12/15/08 Crude Oil
Crude oil rallied more than 8% to above $50 on expectations that the Organization of Petroleum Exporting Countries will cut its output at Wednesday's meeting. Gold for February delivery jumped $22.50, or 2.7%, to $843 an ounce on the Comex division of the New York Mercantile Exchange, the highest since Oct. 15.
Monday's gain in gold followed its 9% advance in the past week. In other metals, March silver futures rose 1.1% to $10.345 an ounce. January platinum gained 1.6% to $835.20 an ounce and March palladium added 0.4% to $175.65 an ounce.
Goldman Sachs downgraded Apple Inc. to neutral from buy, citing concerns over consumer spending in the first half of 2009 and the company's valuation premium. AT&T was cut to neutral from buy by Goldman Sachs.
Illinois Tool Works Inc.expects fourth quarter earnings per share from continuing operations to be 44 cents to 52 cents. The company estimated that revenue would fall 7% to 9% in the quarter. For the full year 2008, Illinois Toolworks is forecasting continuing operations net income per share to be in a range of $2.94 to $3.02. The full-year forecast assumes a total Company revenue growth range of 6 percent to 7 percent, the firm said.
Rob Hanna: "No doubt traders will hear about a possible “Santa Claus Rally” many times in the next few weeks. When looking at the S&P 500, though, I found the best week in December to be option expirations week. The edge has been especially pronounced over the last 24 years. During that period the market has closed the week higher about 81% of the time."
Brett Steenbarger: "I continue to view this as a range market; we need to see continued strength in NYSE TICK and a renewal of stocks making fresh 20-day highs to sustain a breakout move to the upside. With the weak money flow numbers, I'll need to see confirmation of strength from other indicators before assuming such a breakout. Renewed weakness in TICK and a continuation of 20-day lows outnumbering highs would lead me to expect a test of last week's lows.
Longer term, we continue to see a pattern of lower highs and lower lows during the overbought and oversold periods in the Cumulative DSI, suggesting we haven't yet reversed the bear."
Electrolux, the second-largest maker of domestic appliances, on Monday provided another dire warning about the state of worldwide consumer demand by cutting more than 3,000 jobs while indicating that its operating profit for the fourth quarter could be as much as 60 per cent below last year’s figure.
Northern Trust, the Chicago-based bank, said on Monday that it would cut 450 jobs, or 4 per cent of its workforce, to reduce costs and improve efficiency amid worsening economic conditions.
According to the FT, the US banking industry could lose billions of dollars in annual interest payments, according to a study that warns of credit card lenders raising prices after a regulatory overhaul.
The Federal Reserve board will meet this week to finalise changes to rules governing the $970bn credit card business.
In a survey released last week by the American Kennel Club, 81 percent of respondents said they would buy holiday gifts for their dogs, and 69 percent would sooner tighten their belts on friends and extended family than tighten the collars on their dogs. And 65 percent would rather eat ramen noodles than make their dogs eat on the cheap.
Huntsman Corp. will end its $6.5 billion deal that would have seen it acquired by Hexion Specialty Chemicals Inc., a tie-up that unraveled because of the global credit crisis and sparked a string of lawsuits.
Toni Straka: "Going out of its way in order not to disclose documents related to the give-away of $2 trillion, the Fed rejected a Freedom of Information Act request by information provider Bloomberg that requested information about the recipients of this sizable addition to taxpayers' burden. Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression. The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests."
Homes in the United States have lost trillions of dollars in value during 2008, with nearly 11.7 million American households now owing more on their mortgage than their homes are worth, real estate website Zillow.com said on Monday.
U.S. homes are set to lose well over $2 trillion in value during 2008, according to an analysis of recent Zillow Real Estate Market Reports.
Home values declined 8.4 percent year-over-year during the first three quarters of this year, compared to the same period in 2007, the reports showed.
Manufacturing activity in the New York area contracted at a record pace in November, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to negative 25.8 in December from negative 25.4 in November. New orders and shipments were slightly higher, but unfilled orders fell to a record low. Prices paid plunged to negative 7.5 in December from 27 in November.
Almost a third of hedge funds will shut or merge after the $1.5 trillion industry posted its worst ever performance this year, according to IGS Group, which advises hedge funds on raising money.
“The failure rate is going to go up, the closure rate is going up, and the merger rate is going up,” IGS Chief Executive Officer John Godden said in an interview in London. “It’s going to be a 30 percent wipe out.”
Capital One Financial, one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded. In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent.
Wal-Mart Stores' chief executive said on Sunday he sees changes in the habits of the chain's customers as they contend with the recession, and also said Wal-Mart had offered to help the incoming Obama administration with health care and environmental issues.
"The number one issue today is (consumers') concern about their job," Lee Scott said on NBC's "Meet the Press."
"In our pharmacy group, we have increases in prescription drugs, but not at the same rate it was," he said. "What we're seeing is an increase in self-treatment."
While the total amount of U.S. government debt outstanding rose to $10.7 trillion in November from $9.15 trillion a year earlier, the amount of interest paid in the last two months fell by $10 billion, according to the Treasury Department.
The sticking point, which ultimately killed prospects for an agreement, was a Republican demand to set a specific date for cutbacks in auto-worker wages and benefits. Corker says lawmakers were “three words” away from a deal. “Had we agreed on a date, any date that’s reasonable, I think it would have passed the Senate with 90 votes,” he says.
The world’s 50 richest Arabs have lost a staggering $25 billion between them in the last year, as the global financial crisis sweeps through the region.
The figures are revealed in the Arabian Business 2008 Rich List, which will be published on Sunday.
Atmel said it will cut its North American workforce by 11% and implement a 10-day shutdown for non-manufacturing employees, among other planned actions to lower its costs.
The output of the nation's factories, mines and utilities fell 0.6% in November on broad-based weakness across manufacturing industries, the Federal Reserve reported Monday. The production of U.S. factories declined 1.4% in November, despite the resumption of work at Boeing Co. after a strike ended. Mining output rose 2.5% as oil and gas production continued to recover from September's storms. Excluding the rebounds from the strike and the storms, industrial production fell about 1.5% in November, the Fed said. Capacity utilization in industry fell to a five-year low of 75.4% from a revised 76%.
The one-month U.S. Treasury bill yield turned negative in a safe haven bid on Monday, while signals of deflation in a factory index briefly lifted longer maturity government securities prices into positive territory.
The one-month Treasury bill yield turned slightly negative according to data from online fixed income trading platform TradeWeb, showing that investors were paying a fee to keep their money in ultra short-dated government instruments.
Rebecca Wilder: "The budget deficit is already estimated to reach $1 trillion (yes, $1,000,000,000,000) in 2009, and that doesn’t include the $300 billion, no $500 billion, no $1 trillion stimulus plan. When is it okay to worry?
If the only new federal outlays were in relation to the second ECONOMIC stimulus package, then I wouldn't be as worried. However, the U.S. government has already funneled $1.06 trillion into stemming the credit crisis, leaving little wiggle room for Obama's latest $1 trillion stimulus package. Time to worry."
Brokerage firm and investment manager Charles Schwab Corp. said Monday it is cutting at least 100 jobs in an effort to improve operating efficiency.
In Iraq, nearly 150,000 U.S. troops remain in Iraq. More than 4,209 members of the U.S. military have died. In Afghanistan, there are about 31,000 U.S. troops and commanders have called for up to 20,000 more.
RBC Capital Markets shuffled ratings on several oil service stocks on Monday, including an upgrade of sector leader Schlumberger to outperform from peer perform. RBC Capital Markets cited the oil service giant's geographic and product service breadth and said its earnings will decline the least through 2010 relative to its large cap peer group. Schlumberger shares rose 6.4% to $43.69. RBC downgraded Allis-Chalmers Energy Inc., Cameron International, National Oilwell Varco, Noble Corp and Weatherford to sector perform from outperform. Rowan Companies Inc.drew a downgrade to underperform from sector perform on "risks associated with reduced activity and pricing in the offshore jackup market."
The dollar index, a measure of the U.S. dollar against a trade-weighted basket of six currencies, fell 1.4% to 82.02, down from 83.662. "After largely being confined to range trading against the major European currencies in recent weeks, the dollar has broken down," said Marc Chandler, head of global currency strategy at Brown Brothers Harriman & Co. The euro rallied 2.5% at $1.3691, up from $1.3374. The British pound surged 2.3% to $1.5290 from $1.4933.
Crude for January delivery was last down 60 cents, or 1.3%, at $45.68 a barrel on the New York Mercantile Exchange. It had surged 8.1% to $50.05 a barrel earlier, topping the $50 mark for the first time since Dec. 1. The contract jumped 13.4% last week, the biggest weekly rally in four years.
The Dow Jones Industrial Average finished down 65 points, or 0.8%, at 8,564, off an earlier low of 8,469, and a high of 8,676. The S&P 500 index lost 11 points to 868, while the Nasdaq Composite fell 32 points, or 2%, to 1,508.
Crude for January delivery fell $1.77, or 3.8%, to close at $44.51 a barrel on the New York Mercantile Exchange. It had surged 8.1% to $50.05 a barrel earlier, topping the $50 mark for the first time since Dec. 1. Gold for February delivery rose $16 to end at $836.50 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing level since Oct. 15.
Monday, December 15, 2008
China
12/14/08 China
Kohl's Corp. and Forever 21 Inc. won a joint bid to take over 46 former Mervyns stores for $6.25 million, the companies said Friday. Department-store operator Kohl's will assume 31 of the locations, while trendy retailer Forever 21 will have 15 sites, pending approval by the court overseeing Mervyns' bankruptcy proceedings. Almost all the stores are in California.
The Iranian Oil Ministry says Iran is proposing a cut in OPEC's production of up to 2 million barrels per day.
The ministry's Web site quotes Iran's Oil Minister Gholam Hossein Nozari as saying Iran would push for a production cut of 1.5 to 2 million barrels per day at the organization's meeting in Algeria on Wednesday.
Nozari said Sunday the proposed cut is meant to provide balance to the oil market.
China aims to increase its money supply 17 percent in 2009 and encourage lending to boost domestic consumption and buoy growth in the world’s fourth-largest economy.
M2, the broadest measure, including cash and all deposits, will increase 17 percent, the State Council said in a statement on its Web site. The government will also suspend the issue of three-year central-bank notes and aims to increase total financial-institution lending by 4 trillion yuan ($584 billion) next year, the statement said.
Peter Schiff: "Once the government runs out of foreign and private sector bidders for new treasuries, the Federal Reserve will be the only buyer, and the hyper-inflation cat will be completely out of the bag. Sensing this, the Fed has recently indicated a desire to begin issuing its own bonds. However, since dollars are already recorded as liabilities on the Fed's balance sheet (dollars are in actuality Federal Reserve Notes) the Fed already issues debt. The difference now is that they are proposing to issue interest bearing debt. Perhaps the Fed feels this will make holding its notes more appealing. However, since the interest will be paid in more of its own script, I do not believe this con will work."
Kongsberg Automotive, a Norway-based supplier of automotive, commercial and industrial products, said Saturday that it plans to close facilities in Ohio and Kansas and move production to Mexico as part of a restructuring of its North American operations.
Kongsberg officials said the decisions were a result of the "global automotive market collapse" that has resulted in a steep drop in demand for automotive components especially in North America.
Kongsberg said its Van Wert, Ohio facility will close sometime in the summer and its production will be transferred to the company's Nuevo Laredo, Mexico facility, eliminating about 105 jobs.
The company said it also plans to move its Haysville, Kan. facility's production to its facility in Matamoros, Mexico. The Haysville facility will also close sometime in the summer, affecting about 100 jobs, Kongsberg said.
Natural gas is down 26% year to date versus a 53% decline in oil.
Don't expect an announcement Sunday or Monday from the White House on a possible plan to prevent the collapse of the troubled auto industry. That's the latest word from White House officials. We'll see.
Banco Santander of Spain plans to cut 1,900 jobs in 2009 as it absorbs two acquisitions made this year, the bank said.
The cuts total 8% of the 23,000 jobs at its British business, which includes Abbey National plus the acquired Alliance & Leicester and the savings business of Bradford & Bingley.
In 2009, Honeywell forecasts sales of $33.6 billion to $35.3 billion and earnings per share of $3.20 to $3.55. "Overall, 2008 sales will be up 6%, earnings per share is expected to increase approximately 20%, and free cash flow conversion will be greater than 100% of net income," said Chief Executive Dave Cote said in a statement.
China's industrial output growth slowed to 5.4% in November, easing from 8.2% in October, the weakest pace of gains since Feb. 2002, according to data released by the National Bureau of Statistics Monday.
Japan's Nikkei 225 Average, which slumped 5.6% Friday, soared 4% to 8,561.22 even after Bank of Japan's tankan survey showed business sentiment dropped sharply. The broader Topix index gained 3.4% to 840.78. Australia's S&P/ASX 200 rose 3.5% to 3,633 and South Korea's Kospi jumped 3.5% to 1,141.87, while New Zealand's NZX 50 index rose 0.8% to 2,697.17.
The Bank of Japan's quarterly tankan showed the headline diffusion index for large manufacturers deteriorated at its fastest pace since August 1974, falling 21 points to minus 24. The reading was the weakest in nearly seven years.
Bill Felckenstein: "Stocks may claw upward for now, but the next quarter could be a different story. And while the threat of financial-stock collapses is fading, this brutal recession has far to go."
John Hussman: "In the 11 trading sessions from November 20 to December 8, the S&P 500 gained 20.9% based on end-of-day closing values. It certainly has not felt as if the market enjoyed an advance in excess of 20% from its November low to last Monday's close, but it has been a material gain (from which some retracement is quite possible).
I continue to view the market as undervalued, but clearly 20% less so than a few weeks ago. Of course, a 20% difference is material. While our investment stance remains modestly constructive on the basis of valuation, we have somewhat less exposure to market fluctuations than we had a couple of weeks ago when prices were extraordinarily compressed. What bothers me about the recent rebound is the tepid volume and general lack of leadership. We certainly don't observe market action from any industry group that reveals investor expectations for an economic recovery. The advance we've seen is better characterized as a short squeeze, and a period where investors have “stepped back” from extreme panic, rather than something that reflects investors “looking across the valley to the eventual recovery.”
Kohl's Corp. and Forever 21 Inc. won a joint bid to take over 46 former Mervyns stores for $6.25 million, the companies said Friday. Department-store operator Kohl's will assume 31 of the locations, while trendy retailer Forever 21 will have 15 sites, pending approval by the court overseeing Mervyns' bankruptcy proceedings. Almost all the stores are in California.
The Iranian Oil Ministry says Iran is proposing a cut in OPEC's production of up to 2 million barrels per day.
The ministry's Web site quotes Iran's Oil Minister Gholam Hossein Nozari as saying Iran would push for a production cut of 1.5 to 2 million barrels per day at the organization's meeting in Algeria on Wednesday.
Nozari said Sunday the proposed cut is meant to provide balance to the oil market.
China aims to increase its money supply 17 percent in 2009 and encourage lending to boost domestic consumption and buoy growth in the world’s fourth-largest economy.
M2, the broadest measure, including cash and all deposits, will increase 17 percent, the State Council said in a statement on its Web site. The government will also suspend the issue of three-year central-bank notes and aims to increase total financial-institution lending by 4 trillion yuan ($584 billion) next year, the statement said.
Peter Schiff: "Once the government runs out of foreign and private sector bidders for new treasuries, the Federal Reserve will be the only buyer, and the hyper-inflation cat will be completely out of the bag. Sensing this, the Fed has recently indicated a desire to begin issuing its own bonds. However, since dollars are already recorded as liabilities on the Fed's balance sheet (dollars are in actuality Federal Reserve Notes) the Fed already issues debt. The difference now is that they are proposing to issue interest bearing debt. Perhaps the Fed feels this will make holding its notes more appealing. However, since the interest will be paid in more of its own script, I do not believe this con will work."
Kongsberg Automotive, a Norway-based supplier of automotive, commercial and industrial products, said Saturday that it plans to close facilities in Ohio and Kansas and move production to Mexico as part of a restructuring of its North American operations.
Kongsberg officials said the decisions were a result of the "global automotive market collapse" that has resulted in a steep drop in demand for automotive components especially in North America.
Kongsberg said its Van Wert, Ohio facility will close sometime in the summer and its production will be transferred to the company's Nuevo Laredo, Mexico facility, eliminating about 105 jobs.
The company said it also plans to move its Haysville, Kan. facility's production to its facility in Matamoros, Mexico. The Haysville facility will also close sometime in the summer, affecting about 100 jobs, Kongsberg said.
Natural gas is down 26% year to date versus a 53% decline in oil.
Don't expect an announcement Sunday or Monday from the White House on a possible plan to prevent the collapse of the troubled auto industry. That's the latest word from White House officials. We'll see.
Banco Santander of Spain plans to cut 1,900 jobs in 2009 as it absorbs two acquisitions made this year, the bank said.
The cuts total 8% of the 23,000 jobs at its British business, which includes Abbey National plus the acquired Alliance & Leicester and the savings business of Bradford & Bingley.
In 2009, Honeywell forecasts sales of $33.6 billion to $35.3 billion and earnings per share of $3.20 to $3.55. "Overall, 2008 sales will be up 6%, earnings per share is expected to increase approximately 20%, and free cash flow conversion will be greater than 100% of net income," said Chief Executive Dave Cote said in a statement.
China's industrial output growth slowed to 5.4% in November, easing from 8.2% in October, the weakest pace of gains since Feb. 2002, according to data released by the National Bureau of Statistics Monday.
Japan's Nikkei 225 Average, which slumped 5.6% Friday, soared 4% to 8,561.22 even after Bank of Japan's tankan survey showed business sentiment dropped sharply. The broader Topix index gained 3.4% to 840.78. Australia's S&P/ASX 200 rose 3.5% to 3,633 and South Korea's Kospi jumped 3.5% to 1,141.87, while New Zealand's NZX 50 index rose 0.8% to 2,697.17.
The Bank of Japan's quarterly tankan showed the headline diffusion index for large manufacturers deteriorated at its fastest pace since August 1974, falling 21 points to minus 24. The reading was the weakest in nearly seven years.
Bill Felckenstein: "Stocks may claw upward for now, but the next quarter could be a different story. And while the threat of financial-stock collapses is fading, this brutal recession has far to go."
John Hussman: "In the 11 trading sessions from November 20 to December 8, the S&P 500 gained 20.9% based on end-of-day closing values. It certainly has not felt as if the market enjoyed an advance in excess of 20% from its November low to last Monday's close, but it has been a material gain (from which some retracement is quite possible).
I continue to view the market as undervalued, but clearly 20% less so than a few weeks ago. Of course, a 20% difference is material. While our investment stance remains modestly constructive on the basis of valuation, we have somewhat less exposure to market fluctuations than we had a couple of weeks ago when prices were extraordinarily compressed. What bothers me about the recent rebound is the tepid volume and general lack of leadership. We certainly don't observe market action from any industry group that reveals investor expectations for an economic recovery. The advance we've seen is better characterized as a short squeeze, and a period where investors have “stepped back” from extreme panic, rather than something that reflects investors “looking across the valley to the eventual recovery.”
Sunday, December 14, 2008
Relief Rallies
12/13/08 Relief Rallies
Michael Pento: "This week marked the beginning of what I believe is the manic bubble stage in the nearly three decade long Treasury bull market. On Monday, the U.S. Department of Treasury sold $27 billion of three month bills at a discount rate of .005%. That rate is the lowest since the auction began in 1929. On Tuesday, $30 billion of four-week Treasury bills were sold at 0%! Again, the lowest yield ever recorded for that security.
According to data compiled by Bloomberg, 41 U.S. money market funds have daily annualized yields at or less than .05% including four funds with a yield of zero. If one needed more evidence of this epic bubble, you could find it in the fact that a 2-year Treasury note yields just .8% and a 1 year bill offers a paltry .45% as of today's trading." I never knew a debt printing press could be a safety net offering no monetary return. One is never to old to learn new tricks.
John Mauldin: "There are things in today's markets that are simply astounding. They should not exist, yet they do. Why should US bills trade at negative interest? How can oil be trading at all-time highs in terms of spreads over the next year? Bank debt and bonds are trading at discounts not to be believed. Want some free money? I show you a trade that gives you (almost) just that. Fed funds at zero? Are we starting to push on a string?...
This morning West Texas Intermediate January oil futures prices were (courtesy of Dennis Gartman) $45.80. This rises to $52.28 by just April. A few day's ago, Dennis reports, the spread between the first and fifth futures months had risen to $8.06, the highest ever. When oil was at $147, the spread was an average of $3.25, or about 2.5%. You can buy January 09 crude futures at a stunning 34.5% lower than January 2010.
That means if you could find a place to store that oil, you could lock in a guaranteed 34% profit, less the cost of storage. Sounds like easy money. This is just something that shouldn't be. But what this tells us is that storage for oil is very tight. Oil producers are leasing very large ships to store excess oil, as they cannot find places to store it on land. Storing oil on ships is expensive, so that cost of storage gets figured into the price of oil a year out."
The Federal Deposit Insurance Corporation said late Friday that the Sanderson State Bank of Sanderson, Texas, was closed by the Texas Department of Banking, making it the 25th U.S. bank failure of the year.
Toyota Motor Corp is likely to further cut its earnings forecasts and report an operating loss of about 100 billion yen ($1 billion) in the October-March period, Japanese media reported on Saturday.
George Ure: "Probably middle of next week before we get the complete picture, but already it's clear in some of the early West Coast container traffic reports that things are continuing to deteriorate down on the docks. The Port of Los Angeles reports November outbound traffic was down 12.83% and inbound traffic (e.g. coming to the US) was down 9.69% - worse than October and down 10.4% for the month.
Over the bridge in Long Beach, November container traffic inbound was down 13.6% compared with year-ago figures and worse (from a balance of trade standpoint) the outbound containers were down 23.6% for a fiscal YTD decline of 8.9% and a decline for November of 16.8%
As if that's not enough to kill the trucking business, we notice that the state of California has put in tough new air pollution standards that will cost may truckers their jobs."
The regulations, approved one day after the California Air Resources Board's landmark vote to curb greenhouse gases, require all trucks and buses, whether or not they are registered in the state, to retrofit or replace their rigs starting in 2010.
Air board officials estimate the changes will cost the trucking industry $5.5 billion, causing some truckers to plead for financial assistance. They said they will offer truck owners $1 billion in help.
After hearing public comment for two days, the board voted unanimously in favor of the rule.
According to the WSJ, General Growth Properties Inc. scored a victory in its struggle to manage its $27 billion debt load by refinancing several mortgages coming due, but the mall owner still was negotiating Friday to extend the deadline on a $900 million loan due at midnight. General Growth gave itself some breathing room by retiring $58 million in bonds and refinancing $814 million in mortgages due in 2009. The mortgages and retired bonds were held by a retirement system, according to people familiar with the matter.
The head of OPEC says Russia and three other non-cartel members will take part in the oil producers' summit next week in Oran, Algeria.
Chakib Khelil says Russia will send its deputy prime minister in charge of energy and its oil minister to Wednesday's summit. The other guest countries invited by the 14-member cartel are Oman, Azerbaijan and Syria.
Khelil asserts that a final consensus has been reached by the Organization of Petroleum Exporting Countries to reduce oil output levels.
The OPEC head, who is also Algeria's oil minister, spoke Saturday.
Baidu.com Inc., China's leading search engine, is cutting its projected revenue by up to 15 percent after it dropped some advertisers because of a scandal over unlicensed companies selling medical products.
The Fed refuses to grant Bloomberg News's request to disclose the recipients of more than $2T of emergency loans from U.S. taxpayers and the assets it's accepting as collateral. "If they told us what they held, we would know the potential losses that the government may take, and that’s what they don’t want us to know."
Created in 1919, GMAC has lost $7.9 billion in the five quarters ending Sept 30.
While its Residential Capital mortgage unit has been the main source of its troubles, GMAC's auto finance unit is also losing money as more borrowers are missing payments and the value of leased vehicles declines.
Mike Burk: "Although most of the major indices were up last week there was very little strength in the short term indicators.
I expect the major indices to be lower on Friday December 19 than they were on Friday December 12."
Tim Wood: " I see no evidence at this time to say that the November bottom has marked THE bottom or that the bear market is now over. Rather, the now one-year old primary bearish trend that was first established on November 21, 2007 still remains intact and as a result, the Dow theory is still forecasting stormy economic conditions. Here's why. According to Dow theory, once the primary trend is established it is considered to still be in force until something happens to invalidate that trend. To date, nothing of the kind has occurred and I believe, based upon the data at hand today, that there will be continued liquidation in the future as the deflationary forces of K-wave winter continue to bear down...I view any relief rallies from these oversold levels merely as intermission."
Michael Pento: "This week marked the beginning of what I believe is the manic bubble stage in the nearly three decade long Treasury bull market. On Monday, the U.S. Department of Treasury sold $27 billion of three month bills at a discount rate of .005%. That rate is the lowest since the auction began in 1929. On Tuesday, $30 billion of four-week Treasury bills were sold at 0%! Again, the lowest yield ever recorded for that security.
According to data compiled by Bloomberg, 41 U.S. money market funds have daily annualized yields at or less than .05% including four funds with a yield of zero. If one needed more evidence of this epic bubble, you could find it in the fact that a 2-year Treasury note yields just .8% and a 1 year bill offers a paltry .45% as of today's trading." I never knew a debt printing press could be a safety net offering no monetary return. One is never to old to learn new tricks.
John Mauldin: "There are things in today's markets that are simply astounding. They should not exist, yet they do. Why should US bills trade at negative interest? How can oil be trading at all-time highs in terms of spreads over the next year? Bank debt and bonds are trading at discounts not to be believed. Want some free money? I show you a trade that gives you (almost) just that. Fed funds at zero? Are we starting to push on a string?...
This morning West Texas Intermediate January oil futures prices were (courtesy of Dennis Gartman) $45.80. This rises to $52.28 by just April. A few day's ago, Dennis reports, the spread between the first and fifth futures months had risen to $8.06, the highest ever. When oil was at $147, the spread was an average of $3.25, or about 2.5%. You can buy January 09 crude futures at a stunning 34.5% lower than January 2010.
That means if you could find a place to store that oil, you could lock in a guaranteed 34% profit, less the cost of storage. Sounds like easy money. This is just something that shouldn't be. But what this tells us is that storage for oil is very tight. Oil producers are leasing very large ships to store excess oil, as they cannot find places to store it on land. Storing oil on ships is expensive, so that cost of storage gets figured into the price of oil a year out."
The Federal Deposit Insurance Corporation said late Friday that the Sanderson State Bank of Sanderson, Texas, was closed by the Texas Department of Banking, making it the 25th U.S. bank failure of the year.
Toyota Motor Corp is likely to further cut its earnings forecasts and report an operating loss of about 100 billion yen ($1 billion) in the October-March period, Japanese media reported on Saturday.
George Ure: "Probably middle of next week before we get the complete picture, but already it's clear in some of the early West Coast container traffic reports that things are continuing to deteriorate down on the docks. The Port of Los Angeles reports November outbound traffic was down 12.83% and inbound traffic (e.g. coming to the US) was down 9.69% - worse than October and down 10.4% for the month.
Over the bridge in Long Beach, November container traffic inbound was down 13.6% compared with year-ago figures and worse (from a balance of trade standpoint) the outbound containers were down 23.6% for a fiscal YTD decline of 8.9% and a decline for November of 16.8%
As if that's not enough to kill the trucking business, we notice that the state of California has put in tough new air pollution standards that will cost may truckers their jobs."
The regulations, approved one day after the California Air Resources Board's landmark vote to curb greenhouse gases, require all trucks and buses, whether or not they are registered in the state, to retrofit or replace their rigs starting in 2010.
Air board officials estimate the changes will cost the trucking industry $5.5 billion, causing some truckers to plead for financial assistance. They said they will offer truck owners $1 billion in help.
After hearing public comment for two days, the board voted unanimously in favor of the rule.
According to the WSJ, General Growth Properties Inc. scored a victory in its struggle to manage its $27 billion debt load by refinancing several mortgages coming due, but the mall owner still was negotiating Friday to extend the deadline on a $900 million loan due at midnight. General Growth gave itself some breathing room by retiring $58 million in bonds and refinancing $814 million in mortgages due in 2009. The mortgages and retired bonds were held by a retirement system, according to people familiar with the matter.
The head of OPEC says Russia and three other non-cartel members will take part in the oil producers' summit next week in Oran, Algeria.
Chakib Khelil says Russia will send its deputy prime minister in charge of energy and its oil minister to Wednesday's summit. The other guest countries invited by the 14-member cartel are Oman, Azerbaijan and Syria.
Khelil asserts that a final consensus has been reached by the Organization of Petroleum Exporting Countries to reduce oil output levels.
The OPEC head, who is also Algeria's oil minister, spoke Saturday.
Baidu.com Inc., China's leading search engine, is cutting its projected revenue by up to 15 percent after it dropped some advertisers because of a scandal over unlicensed companies selling medical products.
The Fed refuses to grant Bloomberg News's request to disclose the recipients of more than $2T of emergency loans from U.S. taxpayers and the assets it's accepting as collateral. "If they told us what they held, we would know the potential losses that the government may take, and that’s what they don’t want us to know."
Created in 1919, GMAC has lost $7.9 billion in the five quarters ending Sept 30.
While its Residential Capital mortgage unit has been the main source of its troubles, GMAC's auto finance unit is also losing money as more borrowers are missing payments and the value of leased vehicles declines.
Mike Burk: "Although most of the major indices were up last week there was very little strength in the short term indicators.
I expect the major indices to be lower on Friday December 19 than they were on Friday December 12."
Tim Wood: " I see no evidence at this time to say that the November bottom has marked THE bottom or that the bear market is now over. Rather, the now one-year old primary bearish trend that was first established on November 21, 2007 still remains intact and as a result, the Dow theory is still forecasting stormy economic conditions. Here's why. According to Dow theory, once the primary trend is established it is considered to still be in force until something happens to invalidate that trend. To date, nothing of the kind has occurred and I believe, based upon the data at hand today, that there will be continued liquidation in the future as the deflationary forces of K-wave winter continue to bear down...I view any relief rallies from these oversold levels merely as intermission."
Friday, December 12, 2008
Autos
12/12/08 Autos
UAW: Even if union worked for free, GM would fail by January.
Auto bailout fails in the Senate. Futures down big triple digits in early trading. Futures for the Dow Jones Industrial Average declined 287 points to 8,233. Those for the S&P 500 fell 33.9 points to 840.6 and Nasdaq 100 futures were off 34.2 points at 1155.8.
The U.K. FTSE 100 index dropped 4.1% to 4,209.49, the German DAX 30 index fell 4.4% to 4,559.56 and the French CAC-40 index slid 5% to 3,141.14.
Inflation at the wholesale level decelerated sharply in November for the second straight month, the Labor Department said Friday. The producer price index fell 2.2%, driven by an 11.2% drop in energy prices. This follows a record 2.8% drop in October. Food prices were flat in November. The core PPI, excluding food and energy costs, also moderated in November. The core rate rose 0.1% in the month, down from a 0.4% gain in October and the smallest gain since March.
Retail sales were down 7.4% compared with a year earlier. Sales fell a revised 2.9% in October and a revised 1.6% in September. But the extent of the decline was exaggerated by an historic drop in retail gasoline prices in November. Excluding the record 14.7% drop in sales at gas stations, retail sales fell 0.2%.
Goldman Sachs on Friday cut its 2009 outlook for oil prices to $45 a barrel from $80 a barrel in the face of the global economic slowdown, while raising the possibility that crude could dip below $40 a barrel shortly.
Gold for February delivery fell $9.10, or 1%, to $817.50 an ounce in electronic trading on Globex. Other metals also posted losses, with copper falling 7.4% and silver falling 3.2%. Crude oil for January delivery fell $2.92, or 6%, to $45.05 a barrel in electronic trading on Globex.
India's industrial production contracted for the first time in 15 years in October, the Ministry of Statistics said Friday, the latest gloomy economic news to cast doubt on government efforts to stimulate growth.
The index of industrial production shrank 0.4 percent in October, due in part to falling production of consumer goods. From April to October, the index grew by 4.1 percent versus 9.9 percent during the same period last year.
Dollar slides to 13-year low against the yen.
Martin Hutchinson: "Over the next 15 years, Americans and Europeans may suffer a worse fall in their living standards than during the Great Depression, albeit played out agonizingly slowly."
European Central Bank policy makers signaled they’re reluctant to cut the benchmark interest rate much further after three reductions to 2.5 percent since October, and may not trim borrowing costs again next month.
Blackstone Group LP, the world’s biggest private-equity firm, plans to eliminate about 70 jobs as profits from leveraged-buyout decline, according to two people familiar with the matter.
The layoffs, representing about 7 percent of Blackstone’s 1,000 workers, will affect most of the New York-based company’s business units, said the people, who asked not to be named because the decisions haven’t been made public. A Blackstone official declined to comment.
Ladenburg Thalmann's Richard Bove cut his price target on Wells Fargo and said the bank will take a charge of $40 billion in the fourth quarter related to the acquisition of Wachovia.
California faces a $41.8 billion shortfall for its combined current and next fiscal years, up from a prior $28 billion estimate as its economy weakens and revenues decline, the director of the state's Department of Finance, said on Thursday.
Fairchild Semiconductor said Friday it plans to cut 1,100 jobs, or about 12 percent of its work force, and reduced its revenue guidance for its fiscal fourth quarter.
Alcatel-Lucent SA said Friday it will eliminate another 1,000 white-collar jobs as part of its new chief's plan to return the company to profitability, but shares slumped as investors were hoping for a bolder shift in business strategy.
Biotechnology firm Elan Corp. said Friday it is closing its offices in New York and Tokyo during the first quarter as it realigns operations.
Elan said it will eliminate an unspecified number of positions and revise its marketing activities for Tysabri as a treatment for Crohn's disease.
Galina Alexeenko and Sandra Kollen: "The Baltic Dry Index, an indirect gauge of international trade flows, has dropped by more than 90 percent since its peak in June as a result not only of decreased global demand but also availability of financing that demand, according to Dismal Scientist....In the words of the WTO’s Director-General Pascal Lamy, “The world economy is slowing and we are seeing trade decrease. If trade finance is not tackled, we run the risk of further exacerbating this downward spiral.” Since about 40 percent of U.S. exports are shipped to developing countries, the inability of the importers in those countries to finance their purchases of U.S.-made goods can’t help the U.S. exports sector, which is already suffering from falling foreign demand as the global economy slows."
London Banker: "Deflation has become inevitable...Anyone sitting on a pile of cash now is unlikely to want to either (a) place it in a bank, or (b) invest it in the stock market. As a result, the implosion of the financial and real economy must continue no matter how big the central bank’s aspirations for its balance sheet or the treasury’s aspirations for its deficit.
If US, EU and UK had substantial domestic savings to fund their banks (as in Japan in 1990), then perhaps the consequences would not be so imminently disastrous. Lacking sufficient domestic savings, however, their actions will likely make foreign creditors in Japan, China, the Gulf and elsewhere question whether it is worthwhile to keep pumping scarce savings into such flawed and reckless economies."
The dollar remained 1.3% lower against the Japanese currency at 90.20 yen. The greenback previously plunged to a 13-year low below 89 yen in Asian trade. The euro was up 0.3% against the dollar at $1.3384, near its high for the day. Crude's weakness continues and it's now down 9% on the day.
Including ETF activity, Equity funds report net cash inflows totaling $5.791 billion in the week ended 12/10/08 with Domestic funds reporting net inflows of $5.683 billion and Non-domestic funds reporting net inflows of $108 million;
According to AMG Data Services, Excluding ETF activity, Equity funds report net cash outflows totaling -$3.930 billion with Domestic funds reporting net outflows of -$2.109 billion and Non-domestic funds reporting net outflows totaling -$1.821 billion;
Excluding ETF activity Equity income funds report net inflows ($218 Mil) for the seventh of the last eight weeks.
The dollar is teetering just below a critical level versus the euro that could send it nearly 40 percent lower, Phil Roberts, technical analyst at Barclays Capital, told CNBC.
After hitting a 28-year low in November, consumer sentiment improved in early December, according to a survey by the University of Michigan and Reuters. The consumer sentiment index rose to 59.1 in December from 55.3 in the previous month. All of the increase came in the current conditions index, which rose to 69.4 from 57.5. Economists attributed the gain to the fall in gasoline prices. The expectations index dropped to 52.4 in December from 53.9.
General Motors Corp.on Friday said it will cut its first-quarter production by 250,000 cars and trucks as a result of "rapidly deteriorating market conditions."
Americans drove 100 billion fewer miles in the 12 months ending in October than they had the year before, a decline of about 3.4%, the Transportation Department reported Friday.
Bonds issued by General Motors Corp. and Ford Motor Co. plummeted Friday after the Senate failed to pass a rescue package for the auto industry. General Motors' 8.375% bonds due in 2033 fell 5.5 cents to 10.5 cents for every $1 invested, according to junk-bond specialist KDP Investment Advisors, Inc.
Honda Motor Co. will cut production in North America by another 119,000 units by the end of its fiscal year, underscoring the malaise in the global auto industry, The Wall Street Journal reported on its Web site Friday. The latest decision, the fourth round of production cuts in North America for the Japanese automaker, brings Honda's total output reduction to 175,000 units by March 31, the newspaper said. The company plans to make 1,293,000 vehicles this year, down 12% from its original target of 1,468,000 units, according to the Journal.
International Paper to cut 1,000 to 1,500 jobs.
The Federal Deposit Insurance Corporation said late Friday that Haven Trust Bank of Duluth, Ga., was closed by the Georgia Department of Banking and Finance. The failure not only marks the 24th bank failure of the year, but the fifth in the Atlanta area.
The Dow Jones Industrial Average gained 64.59 points, or 0.8%, to end at 8,629.68, leaving it off nearly 0.1% from last Friday's close. The S&P 500 climbed 6.14 points, or 0.7%, to 879.73, giving it a 0.4% rise on the week. The Nasdaq Composite advanced 32.84 points, or 2.2%, to 1,540.72, leaving the technology-laden index up 2.1% from a week ago.
Crude oil for January delivery fell $1.70 to end at $46.28 a barrel on the New York Mercantile Exchange. Gold for February delivery ended down $6.10 at $820.50 an ounce on the New York Mercantile Exchange.
UAW: Even if union worked for free, GM would fail by January.
Auto bailout fails in the Senate. Futures down big triple digits in early trading. Futures for the Dow Jones Industrial Average declined 287 points to 8,233. Those for the S&P 500 fell 33.9 points to 840.6 and Nasdaq 100 futures were off 34.2 points at 1155.8.
The U.K. FTSE 100 index dropped 4.1% to 4,209.49, the German DAX 30 index fell 4.4% to 4,559.56 and the French CAC-40 index slid 5% to 3,141.14.
Inflation at the wholesale level decelerated sharply in November for the second straight month, the Labor Department said Friday. The producer price index fell 2.2%, driven by an 11.2% drop in energy prices. This follows a record 2.8% drop in October. Food prices were flat in November. The core PPI, excluding food and energy costs, also moderated in November. The core rate rose 0.1% in the month, down from a 0.4% gain in October and the smallest gain since March.
Retail sales were down 7.4% compared with a year earlier. Sales fell a revised 2.9% in October and a revised 1.6% in September. But the extent of the decline was exaggerated by an historic drop in retail gasoline prices in November. Excluding the record 14.7% drop in sales at gas stations, retail sales fell 0.2%.
Goldman Sachs on Friday cut its 2009 outlook for oil prices to $45 a barrel from $80 a barrel in the face of the global economic slowdown, while raising the possibility that crude could dip below $40 a barrel shortly.
Gold for February delivery fell $9.10, or 1%, to $817.50 an ounce in electronic trading on Globex. Other metals also posted losses, with copper falling 7.4% and silver falling 3.2%. Crude oil for January delivery fell $2.92, or 6%, to $45.05 a barrel in electronic trading on Globex.
India's industrial production contracted for the first time in 15 years in October, the Ministry of Statistics said Friday, the latest gloomy economic news to cast doubt on government efforts to stimulate growth.
The index of industrial production shrank 0.4 percent in October, due in part to falling production of consumer goods. From April to October, the index grew by 4.1 percent versus 9.9 percent during the same period last year.
Dollar slides to 13-year low against the yen.
Martin Hutchinson: "Over the next 15 years, Americans and Europeans may suffer a worse fall in their living standards than during the Great Depression, albeit played out agonizingly slowly."
European Central Bank policy makers signaled they’re reluctant to cut the benchmark interest rate much further after three reductions to 2.5 percent since October, and may not trim borrowing costs again next month.
Blackstone Group LP, the world’s biggest private-equity firm, plans to eliminate about 70 jobs as profits from leveraged-buyout decline, according to two people familiar with the matter.
The layoffs, representing about 7 percent of Blackstone’s 1,000 workers, will affect most of the New York-based company’s business units, said the people, who asked not to be named because the decisions haven’t been made public. A Blackstone official declined to comment.
Ladenburg Thalmann's Richard Bove cut his price target on Wells Fargo and said the bank will take a charge of $40 billion in the fourth quarter related to the acquisition of Wachovia.
California faces a $41.8 billion shortfall for its combined current and next fiscal years, up from a prior $28 billion estimate as its economy weakens and revenues decline, the director of the state's Department of Finance, said on Thursday.
Fairchild Semiconductor said Friday it plans to cut 1,100 jobs, or about 12 percent of its work force, and reduced its revenue guidance for its fiscal fourth quarter.
Alcatel-Lucent SA said Friday it will eliminate another 1,000 white-collar jobs as part of its new chief's plan to return the company to profitability, but shares slumped as investors were hoping for a bolder shift in business strategy.
Biotechnology firm Elan Corp. said Friday it is closing its offices in New York and Tokyo during the first quarter as it realigns operations.
Elan said it will eliminate an unspecified number of positions and revise its marketing activities for Tysabri as a treatment for Crohn's disease.
Galina Alexeenko and Sandra Kollen: "The Baltic Dry Index, an indirect gauge of international trade flows, has dropped by more than 90 percent since its peak in June as a result not only of decreased global demand but also availability of financing that demand, according to Dismal Scientist....In the words of the WTO’s Director-General Pascal Lamy, “The world economy is slowing and we are seeing trade decrease. If trade finance is not tackled, we run the risk of further exacerbating this downward spiral.” Since about 40 percent of U.S. exports are shipped to developing countries, the inability of the importers in those countries to finance their purchases of U.S.-made goods can’t help the U.S. exports sector, which is already suffering from falling foreign demand as the global economy slows."
London Banker: "Deflation has become inevitable...Anyone sitting on a pile of cash now is unlikely to want to either (a) place it in a bank, or (b) invest it in the stock market. As a result, the implosion of the financial and real economy must continue no matter how big the central bank’s aspirations for its balance sheet or the treasury’s aspirations for its deficit.
If US, EU and UK had substantial domestic savings to fund their banks (as in Japan in 1990), then perhaps the consequences would not be so imminently disastrous. Lacking sufficient domestic savings, however, their actions will likely make foreign creditors in Japan, China, the Gulf and elsewhere question whether it is worthwhile to keep pumping scarce savings into such flawed and reckless economies."
The dollar remained 1.3% lower against the Japanese currency at 90.20 yen. The greenback previously plunged to a 13-year low below 89 yen in Asian trade. The euro was up 0.3% against the dollar at $1.3384, near its high for the day. Crude's weakness continues and it's now down 9% on the day.
Including ETF activity, Equity funds report net cash inflows totaling $5.791 billion in the week ended 12/10/08 with Domestic funds reporting net inflows of $5.683 billion and Non-domestic funds reporting net inflows of $108 million;
According to AMG Data Services, Excluding ETF activity, Equity funds report net cash outflows totaling -$3.930 billion with Domestic funds reporting net outflows of -$2.109 billion and Non-domestic funds reporting net outflows totaling -$1.821 billion;
Excluding ETF activity Equity income funds report net inflows ($218 Mil) for the seventh of the last eight weeks.
The dollar is teetering just below a critical level versus the euro that could send it nearly 40 percent lower, Phil Roberts, technical analyst at Barclays Capital, told CNBC.
After hitting a 28-year low in November, consumer sentiment improved in early December, according to a survey by the University of Michigan and Reuters. The consumer sentiment index rose to 59.1 in December from 55.3 in the previous month. All of the increase came in the current conditions index, which rose to 69.4 from 57.5. Economists attributed the gain to the fall in gasoline prices. The expectations index dropped to 52.4 in December from 53.9.
General Motors Corp.on Friday said it will cut its first-quarter production by 250,000 cars and trucks as a result of "rapidly deteriorating market conditions."
Americans drove 100 billion fewer miles in the 12 months ending in October than they had the year before, a decline of about 3.4%, the Transportation Department reported Friday.
Bonds issued by General Motors Corp. and Ford Motor Co. plummeted Friday after the Senate failed to pass a rescue package for the auto industry. General Motors' 8.375% bonds due in 2033 fell 5.5 cents to 10.5 cents for every $1 invested, according to junk-bond specialist KDP Investment Advisors, Inc.
Honda Motor Co. will cut production in North America by another 119,000 units by the end of its fiscal year, underscoring the malaise in the global auto industry, The Wall Street Journal reported on its Web site Friday. The latest decision, the fourth round of production cuts in North America for the Japanese automaker, brings Honda's total output reduction to 175,000 units by March 31, the newspaper said. The company plans to make 1,293,000 vehicles this year, down 12% from its original target of 1,468,000 units, according to the Journal.
International Paper to cut 1,000 to 1,500 jobs.
The Federal Deposit Insurance Corporation said late Friday that Haven Trust Bank of Duluth, Ga., was closed by the Georgia Department of Banking and Finance. The failure not only marks the 24th bank failure of the year, but the fifth in the Atlanta area.
The Dow Jones Industrial Average gained 64.59 points, or 0.8%, to end at 8,629.68, leaving it off nearly 0.1% from last Friday's close. The S&P 500 climbed 6.14 points, or 0.7%, to 879.73, giving it a 0.4% rise on the week. The Nasdaq Composite advanced 32.84 points, or 2.2%, to 1,540.72, leaving the technology-laden index up 2.1% from a week ago.
Crude oil for January delivery fell $1.70 to end at $46.28 a barrel on the New York Mercantile Exchange. Gold for February delivery ended down $6.10 at $820.50 an ounce on the New York Mercantile Exchange.
Thursday, December 11, 2008
Back To The Future
12/11/08 Back To The Future
Costco Wholesale Corp. reported fiscal first-quarter net income was about flat on 1% higher same-store sales and 3.6% higher total sales. For the quarter ended Nov. 23, earnings were $262.5 million, or 60 cents a share, compared with $262 million, or 59 cents, in the year-earlier period. Shares outstanding fell 1.2% to 440.5 million. Net sales reached $16.04 billion from $15.47 billion.
Gold for February delivery gained $19.90, or 2.5%, to $828.70 an ounce in electronic trading on Globex. The dollar extended its losses after the Labor Department reported that the number of first-time filings for state unemployment benefits jumped by 58,000 to a 26-year high of 573,000 last week. The U.S. dollar index, a measure of the greenback against a trade-weighted basket of six currencies, fell 0.7% to 84.10. The euro soared 1.6% to $1.3230 and the British pound rose 0.7% to $1.4907. The dollar fell 1.6% to 91.32 yen.
January crude up $3.09, or 7%, to $46.62 a barrel on Globex.
Prices of goods and services imported into the United States plummeted a record 6.7% in November as imported crude oil prices fell a record 25.8%. It's not just petroleum prices that are falling: Prices of nonfuel imports fell a record 1.8%. The prices that U.S. producers received for their exports also fell, dropping a record 3.2% in November. In the past 12 months, import prices are down 4.4%, including a 29% drop in petroleum prices. It's the largest year-over-year decline in import prices since 2002. Even with lower import prices, the U.S. trade deficit widened by 1.1% in October to $57.2 billion, the Commerce Department said Thursday. The trade deficit was above the consensus forecast of Wall Street economists of a deficit of $54.5 billion. Exports fell faster than imports in October. Exports dropped to the lowest level in seven months as foreign purchases of U.S. aircraft, automobiles, chemicals and food waned. The U.S. trade deficit with China widened to $28.0 billion in October compared with $25.9 billion in the same month last year.
Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October, SpendingPulse said.
The November figure was the largest one-month drop in SpendingPulse history, which began in 2003, surpassing the prior record fall of 2.4 percent set two months ago.
The report was the latest evidence that U.S. retailers are facing one of the worst holiday retail seasons in recent memory. The year-end shopping period accounts for the bulk of the annual business of many retailers.
"We are talking about a consumer who is wary of spending," said Kamalesh Rao, SpendingPulse's director of economic research.
Even though gas prices have fallen sharply, consumer spending is still on the skids. It's all about jobs, fear of losing a job, and a shrinking standard of living.
Benefits for state and local government employees cost an average of $13.41 per hour worked in September 2008, $4.21 of which was for health insurance. Employer costs for civilian workers averaged $28.87 per hour worked; $20.13 for wages and salaries and $8.74 for benefits.
U.S. gross domestic product is on track to decline at a 6.6% annual rate this quarter, one of its worst performances ever, economists for Macroeconomic Advisers said Thursday.
Average U.S. gasoline prices fell by 2 cents to $1.66 a gallon on Thursday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $2.22 a gallon. A year ago, it sold for $2.99 a gallon.
P&G continues to expect earnings per share of $1.58 to $1.63 for the quarter and $4.28 to $4.38 for the year
The $41 billion leveraged buyout of BCE Inc., the Montreal telecoms giant, ended after auditors KPMG concluded that the company that resulted from the deal would not be solvent, the potential buying group said.
The Swiss National Bank on Thursday cut its three-month Libor target range by half a percentage point to to a 0% to 1% range, in line with expectations.
Toyota Corp. is planning to cut output by more than one million vehicles next year in anticipation of weak global demand, according to Japanese media reports.
Sharp Corp., facing slumping demand for some consumer products, will lay off about 300 workers and shutter two production lines at two factories in western Japan that make liquid-crystal-display panels for cell phones and personal computers, according to a report in the Nikkei newspaper Thursday, which did not cite its source.
Russians are shifting their cash into foreign currencies and buying things they don’t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 percent against the dollar since August, when Russia’s invasion of neighboring Georgia helped spur investors to pull almost $200 billion out of the country, according to BNP Paribas SA.
The central bank today expanded the ruble’s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy.
Saudi Arabia, the world’s biggest oil exporter, cut production more than traders and analysts had estimated last month, reflecting the nation’s commitment to halt the $100 plunge in crude prices. Oil rallied after Oil Minister Ali al-Naimi said in an interview in Poznan, Poland, that the kingdom pumped 8.493 million barrels of oil a day in November. That’s 287,000 barrels a day less than estimated by the International Energy Agency, and close to Saudi Arabia’s OPEC quota of 8.477 million barrels.
The IEA said world crude oil demand this year is now expected to officially enter its own recession of sorts, with oil consumption contracting for the first time in 25 years.
Real-estate developer Forest City Enterprises said it will halt new projects and focus on reducing debt and managing its existing real-estate portfolio.
The Iraqi government has called for the administration of U.S. President-elect Barack Obama to initiate sustained dialogue with Iran in hopes of greater Middle Eastern stability, a government spokesman said on Thursday.Spokesman Ali al-Dabbagh also called for dialogue to improve relations between Iran and Arab countries.
The IEA cut its forecast for global oil demand this year by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007.
"The global demand contraction expected in 2008 will be the first since 1983," the agency said in its monthly oil market report.
The IEA slashed its forecast for oil demand in developed nations in the 30-country Organization for Economic Cooperation and Development by 290,000 barrels a day this year and 210,000 barrels a day in 2009.
Demand in non-OECD countries will rise 3.9 percent this year and 2.9 percent in 2009, the IEA said, slightly slower than its forecast in its report for November. It said the predicted cuts were linked to the economic slowdown and revised data in Asian countries like Malaysia, Taiwan and Thailand.
Sara Lee Corp. will reduce its work force by 700 jobs as part of plan to cut costs by up to $250 million.
Cummins Engine Co.said Thursday it would cut 500 jobs, or 3.5% of its workforce, before 2009 because of a sudden drop in demand for its medium- and heavy duty trucks and construction products. Cummins said it now expects 2008 sales to increase 9%, which is below its previous guidance of 12%. Earnings before interest and taxes were reduced to 9% of sales, versus the prior guidance of 10%.
Stanley Works says it plans to cut 2,000 jobs, or about 10 percent of its work force, and close three manufacturing facilities.
Boeing Co. said the 787 Dreamliner is now almost two years behind schedule and won’t be delivered to the first customer until the first quarter of 2010, the fourth delay for the best-selling new aircraft in the planemaker’s history. Boeing has clearly shown that its ability in the field of logistics is nil.
General Motors Corp. has been asked for payments in advance by a small number of auto-parts suppliers after saying it would run out of money by month’s end without U.S. loans, people familiar with the matter said.
GM has rejected the requests, which so far come from a fraction of its 3,600 suppliers, said the people, who asked not to be identified because the discussions are private. GM typically pays vendors about 45 days after getting an invoice.
The full moon of tomorrow is the biggest and brightest of the year. What impact will that be having?
Some industry executives and analysts predict that 2009 could be the worst year for freight-transportation volume in three decades or more. You believe the rail stocks fully reflect this view? Berkshire Hathaway's stake in Burlington Northern Santa Fe is up to 19.83 percent, after Warren Buffett's holding company bought 3.3 million additional shares on Monday and Tuesday.It reported a stake of about 18.9 percent as of October 28. In a filing with the SEC tonight (Wednesday), Berkshire says it bought the Burlington shares at $77 and $80 a share after 'put' options it sold were exercised.During those two days, Burlington traded between a low of $73.76 and a high of $77.50, about where it was at the beginning of the year, after retreating from a 52-week high of almost $115 in June.
According to www.divorcerate.org, the first marriage failure rate is running about 41%, second marriages fail at a 60% rate, while thirds fail at 73%.
Mexico said Wednesday that rising domestic consumption will cut the country's oil exports almost 40 percent by 2017, although the country hopes to increase crude production to just over 3 million barrels per day by that time.
Exports will drop from the estimated daily average of 1.4 million barrels per day in 2008 to about 875 million barrels in 2017, according to a 10-year planning report from the Energy Department. Mexico is currently one of the main crude suppliers to the U.S. market.
Marathon Oil continues to weigh whether to break out its refining business from its exploration and production operations in the wake of the challenging economic environment. "Our review thus far indicates that a separation of the businesses may enhance shareholder value, however, the recent extreme volatility in the capital and commodity markets requires further evaluation before a decision can be reached.
Bank of Korea Cuts Key Rate to Record Low of 3%.
Mathias Kruettli: "Unemployment in the U.S. is likely to increase further, and this will cause a jump in defaults on credit card debt. Since the total outstanding credit card debt in the U.S. has reached a level of 1 trillion USD, higher charge-off rates on credit card portfolios could turn out to have devastating effects for U.S. commercial banks.... we forecast write-downs on U.S. credit card debt receivables in 2009....In the worst case scenario the write-downs could be as high as 146 billion USD. In the best case the write-downs will be around 64 billion USD. We come to the conclusion that write-downs in 2009 are likely to be significantly higher than in 2008 (50 billion USD). Considering that the total write-downs on credit card receivables have never exceeded 50 billion USD in the past, it is doubtful if the credit card issuers could absorb write-downs of far above 100 billion USD."
Goldman Sachs Group Inc.is giving longtime employees an incentive to leave before the end of the year, the Financial Times reported Thursday. The company as of 2009 is extending the length of service required by Goldman employees to be eligible for the firm's full retirement package, FT said. Rather than requiring a combination of age and years of service to exceed 55, the new rule will call for 60, according to the report. Like other Wall Street firms, Goldman has been hurt by the credit crunch and announced layoffs.
The "nasty" U.S. recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday said.
Baidu.com Inc. lowered its fourth-quarter revenue guidance on Thursday after the Chinese search engine operator suspended thousands of merchants from its paid-search service that were selling medical products without licenses on file.
Beijing-based Baidu now expects its quarterly revenue to range from 890 million yuan ($131 million) to 900 million yuan ($133 million). The company previously forecast revenue of roughly 1.03 billion yuan ($151 million) to 1.06 billion yuan ($155 million).
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?” he said in a Bloomberg Television interview yesterday.
An investor who bought $1 million in three-month bills at the closing rate of negative 0.01 percent on Dec. 9 would realize a loss of $25.56 when the securities mature. This is nuts!!!!!!
Even at the low yields, the government received bids for four times the amount of four-week bills it auctioned this week, according to the Treasury.
The VIX, which measures the cost of using options as insurance against declines in the S&P 500, has dropped 31 percent since Nov. 20, when it rose to 80.86, the highest in its 18-year history. Equities have rallied about 20% from their lows; however, the VIX still sits at a lofty 55+.
Randall Forsyth: "ISI, the perennially top-rated economics advisory headed up by Ed Hyman and Nancy Lazar, is telling clients its own survey of trucking companies has fallen into “uncharted territory” to the lowest in a decade. They admit their survey doesn’t go back to the 1990 recession let alone the 1981-82 deep downturn. But ISI says the steep plunge in its trucking survey would correlate with a 7.2% plunge in fourth-quarter gross domestic product."
Defense contractor Textron Inc. is laying off more than 120 employees, primarily from its corporate offices in Rhode Island, Michigan and Texas.
Natural gas stocks fall 67 Bcf last week: EIA.
Cocoa rose to its highest since at least 1989 in London as a weaker dollar buoyed demand for commodities and amid concern about supply from Ivory Coast, the world’s biggest grower.
Deliveries to Ivory Coast ports for shipment abroad fell 30 percent in the week ended Nov. 30 to about 45,315 metric tons from 65,000 tons a year earlier, an industry official with access to the information said yesterday. The country’s growers are getting paid 20 percent more for beans than a month ago because prolonged rainfall has reduced supply, according to figures published by the state-run Bourse du Café et du Cacao.
The South African Reserve Bank has cut a key interest rate by a half percentage point to 11.5 percent in a bid to stimulate the flagging economy.
KB Toys filed for bankruptcy protection for the second time in four years on Thursday, joining fellow retailers Linens 'n Things and Steve & Barry's in seeking Chapter 11 protection amid the recession.
U.S. household net worth decreased 4.7 percent in the third quarter, the fourth consecutive quarterly decline, as real estate and financial assets lost value in the recession, a Federal Reserve report showed on Thursday.
January crude ends up $4.46, or 10.2%, to $47.98 a barrel. Gold for February delivery rose $17.80 to end at $826.60 an ounce on the New York Mercantile Exchange. The euro soared 2.8% against the U.S. dollar to trade at $1.3384 Thursday, as the greenback posted broad-based losses.
Stung by the loss of $2.81 trillion in their net wealth, U.S. households paid down their debts in the third quarter for the first time since at least 1952, the Federal Reserve reported Thursday. As of Sept. 30, households' total outstanding debt shrank at an annual rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report.
For 2009, Jamie Dimon, JP Morgan Chase CEO, believes that the economy is going to be unemployment driven. He expects unemployment to drive commercial losses and consumer losses. He even noted that "if we are lucky" it would get worse for another two quarters and then start to see some improvements. But he did re-stress that that would be under the "lucky" case scenario.
Dimon already called for lower housing prices. He did say he thinks that it is possible that housing could go another 20% or 10% from today. But he did not know where that will really go. He said "November" was a terrible trading month in the usual suspects and said December was looking that way too. As he said before, he still expects loan losses to rise.
Bank of America plans to cut 30,000 to 35,000 jobs over the next three years. The reductions reflect it's upcoming acquisition of Merrill Lynch and the "weak" economy, which the bank said is affecting business activity.
The Dow Jones Industrial Average fell 196 points, or 2.2%, to 8,565, well off a high of 8,809 as 28 of the Dow's 30 components fell. The S&P 500 index also fell 25 points, or 2.8%, to 873, while the Nasdaq Composite fell 57 points, or 3.7%, to end at 1,507.
GlaxoSmithKline PLC said Thursday that a Phase III study showed that the combination of its breast cancer drug Tykerb with Novartis AG's Femara significantly increased survival in postmenopausal breast cancer patients compared with the use of Femara alone. The 1,286-patient study showed that patients with spreading breast cancer given Tykerb and Femara survived without the cancer progressing an average 5.2 months longer than women given Femara alone. Tykerb was approved in the U.S. in 2007 to be used with Roche's Xeloda to treat advanced, metastatic breast cancer.
The Nikkei 225 Average dropped 3% to 8,462.05, after rising for four straight sessions, and the Topix Index gave up 2% to 832.73. South Korea's Kospi lost 2.7% to 1,123.87, snapping a five-session advance, Australia's S&P/ASX 200 slid 1.6% to 3,539.90 and New Zealand's NZX 50 index dipped 1.1% to 2,697.85.
BorgWarner said that it would have reduced its global workforce by about 2,900 people, or 17% of its workforce, by the end of the year. It is planning to shut down most of its North American operations for extended periods starting the week of Dec. 15 and will re-open at various times in January.
General Motors has hired lawyers and bankers to consider whether the company should file for bankruptcy protection as it continues to await a Federal bailout package, The Wall Street Journal reported Thursday on its Web site.
Chrysler LLC is nearing the minimum level of cash it needs to run the company and will have trouble paying bills after the first of the year, according to its chief financial officer.
Costco Wholesale Corp. reported fiscal first-quarter net income was about flat on 1% higher same-store sales and 3.6% higher total sales. For the quarter ended Nov. 23, earnings were $262.5 million, or 60 cents a share, compared with $262 million, or 59 cents, in the year-earlier period. Shares outstanding fell 1.2% to 440.5 million. Net sales reached $16.04 billion from $15.47 billion.
Gold for February delivery gained $19.90, or 2.5%, to $828.70 an ounce in electronic trading on Globex. The dollar extended its losses after the Labor Department reported that the number of first-time filings for state unemployment benefits jumped by 58,000 to a 26-year high of 573,000 last week. The U.S. dollar index, a measure of the greenback against a trade-weighted basket of six currencies, fell 0.7% to 84.10. The euro soared 1.6% to $1.3230 and the British pound rose 0.7% to $1.4907. The dollar fell 1.6% to 91.32 yen.
January crude up $3.09, or 7%, to $46.62 a barrel on Globex.
Prices of goods and services imported into the United States plummeted a record 6.7% in November as imported crude oil prices fell a record 25.8%. It's not just petroleum prices that are falling: Prices of nonfuel imports fell a record 1.8%. The prices that U.S. producers received for their exports also fell, dropping a record 3.2% in November. In the past 12 months, import prices are down 4.4%, including a 29% drop in petroleum prices. It's the largest year-over-year decline in import prices since 2002. Even with lower import prices, the U.S. trade deficit widened by 1.1% in October to $57.2 billion, the Commerce Department said Thursday. The trade deficit was above the consensus forecast of Wall Street economists of a deficit of $54.5 billion. Exports fell faster than imports in October. Exports dropped to the lowest level in seven months as foreign purchases of U.S. aircraft, automobiles, chemicals and food waned. The U.S. trade deficit with China widened to $28.0 billion in October compared with $25.9 billion in the same month last year.
Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October, SpendingPulse said.
The November figure was the largest one-month drop in SpendingPulse history, which began in 2003, surpassing the prior record fall of 2.4 percent set two months ago.
The report was the latest evidence that U.S. retailers are facing one of the worst holiday retail seasons in recent memory. The year-end shopping period accounts for the bulk of the annual business of many retailers.
"We are talking about a consumer who is wary of spending," said Kamalesh Rao, SpendingPulse's director of economic research.
Even though gas prices have fallen sharply, consumer spending is still on the skids. It's all about jobs, fear of losing a job, and a shrinking standard of living.
Benefits for state and local government employees cost an average of $13.41 per hour worked in September 2008, $4.21 of which was for health insurance. Employer costs for civilian workers averaged $28.87 per hour worked; $20.13 for wages and salaries and $8.74 for benefits.
U.S. gross domestic product is on track to decline at a 6.6% annual rate this quarter, one of its worst performances ever, economists for Macroeconomic Advisers said Thursday.
Average U.S. gasoline prices fell by 2 cents to $1.66 a gallon on Thursday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $2.22 a gallon. A year ago, it sold for $2.99 a gallon.
P&G continues to expect earnings per share of $1.58 to $1.63 for the quarter and $4.28 to $4.38 for the year
The $41 billion leveraged buyout of BCE Inc., the Montreal telecoms giant, ended after auditors KPMG concluded that the company that resulted from the deal would not be solvent, the potential buying group said.
The Swiss National Bank on Thursday cut its three-month Libor target range by half a percentage point to to a 0% to 1% range, in line with expectations.
Toyota Corp. is planning to cut output by more than one million vehicles next year in anticipation of weak global demand, according to Japanese media reports.
Sharp Corp., facing slumping demand for some consumer products, will lay off about 300 workers and shutter two production lines at two factories in western Japan that make liquid-crystal-display panels for cell phones and personal computers, according to a report in the Nikkei newspaper Thursday, which did not cite its source.
Russians are shifting their cash into foreign currencies and buying things they don’t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 percent against the dollar since August, when Russia’s invasion of neighboring Georgia helped spur investors to pull almost $200 billion out of the country, according to BNP Paribas SA.
The central bank today expanded the ruble’s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy.
Saudi Arabia, the world’s biggest oil exporter, cut production more than traders and analysts had estimated last month, reflecting the nation’s commitment to halt the $100 plunge in crude prices. Oil rallied after Oil Minister Ali al-Naimi said in an interview in Poznan, Poland, that the kingdom pumped 8.493 million barrels of oil a day in November. That’s 287,000 barrels a day less than estimated by the International Energy Agency, and close to Saudi Arabia’s OPEC quota of 8.477 million barrels.
The IEA said world crude oil demand this year is now expected to officially enter its own recession of sorts, with oil consumption contracting for the first time in 25 years.
Real-estate developer Forest City Enterprises said it will halt new projects and focus on reducing debt and managing its existing real-estate portfolio.
The Iraqi government has called for the administration of U.S. President-elect Barack Obama to initiate sustained dialogue with Iran in hopes of greater Middle Eastern stability, a government spokesman said on Thursday.Spokesman Ali al-Dabbagh also called for dialogue to improve relations between Iran and Arab countries.
The IEA cut its forecast for global oil demand this year by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007.
"The global demand contraction expected in 2008 will be the first since 1983," the agency said in its monthly oil market report.
The IEA slashed its forecast for oil demand in developed nations in the 30-country Organization for Economic Cooperation and Development by 290,000 barrels a day this year and 210,000 barrels a day in 2009.
Demand in non-OECD countries will rise 3.9 percent this year and 2.9 percent in 2009, the IEA said, slightly slower than its forecast in its report for November. It said the predicted cuts were linked to the economic slowdown and revised data in Asian countries like Malaysia, Taiwan and Thailand.
Sara Lee Corp. will reduce its work force by 700 jobs as part of plan to cut costs by up to $250 million.
Cummins Engine Co.said Thursday it would cut 500 jobs, or 3.5% of its workforce, before 2009 because of a sudden drop in demand for its medium- and heavy duty trucks and construction products. Cummins said it now expects 2008 sales to increase 9%, which is below its previous guidance of 12%. Earnings before interest and taxes were reduced to 9% of sales, versus the prior guidance of 10%.
Stanley Works says it plans to cut 2,000 jobs, or about 10 percent of its work force, and close three manufacturing facilities.
Boeing Co. said the 787 Dreamliner is now almost two years behind schedule and won’t be delivered to the first customer until the first quarter of 2010, the fourth delay for the best-selling new aircraft in the planemaker’s history. Boeing has clearly shown that its ability in the field of logistics is nil.
General Motors Corp. has been asked for payments in advance by a small number of auto-parts suppliers after saying it would run out of money by month’s end without U.S. loans, people familiar with the matter said.
GM has rejected the requests, which so far come from a fraction of its 3,600 suppliers, said the people, who asked not to be identified because the discussions are private. GM typically pays vendors about 45 days after getting an invoice.
The full moon of tomorrow is the biggest and brightest of the year. What impact will that be having?
Some industry executives and analysts predict that 2009 could be the worst year for freight-transportation volume in three decades or more. You believe the rail stocks fully reflect this view? Berkshire Hathaway's stake in Burlington Northern Santa Fe is up to 19.83 percent, after Warren Buffett's holding company bought 3.3 million additional shares on Monday and Tuesday.It reported a stake of about 18.9 percent as of October 28. In a filing with the SEC tonight (Wednesday), Berkshire says it bought the Burlington shares at $77 and $80 a share after 'put' options it sold were exercised.During those two days, Burlington traded between a low of $73.76 and a high of $77.50, about where it was at the beginning of the year, after retreating from a 52-week high of almost $115 in June.
According to www.divorcerate.org, the first marriage failure rate is running about 41%, second marriages fail at a 60% rate, while thirds fail at 73%.
Mexico said Wednesday that rising domestic consumption will cut the country's oil exports almost 40 percent by 2017, although the country hopes to increase crude production to just over 3 million barrels per day by that time.
Exports will drop from the estimated daily average of 1.4 million barrels per day in 2008 to about 875 million barrels in 2017, according to a 10-year planning report from the Energy Department. Mexico is currently one of the main crude suppliers to the U.S. market.
Marathon Oil continues to weigh whether to break out its refining business from its exploration and production operations in the wake of the challenging economic environment. "Our review thus far indicates that a separation of the businesses may enhance shareholder value, however, the recent extreme volatility in the capital and commodity markets requires further evaluation before a decision can be reached.
Bank of Korea Cuts Key Rate to Record Low of 3%.
Mathias Kruettli: "Unemployment in the U.S. is likely to increase further, and this will cause a jump in defaults on credit card debt. Since the total outstanding credit card debt in the U.S. has reached a level of 1 trillion USD, higher charge-off rates on credit card portfolios could turn out to have devastating effects for U.S. commercial banks.... we forecast write-downs on U.S. credit card debt receivables in 2009....In the worst case scenario the write-downs could be as high as 146 billion USD. In the best case the write-downs will be around 64 billion USD. We come to the conclusion that write-downs in 2009 are likely to be significantly higher than in 2008 (50 billion USD). Considering that the total write-downs on credit card receivables have never exceeded 50 billion USD in the past, it is doubtful if the credit card issuers could absorb write-downs of far above 100 billion USD."
Goldman Sachs Group Inc.is giving longtime employees an incentive to leave before the end of the year, the Financial Times reported Thursday. The company as of 2009 is extending the length of service required by Goldman employees to be eligible for the firm's full retirement package, FT said. Rather than requiring a combination of age and years of service to exceed 55, the new rule will call for 60, according to the report. Like other Wall Street firms, Goldman has been hurt by the credit crunch and announced layoffs.
The "nasty" U.S. recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday said.
Baidu.com Inc. lowered its fourth-quarter revenue guidance on Thursday after the Chinese search engine operator suspended thousands of merchants from its paid-search service that were selling medical products without licenses on file.
Beijing-based Baidu now expects its quarterly revenue to range from 890 million yuan ($131 million) to 900 million yuan ($133 million). The company previously forecast revenue of roughly 1.03 billion yuan ($151 million) to 1.06 billion yuan ($155 million).
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?” he said in a Bloomberg Television interview yesterday.
An investor who bought $1 million in three-month bills at the closing rate of negative 0.01 percent on Dec. 9 would realize a loss of $25.56 when the securities mature. This is nuts!!!!!!
Even at the low yields, the government received bids for four times the amount of four-week bills it auctioned this week, according to the Treasury.
The VIX, which measures the cost of using options as insurance against declines in the S&P 500, has dropped 31 percent since Nov. 20, when it rose to 80.86, the highest in its 18-year history. Equities have rallied about 20% from their lows; however, the VIX still sits at a lofty 55+.
Randall Forsyth: "ISI, the perennially top-rated economics advisory headed up by Ed Hyman and Nancy Lazar, is telling clients its own survey of trucking companies has fallen into “uncharted territory” to the lowest in a decade. They admit their survey doesn’t go back to the 1990 recession let alone the 1981-82 deep downturn. But ISI says the steep plunge in its trucking survey would correlate with a 7.2% plunge in fourth-quarter gross domestic product."
Defense contractor Textron Inc. is laying off more than 120 employees, primarily from its corporate offices in Rhode Island, Michigan and Texas.
Natural gas stocks fall 67 Bcf last week: EIA.
Cocoa rose to its highest since at least 1989 in London as a weaker dollar buoyed demand for commodities and amid concern about supply from Ivory Coast, the world’s biggest grower.
Deliveries to Ivory Coast ports for shipment abroad fell 30 percent in the week ended Nov. 30 to about 45,315 metric tons from 65,000 tons a year earlier, an industry official with access to the information said yesterday. The country’s growers are getting paid 20 percent more for beans than a month ago because prolonged rainfall has reduced supply, according to figures published by the state-run Bourse du Café et du Cacao.
The South African Reserve Bank has cut a key interest rate by a half percentage point to 11.5 percent in a bid to stimulate the flagging economy.
KB Toys filed for bankruptcy protection for the second time in four years on Thursday, joining fellow retailers Linens 'n Things and Steve & Barry's in seeking Chapter 11 protection amid the recession.
U.S. household net worth decreased 4.7 percent in the third quarter, the fourth consecutive quarterly decline, as real estate and financial assets lost value in the recession, a Federal Reserve report showed on Thursday.
January crude ends up $4.46, or 10.2%, to $47.98 a barrel. Gold for February delivery rose $17.80 to end at $826.60 an ounce on the New York Mercantile Exchange. The euro soared 2.8% against the U.S. dollar to trade at $1.3384 Thursday, as the greenback posted broad-based losses.
Stung by the loss of $2.81 trillion in their net wealth, U.S. households paid down their debts in the third quarter for the first time since at least 1952, the Federal Reserve reported Thursday. As of Sept. 30, households' total outstanding debt shrank at an annual rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report.
For 2009, Jamie Dimon, JP Morgan Chase CEO, believes that the economy is going to be unemployment driven. He expects unemployment to drive commercial losses and consumer losses. He even noted that "if we are lucky" it would get worse for another two quarters and then start to see some improvements. But he did re-stress that that would be under the "lucky" case scenario.
Dimon already called for lower housing prices. He did say he thinks that it is possible that housing could go another 20% or 10% from today. But he did not know where that will really go. He said "November" was a terrible trading month in the usual suspects and said December was looking that way too. As he said before, he still expects loan losses to rise.
Bank of America plans to cut 30,000 to 35,000 jobs over the next three years. The reductions reflect it's upcoming acquisition of Merrill Lynch and the "weak" economy, which the bank said is affecting business activity.
The Dow Jones Industrial Average fell 196 points, or 2.2%, to 8,565, well off a high of 8,809 as 28 of the Dow's 30 components fell. The S&P 500 index also fell 25 points, or 2.8%, to 873, while the Nasdaq Composite fell 57 points, or 3.7%, to end at 1,507.
GlaxoSmithKline PLC said Thursday that a Phase III study showed that the combination of its breast cancer drug Tykerb with Novartis AG's Femara significantly increased survival in postmenopausal breast cancer patients compared with the use of Femara alone. The 1,286-patient study showed that patients with spreading breast cancer given Tykerb and Femara survived without the cancer progressing an average 5.2 months longer than women given Femara alone. Tykerb was approved in the U.S. in 2007 to be used with Roche's Xeloda to treat advanced, metastatic breast cancer.
The Nikkei 225 Average dropped 3% to 8,462.05, after rising for four straight sessions, and the Topix Index gave up 2% to 832.73. South Korea's Kospi lost 2.7% to 1,123.87, snapping a five-session advance, Australia's S&P/ASX 200 slid 1.6% to 3,539.90 and New Zealand's NZX 50 index dipped 1.1% to 2,697.85.
BorgWarner said that it would have reduced its global workforce by about 2,900 people, or 17% of its workforce, by the end of the year. It is planning to shut down most of its North American operations for extended periods starting the week of Dec. 15 and will re-open at various times in January.
General Motors has hired lawyers and bankers to consider whether the company should file for bankruptcy protection as it continues to await a Federal bailout package, The Wall Street Journal reported Thursday on its Web site.
Chrysler LLC is nearing the minimum level of cash it needs to run the company and will have trouble paying bills after the first of the year, according to its chief financial officer.
Wednesday, December 10, 2008
Grim
12/10/08 Grim
Influential bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that "lubricate the economy" is grim. "The big banks are going to be on life support for at least 18 months, if not 36 months,"
Oppenheimer's executive director of equity research told CNBC Wednesday morning. "The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years."
Quintus Rufus: "Fear makes men believe the worst."
Average U.S. retail gasoline prices fell a penny to $1.68 a gallon on Wednesday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $2.24 a gallon. A year ago, it sold for $3.00 a gallon.
The Federal Reserve is mulling issuing its own debt for the first time in a move that would give it more flexibility to stabilize financial markets, The Wall Street Journal reported Wednesday, citing a person familiar with the matter.
Agrium estimates second-half earnings at US$3.30 to US$4 a share. Lower wholesale volumes and pricing and inventory-valuation adjustments could reduce operating results as much as 15% from the low end of its estimates.
Japanese machinery orders fell a less-than-expected 4.4% in October from September, dragged lower by a sharp fall in orders from overseas buyers.
Yahoo reportedly will layoff 1,500 employees.
Rio Tinto to cut 14,000 jobs and slash spending.
The Oil Drum: "Just how daunting is OPEC’s challenge to rein in falling oil prices? Beyond its control, if economist and oil-market analyst Philip Verleger is right.
Mr. Verleger, a former Carter administration official, academic, and energy-industry consultant, says OPEC can forget about tiny production cuts of 1 or 2 million barrels when it meets later this month in Algeria. The cartel needs to wipe out at least 7 million barrels per day of oil production to bring oil markets close to balance, he says, according to Platt’s The Barrel.
And that’s not likely to happen, which spells even more happy times for oil bears, Mr. Verleger says: “Since cuts of such magnitude are out of the question, one should expect prices to come under further downward pressure.”
Verleger did not account for the coming downward leg for the dollar, and that will give a big boost to oil prices. I wonder if Verlager is putting his money where his mouth is. Talk means nothing to me.
U.S. stock futures indicate a higher open, buoyed by progress toward a bailout program for troubled U.S. auto makers. Congress is a group of suckers placing the burden on tax payers.
China's exports dropped for the first time in seven years. Imports plunged 17.9 percent, pushing the trade surplus to a record $40.09 billion. Demand from the US and EU which account for 40% of Chinese exports is plunging. Processing trade components have shown the sharpest slowing. China experienced four consecutive record monthly trade surpluses as commodity prices falls eroded import growth.
Toyota Motor Corp. said Wednesday it would further reduce production at several factories in North America, as the global slowdown continues to cut into the automaker's sales abroad.
Japan's largest carmaker will temporarily suspend output in December and January, according to Toyota spokesman Paul Nolasco.
Production will be stopped in Indiana for six days, Kentucky for nine days and Canada for 10 days. In addition, production of the Corolla and Tacoma brands at a plant in California jointly run with General Motors will be suspended for 10 days.
The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.
Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harbor, according to the median estimate of 51 economists surveyed Dec. 4 through Dec. 9. By the middle of next year, the economy will have shrunk for a record four consecutive quarters, the survey showed.
Applications for U.S. home mortgages slipped last week in a setback from the record jump in the previous period after a Federal Reserve proposal aimed at lowering interest rates, according to data from an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 7.1 percent to 796.8 in the week ended Dec. 5.
Seagate slashed its outlook for its fiscal second quarter ending January 2, as the disk-drives business continues to suffer along with falling PC sales.
Nortel Networks has hired legal counsel to explore bankruptcy-court protection from creditors in case its restructuring plan fails, according to the Wall Street Journal, which attributes the story to “people familiar with the situation.”
Hutchinson Technology will cut its workforce by 20%-25% by the end of January 2009.The move will result in the loss of between 900 and 1,125 jobs.
Office Depot Inc.said Wednesday that over the next three months it will close 112 underperforming North American stores and another 14 stores as their leases expire in 2009. New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores.
Gold for February delivery gained $15.20, or 2%, to $789.50 an ounce in electronic trading on Globex.
Frank Barbera: "Yet even as the air waves of cable TV fill with fervent deflationary forecasts for even lower Oil prices and even lower bond yields, the evidence continues to mount that the current extremes look historically overdone. I believe Treasury Bonds are the last great bubble yet to pop. As the New Year approaches and a great deal of the forced hedge fund liquidation comes to its end, odds are high the Treasury Bond yields will begin to reverse and chart an upward course during the first quarter of 2009. In my view, Bond yields are near what promises to be an historic secular low...the 2.50% zone on the 10 Year Bond is likely to host a very important secular low...a lot of the heavy selling stemming from hedge fund carry trade unwinding could now be coming to an end with a downside reversal in the Yen dead ahead."
Britain's pound fell to a record low against the euro on Wednesday -- hitting near parity -- as fears about the strength of the British economy grew.
At its lowest, one pound bought just under 1.14 euros -- marking the weakest the pound has been against Europe's single currency since the euro was launched a decade ago.
GMAC LLC, the auto and home lender seeking federal aid, hasn’t obtained enough capital to become a bank holding company and may abandon the effort, casting new doubt on the firm’s ability to survive.
A debt exchange by GMAC and its Residential Capital LLC mortgage unit designed to bolster the company’s finances didn’t attract enough participation, GMAC said today in a statement. That leaves GMAC short of the $30 billion in regulatory capital demanded by the Federal Reserve, and the regulator won’t approve the conversion unless the goal is met, the lender said.
Mark Thoma: "In the past two years the wealth that is the global capital stock has fallen in value from $80 trillion to $60 trillion."
Eastman Kodak Co said its 2008 revenue and earnings will fall short of expectations, because of a dramatic slowdown in consumer spending, sending shares down as much as 9 percent.
Crude-oil stocks rose by 3.4 million barrels during the week ended Dec. 5, American Petroleum Institute (API) reported Wednesday. In a separate report, the U.S. Energy Information Administration said that crude supplies rose by 400,000 barrels during the week. API also reported that total motor gasoline stocks rose by 5 million barrels last week and total distillate stocks increased by 3.7 million barrels.
Inventories at U.S. wholesalers fell in October by the most in seven years as the biggest drop in demand ever caused companies to scale back.
The 1.1 percent decline in the value of stockpiles was larger than forecast and followed a revised 0.4 percent decrease in September, the Commerce Department said today in Washington. Sales plunged 4.1 percent in October, the most since records began in 1992.
Wholesalers had enough goods on hand to last 1.16 months at the current sales pace, the most since February 2007. Excess stockpiles heading into the holiday shopping signal companies may have to slash prices to trim stocks.
Again, pricing power has vanished.
Corn, wheat, and soybeans are enjoying big morning gains. Gold for February delivery surged $34.60 to end at $808.80 an ounce on the New York Mercantile Exchange.The train is leaving the station. Crude oil for January delivery rose $1.45, or 3.4%, to end at $43.52 a barrel on the New York Mercantile Exchange.
Positivo Informatica SA, Brazil’s biggest computer maker, jumped 89 percent in the past two days after Brazilian newspapers reported that Lenovo, China’s biggest PC maker, or Dell, the world’s second-largest computer maker after Hewlett-Packard Co., may buy Positivo.
Venezuela’s debt rating outlook was lowered to negative from stable by Standard & Poor’s amid concern President Hugo Chavez will be reluctant to cut spending as oil revenue plunges.
Praxair, the largest producer of industrial gases, is cutting 1,600 jobs and reducing its earnings guidance due to a drop in demand.
California's budget crisis is growing worse as its shortfall for its current fiscal year has increased to an estimated $14.8 billion from a previously estimated $11.2 billion, Gov. Arnold Schwarzenegger said on Wednesday.
The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.
The country remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year.
The Treasury Department said Wednesday that the gap between the government's revenue collections and what it paid out last month totaled $164.4 billion, the largest deficit ever recorded for the month of November. For the first two months of the fiscal year, Treasury reported a record deficit of $401.6 billion. The government spent $99.6 billion in November in various bank bailout programs.
The S&P 500 index rose 10 points, or 1.2%, to 899, while the Nasdaq Compositegained 18 points, or 1.2%, to 1,565. The Dow Jones Industrial Average rose 70 points, or 0.8%, to 8,761.
Mexican bakery giant Grupo Bimbo SAB announced Wednesday it has signed an agreement to buy the U.S. subsidiary of Canada's George Weston Ltd. for $2.4 billion, a deal that would make it one of the world's largest baked foods companies.
Weston Foods Inc. makes breads and pastries under brands including Entenmann's, Freihofer's, Stroehmann and Thomas'. It has 22 plants and more than 4,000 distribution routes, concentrated largely on the east coast of the United States.
Dipchand "Deep" Nishar, a longtime Google Inc. executive who helped start its mobile business and other key products, is leaving the company to become a senior executive at LinkedIn Corp.
Mr. Nishar, 40, in January will become vice president of product strategy for the social-network that is focused on professionals. He will lead LinkedIn's efforts to develop new products and services on top of its social-networking site.
Influential bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that "lubricate the economy" is grim. "The big banks are going to be on life support for at least 18 months, if not 36 months,"
Oppenheimer's executive director of equity research told CNBC Wednesday morning. "The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years."
Quintus Rufus: "Fear makes men believe the worst."
Average U.S. retail gasoline prices fell a penny to $1.68 a gallon on Wednesday, according to the AAA Daily Fuel Gauge Report. A month ago, gasoline sold for $2.24 a gallon. A year ago, it sold for $3.00 a gallon.
The Federal Reserve is mulling issuing its own debt for the first time in a move that would give it more flexibility to stabilize financial markets, The Wall Street Journal reported Wednesday, citing a person familiar with the matter.
Agrium estimates second-half earnings at US$3.30 to US$4 a share. Lower wholesale volumes and pricing and inventory-valuation adjustments could reduce operating results as much as 15% from the low end of its estimates.
Japanese machinery orders fell a less-than-expected 4.4% in October from September, dragged lower by a sharp fall in orders from overseas buyers.
Yahoo reportedly will layoff 1,500 employees.
Rio Tinto to cut 14,000 jobs and slash spending.
The Oil Drum: "Just how daunting is OPEC’s challenge to rein in falling oil prices? Beyond its control, if economist and oil-market analyst Philip Verleger is right.
Mr. Verleger, a former Carter administration official, academic, and energy-industry consultant, says OPEC can forget about tiny production cuts of 1 or 2 million barrels when it meets later this month in Algeria. The cartel needs to wipe out at least 7 million barrels per day of oil production to bring oil markets close to balance, he says, according to Platt’s The Barrel.
And that’s not likely to happen, which spells even more happy times for oil bears, Mr. Verleger says: “Since cuts of such magnitude are out of the question, one should expect prices to come under further downward pressure.”
Verleger did not account for the coming downward leg for the dollar, and that will give a big boost to oil prices. I wonder if Verlager is putting his money where his mouth is. Talk means nothing to me.
U.S. stock futures indicate a higher open, buoyed by progress toward a bailout program for troubled U.S. auto makers. Congress is a group of suckers placing the burden on tax payers.
China's exports dropped for the first time in seven years. Imports plunged 17.9 percent, pushing the trade surplus to a record $40.09 billion. Demand from the US and EU which account for 40% of Chinese exports is plunging. Processing trade components have shown the sharpest slowing. China experienced four consecutive record monthly trade surpluses as commodity prices falls eroded import growth.
Toyota Motor Corp. said Wednesday it would further reduce production at several factories in North America, as the global slowdown continues to cut into the automaker's sales abroad.
Japan's largest carmaker will temporarily suspend output in December and January, according to Toyota spokesman Paul Nolasco.
Production will be stopped in Indiana for six days, Kentucky for nine days and Canada for 10 days. In addition, production of the Corolla and Tacoma brands at a plant in California jointly run with General Motors will be suspended for 10 days.
The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.
Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harbor, according to the median estimate of 51 economists surveyed Dec. 4 through Dec. 9. By the middle of next year, the economy will have shrunk for a record four consecutive quarters, the survey showed.
Applications for U.S. home mortgages slipped last week in a setback from the record jump in the previous period after a Federal Reserve proposal aimed at lowering interest rates, according to data from an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 7.1 percent to 796.8 in the week ended Dec. 5.
Seagate slashed its outlook for its fiscal second quarter ending January 2, as the disk-drives business continues to suffer along with falling PC sales.
Nortel Networks has hired legal counsel to explore bankruptcy-court protection from creditors in case its restructuring plan fails, according to the Wall Street Journal, which attributes the story to “people familiar with the situation.”
Hutchinson Technology will cut its workforce by 20%-25% by the end of January 2009.The move will result in the loss of between 900 and 1,125 jobs.
Office Depot Inc.said Wednesday that over the next three months it will close 112 underperforming North American stores and another 14 stores as their leases expire in 2009. New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores.
Gold for February delivery gained $15.20, or 2%, to $789.50 an ounce in electronic trading on Globex.
Frank Barbera: "Yet even as the air waves of cable TV fill with fervent deflationary forecasts for even lower Oil prices and even lower bond yields, the evidence continues to mount that the current extremes look historically overdone. I believe Treasury Bonds are the last great bubble yet to pop. As the New Year approaches and a great deal of the forced hedge fund liquidation comes to its end, odds are high the Treasury Bond yields will begin to reverse and chart an upward course during the first quarter of 2009. In my view, Bond yields are near what promises to be an historic secular low...the 2.50% zone on the 10 Year Bond is likely to host a very important secular low...a lot of the heavy selling stemming from hedge fund carry trade unwinding could now be coming to an end with a downside reversal in the Yen dead ahead."
Britain's pound fell to a record low against the euro on Wednesday -- hitting near parity -- as fears about the strength of the British economy grew.
At its lowest, one pound bought just under 1.14 euros -- marking the weakest the pound has been against Europe's single currency since the euro was launched a decade ago.
GMAC LLC, the auto and home lender seeking federal aid, hasn’t obtained enough capital to become a bank holding company and may abandon the effort, casting new doubt on the firm’s ability to survive.
A debt exchange by GMAC and its Residential Capital LLC mortgage unit designed to bolster the company’s finances didn’t attract enough participation, GMAC said today in a statement. That leaves GMAC short of the $30 billion in regulatory capital demanded by the Federal Reserve, and the regulator won’t approve the conversion unless the goal is met, the lender said.
Mark Thoma: "In the past two years the wealth that is the global capital stock has fallen in value from $80 trillion to $60 trillion."
Eastman Kodak Co said its 2008 revenue and earnings will fall short of expectations, because of a dramatic slowdown in consumer spending, sending shares down as much as 9 percent.
Crude-oil stocks rose by 3.4 million barrels during the week ended Dec. 5, American Petroleum Institute (API) reported Wednesday. In a separate report, the U.S. Energy Information Administration said that crude supplies rose by 400,000 barrels during the week. API also reported that total motor gasoline stocks rose by 5 million barrels last week and total distillate stocks increased by 3.7 million barrels.
Inventories at U.S. wholesalers fell in October by the most in seven years as the biggest drop in demand ever caused companies to scale back.
The 1.1 percent decline in the value of stockpiles was larger than forecast and followed a revised 0.4 percent decrease in September, the Commerce Department said today in Washington. Sales plunged 4.1 percent in October, the most since records began in 1992.
Wholesalers had enough goods on hand to last 1.16 months at the current sales pace, the most since February 2007. Excess stockpiles heading into the holiday shopping signal companies may have to slash prices to trim stocks.
Again, pricing power has vanished.
Corn, wheat, and soybeans are enjoying big morning gains. Gold for February delivery surged $34.60 to end at $808.80 an ounce on the New York Mercantile Exchange.The train is leaving the station. Crude oil for January delivery rose $1.45, or 3.4%, to end at $43.52 a barrel on the New York Mercantile Exchange.
Positivo Informatica SA, Brazil’s biggest computer maker, jumped 89 percent in the past two days after Brazilian newspapers reported that Lenovo, China’s biggest PC maker, or Dell, the world’s second-largest computer maker after Hewlett-Packard Co., may buy Positivo.
Venezuela’s debt rating outlook was lowered to negative from stable by Standard & Poor’s amid concern President Hugo Chavez will be reluctant to cut spending as oil revenue plunges.
Praxair, the largest producer of industrial gases, is cutting 1,600 jobs and reducing its earnings guidance due to a drop in demand.
California's budget crisis is growing worse as its shortfall for its current fiscal year has increased to an estimated $14.8 billion from a previously estimated $11.2 billion, Gov. Arnold Schwarzenegger said on Wednesday.
The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.
The country remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year.
The Treasury Department said Wednesday that the gap between the government's revenue collections and what it paid out last month totaled $164.4 billion, the largest deficit ever recorded for the month of November. For the first two months of the fiscal year, Treasury reported a record deficit of $401.6 billion. The government spent $99.6 billion in November in various bank bailout programs.
The S&P 500 index rose 10 points, or 1.2%, to 899, while the Nasdaq Compositegained 18 points, or 1.2%, to 1,565. The Dow Jones Industrial Average rose 70 points, or 0.8%, to 8,761.
Mexican bakery giant Grupo Bimbo SAB announced Wednesday it has signed an agreement to buy the U.S. subsidiary of Canada's George Weston Ltd. for $2.4 billion, a deal that would make it one of the world's largest baked foods companies.
Weston Foods Inc. makes breads and pastries under brands including Entenmann's, Freihofer's, Stroehmann and Thomas'. It has 22 plants and more than 4,000 distribution routes, concentrated largely on the east coast of the United States.
Dipchand "Deep" Nishar, a longtime Google Inc. executive who helped start its mobile business and other key products, is leaving the company to become a senior executive at LinkedIn Corp.
Mr. Nishar, 40, in January will become vice president of product strategy for the social-network that is focused on professionals. He will lead LinkedIn's efforts to develop new products and services on top of its social-networking site.
Tuesday, December 09, 2008
Pricing Power Has Vanished
12/9/08 Pricing Power Has Vanished
John Crudele: "In 1994 the Clinton White House decided that the unemployment rate needed to be modernized.
So anyone who had been out of work for at least a year was no longer counted as unemployed - they were just too lazy and discouraged to find work.
Those clever Clintons also changed the way the questions were asked, so that more people would drop out of the unemployment statistics.
John Williams, an economist who tracks this stuff on his Web site ShadowStats.com, says today's unemployment rate would be 16.5 percent if we went back to the old way of measuring it."
The National Federation of Independent Business's small-business optimism index reached its fourth-lowest reading in the survey's 35-year history. "Pricing power has vanished and reports of sales declines are at record high levels," said William Dunkelberg, NFIB chief economist in a statement. "Profits can't improve in this environment."
The U.K. FTSE 100 index dropped 1.4% to 4,240.1, the German DAX 30 index fell 1.5% to 4,645.82 and the French CAC-40 index dropped 1.3% to 3,204.11. The Nikkei 225 Average finished 0.8% higher at 8,395.87, adding to a 5.2% advance Monday. The broader Topix index added 0.7% to 817.94.
Japanese electronics major Sony Corp.Tuesday said it plans to cut 8,000 jobs and close about 10% of its 57 manufacturing sites as part of measures to achieve annual savings of more than 100 billion yen ($1.08 billion) by March 2010.
World airlines expect $2.5 billion in losses in 2009.
As more people turn to emergency rooms as a last resort, doctors warn that hospitals could be overwhelmed.
Another sign of tough times: Clinics are reporting a surge in the number of women applying to donate eggs.
Virgin America, the only U.S. carrier based in the Bay Area, will begin service from California to Boston in February.
Loan volumes under the Small Business Administration's main small-business loan program -- called the 7(a) program -- were down 30 percent in the year ended in October compared with the previous year.
And more than 75 percent of the nation's banks said they had tightened their standards for loans to small businesses over the past three months, according to a recent Federal Reserve Senior Loan Officer Opinion Survey.
Small businesses are "getting hit from both sides," said Sandy K. Baruah, acting administrator of the SBA, because even the companies that have long relationships with financial institutions and are in solid financial condition are no longer getting new loans approved and are having existing lines curtailed.
About two-thirds of U.S. homeowners are cutting spending on everything from new cars to visits to the local cinema, as a troubled economy leads people to reassess how much debt they are comfortable having. Twenty-seven percent of homeowners said they are putting off big expenses such as a car or home improvement, according to a Wells Fargo survey released Monday.
Chain-store sales for the week ended Dec. 6 rose 0.4% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales fell 0.8%.
Palatin Technologies, Inc. (Amex: PTN) today announced an extension of its exclusive research collaboration and license agreement with AstraZeneca (NYSE: AZN) to discover, develop and commercialize compounds that target melanocortin receptors and the signing of a clinical trial sponsored research agreement.
Under the extension to the license agreement, Palatin will receive an upfront payment of $1.6 million and AstraZeneca has been granted licenses to additional compounds and patents. Additionally, the research collaboration term has been extended, with Palatin contributing scientific expertise and AstraZeneca supporting Palatin’s internal activities at an agreed full-time equivalent rate.
Under the clinical trial sponsored research agreement, Palatin will be responsible for conducting a study of the effects of melanocortin receptor specific compounds on food intake, obesity and other metabolic parameters.
Novellus to cut global workforce by about 10%.
Canada's central bank cut its benchmark interest rate more than expected, reducing the overnight rate by 75 basis points to 1.50% because of the "weakening outlook for growth and inflation." Most analysts expected a rate cut of 50 basis points.
Nucor Corp., the Charlotte, N.C., steelmaker, estimated it would be "marginally" profitable in the fourth quarter as end users order less steel and reduce their inventories. Total steel shipments for the quarter should drop some 40% from the third quarter, and Nucor should use on average only a bit more than half its capacity in the fourth period, Nucor said in a statement on Tuesday.
Jefferies & Co. analyst Daniel Binder said in a note on Costco: raised his first-quarter earnings estimate to 66 cents per share from 62 cents per share. However, Binder cut his fiscal 2009 earnings estimate to $2.88 per share from $3.08 per share. He also cut his fiscal 2010 earnings estimate to $3.16 from $3.40. At $55, I don't see much near-term upside potential.
BCE Inc. said it hired PricewaterhouseCoopers LLP in an effort to help the Canadian telecom giant complete a $35 billion deal to go private later this week.
PricewaterhouseCoopers was hired to help convince auditor KPMG LLC that BCE, the parent of Bell Canada, will remain solvent after the deal is completed. To close the deal on Thursday as scheduled, KPMG must sign off on the solvency opinion.
Late last month, KPMG said it did not believe BCE could remain solvent if the deal is completed because of the amount of debt needed to finance the deal and current market conditions. BCE was set to sell itself to a consortium of private groups, led by the Ontario Teachers Pension Plan Board and several U.S. partners.
Corning Inc.plans to reduce capital spending next year as nearly all of its businesses have been "negatively impacted" by the global recession. In a statement, the company said it is contemplating "permanent manufacturing capacity consolidation, reducing operating expenses to be flat or lower than 2008, and workforce reductions."
Danaher Corp. fell 5.1 percent to $49.29. The company said fourth-quarter profit will be lower than previously forecast. It will close 13 factories and cut 1,700 jobs because of the deteriorating economy.
Fewer Americans signed contracts to buy previously owned homes in October as credit markets seized, signaling the housing slump will extend into a fourth year.
The index of signed purchase agreements, or pending home resales, fell a less-than-forecast 0.7 percent to 88.9 from a revised 89.5 in September, according to a report from the National Association of Realtors today in Washington. Pending resales jumped 7.8 percent in the South and climbed 0.6 percent in the Northeast. They slumped 8.7 percent in the West and 4.3 percent in the Midwest. Demand for housing remains “uneven” across the country, with some markets in Florida, California and the Las Vegas region showing “healthy gains” from the same time last year, the report said.
The Federal Reserve announced Tuesday that it will auction $300 billion in credit through its Term Auction Facility in January. The central bank will offer $150 billion in 28-day credit on Jan. 12 and $150 billion in 84-day credit on Jan. 26. The TAF is aimed at providing credit to banks.
Some of the recent indices have rallied 20%; however, the rail stocks have rallied only 10% from their 52-week lows. That is a further indication of industrial weakness now and looking forward.
Do FedEx and UPS have further to go on the downside?
“Even if the companies have sufficient collateral, lending to an auto manufacturing company would represent a marked departure from that policy, and would take us into distinctly new realms of policymaking,” Bernanke said. “In particular, it would raise the question as to whether the Federal Reserve should be involved in industrial policy, which has traditionally been outside the range of our responsibilities.”
Are earnings estimates for the Dow and the S&P 500 too high for 2009?
With the heating season upon us, has natural gas hit bottom at $5.50?
Des Moines-based Principal Financial Group Inc. says it is cutting 300 jobs at its headquarters and around 250 in 45 other locations.
The National Football League will cut about 150 league jobs, or about 14% of its staff, over the next 60 days to cut costs in response to the recession, according to media reports Tuesday.
Gold for February delivery rose $4.90 to end at $774.20 an ounce on the New York Mercantile Exchange. Crude for January delivery dropped $1.64 to end at $42.07 a barrel on the New York Mercantile Exchange.
Citigroup Inc.will cut 1,000 jobs at its Japanese retail brokerage unit, Nikko Cordial Securities Inc., Bloomberg reported Wednesday.
The Dow Jones Industrial Average fell 242.85 points to 8,691.33. The S&P 500 shed 21.03 points to 888.67. The Nasdaq Composite (COMP) declined 24.4 points to 1,547.37.
Electronic Arts said late Tuesday it expects fiscal 2009 net revenue and earnings per share to be below the guidance previously announced in October due to lower than expected sales in North America and Europe.
The Treasury Department sold $32 billion in four-week bills Tuesday at a yield of zero, implying investors purely wanted the assurance that they would get their principal back. Investors bid $128 billion at the auction, more than four times the amount available.
John Crudele: "In 1994 the Clinton White House decided that the unemployment rate needed to be modernized.
So anyone who had been out of work for at least a year was no longer counted as unemployed - they were just too lazy and discouraged to find work.
Those clever Clintons also changed the way the questions were asked, so that more people would drop out of the unemployment statistics.
John Williams, an economist who tracks this stuff on his Web site ShadowStats.com, says today's unemployment rate would be 16.5 percent if we went back to the old way of measuring it."
The National Federation of Independent Business's small-business optimism index reached its fourth-lowest reading in the survey's 35-year history. "Pricing power has vanished and reports of sales declines are at record high levels," said William Dunkelberg, NFIB chief economist in a statement. "Profits can't improve in this environment."
The U.K. FTSE 100 index dropped 1.4% to 4,240.1, the German DAX 30 index fell 1.5% to 4,645.82 and the French CAC-40 index dropped 1.3% to 3,204.11. The Nikkei 225 Average finished 0.8% higher at 8,395.87, adding to a 5.2% advance Monday. The broader Topix index added 0.7% to 817.94.
Japanese electronics major Sony Corp.Tuesday said it plans to cut 8,000 jobs and close about 10% of its 57 manufacturing sites as part of measures to achieve annual savings of more than 100 billion yen ($1.08 billion) by March 2010.
World airlines expect $2.5 billion in losses in 2009.
As more people turn to emergency rooms as a last resort, doctors warn that hospitals could be overwhelmed.
Another sign of tough times: Clinics are reporting a surge in the number of women applying to donate eggs.
Virgin America, the only U.S. carrier based in the Bay Area, will begin service from California to Boston in February.
Loan volumes under the Small Business Administration's main small-business loan program -- called the 7(a) program -- were down 30 percent in the year ended in October compared with the previous year.
And more than 75 percent of the nation's banks said they had tightened their standards for loans to small businesses over the past three months, according to a recent Federal Reserve Senior Loan Officer Opinion Survey.
Small businesses are "getting hit from both sides," said Sandy K. Baruah, acting administrator of the SBA, because even the companies that have long relationships with financial institutions and are in solid financial condition are no longer getting new loans approved and are having existing lines curtailed.
About two-thirds of U.S. homeowners are cutting spending on everything from new cars to visits to the local cinema, as a troubled economy leads people to reassess how much debt they are comfortable having. Twenty-seven percent of homeowners said they are putting off big expenses such as a car or home improvement, according to a Wells Fargo survey released Monday.
Chain-store sales for the week ended Dec. 6 rose 0.4% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales fell 0.8%.
Palatin Technologies, Inc. (Amex: PTN) today announced an extension of its exclusive research collaboration and license agreement with AstraZeneca (NYSE: AZN) to discover, develop and commercialize compounds that target melanocortin receptors and the signing of a clinical trial sponsored research agreement.
Under the extension to the license agreement, Palatin will receive an upfront payment of $1.6 million and AstraZeneca has been granted licenses to additional compounds and patents. Additionally, the research collaboration term has been extended, with Palatin contributing scientific expertise and AstraZeneca supporting Palatin’s internal activities at an agreed full-time equivalent rate.
Under the clinical trial sponsored research agreement, Palatin will be responsible for conducting a study of the effects of melanocortin receptor specific compounds on food intake, obesity and other metabolic parameters.
Novellus to cut global workforce by about 10%.
Canada's central bank cut its benchmark interest rate more than expected, reducing the overnight rate by 75 basis points to 1.50% because of the "weakening outlook for growth and inflation." Most analysts expected a rate cut of 50 basis points.
Nucor Corp., the Charlotte, N.C., steelmaker, estimated it would be "marginally" profitable in the fourth quarter as end users order less steel and reduce their inventories. Total steel shipments for the quarter should drop some 40% from the third quarter, and Nucor should use on average only a bit more than half its capacity in the fourth period, Nucor said in a statement on Tuesday.
Jefferies & Co. analyst Daniel Binder said in a note on Costco: raised his first-quarter earnings estimate to 66 cents per share from 62 cents per share. However, Binder cut his fiscal 2009 earnings estimate to $2.88 per share from $3.08 per share. He also cut his fiscal 2010 earnings estimate to $3.16 from $3.40. At $55, I don't see much near-term upside potential.
BCE Inc. said it hired PricewaterhouseCoopers LLP in an effort to help the Canadian telecom giant complete a $35 billion deal to go private later this week.
PricewaterhouseCoopers was hired to help convince auditor KPMG LLC that BCE, the parent of Bell Canada, will remain solvent after the deal is completed. To close the deal on Thursday as scheduled, KPMG must sign off on the solvency opinion.
Late last month, KPMG said it did not believe BCE could remain solvent if the deal is completed because of the amount of debt needed to finance the deal and current market conditions. BCE was set to sell itself to a consortium of private groups, led by the Ontario Teachers Pension Plan Board and several U.S. partners.
Corning Inc.plans to reduce capital spending next year as nearly all of its businesses have been "negatively impacted" by the global recession. In a statement, the company said it is contemplating "permanent manufacturing capacity consolidation, reducing operating expenses to be flat or lower than 2008, and workforce reductions."
Danaher Corp. fell 5.1 percent to $49.29. The company said fourth-quarter profit will be lower than previously forecast. It will close 13 factories and cut 1,700 jobs because of the deteriorating economy.
Fewer Americans signed contracts to buy previously owned homes in October as credit markets seized, signaling the housing slump will extend into a fourth year.
The index of signed purchase agreements, or pending home resales, fell a less-than-forecast 0.7 percent to 88.9 from a revised 89.5 in September, according to a report from the National Association of Realtors today in Washington. Pending resales jumped 7.8 percent in the South and climbed 0.6 percent in the Northeast. They slumped 8.7 percent in the West and 4.3 percent in the Midwest. Demand for housing remains “uneven” across the country, with some markets in Florida, California and the Las Vegas region showing “healthy gains” from the same time last year, the report said.
The Federal Reserve announced Tuesday that it will auction $300 billion in credit through its Term Auction Facility in January. The central bank will offer $150 billion in 28-day credit on Jan. 12 and $150 billion in 84-day credit on Jan. 26. The TAF is aimed at providing credit to banks.
Some of the recent indices have rallied 20%; however, the rail stocks have rallied only 10% from their 52-week lows. That is a further indication of industrial weakness now and looking forward.
Do FedEx and UPS have further to go on the downside?
“Even if the companies have sufficient collateral, lending to an auto manufacturing company would represent a marked departure from that policy, and would take us into distinctly new realms of policymaking,” Bernanke said. “In particular, it would raise the question as to whether the Federal Reserve should be involved in industrial policy, which has traditionally been outside the range of our responsibilities.”
Are earnings estimates for the Dow and the S&P 500 too high for 2009?
With the heating season upon us, has natural gas hit bottom at $5.50?
Des Moines-based Principal Financial Group Inc. says it is cutting 300 jobs at its headquarters and around 250 in 45 other locations.
The National Football League will cut about 150 league jobs, or about 14% of its staff, over the next 60 days to cut costs in response to the recession, according to media reports Tuesday.
Gold for February delivery rose $4.90 to end at $774.20 an ounce on the New York Mercantile Exchange. Crude for January delivery dropped $1.64 to end at $42.07 a barrel on the New York Mercantile Exchange.
Citigroup Inc.will cut 1,000 jobs at its Japanese retail brokerage unit, Nikko Cordial Securities Inc., Bloomberg reported Wednesday.
The Dow Jones Industrial Average fell 242.85 points to 8,691.33. The S&P 500 shed 21.03 points to 888.67. The Nasdaq Composite (COMP) declined 24.4 points to 1,547.37.
Electronic Arts said late Tuesday it expects fiscal 2009 net revenue and earnings per share to be below the guidance previously announced in October due to lower than expected sales in North America and Europe.
The Treasury Department sold $32 billion in four-week bills Tuesday at a yield of zero, implying investors purely wanted the assurance that they would get their principal back. Investors bid $128 billion at the auction, more than four times the amount available.
Monday, December 08, 2008
Ambiguous
12/8/08 Ambiguous
John Hussman: "The condition of the stock market here is ambiguous. Valuations are generally favorable, market action is generally unfavorable but with tenuous signs of improvement, the economy is deteriorating, and it is difficult to estimate how much further it will weaken, yet the outlook for further economic weakness is common knowledge, so it may already be reflected in prices.
The ability to be comfortable with uncertainty is one of the qualities that allow good investors to function – to pursue a disciplined investment approach even when the likely direction of the market is ambiguous.
The desire to create certainty out of ambiguity; to boldly take one side or another in defiance of all contrary evidence; is both tempting and foolish. Ambiguous conditions warrant moderate investment positions because the prospect for expected returns has to be tempered by the prospect for risk. Investors who accept a moderate investment exposure here should not do so in hopes of “picking a bottom” or “catching a falling knife.” They should do so in order to properly align their investment exposure with the moderate return/risk profile that characterizes market conditions here."
President-elect Barack Obama braced the country for more tough times Sunday, saying twice in an interview that the nation’s already dismal economy would continue to worsen in the months ahead.
Obama, speaking to Tom Brokaw on NBC’s “Meet the Press,” used some of his starkest language yet to underscore the severity of the challenge he’ll face upon taking office next month.
“If you look at the unemployment numbers that came out yesterday, if you think about almost 2 million jobs lost so far, if you think about the fragility of the financial system and the fact that it is now a global financial system so that what happens in Thailand or Russia can have an impact here, and obviously what happens on Wall Street has an impact worldwide, when you think about the structural problems that we already had in the economy before the financial crisis, this is a big problem, and it's going to get worse,” he said in the interview taped Saturday.
Nobel economics prize winner Paul Krugman said Sunday in Stockholm that the beleaguered U.S. auto industry will likely disappear.
Switzerland's troubled financial-services giant UBS may announce as many as 4,500 more job cuts in coming weeks, Swiss newspapers reported Sunday.
The average price of U.S. gasoline fell 22 cents a gallon during the past two weeks, bringing it to its lowest level in nearly five years, according to a national survey released Sunday.
The average price of regular gasoline Friday was $1.75 a gallon, oil industry analyst Trilby Lundberg said. The price of mid-grade was $1.90 a gallon and the price of premium was $2.02 a gallon.
Illinois Tool Works Inc. said Monday that it was lowering its forecast for fourth-quarter earnings from continuing operations for 2008. The new fourth-quarter forecast for continuing operations range is 44 cents to 52 cents a share. That compares to a range of 74 cents to to 82 cents previously issued on Oct. 16. This new forecast assumes a revenue decrease of 7% to 9%. For the full year, the company is now forecasting income per share from continuing operations to be in a range of $2.94 to $3.02.
Dow Chemical Co. will cut about 5,000 full-time jobs as it accelerates a strategy to cut costs to address "current economic realities." Further, the Midland, Mich., chemical giant will dismiss 6,000 contractors, idle 180 plants and shutter 20 facilities in "high-cost locations."
February gold soared $20.80, or 3%, to $773 an ounce in electronic trading on Globex. Crude oil for January delivery soared $2.72, or 6.7%, to $43.55 a barrel in electronic trading on Globex.
McDonald's Corp.said Monday that its global same-store sales rose 7.7% in November. In the U.S., comparable sales grew 4.5% during the month, on strength in breakfast and chicken items.
For 2009, 3M forecast earnings of $4.50 to $4.95 a share, while analysts' outlook is for $5.29 a share.
The Tribune Company filed for Chapter 11 bankruptcy.
Rob Hanna: "The market posted at Follow Through Day again last week. This is at least the 6th Follow-Through Day since the 2007 top. New blog readers may want to check out the series of studies I’ve written on Follow-Through Days (FTD’s) to gauge their usefulness....A FTD is a positive sign when looking for a potential market bottom and subsequent rally. The current rally attempt may succeed. The market certainly seems overdue for a substantial and sustained rally. FTD and other bottoming signals have proven far less reliable over the last year. There have been a few other times where they have struggled as well. The period above is one example. Just something for the back of the mind as the current rally attempt unfolds."
Brett Steenbarger: "In sum, the ball is in the bull's court. We made several runs at the lows this past week and held at higher lows. We rallied off bad economic news and now are testing resistance at SPX 900. As noted in the quote above from last week's review, a strong close above 900 with an expansion of new 20-day highs would confirm an intermediate-term uptrend. Failure to remain above the 900 level would keep us in a range bound market and, ultimately, would lead me to expect a test of last week's lows at minimum."
Australia was up nearly 3.7%, The Hang Seng was up 8.66%, Japan's Nikkei was up 5.2% and South Korea was up almost 7.5%. France is up 6.6%, Germany up more than 6% and even England is up nearly 5%. Russia's dollar-denominated RTS stock index surged 7.3% and South Africa's All Share index rose 7.2%. In Brazil, the Bovespa stock index rallied 6%.
The National Credit Union Administration (NCUA) today accepted appointment as receiver/liquidator of West Hartford Credit Union, Inc., in Farmington Connecticut, following the State of Connecticut Department of Banking decision to close the credit union.
China's passenger car sales fell 10.3 percent in November from a year earlier as stalling economic growth sapped consumer confidence, state media reports said Monday.
Companies in the MSCI World Index trade for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sell at a discount to shareholder equity, data compiled by Bloomberg show.
The cash-rich companies allow investors to pay nothing for future earnings streams, providing opportunities to buyers concerned about deflation, according to Jean-Marie Eveillard, whose $16 billion First Eagle Global Fund has beaten 98 percent of competitors this year. Microsoft Corp. and Novo Nordisk A/S, which generate the most money compared with debt, can expand even if lower consumer demand erodes profits.
“Cash is king, not necessarily for the investor but for corporations,” Eveillard said in an interview from New York last week. His fund holds both Microsoft and Namyang Dairy. “It’s useful to sit on a ton of cash, No. 1 to survive, as opposed to going bankrupt, and No. 2 to seize opportunities either to make acquisitions cheaply or to squeeze competitors.”
The 40 percent drop in the Standard & Poor’s 500 Index is the steepest since 1931, while the MSCI World’s 45 percent plummet is the biggest since the gauge started in 1970.
Brazil's Vale mining company says it has suspended production of iron ore pellets at two of its plants in the southeastern state of Espirito Santo.
Companhia Vale Rio Doce SA is blaming a "severe global recession" for decreased demand for iron ore pellets from steel makers. The two plants produce 7.3 million metric tons per year.
The company's decision on Monday came just days after Vale announced it will reduce nickel production at its Canadian unit and cut jobs with a voluntary retirement program.
Vale last week said it has cut 1,300 jobs from its work force of 62,000 since the global meltdown began. It has idled 5,500 workers with pay to slow ore production, and 1,200 are being retrained.
Publicis Groupe media agency ZenithOptimedia expects U.S. ad spending to drop 6.2% in 2009 to $161.8 billion. WPP's agency GroupM sees a decline of 3% to $157 billion. Continued growth in emerging markets will help offset declines in North America and Western Europe, according to both firms.
Hungary's central bank surprised investors Monday by cutting its benchmark interest rate by 50 basis points to 10.50% in an unscheduled meeting.
Satyajit Das: " Deterioration in the US economy and the need to issue additional debt to support the financial sector may place increasing pressure on the US sovereign rating and the dollar. US Government support for financial institutions is already approaching 6% of GDP compared to less than 4% for the Savings and Loans crisis.
Deterioration in the credit quality of the United States results in losses on investment through falls in the market value of the debt and a weaker dollar. The credit default swap ("CDS") market for sovereign debt is increasingly pricing in increased funding costs for the US. The fee for hedging against losses on $10 million of Treasuries was about 0.58% pa for 10 years (equivalent to $58,000 annually) in December 2008. This is an increase from 0.01% pa ($1,000) in 2007 and 0.40% pa ($40,000) in October 2008.
It is also not easy to tap this liquidity pool. Given the size of the portfolios, it is difficult for large investors like China to rapidly mobilise a large portion of these funds by liquidating their investments and converting them into the home currency without substantial losses. This means that this money may not, in reality, be available, at least at short notice.
If the dollar assets lose value or cannot be accessed then China must still service its liabilities. It can print money but will suffer the economic consequences including inflation and higher funding costs....The global liquidity process was multi-faceted. There was traditional domestic credit creation system built on the fractional reserve system that underpins banking. The leverage in the system was pushed to extreme levels. Losses and renewed regulation are forcing this system of credit creation to shut down.
The foreign exchange reserve system was another part of the global credit process. Dollar liquidity re-circulation has also slowed as a result of reduced trade flows (driven by falls in US consumption and imports), losses on dollar investments, domestic claims on reserves and the inability to readily mobilise large amount of reserves.
Another credit process - the export of Yen savings via the Yen carry trade and acquisition of foreign assets by Japanese investors) - has also slowed....Markets placed great faith in the volume of money available to support asset prices and assist in alleviating shortages of liquidity. The perceived abundance of liquidity was, in reality, merely an illusion created by high levels of debt and leverage as well as the structure of global capital flows. As the financial system de-leverages, it is becoming clear, unsurprisingly, that available capital is more limited than previously estimated.
As Sigmund Freud once observed: "Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces."
In the first 15 minutes of trading on Monday, the Dow rose 260 points, the Nasdaq by 42 points, and the S&P 500 by 30 points. Google and Apple lead the parade. The VIX remains at a high level of 58+.
The ratio of borrowers 60 or more days past due rose for the seventh straight quarter to a national average high of 3.96 percent, up more than 12 percent from the second quarter and 54 percent from the same period last year, the report showed.
Third-quarter delinquency rates were highest in Florida, with 7.82 percent, and Nevada, with 7.71 percent. The lowest delinquency rate was in North Dakota, with 1.35 percent, the report showed.
The average national mortgage debt per borrower was $192,287, a 3.45 percent drop on a year-over-year basis, the report showed.
Taliban fighters have a “permanent presence” in almost three quarters of Afghanistan and are tightening a noose around the capital, Kabul, according to a Paris-based research organization.
The International Council on Security and Development, which has fulltime offices in Afghanistan, said in a report that Taliban fighters have advanced out of their bases in the south and east and are infiltrating Kabul at will.
“The Taliban are now dictating terms in Afghanistan, both politically and militarily,” Paul Burton, ICOS Director of Policy, said. “There is a real danger the Taliban will simply overrun Afghanistan.”
Job losses in the United States could easily reach 3 million by the middle of next year, said Gad Levanon, a senior economist for the Conference Board. The private research group said Monday that its employment trends index fell 1.6% in November and is down 13% in the past year. The index looks at eight labor market indicators to judge the path of employment. Since the recession began a year ago, the economy has lost 1.9 million jobs, including 533,000 in November alone. "The continued deterioration in the labor market will exert significant downward pressure on wages," Levanon said.
Detronius Arbiter: "I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization."
Mine operator Cliffs Natural Resources says it's cutting production at its six North American iron ore mines and one coal operation in the face of lower demand from the steel industry.
The Cleveland-based company said the rate of iron ore production is being dropped to approximately 15 million tons, from expectations of 23 million tons, at its mines in Michigan, Minnesota and Canada. Cliffs says it's also idling pellet furnaces.
Separately, Cliffs says it's cutting expected U.S. coal production by 100,000 tons to about 3.5 million tons. About 100 workers at the Pinnacle Complex in West Virginia were scheduled to be laid off Monday. The Wyoming County mine produces metallurgical coal used to make coal for firing steel blast furnaces.
Banks have cut back their lending in recent weeks after a surge earlier in the fall, said Donald Kohn, the Federal Reserve's vice-chairman on Monday. "In recent weeks, bank lending appears to have dropped back, consistent with the significant tightening of terms and standards reported by bank loan officers in recent quarters as well as the weakening of economic activity," Kohn said at a housing conference sponsored by the Office of Thrift Supervision.
Gold for February delivery rose $17.10 to end at $769.30 an ounce on the New York Mercantile Exchange. January crude ends up $2.90, or 7.1%, at $43.71 a barrel
Anheuser-Busch InBev will cut about 1,400 U.S. jobs in its beer-related divisions, or around 6% of the company's U.S. workforce.
I find it interesting that, with the Dow up 4%, the two strongest retailers, Wal-Mart and Costco, both have their stocks down with only one hour left in the trading day.
Level 3 Communications Inc.said late Monday that it will trim about 450 jobs in North America, or about 8% of its workforce, by the end of December.
Texas Instruments Inc.on Monday lowered its revenue and earnings projections for the fourth quarter.
Altera Corp.said late Monday it now projects fourth-quarter sales to fall 9% to 12% from the third quarter compared with its previous outlook of 1% growth to 3% decline.
Con-way said it cut its workforce by 8%, or about 1,450 positions, in response to the steep drop in demand.
The Dow Jones industrials jumped 299 points, or 3.5%, to 8,934, its highest close since Nov. 7. The Standard & Poor's 500 Index closed up 3.8% to 910, its first close above 900 since Nov. 13. The Nasdaq Composite Index was up 62 points, or 4.1%, to 1,572, its best close since Nov. 13.
Japan's economy contracted at a steeper-than-anticipated 1.8% in the July to September period, or 0.5% against the preceding quarter, confirming the government's earlier assessment that the world's second-largest economy fell into recession in the third quarter, according to revised gross domestic product data released by the Cabinet Office Tuesday.
Chip maker Broadcom Corp. said late Monday that it's lowering guidance for its current fourth quarter, citing "significant pushouts and cancellations" by customers.
FedEx Corp.late Monday cut its full-year profit outlook to $3.50 to $4.75 a share as demand for its package-delivery services has weakened in the global economic slowdown. FedEx, of Memphis, Tenn., had expected to earn between $4.75 to $5.25 a share for its fiscal year that ends in May.
John Hussman: "The condition of the stock market here is ambiguous. Valuations are generally favorable, market action is generally unfavorable but with tenuous signs of improvement, the economy is deteriorating, and it is difficult to estimate how much further it will weaken, yet the outlook for further economic weakness is common knowledge, so it may already be reflected in prices.
The ability to be comfortable with uncertainty is one of the qualities that allow good investors to function – to pursue a disciplined investment approach even when the likely direction of the market is ambiguous.
The desire to create certainty out of ambiguity; to boldly take one side or another in defiance of all contrary evidence; is both tempting and foolish. Ambiguous conditions warrant moderate investment positions because the prospect for expected returns has to be tempered by the prospect for risk. Investors who accept a moderate investment exposure here should not do so in hopes of “picking a bottom” or “catching a falling knife.” They should do so in order to properly align their investment exposure with the moderate return/risk profile that characterizes market conditions here."
President-elect Barack Obama braced the country for more tough times Sunday, saying twice in an interview that the nation’s already dismal economy would continue to worsen in the months ahead.
Obama, speaking to Tom Brokaw on NBC’s “Meet the Press,” used some of his starkest language yet to underscore the severity of the challenge he’ll face upon taking office next month.
“If you look at the unemployment numbers that came out yesterday, if you think about almost 2 million jobs lost so far, if you think about the fragility of the financial system and the fact that it is now a global financial system so that what happens in Thailand or Russia can have an impact here, and obviously what happens on Wall Street has an impact worldwide, when you think about the structural problems that we already had in the economy before the financial crisis, this is a big problem, and it's going to get worse,” he said in the interview taped Saturday.
Nobel economics prize winner Paul Krugman said Sunday in Stockholm that the beleaguered U.S. auto industry will likely disappear.
Switzerland's troubled financial-services giant UBS may announce as many as 4,500 more job cuts in coming weeks, Swiss newspapers reported Sunday.
The average price of U.S. gasoline fell 22 cents a gallon during the past two weeks, bringing it to its lowest level in nearly five years, according to a national survey released Sunday.
The average price of regular gasoline Friday was $1.75 a gallon, oil industry analyst Trilby Lundberg said. The price of mid-grade was $1.90 a gallon and the price of premium was $2.02 a gallon.
Illinois Tool Works Inc. said Monday that it was lowering its forecast for fourth-quarter earnings from continuing operations for 2008. The new fourth-quarter forecast for continuing operations range is 44 cents to 52 cents a share. That compares to a range of 74 cents to to 82 cents previously issued on Oct. 16. This new forecast assumes a revenue decrease of 7% to 9%. For the full year, the company is now forecasting income per share from continuing operations to be in a range of $2.94 to $3.02.
Dow Chemical Co. will cut about 5,000 full-time jobs as it accelerates a strategy to cut costs to address "current economic realities." Further, the Midland, Mich., chemical giant will dismiss 6,000 contractors, idle 180 plants and shutter 20 facilities in "high-cost locations."
February gold soared $20.80, or 3%, to $773 an ounce in electronic trading on Globex. Crude oil for January delivery soared $2.72, or 6.7%, to $43.55 a barrel in electronic trading on Globex.
McDonald's Corp.said Monday that its global same-store sales rose 7.7% in November. In the U.S., comparable sales grew 4.5% during the month, on strength in breakfast and chicken items.
For 2009, 3M forecast earnings of $4.50 to $4.95 a share, while analysts' outlook is for $5.29 a share.
The Tribune Company filed for Chapter 11 bankruptcy.
Rob Hanna: "The market posted at Follow Through Day again last week. This is at least the 6th Follow-Through Day since the 2007 top. New blog readers may want to check out the series of studies I’ve written on Follow-Through Days (FTD’s) to gauge their usefulness....A FTD is a positive sign when looking for a potential market bottom and subsequent rally. The current rally attempt may succeed. The market certainly seems overdue for a substantial and sustained rally. FTD and other bottoming signals have proven far less reliable over the last year. There have been a few other times where they have struggled as well. The period above is one example. Just something for the back of the mind as the current rally attempt unfolds."
Brett Steenbarger: "In sum, the ball is in the bull's court. We made several runs at the lows this past week and held at higher lows. We rallied off bad economic news and now are testing resistance at SPX 900. As noted in the quote above from last week's review, a strong close above 900 with an expansion of new 20-day highs would confirm an intermediate-term uptrend. Failure to remain above the 900 level would keep us in a range bound market and, ultimately, would lead me to expect a test of last week's lows at minimum."
Australia was up nearly 3.7%, The Hang Seng was up 8.66%, Japan's Nikkei was up 5.2% and South Korea was up almost 7.5%. France is up 6.6%, Germany up more than 6% and even England is up nearly 5%. Russia's dollar-denominated RTS stock index surged 7.3% and South Africa's All Share index rose 7.2%. In Brazil, the Bovespa stock index rallied 6%.
The National Credit Union Administration (NCUA) today accepted appointment as receiver/liquidator of West Hartford Credit Union, Inc., in Farmington Connecticut, following the State of Connecticut Department of Banking decision to close the credit union.
China's passenger car sales fell 10.3 percent in November from a year earlier as stalling economic growth sapped consumer confidence, state media reports said Monday.
Companies in the MSCI World Index trade for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sell at a discount to shareholder equity, data compiled by Bloomberg show.
The cash-rich companies allow investors to pay nothing for future earnings streams, providing opportunities to buyers concerned about deflation, according to Jean-Marie Eveillard, whose $16 billion First Eagle Global Fund has beaten 98 percent of competitors this year. Microsoft Corp. and Novo Nordisk A/S, which generate the most money compared with debt, can expand even if lower consumer demand erodes profits.
“Cash is king, not necessarily for the investor but for corporations,” Eveillard said in an interview from New York last week. His fund holds both Microsoft and Namyang Dairy. “It’s useful to sit on a ton of cash, No. 1 to survive, as opposed to going bankrupt, and No. 2 to seize opportunities either to make acquisitions cheaply or to squeeze competitors.”
The 40 percent drop in the Standard & Poor’s 500 Index is the steepest since 1931, while the MSCI World’s 45 percent plummet is the biggest since the gauge started in 1970.
Brazil's Vale mining company says it has suspended production of iron ore pellets at two of its plants in the southeastern state of Espirito Santo.
Companhia Vale Rio Doce SA is blaming a "severe global recession" for decreased demand for iron ore pellets from steel makers. The two plants produce 7.3 million metric tons per year.
The company's decision on Monday came just days after Vale announced it will reduce nickel production at its Canadian unit and cut jobs with a voluntary retirement program.
Vale last week said it has cut 1,300 jobs from its work force of 62,000 since the global meltdown began. It has idled 5,500 workers with pay to slow ore production, and 1,200 are being retrained.
Publicis Groupe media agency ZenithOptimedia expects U.S. ad spending to drop 6.2% in 2009 to $161.8 billion. WPP's agency GroupM sees a decline of 3% to $157 billion. Continued growth in emerging markets will help offset declines in North America and Western Europe, according to both firms.
Hungary's central bank surprised investors Monday by cutting its benchmark interest rate by 50 basis points to 10.50% in an unscheduled meeting.
Satyajit Das: " Deterioration in the US economy and the need to issue additional debt to support the financial sector may place increasing pressure on the US sovereign rating and the dollar. US Government support for financial institutions is already approaching 6% of GDP compared to less than 4% for the Savings and Loans crisis.
Deterioration in the credit quality of the United States results in losses on investment through falls in the market value of the debt and a weaker dollar. The credit default swap ("CDS") market for sovereign debt is increasingly pricing in increased funding costs for the US. The fee for hedging against losses on $10 million of Treasuries was about 0.58% pa for 10 years (equivalent to $58,000 annually) in December 2008. This is an increase from 0.01% pa ($1,000) in 2007 and 0.40% pa ($40,000) in October 2008.
It is also not easy to tap this liquidity pool. Given the size of the portfolios, it is difficult for large investors like China to rapidly mobilise a large portion of these funds by liquidating their investments and converting them into the home currency without substantial losses. This means that this money may not, in reality, be available, at least at short notice.
If the dollar assets lose value or cannot be accessed then China must still service its liabilities. It can print money but will suffer the economic consequences including inflation and higher funding costs....The global liquidity process was multi-faceted. There was traditional domestic credit creation system built on the fractional reserve system that underpins banking. The leverage in the system was pushed to extreme levels. Losses and renewed regulation are forcing this system of credit creation to shut down.
The foreign exchange reserve system was another part of the global credit process. Dollar liquidity re-circulation has also slowed as a result of reduced trade flows (driven by falls in US consumption and imports), losses on dollar investments, domestic claims on reserves and the inability to readily mobilise large amount of reserves.
Another credit process - the export of Yen savings via the Yen carry trade and acquisition of foreign assets by Japanese investors) - has also slowed....Markets placed great faith in the volume of money available to support asset prices and assist in alleviating shortages of liquidity. The perceived abundance of liquidity was, in reality, merely an illusion created by high levels of debt and leverage as well as the structure of global capital flows. As the financial system de-leverages, it is becoming clear, unsurprisingly, that available capital is more limited than previously estimated.
As Sigmund Freud once observed: "Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces."
In the first 15 minutes of trading on Monday, the Dow rose 260 points, the Nasdaq by 42 points, and the S&P 500 by 30 points. Google and Apple lead the parade. The VIX remains at a high level of 58+.
The ratio of borrowers 60 or more days past due rose for the seventh straight quarter to a national average high of 3.96 percent, up more than 12 percent from the second quarter and 54 percent from the same period last year, the report showed.
Third-quarter delinquency rates were highest in Florida, with 7.82 percent, and Nevada, with 7.71 percent. The lowest delinquency rate was in North Dakota, with 1.35 percent, the report showed.
The average national mortgage debt per borrower was $192,287, a 3.45 percent drop on a year-over-year basis, the report showed.
Taliban fighters have a “permanent presence” in almost three quarters of Afghanistan and are tightening a noose around the capital, Kabul, according to a Paris-based research organization.
The International Council on Security and Development, which has fulltime offices in Afghanistan, said in a report that Taliban fighters have advanced out of their bases in the south and east and are infiltrating Kabul at will.
“The Taliban are now dictating terms in Afghanistan, both politically and militarily,” Paul Burton, ICOS Director of Policy, said. “There is a real danger the Taliban will simply overrun Afghanistan.”
Job losses in the United States could easily reach 3 million by the middle of next year, said Gad Levanon, a senior economist for the Conference Board. The private research group said Monday that its employment trends index fell 1.6% in November and is down 13% in the past year. The index looks at eight labor market indicators to judge the path of employment. Since the recession began a year ago, the economy has lost 1.9 million jobs, including 533,000 in November alone. "The continued deterioration in the labor market will exert significant downward pressure on wages," Levanon said.
Detronius Arbiter: "I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization."
Mine operator Cliffs Natural Resources says it's cutting production at its six North American iron ore mines and one coal operation in the face of lower demand from the steel industry.
The Cleveland-based company said the rate of iron ore production is being dropped to approximately 15 million tons, from expectations of 23 million tons, at its mines in Michigan, Minnesota and Canada. Cliffs says it's also idling pellet furnaces.
Separately, Cliffs says it's cutting expected U.S. coal production by 100,000 tons to about 3.5 million tons. About 100 workers at the Pinnacle Complex in West Virginia were scheduled to be laid off Monday. The Wyoming County mine produces metallurgical coal used to make coal for firing steel blast furnaces.
Banks have cut back their lending in recent weeks after a surge earlier in the fall, said Donald Kohn, the Federal Reserve's vice-chairman on Monday. "In recent weeks, bank lending appears to have dropped back, consistent with the significant tightening of terms and standards reported by bank loan officers in recent quarters as well as the weakening of economic activity," Kohn said at a housing conference sponsored by the Office of Thrift Supervision.
Gold for February delivery rose $17.10 to end at $769.30 an ounce on the New York Mercantile Exchange. January crude ends up $2.90, or 7.1%, at $43.71 a barrel
Anheuser-Busch InBev will cut about 1,400 U.S. jobs in its beer-related divisions, or around 6% of the company's U.S. workforce.
I find it interesting that, with the Dow up 4%, the two strongest retailers, Wal-Mart and Costco, both have their stocks down with only one hour left in the trading day.
Level 3 Communications Inc.said late Monday that it will trim about 450 jobs in North America, or about 8% of its workforce, by the end of December.
Texas Instruments Inc.on Monday lowered its revenue and earnings projections for the fourth quarter.
Altera Corp.said late Monday it now projects fourth-quarter sales to fall 9% to 12% from the third quarter compared with its previous outlook of 1% growth to 3% decline.
Con-way said it cut its workforce by 8%, or about 1,450 positions, in response to the steep drop in demand.
The Dow Jones industrials jumped 299 points, or 3.5%, to 8,934, its highest close since Nov. 7. The Standard & Poor's 500 Index closed up 3.8% to 910, its first close above 900 since Nov. 13. The Nasdaq Composite Index was up 62 points, or 4.1%, to 1,572, its best close since Nov. 13.
Japan's economy contracted at a steeper-than-anticipated 1.8% in the July to September period, or 0.5% against the preceding quarter, confirming the government's earlier assessment that the world's second-largest economy fell into recession in the third quarter, according to revised gross domestic product data released by the Cabinet Office Tuesday.
Chip maker Broadcom Corp. said late Monday that it's lowering guidance for its current fourth quarter, citing "significant pushouts and cancellations" by customers.
FedEx Corp.late Monday cut its full-year profit outlook to $3.50 to $4.75 a share as demand for its package-delivery services has weakened in the global economic slowdown. FedEx, of Memphis, Tenn., had expected to earn between $4.75 to $5.25 a share for its fiscal year that ends in May.
Saturday, December 06, 2008
The Rally
12/6/08 The Rally
First Georgia Community Bank of Jackson, with four offices southeast of Atlanta, was closed by regulators, becoming the 23rd U.S. bank failure this year amid losses tied to record mortgage delinquencies and foreclosures.
Indexes tied to high-yield, high-risk loan defaults in the U.S. and Europe slumped to records on concern that more companies will break debt terms because of rising unemployment and a global economic slowdown.
The Markit LCDX index linked to U.S. leveraged loans, which falls as sentiment worsens, dropped 1.1 percentage points to 74 percent of face value after falling to as low as 73.55 percent, according to Goldman Sachs Group Inc. The index has fallen from 80 this week. The Markit iTraxx LevX Index of credit-default swaps tied to European loans fell to a record 74 from 77.5 yesterday, according to Morgan Stanley. That compares with 82.9 percent of face value on Nov. 28, according to Markit Ltd.
"A consensus has formed for a significant reduction of production levels" by the 14-member Organization of Petroleum Exporting Countries, OPEC President Chakib Khelil told The Associated Press.
The OPEC head would not discuss how deep the output cut would be, but said it could be "severe," and noted that some analysts are predicting cuts of as much as 2 million barrels per day.
An output decision that startles markets would help bolster plunging oil rates, Khelil said.
"The best way is to surprise them," he said. "I hope it (the decision) will."
The Reserve Bank of India on Saturday announced sizable cuts in its key short-term interest rates, sending a signal to banks to bring down lending rates as it scrambles to protect the real economy from a worsening global financial crisis.
The central bank slashed its lending rate, or the repurchase rate, for the third time since October, by 100 basis points to 6.5%.
It also cut its borrowing rate, or the reverse repurchase rate, for the first time in more than five years by 100 basis points to 5.0%.
The RBI, however, kept banks' cash reserve ratio unchanged at 5.5% and the statutory liquidity ratio at 24%.
The fact that, equities have recently risen during a time of horrendous economic news, has turned several bears into bulls. I prefer not to get caught up in short-term swings but rather focus on the trend. Until that trend turns positive, I will remain a seller into strength and add to positions in times of extreme weakness. In the near-term, I believe there will be pockets of a speculative bounce as well as renewed downward pressure from liquidity problems.
According to the FT, Chinese bargain hunters are preparing to descend on American cities such as Los Angeles and San Francisco, where homeowners have suffered some of the steepest price falls in the US.
SouFun, the biggest real estate website in China, is organising a trip next month to look at properties in California and possibly Nevada. Liu Jian, the company’s chief operating officer, said about 300 people had expressed interest in the idea in the three days since it was advertised, though the company would take only a small group on the first trip.
The government does not count some types of underemployed workers -- those who are overqualified for their current work, for instance. But it does count people who are working part time when they would prefer full time. That count has jumped by 2.8 million in the past 12 months, to 7.3 million. Christine Owens, a worker right's advocate and executive director of the National Employment Law Project, said underemployment "is a much more accurate measure of what the economy is really like for people."
3M Co. is cutting 1,800 jobs in the fourth quarter and ordering some workers to take vacation or unpaid time off for the last two weeks of the year.
3M spokeswoman Jackie Berry told the Star Tribune for a story posted Friday night that the worsening economy forced the cuts. She told the newspaper she didn't have a dollar amount on how much the company expects to save. The company is also postponing merit pay for next year, she said.
The Maplewood-based manufacturer had earlier announced 1,000 job cuts in the third quarter, which ended Sept. 30. The 1,800 new layoffs will come from the U.S., Western Europe and other developed nations.
Billie Joe Armstrong: “A guy walks up to me and asks 'What's Punk?'. So I kick over a garbage can and say 'That's punk!'. So he kicks over the garbage can and says 'That's Punk?', and I say 'No, that's trend!'”
The insurance index rose 10% on Friday.
Chrysler CEO Robert Nardelli told Congress Friday that Chrysler would be pushed toward bankruptcy or even liquidation if it doesn't get federal loans.One might recall that Cerberus owns Chrysler. Cerberus is a private equity firm. No one forced Cerberus to buy Chrysler. If Chrysler needs money, then Cerberus should pony up the funds and not the taxpayers. Chrysler is not too big to fail. They sold 85,260 vehicles last month in the U.S., which amounts to a pimple on an elephant's ass.
Dec. 6 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, may need to cut iron ore production by about a quarter next year as a slump in global steel output curbs demand for the raw material, Merrill Lynch & Co. said.
BHP, the world’s third-biggest iron ore producer, may curb output from mines in Western Australia by 30 million metric tons amid a slump in prices, Merrill Lynch analysts led by Sydney- based Vicky Binns said in a report dated yesterday. Output this year may be cut by 4 million tons, the report said.
Mike Burk: "Downside volume and new lows are the best indicators of bottoms.
Following a bottom, new lows and downside volume diminish rapidly and, although the major averages were down last week, indicators derived from new lows and downside volume showed improvement last week...I keep repeating, because it is important, although there were fewer new lows at the November low than there were at the October low, the November numbers were so high that, at least, a retest of the November lows is likely.
Volatility increases during declines and near bottoms.
Recently we have seen the highest volatility since the crash of 1929....Conditions are in place that would support a rally of a month or two.
I expect the major indices to be higher on Friday December 12 than they were on Friday December 5."
First Georgia Community Bank of Jackson, with four offices southeast of Atlanta, was closed by regulators, becoming the 23rd U.S. bank failure this year amid losses tied to record mortgage delinquencies and foreclosures.
Indexes tied to high-yield, high-risk loan defaults in the U.S. and Europe slumped to records on concern that more companies will break debt terms because of rising unemployment and a global economic slowdown.
The Markit LCDX index linked to U.S. leveraged loans, which falls as sentiment worsens, dropped 1.1 percentage points to 74 percent of face value after falling to as low as 73.55 percent, according to Goldman Sachs Group Inc. The index has fallen from 80 this week. The Markit iTraxx LevX Index of credit-default swaps tied to European loans fell to a record 74 from 77.5 yesterday, according to Morgan Stanley. That compares with 82.9 percent of face value on Nov. 28, according to Markit Ltd.
"A consensus has formed for a significant reduction of production levels" by the 14-member Organization of Petroleum Exporting Countries, OPEC President Chakib Khelil told The Associated Press.
The OPEC head would not discuss how deep the output cut would be, but said it could be "severe," and noted that some analysts are predicting cuts of as much as 2 million barrels per day.
An output decision that startles markets would help bolster plunging oil rates, Khelil said.
"The best way is to surprise them," he said. "I hope it (the decision) will."
The Reserve Bank of India on Saturday announced sizable cuts in its key short-term interest rates, sending a signal to banks to bring down lending rates as it scrambles to protect the real economy from a worsening global financial crisis.
The central bank slashed its lending rate, or the repurchase rate, for the third time since October, by 100 basis points to 6.5%.
It also cut its borrowing rate, or the reverse repurchase rate, for the first time in more than five years by 100 basis points to 5.0%.
The RBI, however, kept banks' cash reserve ratio unchanged at 5.5% and the statutory liquidity ratio at 24%.
The fact that, equities have recently risen during a time of horrendous economic news, has turned several bears into bulls. I prefer not to get caught up in short-term swings but rather focus on the trend. Until that trend turns positive, I will remain a seller into strength and add to positions in times of extreme weakness. In the near-term, I believe there will be pockets of a speculative bounce as well as renewed downward pressure from liquidity problems.
According to the FT, Chinese bargain hunters are preparing to descend on American cities such as Los Angeles and San Francisco, where homeowners have suffered some of the steepest price falls in the US.
SouFun, the biggest real estate website in China, is organising a trip next month to look at properties in California and possibly Nevada. Liu Jian, the company’s chief operating officer, said about 300 people had expressed interest in the idea in the three days since it was advertised, though the company would take only a small group on the first trip.
The government does not count some types of underemployed workers -- those who are overqualified for their current work, for instance. But it does count people who are working part time when they would prefer full time. That count has jumped by 2.8 million in the past 12 months, to 7.3 million. Christine Owens, a worker right's advocate and executive director of the National Employment Law Project, said underemployment "is a much more accurate measure of what the economy is really like for people."
3M Co. is cutting 1,800 jobs in the fourth quarter and ordering some workers to take vacation or unpaid time off for the last two weeks of the year.
3M spokeswoman Jackie Berry told the Star Tribune for a story posted Friday night that the worsening economy forced the cuts. She told the newspaper she didn't have a dollar amount on how much the company expects to save. The company is also postponing merit pay for next year, she said.
The Maplewood-based manufacturer had earlier announced 1,000 job cuts in the third quarter, which ended Sept. 30. The 1,800 new layoffs will come from the U.S., Western Europe and other developed nations.
Billie Joe Armstrong: “A guy walks up to me and asks 'What's Punk?'. So I kick over a garbage can and say 'That's punk!'. So he kicks over the garbage can and says 'That's Punk?', and I say 'No, that's trend!'”
The insurance index rose 10% on Friday.
Chrysler CEO Robert Nardelli told Congress Friday that Chrysler would be pushed toward bankruptcy or even liquidation if it doesn't get federal loans.One might recall that Cerberus owns Chrysler. Cerberus is a private equity firm. No one forced Cerberus to buy Chrysler. If Chrysler needs money, then Cerberus should pony up the funds and not the taxpayers. Chrysler is not too big to fail. They sold 85,260 vehicles last month in the U.S., which amounts to a pimple on an elephant's ass.
Dec. 6 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, may need to cut iron ore production by about a quarter next year as a slump in global steel output curbs demand for the raw material, Merrill Lynch & Co. said.
BHP, the world’s third-biggest iron ore producer, may curb output from mines in Western Australia by 30 million metric tons amid a slump in prices, Merrill Lynch analysts led by Sydney- based Vicky Binns said in a report dated yesterday. Output this year may be cut by 4 million tons, the report said.
Mike Burk: "Downside volume and new lows are the best indicators of bottoms.
Following a bottom, new lows and downside volume diminish rapidly and, although the major averages were down last week, indicators derived from new lows and downside volume showed improvement last week...I keep repeating, because it is important, although there were fewer new lows at the November low than there were at the October low, the November numbers were so high that, at least, a retest of the November lows is likely.
Volatility increases during declines and near bottoms.
Recently we have seen the highest volatility since the crash of 1929....Conditions are in place that would support a rally of a month or two.
I expect the major indices to be higher on Friday December 12 than they were on Friday December 5."
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