1928, over all years the SPX has been up 74% of the time in December with an average gain of 1.3% making it the best month of the year. During the 4th year of the Presidential Cycle the SPX has been up 80% of the time making December the best month of the year by that measure. The average gain of 1.3% in December is 3rd behind an average gain of 2.8% in August and a 1.7% gain in July....The pattern of a violent rally from the November lows is uncomfortably similar to the rally off the October lows into Election day. I expect the major indices to be lower on Friday December 5 than they were on Friday November 28."
Tim Wood: "The most important aspect of Dow theory is the joint movement of the Industrials and the Transports above and below previous secondary high and low points. As you can see on the chart below, the averages last made a joint price low on November 20, 2008, which served to yet again reconfirm the bearish primary trend that was established on November 21, 2007. Now, this is not to say that there won't be bounces. Of course there will and following every secondary low point there is of course, a bounce into a secondary high point. The key is understanding when a secondary low point has been made, what the advance into the secondary high point is telling you and then identifying the turn down out of that secondary high point....As of the October 2007 high the bull market advance that began in 1974 has now run 33 years and has consisted of eight 4-year cycles with a total advance of 2,385%. Note that this advance has been roughly double the previous bull market advance in terms of the percentage move out of the low in which the bull market began. Now the question at hand is, did the October 2007 top mark THE top of this entire bull market advance up from the 1974 low? If so, then we are now operating within the context of a much longer-term secular bear market that should serve to correct the entire 1974 to 2007 bull market. Also, based upon the historical bull and bear market relationships of the past, the 33 year bull market period should be corrected by a 10 to 12 year bear market, which, based on the 2007 top, would take the bear market down into the 2017 to 2019 timeframe."
China’s economy may grow 10 percent next year as the “huge” potential of domestic consumption and investments counters the impact of a global slowdown, a State Council researcher said.
The “vast development potential” of the world’s most- populous nation will ensure a fast rate of expansion in 2009, said Zhang Liqun, a researcher with the Cabinet’s Development Research Center, according to the official Xinhua News Agency. “Domestic enterprises need to accelerate the pace in upgrading their business structures to better cope with a severe world economic situation.”
Rigs drilling for gas in the lower 48 states fell 68 from the prior week and are now down on a year over year basis for the first time since May.
Australia's Perth Mint has suspended physical deliveries of gold until January. it is unable to keep up with demand.
Brady Willett: "The only global currency that doesn’t represent the increasing liabilities of governments, gold, will benefit if current trends persist."
Industry analysts at ShopLocal say "retailers increased Black Friday sale offers by 21% over last year."
"The customer is so pressed for money, so scared, and so in debt," says Howard Davidowitz, chairman of retail consultancy Davidowitz & Associates. "They are so focused on price that the huge must-have toys are gone."
Hormel is cranking out as much Spam as its workers can produce.
China’s manufacturing contracted by the most on record, signaling the growing risk of a slump in the world’s fourth-biggest economy.
The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today.
The dollar fell against the yen before U.S. reports that may show manufacturing shrank and employers cut jobs by the most since 2001 as the recession deepens.
The Oil Drum: "The long-term implications of declines in energy production are very serious. Research shows that standards of living are closely tied to energy consumption. With less energy available, standards of living are likely to decline."
"Every company is trying to secure as much cash as it can [to withstand] the longer-term effects of the credit crisis," says Stefano Rettore, general manager at CHS Brazil, a major grain-trading company. "That's leaving less cash available to finance Brazilian agriculture."
Mike Burk: "Since 1928, over all years the SPX has been up 74% of the time in December with an average gain of 1.3% making it the best month of the year. During the 4th year of the Presidential Cycle the SPX has been up 80% of the time making December the best month of the year by that measure. The average gain of 1.3% in December is 3rd behind an average gain of 2.8% in August and a 1.7% gain in July....The pattern of a violent rally from the November lows is uncomfortably similar to the rally off the October lows into Election day. I expect the major indices to be lower on Friday December 5 than they were on Friday November 28."
Tim Wood: "The most important aspect of Dow theory is the joint movement of the Industrials and the Transports above and below previous secondary high and low points. As you can see on the chart below, the averages last made a joint price low on November 20, 2008, which served to yet again reconfirm the bearish primary trend that was established on November 21, 2007. Now, this is not to say that there won't be bounces. Of course there will and following every secondary low point there is of course, a bounce into a secondary high point. The key is understanding when a secondary low point has been made, what the advance into the secondary high point is telling you and then identifying the turn down out of that secondary high point....As of the October 2007 high the bull market advance that began in 1974 has now run 33 years and has consisted of eight 4-year cycles with a total advance of 2,385%. Note that this advance has been roughly double the previous bull market advance in terms of the percentage move out of the low in which the bull market began. Now the question at hand is, did the October 2007 top mark THE top of this entire bull market advance up from the 1974 low? If so, then we are now operating within the context of a much longer-term secular bear market that should serve to correct the entire 1974 to 2007 bull market. Also, based upon the historical bull and bear market relationships of the past, the 33 year bull market period should be corrected by a 10 to 12 year bear market, which, based on the 2007 top, would take the bear market down into the 2017 to 2019 timeframe."
China’s economy may grow 10 percent next year as the “huge” potential of domestic consumption and investments counters the impact of a global slowdown, a State Council researcher said.
The “vast development potential” of the world’s most- populous nation will ensure a fast rate of expansion in 2009, said Zhang Liqun, a researcher with the Cabinet’s Development Research Center, according to the official Xinhua News Agency. “Domestic enterprises need to accelerate the pace in upgrading their business structures to better cope with a severe world economic situation.”
Rigs drilling for gas in the lower 48 states fell 68 from the prior week and are now down on a year over year basis for the first time since May.
Australia's Perth Mint has suspended physical deliveries of gold until January. it is unable to keep up with demand.
Brady Willett: "The only global currency that doesn’t represent the increasing liabilities of governments, gold, will benefit if current trends persist."
Industry analysts at ShopLocal say "retailers increased Black Friday sale offers by 21% over last year."
"The customer is so pressed for money, so scared, and so in debt," says Howard Davidowitz, chairman of retail consultancy Davidowitz & Associates. "They are so focused on price that the huge must-have toys are gone."
Hormel is cranking out as much Spam as its workers can produce.
China’s manufacturing contracted by the most on record, signaling the growing risk of a slump in the world’s fourth-biggest economy.
The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today.
The dollar fell against the yen before U.S. reports that may show manufacturing shrank and employers cut jobs by the most since 2001 as the recession deepens.
Retail Sales
11/29/08 Retail Sales
Saudi Arabia's king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month.
Saudi Oil Minister Ali Naimi said that the Organization of Petroleum Exporting Countries will "do what needs to be done" to shore up falling oil prices when the cartel meets Dec. 17 in Algeria.
Excluding Wal-Mart Stores, retailers are expected to report Thursday that November sales at stores open more than a year fell 7.1%, according to Thomson Reuters. Even so, it was reported the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation's retailers had to slash prices to attract the crowds in a season that is expected to be the weakest in decades. Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets. Last year, shoppers spent about $10.3 billion on the day after Thanksgiving. I question the validity of these post-Thanksgiving numbers.
According to the FT, Hassan, whose pretzel cart has sat outside the Disney store on New York’s Fifth Avenue for almost 10 years, had never seen a Black Friday like it.
“Last year, I sold almost 1,000 breads. This year it’s only 100 or 150,” he said.
U.S. retailers that lowered prices as much as 70 percent on the day after Thanksgiving may see sales eroded by steeper price cuts in what may be the worst holiday shopping season in six years.
Bargains such as Best Buy Co.’s Toshiba Corp. satellite laptop computer for $379.99, a $270 discount, and Gap Inc.’s buy-one-get-one free holiday sweater offer may leave retailers with slowing sales even as they entice more people to visit stores during the holidays.
More than one million jobs have been lost this year through October, according to the Labor Department. And the upcoming November employment report is expected to show a loss of another 350,000 jobs, according to analysts surveyed by MarketWatch. A decrease of 350,000 would be the largest drop since May 1980, when more than 400,000 jobs were shed.
Falling markets and a sour economy have opened a gap of more than $200 billion in the pension plans of S&P 500 companies, including Ford and GM.
Saudi Arabia's king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month.
Saudi Oil Minister Ali Naimi said that the Organization of Petroleum Exporting Countries will "do what needs to be done" to shore up falling oil prices when the cartel meets Dec. 17 in Algeria.
Excluding Wal-Mart Stores, retailers are expected to report Thursday that November sales at stores open more than a year fell 7.1%, according to Thomson Reuters. Even so, it was reported the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation's retailers had to slash prices to attract the crowds in a season that is expected to be the weakest in decades. Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets. Last year, shoppers spent about $10.3 billion on the day after Thanksgiving. I question the validity of these post-Thanksgiving numbers.
According to the FT, Hassan, whose pretzel cart has sat outside the Disney store on New York’s Fifth Avenue for almost 10 years, had never seen a Black Friday like it.
“Last year, I sold almost 1,000 breads. This year it’s only 100 or 150,” he said.
U.S. retailers that lowered prices as much as 70 percent on the day after Thanksgiving may see sales eroded by steeper price cuts in what may be the worst holiday shopping season in six years.
Bargains such as Best Buy Co.’s Toshiba Corp. satellite laptop computer for $379.99, a $270 discount, and Gap Inc.’s buy-one-get-one free holiday sweater offer may leave retailers with slowing sales even as they entice more people to visit stores during the holidays.
More than one million jobs have been lost this year through October, according to the Labor Department. And the upcoming November employment report is expected to show a loss of another 350,000 jobs, according to analysts surveyed by MarketWatch. A decrease of 350,000 would be the largest drop since May 1980, when more than 400,000 jobs were shed.
Falling markets and a sour economy have opened a gap of more than $200 billion in the pension plans of S&P 500 companies, including Ford and GM.
Friday, November 28, 2008
Government Loan Programs
11/28/08 Government Loan Programs
The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News. That sum represents almost 60 percent of the nation's estimated gross domestic product.
Inventories of crude oil held by developed countries have risen above the Opec oil cartel’s comfort level, Opec warned just as its member countries’ ministers arrived in Cairo on Friday to discuss whether to cut their output further.
Adulla El-Badri, Opec’s secretary-general, said: “The market is oversupplied,” and called the rising oil inventories in consuming countries “a concern”.
The British government took control of Royal Bank of Scotland after investors shunned the bank’s share sale.
Britain's retailers are as gloomy about the crucial Christmas trading period as at any time in the last 25 years, the country's biggest business lobby group said Friday.
In its monthly survey of 185 firms covering 20,000 outlets, the Confederation of British Industry said 40 percent more retailers expected a year-on-year fall in retail sales than a rise in December.
Unemployment in the 15 nations that share the euro shot up to 7.7 percent in October — the highest level in two years — as growth dropped sharply, the EU statistics agency Eurostat said Friday.
Prices also plunged with the annual inflation rate sinking to 2.1 percent in November from 3.2 percent in October, Eurostat said. Lower inflation gives the European Central Bank more room to reduce interest rates, which would help stoke growth.
Citigroup forecasts gold hitting $2000 in 2009.
The yield on the 10 year note tumbled nearly four basis points to a paltry 2.94 percent., the lowest in modern bond market history.
In Japan, factory output fell 3.1 percent from September and household spending slid 3.8 percent. Companies plan to cut output by over 6 percent this month.
Since September, muni bond issuance has plunged by 41% compared with the same period in 2007. 10-year munis now yield about 4% - one full percentage more than Treasurys - despite the former's huge advantage of being tax-exempt.
The market for personal computers won't recover until the third quarter of next year as a global recession weighs on demand and prices, according to a report from JPMorgan released Friday.
In a note to investors, JPMorgan analyst Gokul Hariharan said he expects PC sales to decline by 5 percent year over year in 2009, with revenue from sales down 13 percent. Hariharan predicted that 10 percent growth in notebook sales will be offset by a 19 percent decline in desktops.
The 78 remaining retail locations of the parent company of Corral West Ranchwear are being liquidated, including nine in Montana.
The liquidation, which began Wednesday, is part of bankruptcy proceedings for BTWW Retail.
Steve & Barry’s, Linens ’n Things, Value City and Club Libby Lu have all announced plans to liquidate their inventories and go out of business.
Black Friday brought a sparser and more cautious horde huddling outside stores Friday morning.
The Federal Reserve boosted its lending to commercial banks and investment firms over the past week, indicating that a severe credit crisis was still squeezing the financial system.
The Fed released a report Friday saying commercial banks averaged $93.6 billion in daily borrowing for the week ending Wednesday. That was up from an average of $91.6 billion for the week ending Nov. 19.
The report also said investment firms borrowed an average of $52.4 billion from the Fed's emergency loan program over the week ending Wednesday, up from an average of $50.2 billion the previous week.
Crude for December delivery closed at $54.43 a barrel on the New York Mercantile Exchange. Gold for December delivery rose $7.70, or 1%, to close at $816.20 an ounce on the Comex division of the New York Mercantile Exchange.The Dow gained 102 points, the Nasdaq 3 points, and the S&P 8 points in the half-day session.
The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News. That sum represents almost 60 percent of the nation's estimated gross domestic product.
Inventories of crude oil held by developed countries have risen above the Opec oil cartel’s comfort level, Opec warned just as its member countries’ ministers arrived in Cairo on Friday to discuss whether to cut their output further.
Adulla El-Badri, Opec’s secretary-general, said: “The market is oversupplied,” and called the rising oil inventories in consuming countries “a concern”.
The British government took control of Royal Bank of Scotland after investors shunned the bank’s share sale.
Britain's retailers are as gloomy about the crucial Christmas trading period as at any time in the last 25 years, the country's biggest business lobby group said Friday.
In its monthly survey of 185 firms covering 20,000 outlets, the Confederation of British Industry said 40 percent more retailers expected a year-on-year fall in retail sales than a rise in December.
Unemployment in the 15 nations that share the euro shot up to 7.7 percent in October — the highest level in two years — as growth dropped sharply, the EU statistics agency Eurostat said Friday.
Prices also plunged with the annual inflation rate sinking to 2.1 percent in November from 3.2 percent in October, Eurostat said. Lower inflation gives the European Central Bank more room to reduce interest rates, which would help stoke growth.
Citigroup forecasts gold hitting $2000 in 2009.
The yield on the 10 year note tumbled nearly four basis points to a paltry 2.94 percent., the lowest in modern bond market history.
In Japan, factory output fell 3.1 percent from September and household spending slid 3.8 percent. Companies plan to cut output by over 6 percent this month.
Since September, muni bond issuance has plunged by 41% compared with the same period in 2007. 10-year munis now yield about 4% - one full percentage more than Treasurys - despite the former's huge advantage of being tax-exempt.
The market for personal computers won't recover until the third quarter of next year as a global recession weighs on demand and prices, according to a report from JPMorgan released Friday.
In a note to investors, JPMorgan analyst Gokul Hariharan said he expects PC sales to decline by 5 percent year over year in 2009, with revenue from sales down 13 percent. Hariharan predicted that 10 percent growth in notebook sales will be offset by a 19 percent decline in desktops.
The 78 remaining retail locations of the parent company of Corral West Ranchwear are being liquidated, including nine in Montana.
The liquidation, which began Wednesday, is part of bankruptcy proceedings for BTWW Retail.
Steve & Barry’s, Linens ’n Things, Value City and Club Libby Lu have all announced plans to liquidate their inventories and go out of business.
Black Friday brought a sparser and more cautious horde huddling outside stores Friday morning.
The Federal Reserve boosted its lending to commercial banks and investment firms over the past week, indicating that a severe credit crisis was still squeezing the financial system.
The Fed released a report Friday saying commercial banks averaged $93.6 billion in daily borrowing for the week ending Wednesday. That was up from an average of $91.6 billion for the week ending Nov. 19.
The report also said investment firms borrowed an average of $52.4 billion from the Fed's emergency loan program over the week ending Wednesday, up from an average of $50.2 billion the previous week.
Crude for December delivery closed at $54.43 a barrel on the New York Mercantile Exchange. Gold for December delivery rose $7.70, or 1%, to close at $816.20 an ounce on the Comex division of the New York Mercantile Exchange.The Dow gained 102 points, the Nasdaq 3 points, and the S&P 8 points in the half-day session.
Wednesday, November 26, 2008
Lousy Economic Data
11/26/08 Lousy Economic Data
Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, said the economic turmoil in the US had confirmed his long-held belief that the country was heading for extinction in its present form.
In an interview with the Russian newspaper Izvestia, he outlined how the US would divide along ethnic and cultural lines.
They are: the Pacific coast with its growing Chinese population; the increasingly Hispanic South; independence-minded Texas; the Atlantic Coast; a central state with a large Native American population; and the northern states where – he maintains – Canadian influence is strong.
Alaska could be claimed by Russia, he said, claiming that the region was "only granted on lease, after all".
He said the country's break-up would be accelerated by rising unemployment and Americans losing their savings.
"The dollar isn't secured by anything. The country's foreign debt has grown like an avalanche; this is a pyramid, which has to collapse," said Prof Panarin.
Fitch Ratings cut Toyota's top-notch credit rating today, blaming the world auto market slump and surging yen — the latest sign that even Japan's top automaker is suffering from the global slowdown.
Canadian telecom company BCE Inc. said Wednesday that its $35 billion privatization deal may be in jeopardy, as a preliminary review has found the proposed acquisition may not meet solvency requirements.
BCE, the parent of Bell Canada, is being privatized by an investment group led by the Ontario Teachers Pension Plan Board and several U.S. partners. The deal, which had been set to close on Dec. 11, would be the biggest takeover in Canadian history.
Consumer spending fell 1% in October, the largest decline since September 2001, the Commerce Department reported Wednesday. The result matched analysts' expectations. Real consumer spending fell 0.5%. Personal income rose 0.3% in October after a 0.1% gain in September.
First-time claims for state unemployment benefits fell by 14,000 to 529,000 in the week ending Nov. 22, the Labor Department reported Wednesday. The four-week average of those claims rose to a 25-year high of 518,000. Meanwhile, the number of continuing jobless claims fell by 54,000 to 3.96 million. The four-week average of continuing claims rose to a 25-year high of 3.92 million.
Orders for U.S.-made durable goods fell 6.2% in October, the largest decline in two years, the Commerce Department estimated Wednesday, as orders for transportation goods fell 11.1%. Economists surveyed by MarketWatch had expected an overall decline of 2.5%. Excluding transportation, orders fell 4.4%. Orders for core capital equipment - the kind of investments businesses make to expand or update their productive capacity - fell 4% in October, after a 3.3% decline in September. October shipments fell 2.4% after a 0.2% dip in September. Excluding transportation, shipments fell 1.7% in October after a 0.9% decline in September. New orders for September were revised to a decline of 0.2%, compared with the prior estimate of a 0.9% gain.
Sales of new homes fell an estimated 5.3% in October to a seasonally adjusted annual rate of 433,000, the lowest level since 1991, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch had expected a result of 441,500. Sales fell 6% in the South, hitting the lowest level since 1992. Sales declined 18% in West, hitting the lowest level since 1982. Nationally, sales in October were down 40.1% compared with October 2007. The inventory of unsold homes fell a record 8% in October to 381,000. In the past year, inventories have fallen 25.7%, the biggest drop since the government began tracking the data in 1963. The median sales price was $218,000, down 7% in the past year.
Gold for December delivery fell $7.50, or 0.9%, to $811 an ounce in early electronic trading.
Crude oil for January delivery gained 61 cents to $51.38 a barrel in electronic trading on Globex.
Poland's central bank cut its benchmark interest rate by 25 basis points to 5.75% on Wednesday.
U.S. consumer sentiment fell in November, according to the University of Michigan/Reuters index released Wednesday. The index fell to 55.3 from an early November reading of 57.9.
General Motors Corp. is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer as part of its effort to cut costs to secure $12 billion in government loans, Bloomberg reported in its online edition Wednesday.
The Dow Jones Industrial Average rallied 247 points, or 3%, to end at 8,726, rebounding from a morning low of 8,311. Out of the Dow's 30 stocks, 28 advanced. The S&P 500 index gained 30 points, or 3.5%, to 887, while the Nasdaq Composite jumped 67 points, or 4.6%, to end at 1,532.
Crude for January delivery rose $3.67, or 7.2%, to end at $54.44 a barrel on the New York Mercantile Exchange. Gold for December delivery fell $10 to end at $808.50 an ounce on the Comex division of the New York Mercantile Exchange. - Natural gas inventories fell by 66 billion cubic feet to stand at 3,422 billion cubic feet in the week ended Nov. 21, the Energy Information Administration reported Wednesday. After the data, January natural gas futures were up 28 cents, or 4.4%, to $6.67 per million British thermal units.
Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, said the economic turmoil in the US had confirmed his long-held belief that the country was heading for extinction in its present form.
In an interview with the Russian newspaper Izvestia, he outlined how the US would divide along ethnic and cultural lines.
They are: the Pacific coast with its growing Chinese population; the increasingly Hispanic South; independence-minded Texas; the Atlantic Coast; a central state with a large Native American population; and the northern states where – he maintains – Canadian influence is strong.
Alaska could be claimed by Russia, he said, claiming that the region was "only granted on lease, after all".
He said the country's break-up would be accelerated by rising unemployment and Americans losing their savings.
"The dollar isn't secured by anything. The country's foreign debt has grown like an avalanche; this is a pyramid, which has to collapse," said Prof Panarin.
Fitch Ratings cut Toyota's top-notch credit rating today, blaming the world auto market slump and surging yen — the latest sign that even Japan's top automaker is suffering from the global slowdown.
Canadian telecom company BCE Inc. said Wednesday that its $35 billion privatization deal may be in jeopardy, as a preliminary review has found the proposed acquisition may not meet solvency requirements.
BCE, the parent of Bell Canada, is being privatized by an investment group led by the Ontario Teachers Pension Plan Board and several U.S. partners. The deal, which had been set to close on Dec. 11, would be the biggest takeover in Canadian history.
Consumer spending fell 1% in October, the largest decline since September 2001, the Commerce Department reported Wednesday. The result matched analysts' expectations. Real consumer spending fell 0.5%. Personal income rose 0.3% in October after a 0.1% gain in September.
First-time claims for state unemployment benefits fell by 14,000 to 529,000 in the week ending Nov. 22, the Labor Department reported Wednesday. The four-week average of those claims rose to a 25-year high of 518,000. Meanwhile, the number of continuing jobless claims fell by 54,000 to 3.96 million. The four-week average of continuing claims rose to a 25-year high of 3.92 million.
Orders for U.S.-made durable goods fell 6.2% in October, the largest decline in two years, the Commerce Department estimated Wednesday, as orders for transportation goods fell 11.1%. Economists surveyed by MarketWatch had expected an overall decline of 2.5%. Excluding transportation, orders fell 4.4%. Orders for core capital equipment - the kind of investments businesses make to expand or update their productive capacity - fell 4% in October, after a 3.3% decline in September. October shipments fell 2.4% after a 0.2% dip in September. Excluding transportation, shipments fell 1.7% in October after a 0.9% decline in September. New orders for September were revised to a decline of 0.2%, compared with the prior estimate of a 0.9% gain.
Sales of new homes fell an estimated 5.3% in October to a seasonally adjusted annual rate of 433,000, the lowest level since 1991, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch had expected a result of 441,500. Sales fell 6% in the South, hitting the lowest level since 1992. Sales declined 18% in West, hitting the lowest level since 1982. Nationally, sales in October were down 40.1% compared with October 2007. The inventory of unsold homes fell a record 8% in October to 381,000. In the past year, inventories have fallen 25.7%, the biggest drop since the government began tracking the data in 1963. The median sales price was $218,000, down 7% in the past year.
Gold for December delivery fell $7.50, or 0.9%, to $811 an ounce in early electronic trading.
Crude oil for January delivery gained 61 cents to $51.38 a barrel in electronic trading on Globex.
Poland's central bank cut its benchmark interest rate by 25 basis points to 5.75% on Wednesday.
U.S. consumer sentiment fell in November, according to the University of Michigan/Reuters index released Wednesday. The index fell to 55.3 from an early November reading of 57.9.
General Motors Corp. is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer as part of its effort to cut costs to secure $12 billion in government loans, Bloomberg reported in its online edition Wednesday.
The Dow Jones Industrial Average rallied 247 points, or 3%, to end at 8,726, rebounding from a morning low of 8,311. Out of the Dow's 30 stocks, 28 advanced. The S&P 500 index gained 30 points, or 3.5%, to 887, while the Nasdaq Composite jumped 67 points, or 4.6%, to end at 1,532.
Crude for January delivery rose $3.67, or 7.2%, to end at $54.44 a barrel on the New York Mercantile Exchange. Gold for December delivery fell $10 to end at $808.50 an ounce on the Comex division of the New York Mercantile Exchange. - Natural gas inventories fell by 66 billion cubic feet to stand at 3,422 billion cubic feet in the week ended Nov. 21, the Energy Information Administration reported Wednesday. After the data, January natural gas futures were up 28 cents, or 4.4%, to $6.67 per million British thermal units.
The Economy
11/25/08 The Economy
The Commerce Department's revised reading for the three months ended in September showed gross domestic product declined 0.5%. U.S. corporations' before-tax profits from current production fell 9.0% over the past year, the Commerce Department estimated Tuesday. This is the slowest annual rate since the third quarter of 2001, which included 9/11. In the third quarter, profits fell 0.9% to $1.52 trillion annualized in the third quarter. The government data are adjusted for inventory valuations and capital consumption.
The government said the economy took a tumble in the summer that was worse than first thought as American consumers throttled back their spending by the most in 28 years.
It was further proof the country is almost certainly in the throes of a painful recession.
Case-Shiller U.S. National Home Price Index down 16.6% in Q3. Home prices in 20 major U.S. cities dropped 1.8% in September from the prior month, and had fallen a record 17.4% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest decline in September was found in the San Francisco metro area, where prices fell 3.9%. In the past year, Phoenix has had the largest decline, down 31.9%. For the original 10-city index, prices fell a record 18.6% in the previous 12 months.
BHP Billiton Ltd., the world's biggest mining company, abandoned a hostile $68 billion takeover bid for rival Rio Tinto Ltd., blaming the global economic downturn and plunging commodity prices. Shares of BHP Billiton were up 14 percent at midday in London. Rio Tinto shares had plummeted 36 percent.
Venezuelan President Hugo Chavez said the Organization of Petroleum Exporting Countries should return to a system of setting a price band for crude oil in order to guarantee stability in the market. The country would consider a price of $80 to $100 a barrel to be ``fair,'' Chavez said today in a televised press conference in Caracas.
Brazil, the world’s largest exporter of poultry and second-biggest supplier of soybeans, is seeking investments in ports and roads from China, its largest market for agricultural products.
The collapse of global credit markets that is pushing the U.S., Europe and Japan into simultaneous recessions for the first time since World War II also threatens farmers in Brazil, the world’s biggest grower of coffee, oranges and sugar cane, the second-largest producer of soybeans and third-biggest of corn. Smaller harvests in Brazil may increase costs of commodities next year, said Andre Pessoa, an analyst at Agroconsult who conducts the country’s broadest crop survey.
“When we look ahead, we see demand continuing to grow, while supply will face difficulties,” Pessoa said in an interview from the Florianopolis, Brazil-based company.
Futures contracts in Chicago show corn will jump 18 percent by the end of 2009 to $4.1775 a bushel and soybeans will gain 2 percent to $9.015 a bushel. Coffee will rise 10 percent to $1.2545 a pound, according to contracts in New York.
U.S. average gasoline prices fell below $1.90 a barrel on Tuesday, according to the AAA Daily Fuel Gauge Report. The current average price stands at $1.89 a gallon, down from $1.91 on Monday. A month ago, gasoline sold for $2.70 a gallon. A year ago, it sold for $3.09 a gallon.
D.R. Horton , the largest U.S. homebuilder, on Tuesday reported a wider quarterly loss of $2.53 per share, or $799.9 million, compared with 16 cents per share, or $50.1 million, a year ago.
Home sales revenue for the fourth quarter fell by 50 percent to $1.5 billion.
The company recorded pretax impairment charges totaling $988.9 million and write-offs of $85.7 million related to land option contracts Horton does not intend to pursue.
The financial crisis will likely push the world's developed countries into their worst recession since the early 1980s, the Organization for Economic Cooperation and Development said Tuesday.
The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore. ``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers.
The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.''
Rogers said that he is buying the Japanese yen.
Rep. Ron Paul: "We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed - the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me."
Doug Floyd: "You don't get harmony when everybody sings the same note"
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.
Gold for December delivery gained $9.20, or 1.1%, to $828.70 an ounce on the Comex division of the New York Mercantile Exchange.
Houston-based energy research firm Tudor Pickering Holt on Tuesday noted that U.S. electricty demand appears to be softening as the economy cools off. Data on U.S. electricity use shows a drop of 3% over past five weeks compared to weather-based models. The trend points to less natural gas and coal consumption and lower power needs, analysts noted. "Sluggish electricity demand points to weak industrial or residential conservation and soft Gross Domestic Product," Tudor Pickering Holt noted.
Dollar Tree sees fourth-quarter earnings of $1.07 to $1.15 a share and full-year earnings of $2.45 to $2.53 a share.
Satyajit Das: "John W. Gardner once observed: "The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water." Shoddy monetary philosophies caused the financial crisis. Now inadequate plumbing of the global financial system is exacerbating its risks."
Falling gas prices perked up consumers in November, according to the monthly Conference Board index, which reported Tuesday that confidence rose from a record low in October. The November consumer confidence index increased to 44.9 from an upwardly revised October reading of 38.8. However, consumers' view of current conditions worsened in November, with those saying jobs are "hard to get" rising to 37.2% from 36.6% in the prior month.
The number of problem U.S. banks and thrifts jumped in the third quarter to 171, from 117 at the end of the prior quarter, marking the highest level since the end of 1995 and adding to expectations that more banks will fail, regulators said on Tuesday.
The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.
The FDIC also reported that bank industry income fell 94 percent from the previous year to $1.7 billion in the third quarter.
The "coverage ratio" of reserves to noncurrent loans fell from 89 cents in reserves for every $1 of noncurrent loans to 85 cents, the FDIC said. "This is the tenth consecutive quarter that the industry's coverage ratio has fallen; it is now at its lowest level since the first quarter of 1993," the FDIC warned.
The Dow Jones Industrial Average gained 36.08 points to end at 8,479.47. The S&P 500 climbed 5.57 points to 857.38, while the Nasdaq Composite shed 7.29 points to 1,464.73.
Cisco Systems Inc.reportedly plans to shut down its U.S. and Canadian operations for the last week of December in a cost-cutting move.
Crude for January delivery finished down $3.73, or 6.8%, to end at $50.77 a barrel on the New York Mercantile Exchange. Gold for December delivery closed down $1, or 0.1%, at $818.50 an ounce on the Comex division of the New York Mercantile Exchange.
Deere & Co.'s fiscal fourth-quarter net income fell to $345 million, or 81 cents a share, from $422 million, or 94 cents a share in the year-ago period. The Moline, Ill., farming and construction equipment company said sales rose 21% to $7.4 billion.
Tiffany & Co.earned $44 million, or 35 cents a share, in the third quarter. In the same period a year ago, Tiffany earned $102 million, or 74 cents a share. Net sales were $618 million compared to $627 million.
The Andersons Inc.cut its earnings guidance for 2008 to a range of $2.00 to $2.80 a share from its previous range of $3.50 to $4.00 a share. The diversified group, which includes interests in agriculture and railcar leasing, said the cut was due to continued volatility in the plant nutrients sector.
Steve & Barry's, the once-fast-growing Port Washington, N.Y., retailer of discounted apparel, will close all 173 of its remaining stores, liquidating $250 million of merchandise, the company's owners said.
The People's Bank of China slashed both its lending and borrowing rates by a steep 1.08 percentage points, continuing its monetary easing stance amid a slowing economy, according to reports. Following the latest round of interest rate cuts, the central bank's one-year yuan lending rate stands at 5.58%, while the one-year yuan deposit rate has dropped to 2.52%. The central bank also slashed banks' reserve requirements by 1 percentage point for six big banks and by 2 percentage points for smaller banks.
LandAmerica Financial Group Inc., the Richmond, Va., title insurer, said on Wednesday that it and a subsidiary filed to reorganize under Chapter 11 of U.S. bankruptcy law. LandAmerica said it filed the petitions in U.S. Bankruptcy Court in Richmond.
Nippon Steel Corp. plans to double a planned production cut in the second half of the current financial year because of weakening demand, according to reports.
The Commerce Department's revised reading for the three months ended in September showed gross domestic product declined 0.5%. U.S. corporations' before-tax profits from current production fell 9.0% over the past year, the Commerce Department estimated Tuesday. This is the slowest annual rate since the third quarter of 2001, which included 9/11. In the third quarter, profits fell 0.9% to $1.52 trillion annualized in the third quarter. The government data are adjusted for inventory valuations and capital consumption.
The government said the economy took a tumble in the summer that was worse than first thought as American consumers throttled back their spending by the most in 28 years.
It was further proof the country is almost certainly in the throes of a painful recession.
Case-Shiller U.S. National Home Price Index down 16.6% in Q3. Home prices in 20 major U.S. cities dropped 1.8% in September from the prior month, and had fallen a record 17.4% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest decline in September was found in the San Francisco metro area, where prices fell 3.9%. In the past year, Phoenix has had the largest decline, down 31.9%. For the original 10-city index, prices fell a record 18.6% in the previous 12 months.
BHP Billiton Ltd., the world's biggest mining company, abandoned a hostile $68 billion takeover bid for rival Rio Tinto Ltd., blaming the global economic downturn and plunging commodity prices. Shares of BHP Billiton were up 14 percent at midday in London. Rio Tinto shares had plummeted 36 percent.
Venezuelan President Hugo Chavez said the Organization of Petroleum Exporting Countries should return to a system of setting a price band for crude oil in order to guarantee stability in the market. The country would consider a price of $80 to $100 a barrel to be ``fair,'' Chavez said today in a televised press conference in Caracas.
Brazil, the world’s largest exporter of poultry and second-biggest supplier of soybeans, is seeking investments in ports and roads from China, its largest market for agricultural products.
The collapse of global credit markets that is pushing the U.S., Europe and Japan into simultaneous recessions for the first time since World War II also threatens farmers in Brazil, the world’s biggest grower of coffee, oranges and sugar cane, the second-largest producer of soybeans and third-biggest of corn. Smaller harvests in Brazil may increase costs of commodities next year, said Andre Pessoa, an analyst at Agroconsult who conducts the country’s broadest crop survey.
“When we look ahead, we see demand continuing to grow, while supply will face difficulties,” Pessoa said in an interview from the Florianopolis, Brazil-based company.
Futures contracts in Chicago show corn will jump 18 percent by the end of 2009 to $4.1775 a bushel and soybeans will gain 2 percent to $9.015 a bushel. Coffee will rise 10 percent to $1.2545 a pound, according to contracts in New York.
U.S. average gasoline prices fell below $1.90 a barrel on Tuesday, according to the AAA Daily Fuel Gauge Report. The current average price stands at $1.89 a gallon, down from $1.91 on Monday. A month ago, gasoline sold for $2.70 a gallon. A year ago, it sold for $3.09 a gallon.
D.R. Horton , the largest U.S. homebuilder, on Tuesday reported a wider quarterly loss of $2.53 per share, or $799.9 million, compared with 16 cents per share, or $50.1 million, a year ago.
Home sales revenue for the fourth quarter fell by 50 percent to $1.5 billion.
The company recorded pretax impairment charges totaling $988.9 million and write-offs of $85.7 million related to land option contracts Horton does not intend to pursue.
The financial crisis will likely push the world's developed countries into their worst recession since the early 1980s, the Organization for Economic Cooperation and Development said Tuesday.
The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore. ``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers.
The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.''
Rogers said that he is buying the Japanese yen.
Rep. Ron Paul: "We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed - the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me."
Doug Floyd: "You don't get harmony when everybody sings the same note"
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.
Gold for December delivery gained $9.20, or 1.1%, to $828.70 an ounce on the Comex division of the New York Mercantile Exchange.
Houston-based energy research firm Tudor Pickering Holt on Tuesday noted that U.S. electricty demand appears to be softening as the economy cools off. Data on U.S. electricity use shows a drop of 3% over past five weeks compared to weather-based models. The trend points to less natural gas and coal consumption and lower power needs, analysts noted. "Sluggish electricity demand points to weak industrial or residential conservation and soft Gross Domestic Product," Tudor Pickering Holt noted.
Dollar Tree sees fourth-quarter earnings of $1.07 to $1.15 a share and full-year earnings of $2.45 to $2.53 a share.
Satyajit Das: "John W. Gardner once observed: "The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water." Shoddy monetary philosophies caused the financial crisis. Now inadequate plumbing of the global financial system is exacerbating its risks."
Falling gas prices perked up consumers in November, according to the monthly Conference Board index, which reported Tuesday that confidence rose from a record low in October. The November consumer confidence index increased to 44.9 from an upwardly revised October reading of 38.8. However, consumers' view of current conditions worsened in November, with those saying jobs are "hard to get" rising to 37.2% from 36.6% in the prior month.
The number of problem U.S. banks and thrifts jumped in the third quarter to 171, from 117 at the end of the prior quarter, marking the highest level since the end of 1995 and adding to expectations that more banks will fail, regulators said on Tuesday.
The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.
The FDIC also reported that bank industry income fell 94 percent from the previous year to $1.7 billion in the third quarter.
The "coverage ratio" of reserves to noncurrent loans fell from 89 cents in reserves for every $1 of noncurrent loans to 85 cents, the FDIC said. "This is the tenth consecutive quarter that the industry's coverage ratio has fallen; it is now at its lowest level since the first quarter of 1993," the FDIC warned.
The Dow Jones Industrial Average gained 36.08 points to end at 8,479.47. The S&P 500 climbed 5.57 points to 857.38, while the Nasdaq Composite shed 7.29 points to 1,464.73.
Cisco Systems Inc.reportedly plans to shut down its U.S. and Canadian operations for the last week of December in a cost-cutting move.
Crude for January delivery finished down $3.73, or 6.8%, to end at $50.77 a barrel on the New York Mercantile Exchange. Gold for December delivery closed down $1, or 0.1%, at $818.50 an ounce on the Comex division of the New York Mercantile Exchange.
Deere & Co.'s fiscal fourth-quarter net income fell to $345 million, or 81 cents a share, from $422 million, or 94 cents a share in the year-ago period. The Moline, Ill., farming and construction equipment company said sales rose 21% to $7.4 billion.
Tiffany & Co.earned $44 million, or 35 cents a share, in the third quarter. In the same period a year ago, Tiffany earned $102 million, or 74 cents a share. Net sales were $618 million compared to $627 million.
The Andersons Inc.cut its earnings guidance for 2008 to a range of $2.00 to $2.80 a share from its previous range of $3.50 to $4.00 a share. The diversified group, which includes interests in agriculture and railcar leasing, said the cut was due to continued volatility in the plant nutrients sector.
Steve & Barry's, the once-fast-growing Port Washington, N.Y., retailer of discounted apparel, will close all 173 of its remaining stores, liquidating $250 million of merchandise, the company's owners said.
The People's Bank of China slashed both its lending and borrowing rates by a steep 1.08 percentage points, continuing its monetary easing stance amid a slowing economy, according to reports. Following the latest round of interest rate cuts, the central bank's one-year yuan lending rate stands at 5.58%, while the one-year yuan deposit rate has dropped to 2.52%. The central bank also slashed banks' reserve requirements by 1 percentage point for six big banks and by 2 percentage points for smaller banks.
LandAmerica Financial Group Inc., the Richmond, Va., title insurer, said on Wednesday that it and a subsidiary filed to reorganize under Chapter 11 of U.S. bankruptcy law. LandAmerica said it filed the petitions in U.S. Bankruptcy Court in Richmond.
Nippon Steel Corp. plans to double a planned production cut in the second half of the current financial year because of weakening demand, according to reports.
Monday, November 24, 2008
Two Day Rally
11/24/08 Two Day Rally
Home builders are lobbying Congress for a $250 billion stimulus package, arguing that financial markets won't recover until home prices stop falling.
The U.S. agreed to take unprecedented steps to stabilize Citigroup by moving to guarantee $306 billion in troubled assets weighing on the bank's books.
The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Crude oil for January delivery rose $1.77, or 3.4%, to $51.67 a barrel in electronic trading on Globex. December gold rose $24 to $815.80 an ounce in electronic trading on Globex. Other metal futures also gained, with silver up 5% and copper up 7%.
The number of people working part-time for economic reasons jumped 645,000 in October to 6.7 million. "No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co in New York.
Johnson & Johnson will acquire Israel's Omrix Biopharmaceuticals for $27 a share, or a total of $465 million, the Globes financial news website said on Monday.
Omrix, which makes biosurgical sealants for the prevention of bleeding, or homeostasis, in surgery, is a partner of Johnson & Johnson unit Ethicon.
Hungary's central bank cut its benchmark interest rate by 50 basis points to 11% on Monday.
Resales of U.S. single-family homes and condos fell 3.1% in October to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported Monday. Resales have sunk 1.6% in the past year. Economists surveyed by MarketWatch expected sales to fall to 5.0 million. The inventory of unsold homes on the market fell 0.9% to 4.23 million, a 10.2 month supply at the current sales pace. The median sales prices fell 11.3% in the past year to $183,300. This is the lowest sales price since March 2004.
Citigroup U.S. equity strategist Tobias Levkovich on Monday cut his targets for the S&P 500. He now sees the S&P 500 ending the year at 850, down from 1,200 previously and only 10 points higher than its current levels. By the end of 2009, the index of large capitalization companies should rebound modestly to 1,000 -- instead of the 1,300 previously targeted.
Crude for January delivery surged $4.57, or 9.2%, to end at $54.50 a barrel on the New York Mercantile Exchange.
U.S. stocks posted the biggest two- day rally since 1987 after the government said it will guarantee $306 billion of troubled Citigroup Inc. assets and lawmakers pledged to pass another economic stimulus package.
The S&P 500 added 6.4 percent to 851.31, capping a two-day gain of 13 percent. The Dow Jones Industrial Average climbed 388.68 points, or 4.8 percent, to 8,435.1. The Nasdaq Composite rose 6.3 percent to 1,472.02. Europe’s Dow Jones Stoxx 600 climbed 8.4 percent, while the MSCI Asia Pacific Index slipped 0.7 percent.
Starbucks faces an extremely challenging fiscal 2009 due to the ongoing economic slowdown, the coffee retailer said in a regulatory filing Monday. It noted that its customers may have less money for discretionary spending as a result of job losses, foreclosures, and bankruptcies. "Any resulting decreases in customer traffic or average value per transaction will negatively impact the company's financial performance as reduced revenues result in sales de-leveraging which creates downward pressure on margins," said Starbucks. The company also said it expects negative comparable store sales for fiscal 2009 and that additional restructuring measures may be needed in the future if Starbucks is unable to improve its financial performance.
Home builders are lobbying Congress for a $250 billion stimulus package, arguing that financial markets won't recover until home prices stop falling.
The U.S. agreed to take unprecedented steps to stabilize Citigroup by moving to guarantee $306 billion in troubled assets weighing on the bank's books.
The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Crude oil for January delivery rose $1.77, or 3.4%, to $51.67 a barrel in electronic trading on Globex. December gold rose $24 to $815.80 an ounce in electronic trading on Globex. Other metal futures also gained, with silver up 5% and copper up 7%.
The number of people working part-time for economic reasons jumped 645,000 in October to 6.7 million. "No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co in New York.
Johnson & Johnson will acquire Israel's Omrix Biopharmaceuticals for $27 a share, or a total of $465 million, the Globes financial news website said on Monday.
Omrix, which makes biosurgical sealants for the prevention of bleeding, or homeostasis, in surgery, is a partner of Johnson & Johnson unit Ethicon.
Hungary's central bank cut its benchmark interest rate by 50 basis points to 11% on Monday.
Resales of U.S. single-family homes and condos fell 3.1% in October to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported Monday. Resales have sunk 1.6% in the past year. Economists surveyed by MarketWatch expected sales to fall to 5.0 million. The inventory of unsold homes on the market fell 0.9% to 4.23 million, a 10.2 month supply at the current sales pace. The median sales prices fell 11.3% in the past year to $183,300. This is the lowest sales price since March 2004.
Citigroup U.S. equity strategist Tobias Levkovich on Monday cut his targets for the S&P 500. He now sees the S&P 500 ending the year at 850, down from 1,200 previously and only 10 points higher than its current levels. By the end of 2009, the index of large capitalization companies should rebound modestly to 1,000 -- instead of the 1,300 previously targeted.
Crude for January delivery surged $4.57, or 9.2%, to end at $54.50 a barrel on the New York Mercantile Exchange.
U.S. stocks posted the biggest two- day rally since 1987 after the government said it will guarantee $306 billion of troubled Citigroup Inc. assets and lawmakers pledged to pass another economic stimulus package.
The S&P 500 added 6.4 percent to 851.31, capping a two-day gain of 13 percent. The Dow Jones Industrial Average climbed 388.68 points, or 4.8 percent, to 8,435.1. The Nasdaq Composite rose 6.3 percent to 1,472.02. Europe’s Dow Jones Stoxx 600 climbed 8.4 percent, while the MSCI Asia Pacific Index slipped 0.7 percent.
Starbucks faces an extremely challenging fiscal 2009 due to the ongoing economic slowdown, the coffee retailer said in a regulatory filing Monday. It noted that its customers may have less money for discretionary spending as a result of job losses, foreclosures, and bankruptcies. "Any resulting decreases in customer traffic or average value per transaction will negatively impact the company's financial performance as reduced revenues result in sales de-leveraging which creates downward pressure on margins," said Starbucks. The company also said it expects negative comparable store sales for fiscal 2009 and that additional restructuring measures may be needed in the future if Starbucks is unable to improve its financial performance.
Sunday, November 23, 2008
Risk Accountability
11/23/08 Risk Accountability
Loganville, Ga.-based The Community Bank has been closed by regulators, the Federal Deposit Insurance Corporation said late Friday, marking the 20th bank failure of the year amid the ongoing financial crisis.
In yesterday's posting there was a typo error. The volume on Friday for Citigroup was 1 billion shares and not 1 million.
Steven M. Sears: "Goldman Sachs derivatives strategists told clients on Friday that Standard & Poor's 500 three-month realized volatility is now 66%, surpassing levels of the 1987 crash and the economic malaise of the 1930s. Volatility now rests within striking distance of a moment in stock-market history that has defined financial crisis for almost 100 years.
"During 1929, realized volatility peaked at 68%. We will likely pass that number in short order. That will make the current market the highest sustained volatility environment in S&P 500 history," says Goldman's Krag "Buzz" Gregory, an options strategist."
"Investors right now aren't convinced that we're done seeing dead bodies on the Citigroup balance sheet," said William Fitzpatrick, an equity analyst at Optique Capital Management Inc. in Milwaukee, which oversees about $1 billion and doesn't own Citigroup shares. "That's what the sell-off is, concern over more and more losses over the next couple of quarters."
Peter Schiff: "Borrowed or printed money only has the power to destroy."
Ben Bernanke: "To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system -- for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."
Forbes points out Number of layoffs since Nov. 1, 2008, at America's 500 largest public companies: 90,078.
Buffett's Berkshire Hathaway Inc. investing company is USG's biggest stockholder, with a 17.2 percent stake. With Friday's agreement, Berkshire will receive debt securities designed to be convertible into 26.3 million new USG shares, which could boost its stake to 32 percent. Berkshire is being joined in the deal by Fairfax Financial Holdings Ltd., a Toronto-based insurance and financial-services company.
Under terms of the buy-in, the two companies will purchase a total of $400 million of 10-year convertible senior notes, led by Berkshire's $300 million contribution.
The notes will initially pay a 10 percent annual interest rate and are expected to become convertible into USG shares at a price of $11.40. But the convertibility of the notes needs approval of USG shareholders. If the stockholders turn down the conversion rights, USG said, the interest rate on the notes will jump to 20 percent.
This may seem like a good deal for Berkshire; however, the bulk of their holdings cost about $45 a share. This is more than averaging down. It's providing a life raft to USG.
Dillard's Inc. said it would cut 500, or 0.8%, of its workers to reduce operating costs.
Brett Steenbarger: "Money flow was quite positive for all sectors on Friday, but the Dow Jones Industrial stocks still finished at -$165 million for the week. The weakest flow numbers were seen among the health care and consumer services stocks; the strongest readings came from telecommunications, energy, consumer goods, and utilities.
For the month, money flow was weakest for consumer services and financial stocks; strongest for telecommunications and health care. As has been the case for a while now, monthly money flow among Dow stocks remains in negative territory."
Lynn Turner, a former chief accountant with the Securities and Exchange Commission:“If you’re an entity of this size,” he said, “if you don’t have controls, if you don’t have the right culture and you don’t have people accountable for the risks that they are taking, you’re Citigroup.”
“There is really no excuse for institutions that specialize in credit risk assessment, like large commercial banks, to rely solely on credit ratings in assessing credit risk,” John C. Dugan, the head of the Office of the Comptroller of the Currency, the chief federal bank regulator, said.
NY Times:"Citigroup still holds $20 billion of mortgage-linked securities on its books, the bulk of which have been marked down to between 21 cents and 41 cents on the dollar. It has billions of dollars of giant buyout and corporate loans. And it also faces a potential flood of losses on auto, mortgage and credit card loans as the global economy plunges into a recession.
Also, hundreds of billions of dollars in dubious assets that Citigroup held off its balance sheet is now starting to be moved back onto its books, setting off yet another potential problem.
The bank has already put more than $55 billion in assets back on its balance sheet. It now says an added $122 billion of assets related to credit cards and possibly billions of dollars of other assets will probably come back on the books.
Even though Citigroup executives insist that the bank can ride out its current difficulties, and that the repatriated assets pose no threat, investors have their doubts. Because analysts do not have a complete grip on the quality of those assets, they are warning that Citigroup may have to set aside billions of dollars to guard against losses."
BHP Billiton Ltd.'s Brazilian operations will reduce iron ore pellet production due to weak demand, the Australian resources company said.
BHP's 50 percent-owned Sarmarco iron ore company will close two of its older plants from the end of November until mid-January, and then reassess the market, the company said in a statement Saturday. It did not say what would happen to staff at the plants.
Samarco's third iron ore pellet plant, opened in April this year, will remain in operation. BHP previously said it has no plan to cut iron ore pellet production in Australia.
The closure will temporarily reduce Samarco's annual iron ore pellet production capacity from 24.19 million tons (22 million metric tons) to 8.51 million tons.
Mike Burk: "In the 1930's, the last time we saw declines of this magnitude in the same time frame, the rallies that followed took the S&P 500 (SPX) up 20% - 46%. As of Thursday's close the SPX was down over 40% in less than 3 months, a rare occurrence. From its August 87 high to its October crash low the SPX was down 33.2%. Late 1937 was the last time the SPX fell more than 40% in 3 months, 71 years ago....The 1937 low occurred in late November, the pattern and time frame are similar to what we have recently experienced....I found no examples of the SPX falling more than 50% in 3 months so there is hope for a rally....I expect the major indices to be higher on Friday November 28 than they were on Friday November 21."
Saudi Arabia’s central bank cut its repo rate by 1 percentage point to 3 percent and reduced the level of reserves commercial banks are required to hold with it to 7 percent from 10 percent.
The rate cuts are the second by the Saudi Arabian Monetary Authority in less than two months and are intended to “sustain private sector credit growth,” John Sfakianakis, chief economist at Saudi British Bank in Riyadh, said in a telephone interview today. “We’ve to see whether these measures are fully successful in offsetting a slowdown in the credit growth.”
2009 will be "a year of bad news" for the economy," German Chancellor Angela Merkel warns. "We have stabilized the financial markets thanks to a series of measures for the banks, but confidence still has to be found again and the interbanking market must become functional again."
Michael Santoli: "At the moment, the only close precedents for the past year are a pair of Great Depression-era bear phases. Andrew Burkly of Brown Brothers Harriman noted Friday that the current bear was 284 days old, and was down almost exactly as much as the 1929-'32 and '37-'38 bear markets were after 284 days.
And this was about the point where the paths of those earlier markets diverged, with the '29-'32 example sinking relentlessly to an 86% loss, and the '37-'38 version beginning a bounce that recouped 50% of its losses over six months before rolling over again. This history offers no immediate trading edge, but seems to suggest that being aggressively bearish from recent levels requires a belief that the economic implications of the present crisis at least rhyme with the Depression's....The options market's fear gauge, the Chicago Board Options Exchange's Market Volatility Index (VIX), which is calculated by measuring the implied volatility of certain Standard & Poor's 500 index options expiring in 30 days, set a new all-time closing high of 80.90 on Thursday. This spells trouble for stocks.
VIX at 80 implies a Standard & Poor's 500 average daily move of about 5%."
As many as 2,444 employees at ArcelorMittal's steel plant could be laid off indefinitely in January, the company said.
The company has notified the United Steelworkers and other stakeholders about the possibility of an "indefinite layoff" at the Porter County plant beginning in the second half of January, ArcelorMittal announced Friday.
Loganville, Ga.-based The Community Bank has been closed by regulators, the Federal Deposit Insurance Corporation said late Friday, marking the 20th bank failure of the year amid the ongoing financial crisis.
In yesterday's posting there was a typo error. The volume on Friday for Citigroup was 1 billion shares and not 1 million.
Steven M. Sears: "Goldman Sachs derivatives strategists told clients on Friday that Standard & Poor's 500 three-month realized volatility is now 66%, surpassing levels of the 1987 crash and the economic malaise of the 1930s. Volatility now rests within striking distance of a moment in stock-market history that has defined financial crisis for almost 100 years.
"During 1929, realized volatility peaked at 68%. We will likely pass that number in short order. That will make the current market the highest sustained volatility environment in S&P 500 history," says Goldman's Krag "Buzz" Gregory, an options strategist."
"Investors right now aren't convinced that we're done seeing dead bodies on the Citigroup balance sheet," said William Fitzpatrick, an equity analyst at Optique Capital Management Inc. in Milwaukee, which oversees about $1 billion and doesn't own Citigroup shares. "That's what the sell-off is, concern over more and more losses over the next couple of quarters."
Peter Schiff: "Borrowed or printed money only has the power to destroy."
Ben Bernanke: "To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system -- for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."
Forbes points out Number of layoffs since Nov. 1, 2008, at America's 500 largest public companies: 90,078.
Buffett's Berkshire Hathaway Inc. investing company is USG's biggest stockholder, with a 17.2 percent stake. With Friday's agreement, Berkshire will receive debt securities designed to be convertible into 26.3 million new USG shares, which could boost its stake to 32 percent. Berkshire is being joined in the deal by Fairfax Financial Holdings Ltd., a Toronto-based insurance and financial-services company.
Under terms of the buy-in, the two companies will purchase a total of $400 million of 10-year convertible senior notes, led by Berkshire's $300 million contribution.
The notes will initially pay a 10 percent annual interest rate and are expected to become convertible into USG shares at a price of $11.40. But the convertibility of the notes needs approval of USG shareholders. If the stockholders turn down the conversion rights, USG said, the interest rate on the notes will jump to 20 percent.
This may seem like a good deal for Berkshire; however, the bulk of their holdings cost about $45 a share. This is more than averaging down. It's providing a life raft to USG.
Dillard's Inc. said it would cut 500, or 0.8%, of its workers to reduce operating costs.
Brett Steenbarger: "Money flow was quite positive for all sectors on Friday, but the Dow Jones Industrial stocks still finished at -$165 million for the week. The weakest flow numbers were seen among the health care and consumer services stocks; the strongest readings came from telecommunications, energy, consumer goods, and utilities.
For the month, money flow was weakest for consumer services and financial stocks; strongest for telecommunications and health care. As has been the case for a while now, monthly money flow among Dow stocks remains in negative territory."
Lynn Turner, a former chief accountant with the Securities and Exchange Commission:“If you’re an entity of this size,” he said, “if you don’t have controls, if you don’t have the right culture and you don’t have people accountable for the risks that they are taking, you’re Citigroup.”
“There is really no excuse for institutions that specialize in credit risk assessment, like large commercial banks, to rely solely on credit ratings in assessing credit risk,” John C. Dugan, the head of the Office of the Comptroller of the Currency, the chief federal bank regulator, said.
NY Times:"Citigroup still holds $20 billion of mortgage-linked securities on its books, the bulk of which have been marked down to between 21 cents and 41 cents on the dollar. It has billions of dollars of giant buyout and corporate loans. And it also faces a potential flood of losses on auto, mortgage and credit card loans as the global economy plunges into a recession.
Also, hundreds of billions of dollars in dubious assets that Citigroup held off its balance sheet is now starting to be moved back onto its books, setting off yet another potential problem.
The bank has already put more than $55 billion in assets back on its balance sheet. It now says an added $122 billion of assets related to credit cards and possibly billions of dollars of other assets will probably come back on the books.
Even though Citigroup executives insist that the bank can ride out its current difficulties, and that the repatriated assets pose no threat, investors have their doubts. Because analysts do not have a complete grip on the quality of those assets, they are warning that Citigroup may have to set aside billions of dollars to guard against losses."
BHP Billiton Ltd.'s Brazilian operations will reduce iron ore pellet production due to weak demand, the Australian resources company said.
BHP's 50 percent-owned Sarmarco iron ore company will close two of its older plants from the end of November until mid-January, and then reassess the market, the company said in a statement Saturday. It did not say what would happen to staff at the plants.
Samarco's third iron ore pellet plant, opened in April this year, will remain in operation. BHP previously said it has no plan to cut iron ore pellet production in Australia.
The closure will temporarily reduce Samarco's annual iron ore pellet production capacity from 24.19 million tons (22 million metric tons) to 8.51 million tons.
Mike Burk: "In the 1930's, the last time we saw declines of this magnitude in the same time frame, the rallies that followed took the S&P 500 (SPX) up 20% - 46%. As of Thursday's close the SPX was down over 40% in less than 3 months, a rare occurrence. From its August 87 high to its October crash low the SPX was down 33.2%. Late 1937 was the last time the SPX fell more than 40% in 3 months, 71 years ago....The 1937 low occurred in late November, the pattern and time frame are similar to what we have recently experienced....I found no examples of the SPX falling more than 50% in 3 months so there is hope for a rally....I expect the major indices to be higher on Friday November 28 than they were on Friday November 21."
Saudi Arabia’s central bank cut its repo rate by 1 percentage point to 3 percent and reduced the level of reserves commercial banks are required to hold with it to 7 percent from 10 percent.
The rate cuts are the second by the Saudi Arabian Monetary Authority in less than two months and are intended to “sustain private sector credit growth,” John Sfakianakis, chief economist at Saudi British Bank in Riyadh, said in a telephone interview today. “We’ve to see whether these measures are fully successful in offsetting a slowdown in the credit growth.”
2009 will be "a year of bad news" for the economy," German Chancellor Angela Merkel warns. "We have stabilized the financial markets thanks to a series of measures for the banks, but confidence still has to be found again and the interbanking market must become functional again."
Michael Santoli: "At the moment, the only close precedents for the past year are a pair of Great Depression-era bear phases. Andrew Burkly of Brown Brothers Harriman noted Friday that the current bear was 284 days old, and was down almost exactly as much as the 1929-'32 and '37-'38 bear markets were after 284 days.
And this was about the point where the paths of those earlier markets diverged, with the '29-'32 example sinking relentlessly to an 86% loss, and the '37-'38 version beginning a bounce that recouped 50% of its losses over six months before rolling over again. This history offers no immediate trading edge, but seems to suggest that being aggressively bearish from recent levels requires a belief that the economic implications of the present crisis at least rhyme with the Depression's....The options market's fear gauge, the Chicago Board Options Exchange's Market Volatility Index (VIX), which is calculated by measuring the implied volatility of certain Standard & Poor's 500 index options expiring in 30 days, set a new all-time closing high of 80.90 on Thursday. This spells trouble for stocks.
VIX at 80 implies a Standard & Poor's 500 average daily move of about 5%."
As many as 2,444 employees at ArcelorMittal's steel plant could be laid off indefinitely in January, the company said.
The company has notified the United Steelworkers and other stakeholders about the possibility of an "indefinite layoff" at the Porter County plant beginning in the second half of January, ArcelorMittal announced Friday.
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