5/20/06 Positioning
Whether the market is rising or falling or fairly stagnant, it is mandatory to position oneself properly. Each idividual has his/her tolerance for risk. Remember- the first rule is to limit loss to the minimum and thereby protect your nest egg. Google is not for everyone nor is a U.S. Treasury bond. The second rule is to understand your investment. I promise you that the large investment houses do not fully comprehend their trading in derivatives. They are an accident waiting to happen, and can carry many innocent investors out with them. Here is a small snippet from the Financial Times: "The recent sharp falls in stock markets appear to have been exacerbated by an unusual wave of derivatives activity on the part of hedge funds and big banks, traders yesterday indicated."
Please do not play the game of predicting a bottom or the next bounce. It is a foolhardy as predicting a top to copper. This week commodity prices had their biggest weekly drop in more than 25 years, led by metals and grains. Gold dropped about $100. Crude declined to a 6-week low. These are declines in long-term bull markets. Treasury bonds had a rally in a bear market.
It doesn't matter how many Fed governors call for a pause. The Fed does not control long-term interest rates. We depend on foreign capital.
Bloomberg noted "The global derivatives market expanded to a record $298 trillion in the second half of 2005, led by a 34 percent increase in contracts to insure debt payments, the Bank for International Settlements said... Credit-default swaps rose to $13.7 trillion..."
Make no mistake. Derivatives are the ultimate weapon of mass destruction in financial markets.
A deputy governor of Sweden's Riksbank, Lars Nyberg, said it will soon be time to take the next step towards a less expansionary monetary policy.
He said the expansionary monetary policy can still be seen in, for example, growing credit facilities as well as rising house prices, which now appears to have spread to the commercial property market."The economic indicators and inflation prospects imply it will soon be time to take the next step towards less expansionary monetary policy... in line with market expectations," Nyberg said.
Maybe the Fed and our financial institutions will arrive at the same consclusion as did the Riksbank --- before it's too late.
Saturday, May 20, 2006
Thursday, May 18, 2006
More Spending
5/19/06 More Spending
In a close vote at 1am early Thursday morning, the House passed a $2.7 trillion spending bill.
The measure calls for increasing military spending by 7 percent, to nearly $558 billion in 2007, a figure that includes $50 billion for military operations in Iraq and Afghanistan. The package would essentially freeze or cut spending on most domestic discretionary programs, including education, energy and national parks, and it calls for trimming $6.8 billion over five years from entitlement programs like Medicaid and farm subsidies. The plan would raise the debt ceiling by $653 billion, to $9.6 trillion, and it assumes that the shortfall next year will be $348 billion, about what it is likely to be in 2006.
The laugh of the week: FBI agents began digging on a farm in Milford Township late Wednesday looking for fresh clues in the 1975 disappearance of former Teamsters boss Jimmy Hoffa.
Factory activity expanded for the 11th straight month in the Philadelphia region in May, the Philadelphia Federal Reserve Bank said Thursday. The Philly Fed's business outlook survey rose to 14.4 from 13.2 in April.
Richard Daughty: "Nowadays, "growth" in GDP is created only by increasing debt, which creates new money, which increases prices, which is also a measure of an increase in GDP, and then the inflation that produced the higher prices (and thus the higher GDP) is ignored, making it look like the economy "grew."
In a smart move, a MarketSafeSM Gold Bullion CD from EverBank® is now available.
June natural gas dropped to $5.88 per million British thermal units, its lowest level since late Jan. 2005 after the Energy Department said natural-gas inventories rose 91 billion cubic feet for the week ended May 12.
The Conference Board reported that the Composite Index of Leading Economic Indicators declined 0.1% in April, following a 0.4% rise in March and a 0.4% decline in February. Says Ken Goldstein, Labor Economist at The Conference Board: "The economy is cooling off from the torrid pace of the first quarter. The composite index of Coincident Economic Indicators increased again in April,an indication that the economy carried some forward momentum into the early part of the second quarter. The Leading Economic Indicators, however, edged lower in April. This latest decline, combined with some earlier softening,suggests growth in the third quarter may be slower. With the price of a barrel of oil still around $70, and with interest rates slowly rising, the economy isn't likely to be picking up steam."
Three of the ten indicators that make up the leading index increased in April. The positive contributors -- beginning with the largest positive contributor -- were vendor performance, stock prices, and interest rate spread. The negative contributors -- beginning with the largest negative contributor -- were building permits,manufacturers' new orders for nondefense capital goods, index of consumer expectations, average weekly initial claims for unemployment insurance(inverted), real money supply, and manufacturers' new orders for consumer goods and materials. The average weekly manufacturing hours held steady in April.
In early Thursday trading treasury yields dropped significantly. For example, the 10-year declined to 5.08% from 5.16% and the 30-year from 5.29% to 5.21%. Has anything changed from a fundamental basis? Richmond Fed President Jeffrey Lacker stated ``the inflation outlook is at the borderline of acceptable and perhaps moving beyond. In circumstances like that, containing inflation has to be the primary focus.'' I would continue to avoid the U.S. Treasury market. Why? I think rates will continue to rise and I believe the dollar will continue to fall in value against other major currencies.
More than one billion people in the world have access to the Internet, with a quarter of them with broadband, or high-speed connections, according to a survey.
The report by the firm eMarketer said the milestone of one billion was reached in late 2005, and that nearly 250 million households had broadband connections. The firm estimates that of these people, 845 million use the Internet regularly. It's time for me to focus some attention on the long-term potential for Yahoo and eBay as shares of both are out of favor.
Venezuela's national assembly approved a reform of the organic hydrocarbons law that hikes the royalty rate for all crude exploration and production projects, in some cases doubling the existing rate.
No global warming? According to earthfiles.com, "6,298 Glaciers Are Melting At Unprecedented Rate of 7% Ice Loss Per Year."
June gold closed at $680.90, down $10.90. July silver dropped 72 cents, or 5.4%, to close at a three-week low of $12.52 an ounce. July platinum fell 1.4% and June palladium lost 2.8%. But July copper gained 3.95 cents to close at $3.711 a pound.
Bay Area home sales in April dropped to their lowest level in five years while prices slowly reached a new peak, according to a report on Wednesday.
In the nine-county Bay Area region, 8,358 new and resale houses and condos were sold in April, according to DataQuick Information Systems. That was down more than 14 percent from 9,745 for March, and down just over 25 percent from 11,158 a year ago.
St. Louis Fed president William Poole: "The risks on the inflation side are tilted to the upside,"
Dell Inc. will start using chips from Advanced Micro Devices Inc. in its high-end server product line later this year, both companies said in separate statements late Thursday. This marks the first time Dell has used chips from AMD in its products.
President Bush will nominate Federal Reserve Gov. Donald Kohn to serve as the central bank's vice chairman, the White House announced Thursday. As I have stated so often, Kohn was my choice to take over after Greenspan retired.
Japan's economy grew at an annual 1.9 percent pace in the three months ended March 31, the Cabinet Office said today in Tokyo. The median forecast of 28 economists was for the economy to grow at a 1.1 percent pace. The yen rallied after release of this news.
Symantec sued Microsoft and wants to prevent the release of the Vista operating system. According to the complaint, Microsoft has rewritten the volume management software for its next version of Windows in ways that were not allowed under the licence between the two companies.They used it to develop a rival product, said a spokesperson for Symantec.
Douglas V. Gnazzo: "At its present rate of expansion the current account outcome is headed for $1 TRILLION for the year. Total indebtedness in the United States now amounts to $40 trillion. At interest rates of 5%, this requires annual financing costs of approximately $2 trillion. Real disposable income edged up by 1.4% in 2005, while spending increased 3.5%." If you were a foreigner holding dollars and/or dollar denominated assets, would you be worried?
In a close vote at 1am early Thursday morning, the House passed a $2.7 trillion spending bill.
The measure calls for increasing military spending by 7 percent, to nearly $558 billion in 2007, a figure that includes $50 billion for military operations in Iraq and Afghanistan. The package would essentially freeze or cut spending on most domestic discretionary programs, including education, energy and national parks, and it calls for trimming $6.8 billion over five years from entitlement programs like Medicaid and farm subsidies. The plan would raise the debt ceiling by $653 billion, to $9.6 trillion, and it assumes that the shortfall next year will be $348 billion, about what it is likely to be in 2006.
The laugh of the week: FBI agents began digging on a farm in Milford Township late Wednesday looking for fresh clues in the 1975 disappearance of former Teamsters boss Jimmy Hoffa.
Factory activity expanded for the 11th straight month in the Philadelphia region in May, the Philadelphia Federal Reserve Bank said Thursday. The Philly Fed's business outlook survey rose to 14.4 from 13.2 in April.
Richard Daughty: "Nowadays, "growth" in GDP is created only by increasing debt, which creates new money, which increases prices, which is also a measure of an increase in GDP, and then the inflation that produced the higher prices (and thus the higher GDP) is ignored, making it look like the economy "grew."
In a smart move, a MarketSafeSM Gold Bullion CD from EverBank® is now available.
June natural gas dropped to $5.88 per million British thermal units, its lowest level since late Jan. 2005 after the Energy Department said natural-gas inventories rose 91 billion cubic feet for the week ended May 12.
The Conference Board reported that the Composite Index of Leading Economic Indicators declined 0.1% in April, following a 0.4% rise in March and a 0.4% decline in February. Says Ken Goldstein, Labor Economist at The Conference Board: "The economy is cooling off from the torrid pace of the first quarter. The composite index of Coincident Economic Indicators increased again in April,an indication that the economy carried some forward momentum into the early part of the second quarter. The Leading Economic Indicators, however, edged lower in April. This latest decline, combined with some earlier softening,suggests growth in the third quarter may be slower. With the price of a barrel of oil still around $70, and with interest rates slowly rising, the economy isn't likely to be picking up steam."
Three of the ten indicators that make up the leading index increased in April. The positive contributors -- beginning with the largest positive contributor -- were vendor performance, stock prices, and interest rate spread. The negative contributors -- beginning with the largest negative contributor -- were building permits,manufacturers' new orders for nondefense capital goods, index of consumer expectations, average weekly initial claims for unemployment insurance(inverted), real money supply, and manufacturers' new orders for consumer goods and materials. The average weekly manufacturing hours held steady in April.
In early Thursday trading treasury yields dropped significantly. For example, the 10-year declined to 5.08% from 5.16% and the 30-year from 5.29% to 5.21%. Has anything changed from a fundamental basis? Richmond Fed President Jeffrey Lacker stated ``the inflation outlook is at the borderline of acceptable and perhaps moving beyond. In circumstances like that, containing inflation has to be the primary focus.'' I would continue to avoid the U.S. Treasury market. Why? I think rates will continue to rise and I believe the dollar will continue to fall in value against other major currencies.
More than one billion people in the world have access to the Internet, with a quarter of them with broadband, or high-speed connections, according to a survey.
The report by the firm eMarketer said the milestone of one billion was reached in late 2005, and that nearly 250 million households had broadband connections. The firm estimates that of these people, 845 million use the Internet regularly. It's time for me to focus some attention on the long-term potential for Yahoo and eBay as shares of both are out of favor.
Venezuela's national assembly approved a reform of the organic hydrocarbons law that hikes the royalty rate for all crude exploration and production projects, in some cases doubling the existing rate.
No global warming? According to earthfiles.com, "6,298 Glaciers Are Melting At Unprecedented Rate of 7% Ice Loss Per Year."
June gold closed at $680.90, down $10.90. July silver dropped 72 cents, or 5.4%, to close at a three-week low of $12.52 an ounce. July platinum fell 1.4% and June palladium lost 2.8%. But July copper gained 3.95 cents to close at $3.711 a pound.
Bay Area home sales in April dropped to their lowest level in five years while prices slowly reached a new peak, according to a report on Wednesday.
In the nine-county Bay Area region, 8,358 new and resale houses and condos were sold in April, according to DataQuick Information Systems. That was down more than 14 percent from 9,745 for March, and down just over 25 percent from 11,158 a year ago.
St. Louis Fed president William Poole: "The risks on the inflation side are tilted to the upside,"
Dell Inc. will start using chips from Advanced Micro Devices Inc. in its high-end server product line later this year, both companies said in separate statements late Thursday. This marks the first time Dell has used chips from AMD in its products.
President Bush will nominate Federal Reserve Gov. Donald Kohn to serve as the central bank's vice chairman, the White House announced Thursday. As I have stated so often, Kohn was my choice to take over after Greenspan retired.
Japan's economy grew at an annual 1.9 percent pace in the three months ended March 31, the Cabinet Office said today in Tokyo. The median forecast of 28 economists was for the economy to grow at a 1.1 percent pace. The yen rallied after release of this news.
Symantec sued Microsoft and wants to prevent the release of the Vista operating system. According to the complaint, Microsoft has rewritten the volume management software for its next version of Windows in ways that were not allowed under the licence between the two companies.They used it to develop a rival product, said a spokesperson for Symantec.
Douglas V. Gnazzo: "At its present rate of expansion the current account outcome is headed for $1 TRILLION for the year. Total indebtedness in the United States now amounts to $40 trillion. At interest rates of 5%, this requires annual financing costs of approximately $2 trillion. Real disposable income edged up by 1.4% in 2005, while spending increased 3.5%." If you were a foreigner holding dollars and/or dollar denominated assets, would you be worried?
Wednesday, May 17, 2006
Remote
5/18/06 Remote
The headline news was that the Nasdaq had a sharp drop and was now negative for the year. Not to be completely outdone, trading curbs were in place yesterday morning and the S&P 500 declined to its lowest point in 3 motnhs. Maybe that wasn't the most important news. Let's consider this:
John Snow: "The prospect is 'remote' for a sudden dollar drop." Now, why out of the blue, would Snow make such a statement? I strongly suggest you give this some important thought. In early trading yesterday, the dollar index was at 83.70, right at a 13 month low. The CPI came out and indicated inflation was alive and well -- only a surprise to those with their head up their rear end. Interest rates immediately rose and the 10-year Treasury traded up to a 5.18% yield and the 30-year up to 5.29%. Gold had been up about $20 and then lost that gain. However, as the Nasdaq and the Dow were getting slammed, the dollar index rallied up to 84.75, a huge move in 2 1/2 hours. Some might say because there was noise from euroland that the recent strength in the euro would hurt exports. The euro over a year ago was much stronger and exports were not hurt. Was it short covering? We need to watch the dollar index carefully.
As interest rates rose, there was a greater notion that the Fed would raise again at the next meeting. Housing stocks got hit again. The sentiment was so bearish that, some of these June puts were10 points out of the money, and had my name on them. I want people to sleep at night with this insurance.
Are things in housing that bad? Meritage Homes Corp. Chief Executive Steven Hilton on Wednesday said that, in spite of slowing housing markets, the home builder will meet its 2006 profit forecast between $11.25 and $11.50 a share, up from $8.88 a share in 2005. Speaking at the company's annual investor conference, Hilton said the company expects to offset lower orders by expanding its community count. Despite some markets softening, he noted the long-term outlook for home builders is positive, citing immigration, retiree migration, job-income growth, more baby boomers purchasing vacation homes, and supply constraints due to entitlement delays and no-growth attitudes in some neighborhoods. The stock sells around $59+ and the June 50 puts are trading for 35 cents.
Japan is holding less dollars than at any point in the last two years. That is a smart decision.
Petroleum deliveries for April were down 1.5% from a year earlier, the API said. Refinery utilization averaged 87.7% in April, down from 92.6% in the year-ago period, it said. The API also pointed out that with the transition this spring to a greater use of ethanol in gasoline, "more inventory is likely to appear as 'blending components' rather than as 'finished gasoline," because ethanol is typically blended into gasoline as the product leaves the terminal for the retail outlets.
Jon Markman points out that, according to Ned Davis Research data, since 1950, the market has lost 3.5% during the period from April 30 to Sept. 30 during midterm election years, versus a gain of 0.9% in the period in all years and a gain of 5.6% in the other half of the year -- Sept. 30 to April 30.
In April, Turkmenistan signed a deal to supply China with 30 billion cubic meters of gas per year from 2009 to 2039. "Even if many analysts doubt Turkmenistan's ability to meet this contract, that deal evokes the contradictions inherent in China's transitional phase," the Washington-based Jamestown Foundation said in a report. "In its substance it evokes the old approach: China subsidizing dictators by paying for pipelines as well as for gas and trying to knock prices down while tying up the producer for 30 years."
For well over a year, I have been writing about the global energy deals that China and India made and are making. I spent a good deal of time writing about Kazakhstan, a key long-term energy supplier. Not once did I write that the U.S. was a participant in any of these deals. Why? No one wants to do business with Bush and Cheney and few want our dollars. The polls indicate the American public has had with this crew. Now it's time to finish the job in the elections to be held this year. It's nothing personal. We just should not be represented by inept leaders, and that is being mild.
The majority of homes sold in the United States are too expensive for a family with the median income, the National Association of Home Builders and Wells Fargo said Wednesday. The housing opportunity index rose to 41.3% in the first quarter from a record low 41% in the fourth quarter, meaning that 41.3% of homes sold were affordable for a family earning the median income. Prices of homes sold fell $4,000 to $250,000 while interest rates rose to 6.39% from 6.21%. The median household income rose to $59,600 from $58,000.
Average weekly earnings rose by 4.1 percent, seasonally adjusted, from April 2005 to April 2006. After deflation by the CPI-W, average weekly earnings increased by 0.4 percent.
There is no denying that rising inflation presents problems for all areas of our society. At the same point, a greater emphasis needs to be placed on the fact that foreign purchases of U.S. Treasury bonds hit a 3-year low in March, the latest figures that are available. I see a continuation of this trend and it spells trouble -- big trouble. We are dependent on foreign capital to fund our growing deficits.
Thomas Jefferson: "Ignorance is preferable to error, and he is less remote from the truth who believes nothing than he who believes what is wrong."
The headline news was that the Nasdaq had a sharp drop and was now negative for the year. Not to be completely outdone, trading curbs were in place yesterday morning and the S&P 500 declined to its lowest point in 3 motnhs. Maybe that wasn't the most important news. Let's consider this:
John Snow: "The prospect is 'remote' for a sudden dollar drop." Now, why out of the blue, would Snow make such a statement? I strongly suggest you give this some important thought. In early trading yesterday, the dollar index was at 83.70, right at a 13 month low. The CPI came out and indicated inflation was alive and well -- only a surprise to those with their head up their rear end. Interest rates immediately rose and the 10-year Treasury traded up to a 5.18% yield and the 30-year up to 5.29%. Gold had been up about $20 and then lost that gain. However, as the Nasdaq and the Dow were getting slammed, the dollar index rallied up to 84.75, a huge move in 2 1/2 hours. Some might say because there was noise from euroland that the recent strength in the euro would hurt exports. The euro over a year ago was much stronger and exports were not hurt. Was it short covering? We need to watch the dollar index carefully.
As interest rates rose, there was a greater notion that the Fed would raise again at the next meeting. Housing stocks got hit again. The sentiment was so bearish that, some of these June puts were10 points out of the money, and had my name on them. I want people to sleep at night with this insurance.
Are things in housing that bad? Meritage Homes Corp. Chief Executive Steven Hilton on Wednesday said that, in spite of slowing housing markets, the home builder will meet its 2006 profit forecast between $11.25 and $11.50 a share, up from $8.88 a share in 2005. Speaking at the company's annual investor conference, Hilton said the company expects to offset lower orders by expanding its community count. Despite some markets softening, he noted the long-term outlook for home builders is positive, citing immigration, retiree migration, job-income growth, more baby boomers purchasing vacation homes, and supply constraints due to entitlement delays and no-growth attitudes in some neighborhoods. The stock sells around $59+ and the June 50 puts are trading for 35 cents.
Japan is holding less dollars than at any point in the last two years. That is a smart decision.
Petroleum deliveries for April were down 1.5% from a year earlier, the API said. Refinery utilization averaged 87.7% in April, down from 92.6% in the year-ago period, it said. The API also pointed out that with the transition this spring to a greater use of ethanol in gasoline, "more inventory is likely to appear as 'blending components' rather than as 'finished gasoline," because ethanol is typically blended into gasoline as the product leaves the terminal for the retail outlets.
Jon Markman points out that, according to Ned Davis Research data, since 1950, the market has lost 3.5% during the period from April 30 to Sept. 30 during midterm election years, versus a gain of 0.9% in the period in all years and a gain of 5.6% in the other half of the year -- Sept. 30 to April 30.
In April, Turkmenistan signed a deal to supply China with 30 billion cubic meters of gas per year from 2009 to 2039. "Even if many analysts doubt Turkmenistan's ability to meet this contract, that deal evokes the contradictions inherent in China's transitional phase," the Washington-based Jamestown Foundation said in a report. "In its substance it evokes the old approach: China subsidizing dictators by paying for pipelines as well as for gas and trying to knock prices down while tying up the producer for 30 years."
For well over a year, I have been writing about the global energy deals that China and India made and are making. I spent a good deal of time writing about Kazakhstan, a key long-term energy supplier. Not once did I write that the U.S. was a participant in any of these deals. Why? No one wants to do business with Bush and Cheney and few want our dollars. The polls indicate the American public has had with this crew. Now it's time to finish the job in the elections to be held this year. It's nothing personal. We just should not be represented by inept leaders, and that is being mild.
The majority of homes sold in the United States are too expensive for a family with the median income, the National Association of Home Builders and Wells Fargo said Wednesday. The housing opportunity index rose to 41.3% in the first quarter from a record low 41% in the fourth quarter, meaning that 41.3% of homes sold were affordable for a family earning the median income. Prices of homes sold fell $4,000 to $250,000 while interest rates rose to 6.39% from 6.21%. The median household income rose to $59,600 from $58,000.
Average weekly earnings rose by 4.1 percent, seasonally adjusted, from April 2005 to April 2006. After deflation by the CPI-W, average weekly earnings increased by 0.4 percent.
There is no denying that rising inflation presents problems for all areas of our society. At the same point, a greater emphasis needs to be placed on the fact that foreign purchases of U.S. Treasury bonds hit a 3-year low in March, the latest figures that are available. I see a continuation of this trend and it spells trouble -- big trouble. We are dependent on foreign capital to fund our growing deficits.
Thomas Jefferson: "Ignorance is preferable to error, and he is less remote from the truth who believes nothing than he who believes what is wrong."
Tuesday, May 16, 2006
Analysis
5/17/06 Analysis
By now we know that the April PPI rose 0.8% and the core rate (ex food and energy) only 0.1%.
When analyzing a business, the core rate means nothing. Take Wal-Mart. They are concerned about the impact high energy costs are having on their customers. BJ Wholesale explained their margins were reduced due to higher gas prices. I can give example after example. However, the bond market chose to focus soley on the core rate and interest rates declined for the second consecutive day. Do you really think all businesses can pass increased costs on to their customers? If you do, I think you should trade in the bond pits.
The stock market took a very negative view of the housing numbers. In April, starts declined by 7.4%, the weakest monthly number since November 2004, and permits dropped by 5.4%. Some brokerage firms lowered their earnings estimates for various housing stocks. I think the lower housing starts and permits are good for the industry. Inventory levels need to be reduced, and when they do, bids for homes will once again reach the offering side of the market. KB Homes recently dropped about 8 points in price down to $65+ a share. Starting tomorrow, there are 22 trading days until June options expire. The June $45 KB Homes puts are selling for 20 to 25 cents. The stock has to decline about 50 cents a day on average for those puts to be worth a penny. There is plenty of fear in this group; however, even with Microsoft dropping to a new 52-week low and breaking $23 on the downside, the Microsoft June $22.50
puts are trading around 25 cents.
Marketwatch reported that Medtronic Inc. yesterday said clinical results from two studies show that its Endeavor drug-eluting coronary stent continues to provide significant and sustained efficacy and safety over time, with low rates of repeat procedures and no observations of late-stent thrombosis. The Endeavor stent received CE Mark approval in July 2005, and is not yet approved for use in the United States. The Minneapolis-based medical device company said it filed its first pre-market approval module with the Food and Drug Administration in October 2005, and remains on track for PMA approval in 2007. Medtronic presented the data at the Paris Course on Revascularization.
New research from the NationalInstitute on Aging (NIA) demonstrates that natural compounds available inWild Blueberries increased lifespan and slowed aging-related declines in awhole organism. Working with elegans, an invertebrate model ofmicroscopic-sized worms in a family called nematodes, the study examinedthe effects of Wild Blueberry polyphenols on lifespan and aging (AgingCell, 5(1): 59-68, February 2006). According to the study published by Mark Wilson, MS and collaborators,"This is a significant finding that lends support to previous experimentson cultured cells or short-term rodent studies showing beneficial effectsin aging-related declines and stress resistance...and thus represents asignificant advance in the study of the biological effects of naturalcompounds." Nematodes represent a common in vivo model for studying agingand longevity. Certain aspects of aging are similar between nematodes andmammals, including humans. There is evidence that Wild Blueberry compoundsmay impact cell signaling and gene expression working beyond their directantioxidant effect by reducing stress signals. Cellular stress andinflammation are related to many diseases of aging including heart disease,cancer and neurodegenerative diseases.
I would like to add one more thought to the PPI. Those expecting inflation to moderate might consider that, at the earlier stages of processing, prices for intermediate goods moved up 0.9 percent in April, after edging down 0.1 percent in the prior month, while the crude goods index increased 1.2 percent, following a 2.7-percent decrease in March. One month does not make a trend; however, these figures cannot be dismissed.
Apple dropped 4% yesterday to just below the $65 level. Several market sources cited a bearish report by broker/deal research firm Off the Record Research. A total of 71,696 calls and 79,462 puts changed hands in Apple across the U.S. options market, above its average daily volume of 117,806 contracts, according to Track Data. The May options expire this Friday and recently Apple has declined about 9 points. Apple was not alone. Microsoft, Dell, and eBay made new 52-week lows as did D.R. Horton. KB Homes came within a fraction of a point of a new 52-week low.
Lazy Days, a large privately held retailer of recreational vehicles, reported lower first-quarter sales. But an analyst noted Tuesday that demand for motor homes could be stronger than it appears, based on sales of used vehicles. "Given its size, we believe Lazy Days serves as a proxy for industry retail trends," Baird U.S. Equity Research analyst Craig Kennison said in a note to investors Tuesday.
The company registered a 3 percent drop in first-quarter revenue, as a 3 percent increase in sales of used vehicles was more than offset by a 7 percent decline in new vehicle sales, according to Kennison.
Lazy Days, based in Tampa, Fla., is a major retailer for manufacturers Monaco Coach Corp., Winnebago Industries Inc. and Thor Corp.
Venezuela is considering selling its fleet of 21 U.S.-made F-16 fighter jets to another country, perhaps Iran, in response to a U.S. ban on arms sales to President Hugo Chavez's government, a military official said Tuesday.
Matrix Research upgraded Cascade Natural Gas from neutral to a strong buy.
Marsoft: "After a brief rally in the fourth quarter of 2005, dry bulk freight rates fell anew in the first quarter of 2006, with spot rates tumbling to their lowest levels since early 2003. Period charter rates have followed much the same path as spot rates over the past year, with one-year TC rates generally falling by about 50% compared to their early 2005 peaks.
Cape rates fell back significantly in early 2006, though they remained well above their average level of the past 25 years. For our benchmark Tubarao/Rotterdam iron ore voyage, we estimate that earnings fell from $49,000 per day in late 2005 to an average of $38,000 per day in the first quarter of 2006, the lowest level since mid-2003.
Panamax spot rates on our benchmark USG/Japan grain route fell by nearly 20% in $/tonne terms during the first quarter of 2006, but after accounting for a 7% rise in bunker costs, earnings declined by a steeper 30%, from $23,000 per day in late 2005 to just $16,000 per day in early 2006, their lowest level in three years. Meanwhile, Panamax one-year TC rates declined for a fourth consecutive quarter, tumbling from $19,000 per day in the final quarter of 2005 to just below $17,000 per day in the first quarter of 2006.
Handy and Handymax spot rates also fell by about 30% in the first quarter of 2006. On our benchmark transatlantic roundtrip voyage, we estimate that earnings for a 51,000 dwt Handymax fell from $20,000 per day to $14,000 per day, while small Handy rates for the same trip dropped from $14,000 per day to $9,000 per day."
Russian President Putin: "The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles." Please don't dismiss this thought. It sounds similar to the Iranian oil bourse.
This morning the British pound rose as high as $1.9003 from $1.8859. The euro and yen also advanced against the dollar ahead of U.S. CPI figures later in the session. Gold and copper had big gains as well. It is no coincidence that the CPI will be released early today.
Xstrata, the UK-listed mining group, launched a US$14.6bn unsolicited bid for Canadian nickel miner Falconbridge.
According to the latest Post/ABC survey, Bush's disapproval rating among Republicans has nearly doubled, from 16 percent to 30 percent, in the past month while his approval rating dipped below 70 percent for the first time. Public dissatisfaction with Bush has grown in lockstep with opposition to the conflict in Iraq. Not quite a third — 32 percent — said they approve of the way Bush is handling Iraq, down five points in the past month and a new low in Post-ABC polling. About a third say Iraq has been worth the cost, the lowest level of support recorded in Post-ABC polls. Two in three Americans believe the war has not been worth it, a view shared by eight in 10 Democrats, seven in 10 independents and a third of all Republicans.
More than 180 000 people were evacuated from coastal areas of southern China Wednesday as Typhoon Chanchu, the strongest storm to hit the region at this time of year, churned towards the mainland and Hong Kong.
The rain appears to have finally stopped in New England.
Applications for mortgage loans at major banks rose by 4.6% last week, the Mortgage Bankers Association said Wednesday. Applications are down 14.7% from a year ago.
By now we know that the April PPI rose 0.8% and the core rate (ex food and energy) only 0.1%.
When analyzing a business, the core rate means nothing. Take Wal-Mart. They are concerned about the impact high energy costs are having on their customers. BJ Wholesale explained their margins were reduced due to higher gas prices. I can give example after example. However, the bond market chose to focus soley on the core rate and interest rates declined for the second consecutive day. Do you really think all businesses can pass increased costs on to their customers? If you do, I think you should trade in the bond pits.
The stock market took a very negative view of the housing numbers. In April, starts declined by 7.4%, the weakest monthly number since November 2004, and permits dropped by 5.4%. Some brokerage firms lowered their earnings estimates for various housing stocks. I think the lower housing starts and permits are good for the industry. Inventory levels need to be reduced, and when they do, bids for homes will once again reach the offering side of the market. KB Homes recently dropped about 8 points in price down to $65+ a share. Starting tomorrow, there are 22 trading days until June options expire. The June $45 KB Homes puts are selling for 20 to 25 cents. The stock has to decline about 50 cents a day on average for those puts to be worth a penny. There is plenty of fear in this group; however, even with Microsoft dropping to a new 52-week low and breaking $23 on the downside, the Microsoft June $22.50
puts are trading around 25 cents.
Marketwatch reported that Medtronic Inc. yesterday said clinical results from two studies show that its Endeavor drug-eluting coronary stent continues to provide significant and sustained efficacy and safety over time, with low rates of repeat procedures and no observations of late-stent thrombosis. The Endeavor stent received CE Mark approval in July 2005, and is not yet approved for use in the United States. The Minneapolis-based medical device company said it filed its first pre-market approval module with the Food and Drug Administration in October 2005, and remains on track for PMA approval in 2007. Medtronic presented the data at the Paris Course on Revascularization.
New research from the NationalInstitute on Aging (NIA) demonstrates that natural compounds available inWild Blueberries increased lifespan and slowed aging-related declines in awhole organism. Working with elegans, an invertebrate model ofmicroscopic-sized worms in a family called nematodes, the study examinedthe effects of Wild Blueberry polyphenols on lifespan and aging (AgingCell, 5(1): 59-68, February 2006). According to the study published by Mark Wilson, MS and collaborators,"This is a significant finding that lends support to previous experimentson cultured cells or short-term rodent studies showing beneficial effectsin aging-related declines and stress resistance...and thus represents asignificant advance in the study of the biological effects of naturalcompounds." Nematodes represent a common in vivo model for studying agingand longevity. Certain aspects of aging are similar between nematodes andmammals, including humans. There is evidence that Wild Blueberry compoundsmay impact cell signaling and gene expression working beyond their directantioxidant effect by reducing stress signals. Cellular stress andinflammation are related to many diseases of aging including heart disease,cancer and neurodegenerative diseases.
I would like to add one more thought to the PPI. Those expecting inflation to moderate might consider that, at the earlier stages of processing, prices for intermediate goods moved up 0.9 percent in April, after edging down 0.1 percent in the prior month, while the crude goods index increased 1.2 percent, following a 2.7-percent decrease in March. One month does not make a trend; however, these figures cannot be dismissed.
Apple dropped 4% yesterday to just below the $65 level. Several market sources cited a bearish report by broker/deal research firm Off the Record Research. A total of 71,696 calls and 79,462 puts changed hands in Apple across the U.S. options market, above its average daily volume of 117,806 contracts, according to Track Data. The May options expire this Friday and recently Apple has declined about 9 points. Apple was not alone. Microsoft, Dell, and eBay made new 52-week lows as did D.R. Horton. KB Homes came within a fraction of a point of a new 52-week low.
Lazy Days, a large privately held retailer of recreational vehicles, reported lower first-quarter sales. But an analyst noted Tuesday that demand for motor homes could be stronger than it appears, based on sales of used vehicles. "Given its size, we believe Lazy Days serves as a proxy for industry retail trends," Baird U.S. Equity Research analyst Craig Kennison said in a note to investors Tuesday.
The company registered a 3 percent drop in first-quarter revenue, as a 3 percent increase in sales of used vehicles was more than offset by a 7 percent decline in new vehicle sales, according to Kennison.
Lazy Days, based in Tampa, Fla., is a major retailer for manufacturers Monaco Coach Corp., Winnebago Industries Inc. and Thor Corp.
Venezuela is considering selling its fleet of 21 U.S.-made F-16 fighter jets to another country, perhaps Iran, in response to a U.S. ban on arms sales to President Hugo Chavez's government, a military official said Tuesday.
Matrix Research upgraded Cascade Natural Gas from neutral to a strong buy.
Marsoft: "After a brief rally in the fourth quarter of 2005, dry bulk freight rates fell anew in the first quarter of 2006, with spot rates tumbling to their lowest levels since early 2003. Period charter rates have followed much the same path as spot rates over the past year, with one-year TC rates generally falling by about 50% compared to their early 2005 peaks.
Cape rates fell back significantly in early 2006, though they remained well above their average level of the past 25 years. For our benchmark Tubarao/Rotterdam iron ore voyage, we estimate that earnings fell from $49,000 per day in late 2005 to an average of $38,000 per day in the first quarter of 2006, the lowest level since mid-2003.
Panamax spot rates on our benchmark USG/Japan grain route fell by nearly 20% in $/tonne terms during the first quarter of 2006, but after accounting for a 7% rise in bunker costs, earnings declined by a steeper 30%, from $23,000 per day in late 2005 to just $16,000 per day in early 2006, their lowest level in three years. Meanwhile, Panamax one-year TC rates declined for a fourth consecutive quarter, tumbling from $19,000 per day in the final quarter of 2005 to just below $17,000 per day in the first quarter of 2006.
Handy and Handymax spot rates also fell by about 30% in the first quarter of 2006. On our benchmark transatlantic roundtrip voyage, we estimate that earnings for a 51,000 dwt Handymax fell from $20,000 per day to $14,000 per day, while small Handy rates for the same trip dropped from $14,000 per day to $9,000 per day."
Russian President Putin: "The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles." Please don't dismiss this thought. It sounds similar to the Iranian oil bourse.
This morning the British pound rose as high as $1.9003 from $1.8859. The euro and yen also advanced against the dollar ahead of U.S. CPI figures later in the session. Gold and copper had big gains as well. It is no coincidence that the CPI will be released early today.
Xstrata, the UK-listed mining group, launched a US$14.6bn unsolicited bid for Canadian nickel miner Falconbridge.
According to the latest Post/ABC survey, Bush's disapproval rating among Republicans has nearly doubled, from 16 percent to 30 percent, in the past month while his approval rating dipped below 70 percent for the first time. Public dissatisfaction with Bush has grown in lockstep with opposition to the conflict in Iraq. Not quite a third — 32 percent — said they approve of the way Bush is handling Iraq, down five points in the past month and a new low in Post-ABC polling. About a third say Iraq has been worth the cost, the lowest level of support recorded in Post-ABC polls. Two in three Americans believe the war has not been worth it, a view shared by eight in 10 Democrats, seven in 10 independents and a third of all Republicans.
More than 180 000 people were evacuated from coastal areas of southern China Wednesday as Typhoon Chanchu, the strongest storm to hit the region at this time of year, churned towards the mainland and Hong Kong.
The rain appears to have finally stopped in New England.
Applications for mortgage loans at major banks rose by 4.6% last week, the Mortgage Bankers Association said Wednesday. Applications are down 14.7% from a year ago.
Monday, May 15, 2006
Changing Tides
5/16/06 Changing Tides
U.S. home builders have turned negative on the housing market for the first time since just after 9/11, the National Association of Home Builders and Wells Fargo said Monday. The NAHB/Wells Fargo housing market index, a builders' sentiment gauge, fell six points in May from a revised 51 to 45, the lowest level since June 1995, the industry group said. The index shows more builders say the market is "poor" than say it's "good." The index has fallen 23 points in the last seven months. In May, builders' assessment of current single-family home sales fell to 50 from 55. The assessment of future sales dropped to 54 from 59. The assessment of the traffic of prospective buyers dropped to 32 from 39. Meanwhile, the NAR reported that, from 3/2005 to 3/2006 price of a single family home rose 10.3% on a nationwide basis. It will be interesting to see what the results are for the next 12 months. For example, existing home sales are down more than 15% in five states that have had the hottest housing markets, the National Association of Realtors said Monday. Sales were down 22.2% year-over-year in Arizona, 19.2% in California, 18.2% in the District of Columbia, 15.7% in Florida and 15% in Nevada, the real estate group said. Nationally, sales of existing homes fell 2.1% year-over-year in the first quarter. The hot states now are New Mexico, Louisiana, Montana and Mississippi.
Capital flows into the United States fell to $69.8 billion in March after reaching a revised $90.5 billion in February, the Treasury Department said Monday. In sum, the capital flow in March covered the monthly trade deficit by $7 billion but that excludes the budget deficit that is running over $25 billion a month in the red.
Manufacturing activity in the New York area expanded at a slower pace in May, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to 12.4 in May from 15.8 in April. This is the lowest level since June 2005.
eBay's Skype, the Web telephone company, on Monday announced a marketing promotion that will allow its users in the United States and Canada to make free calls to conventional wireline and mobile phones.
Gary Lammert: "March 2000 was not Sept-October 1929. But perhaps May 2006 is April 1932.The borrowers of last resort: the American consumer and the taxrefunding and war borrowing US government are unknowingly nearexhaustion. The American president with low unemployment, continuedtax rebates, and recent hefty tax revenues is perhaps as unsuspectingof the deterministic fractal valuation events soon to unfold as is hisincreasingly dissatisfied public. Mr.Hoover with his ample treasuryhad a relatively enviable position."
After several years in which residential rental prices had little or no rise, the dynamics are changing and rents are on the rise. How will that impact the CPI in coming months?
Rep. Ron Paul: "Our relative wealth as a nation is measured in dollars, and the steady erosion of the value of those dollars means we will all be poorer in the future. The artificial stimulation of our economy through cheap money comes with a price. When dollars are abundant, they are worth less. This is the reality facing Americans today, especially older Americans who rely on savings to finance their retirement years."
Profit margins narrowed for the first time in at least two years and expenses rose. Investors were disappointed that the earnings gain was spurred by credit card revenue and a one-time tax gain. Target's results were hurt by markdowns and investments to buy more merchandise direct from manufacturers, Goldman, Sachs & Co. analyst Adrianne Shapira said today in a report. Those of you who purchased Wal-Mart stock and sold Target short have a handsome gain on the books.
Despite a sharp decline in oil, gold, silver, copper, zinc and other metals, despite a continued rise in volatility, despite a drop in interest rates and a rise in the dollar index, equities simply have trouble gaining traction. The Dow and the S&P 500 registered modest gains and the Nasdaq a small loss.
The President of Venezuela yesterday offered to supply the poor in Britain with cheap heating oil in the winter, in an apparent attempt to embarrass Tony Blair's Government.
The NAHB projects home sales will fall 12 percent in 2006 from record sales in 2005, and new single-family home starts will decline 7 percent from last year. The index has declined on a seasonally adjusted basis every month since January. D.R. Horton, the nation's largest homebuilder, declined to a new 52-week low.
Wal-Mart stated first-quarter net income rose 6.3% to $2.615 billion, or 63 cents a share, with revenue up 12.2% to $80.47 billion. Analysts polled by Thomson First Call were expecting earnings of 61 cents a share on revenue of $80.43 billion. The company said its inventory performance was the best it's seen in many quarters, and expects a 2% to 4% U.S. same-store sales rise in the second quarter, and earnings between 70 cents and 74 cents a share. It continues to see fiscal year earnings between $2.88 and $2.95 a share.
House Majority Leader John Boehner said Monday he will not push legislation to reduce the U.S. tariff on ethanol imports.
Bush wants "middle ground" on immigration. It does not surprise me that he did not mention prosecuting those who hire illegal imiigrants. You don't need the national guard for that and you don't need to seek additional funding for that. However, it does require a leader who knows the difference between right and wrong.
U.S. home builders have turned negative on the housing market for the first time since just after 9/11, the National Association of Home Builders and Wells Fargo said Monday. The NAHB/Wells Fargo housing market index, a builders' sentiment gauge, fell six points in May from a revised 51 to 45, the lowest level since June 1995, the industry group said. The index shows more builders say the market is "poor" than say it's "good." The index has fallen 23 points in the last seven months. In May, builders' assessment of current single-family home sales fell to 50 from 55. The assessment of future sales dropped to 54 from 59. The assessment of the traffic of prospective buyers dropped to 32 from 39. Meanwhile, the NAR reported that, from 3/2005 to 3/2006 price of a single family home rose 10.3% on a nationwide basis. It will be interesting to see what the results are for the next 12 months. For example, existing home sales are down more than 15% in five states that have had the hottest housing markets, the National Association of Realtors said Monday. Sales were down 22.2% year-over-year in Arizona, 19.2% in California, 18.2% in the District of Columbia, 15.7% in Florida and 15% in Nevada, the real estate group said. Nationally, sales of existing homes fell 2.1% year-over-year in the first quarter. The hot states now are New Mexico, Louisiana, Montana and Mississippi.
Capital flows into the United States fell to $69.8 billion in March after reaching a revised $90.5 billion in February, the Treasury Department said Monday. In sum, the capital flow in March covered the monthly trade deficit by $7 billion but that excludes the budget deficit that is running over $25 billion a month in the red.
Manufacturing activity in the New York area expanded at a slower pace in May, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to 12.4 in May from 15.8 in April. This is the lowest level since June 2005.
eBay's Skype, the Web telephone company, on Monday announced a marketing promotion that will allow its users in the United States and Canada to make free calls to conventional wireline and mobile phones.
Gary Lammert: "March 2000 was not Sept-October 1929. But perhaps May 2006 is April 1932.The borrowers of last resort: the American consumer and the taxrefunding and war borrowing US government are unknowingly nearexhaustion. The American president with low unemployment, continuedtax rebates, and recent hefty tax revenues is perhaps as unsuspectingof the deterministic fractal valuation events soon to unfold as is hisincreasingly dissatisfied public. Mr.Hoover with his ample treasuryhad a relatively enviable position."
After several years in which residential rental prices had little or no rise, the dynamics are changing and rents are on the rise. How will that impact the CPI in coming months?
Rep. Ron Paul: "Our relative wealth as a nation is measured in dollars, and the steady erosion of the value of those dollars means we will all be poorer in the future. The artificial stimulation of our economy through cheap money comes with a price. When dollars are abundant, they are worth less. This is the reality facing Americans today, especially older Americans who rely on savings to finance their retirement years."
Profit margins narrowed for the first time in at least two years and expenses rose. Investors were disappointed that the earnings gain was spurred by credit card revenue and a one-time tax gain. Target's results were hurt by markdowns and investments to buy more merchandise direct from manufacturers, Goldman, Sachs & Co. analyst Adrianne Shapira said today in a report. Those of you who purchased Wal-Mart stock and sold Target short have a handsome gain on the books.
Despite a sharp decline in oil, gold, silver, copper, zinc and other metals, despite a continued rise in volatility, despite a drop in interest rates and a rise in the dollar index, equities simply have trouble gaining traction. The Dow and the S&P 500 registered modest gains and the Nasdaq a small loss.
The President of Venezuela yesterday offered to supply the poor in Britain with cheap heating oil in the winter, in an apparent attempt to embarrass Tony Blair's Government.
The NAHB projects home sales will fall 12 percent in 2006 from record sales in 2005, and new single-family home starts will decline 7 percent from last year. The index has declined on a seasonally adjusted basis every month since January. D.R. Horton, the nation's largest homebuilder, declined to a new 52-week low.
Wal-Mart stated first-quarter net income rose 6.3% to $2.615 billion, or 63 cents a share, with revenue up 12.2% to $80.47 billion. Analysts polled by Thomson First Call were expecting earnings of 61 cents a share on revenue of $80.43 billion. The company said its inventory performance was the best it's seen in many quarters, and expects a 2% to 4% U.S. same-store sales rise in the second quarter, and earnings between 70 cents and 74 cents a share. It continues to see fiscal year earnings between $2.88 and $2.95 a share.
House Majority Leader John Boehner said Monday he will not push legislation to reduce the U.S. tariff on ethanol imports.
Bush wants "middle ground" on immigration. It does not surprise me that he did not mention prosecuting those who hire illegal imiigrants. You don't need the national guard for that and you don't need to seek additional funding for that. However, it does require a leader who knows the difference between right and wrong.
Sunday, May 14, 2006
Concerns
5/15/04 Concerns
An index of prices that companies in Japan pay for energy and raw materials climbed 2.5 percent from a year earlier, the 26th successive increase, the Bank of Japan said in Tokyo on Sunday. A 27 percent gain in Dubai crude oil prices this year, the benchmark for Asian refiners, has made it more difficult for companies to pass on costs to customers. . ``Companies just can't pass on costs at the same pace as they did last year,'' said Junichi Makino, a senior economist at Daiwa Institute of Research Ltd. in Tokyo. ``Cost gains will become a bigger concern for corporate profits this year.'' This same cost squeeze face companies in the U.S.
In the latest Newsweek poll, 57 Percent Say Administration Has Gone Too Far in Expanding Presidential Power; 50 Percent Say History Will View Bush as a Below Average President 71 Percent Are Dissatisfied With the Way Things Are Going in the U.S.
Venezuela's President Hugo Chavez warned at a conference in London on Sunday that a US attack on Iran would trigger an enormous military escalation, and he criticized the war in Iraq, calling it the "Vietnam of the 21st century.".
According to the Financial Times, on Tuesday Chile's president will lay the first stone of a new liquid natural gas re-gasification plant at Quintero near the port of Valparaiso. Engineering studies have still to be completed, but the ceremony will underline official commitment to the project being developed by BG of the UK together with local partners Enap, Endesa and Metrogas. The plant, which will cost up to $400m and supply about 45 per cent of Chile’s needs, will depend on imported LNG from Indonesia or Africa and the gas it produces will supplement fuel currently sold to Chile by Argentina.
The Detroit Free Press observed that Sheldon Sandler, founder of Bel Air Partners, a New Jersey financial consulting firm specializing in auto retailing, said the priciest of the major dealerships to acquire now is Lexus, which commands a premium of six to 10 times annual profits, in addition to its property. BMW and Mercedes come next, followed by Honda and Toyota, at multiples of four times profits.
Cadillac, Chevrolet and Chrysler stores command premiums of two to 3 1/2 times annual earnings, but Pontiac, Ford, Buick and Lincoln Mercury dealers are sometimes worth no more than the value of the real estate they occupy, Sandler said.
Early this morning, June gold futures dropped $19 an ounce to $692.80 and July silver futures fell 77.5 cents to $13.46 an ounce.
The yuan strengthened beyond 8 to the dollar for the first time in more than 12 years. How long will it take to get to 7 to the dollar?
In early overseas Monday trading, crude-oil futures fell by more than $1 a barrel.
With the recent spike in the volatility index (VIX), it would not surprise to see an effort to have a very short term rally. Again, if that were the case, I would use the strength to lighten up on trading positions.
Barry Ritholtz: "The breach of a key uptrend in the ratio of the S&P 500 to the 10-year U.S. government bond yield suggests either stock prices are headed much lower or bond yields are headed much higher -- or both -- in the longer term."
"This is the tip of the iceberg. It's going to get worse," Massachusetts Emergency Management Agency spokesman Peter Judge said Sunday. "We fear that 15 rivers will be pushed over flood level or right up to flood level." The governors of New Hampshire and Massachusetts declared states of emergency, while Maine Gov. John Baldacci declared a state of emergency for his state's southernmost county, York County.
Southeast Asian trade ministers(ASEAN) opened talks Monday on ways to speed up economic integration and turn the region into a single market by 2015, five years earlier than planned.
An index of prices that companies in Japan pay for energy and raw materials climbed 2.5 percent from a year earlier, the 26th successive increase, the Bank of Japan said in Tokyo on Sunday. A 27 percent gain in Dubai crude oil prices this year, the benchmark for Asian refiners, has made it more difficult for companies to pass on costs to customers. . ``Companies just can't pass on costs at the same pace as they did last year,'' said Junichi Makino, a senior economist at Daiwa Institute of Research Ltd. in Tokyo. ``Cost gains will become a bigger concern for corporate profits this year.'' This same cost squeeze face companies in the U.S.
In the latest Newsweek poll, 57 Percent Say Administration Has Gone Too Far in Expanding Presidential Power; 50 Percent Say History Will View Bush as a Below Average President 71 Percent Are Dissatisfied With the Way Things Are Going in the U.S.
Venezuela's President Hugo Chavez warned at a conference in London on Sunday that a US attack on Iran would trigger an enormous military escalation, and he criticized the war in Iraq, calling it the "Vietnam of the 21st century.".
According to the Financial Times, on Tuesday Chile's president will lay the first stone of a new liquid natural gas re-gasification plant at Quintero near the port of Valparaiso. Engineering studies have still to be completed, but the ceremony will underline official commitment to the project being developed by BG of the UK together with local partners Enap, Endesa and Metrogas. The plant, which will cost up to $400m and supply about 45 per cent of Chile’s needs, will depend on imported LNG from Indonesia or Africa and the gas it produces will supplement fuel currently sold to Chile by Argentina.
The Detroit Free Press observed that Sheldon Sandler, founder of Bel Air Partners, a New Jersey financial consulting firm specializing in auto retailing, said the priciest of the major dealerships to acquire now is Lexus, which commands a premium of six to 10 times annual profits, in addition to its property. BMW and Mercedes come next, followed by Honda and Toyota, at multiples of four times profits.
Cadillac, Chevrolet and Chrysler stores command premiums of two to 3 1/2 times annual earnings, but Pontiac, Ford, Buick and Lincoln Mercury dealers are sometimes worth no more than the value of the real estate they occupy, Sandler said.
Early this morning, June gold futures dropped $19 an ounce to $692.80 and July silver futures fell 77.5 cents to $13.46 an ounce.
The yuan strengthened beyond 8 to the dollar for the first time in more than 12 years. How long will it take to get to 7 to the dollar?
In early overseas Monday trading, crude-oil futures fell by more than $1 a barrel.
With the recent spike in the volatility index (VIX), it would not surprise to see an effort to have a very short term rally. Again, if that were the case, I would use the strength to lighten up on trading positions.
Barry Ritholtz: "The breach of a key uptrend in the ratio of the S&P 500 to the 10-year U.S. government bond yield suggests either stock prices are headed much lower or bond yields are headed much higher -- or both -- in the longer term."
"This is the tip of the iceberg. It's going to get worse," Massachusetts Emergency Management Agency spokesman Peter Judge said Sunday. "We fear that 15 rivers will be pushed over flood level or right up to flood level." The governors of New Hampshire and Massachusetts declared states of emergency, while Maine Gov. John Baldacci declared a state of emergency for his state's southernmost county, York County.
Southeast Asian trade ministers(ASEAN) opened talks Monday on ways to speed up economic integration and turn the region into a single market by 2015, five years earlier than planned.
Saturday, May 13, 2006
Conditions
5/14/06 Conditions
Earthfiles.com: "The Tibet plateau glaciers have one-sixth of all the world's ice. But those glaciers, which cover about 60,000 square miles at an average height of 13,000 feet above sea level, are melting at the unprecedented rate of 7% per year, triggering drought, desertification and sandstorms in other regions, including China. So far in 2006, China has had thirteen sandstorms. One in mid-April dumped 330,000 tons of sand on Beijing. More than 10 million people, mainly in northern China, are trying to survive a severe drought and lack of drinking water the past month."
Doug Noland: "So far this year, 10-year Treasury yields have jumped 80 basis points to the highest level since May 2002. Over this period, the dollar index has declined about 7%. It should be noted that, as the dollar index sank from 120 to 93 between early-2002 and mid-2003, bond yields collapsed from 5.4% to a low of just above 3%."
Is the dollar a safe haven or the Swiss franc?
Boeing raised list prices about 4 percent for most of its airplanes built in the Seattle area.
The price index of overall exports rose 0.6 percent in April as a 0.7 percent increase in nonagricultural prices more than offset a 0.6 percent decline in agricultural prices. Nonagricultural prices continued the upward trend over each of the past five months, and increased 2.5 percent for the year ended in April. Overall export prices rose 2.4 percent for the same period. The increase in nonagricultural prices was led by a 2.0 percent advance in prices for nonagricultural industrial supplies and materials, the largest monthly increase since October. A sharp rise in fuel prices drove the increase, but higher metals prices were also a contributing factor. The price index for nonagricultural industrial supplies and materials advanced 8.0 percent over the past 12 months.
Iran's President states he considers "invalid" any European proposals that ask Iran to halt uranium enrichment.
Inco said it's raised the cash component of its Falconbridge bid by C$5 a share more by boosting the value of the cash component of the bid, and also said that it now sees $375 million in synergies a year, vs. an earlier estimate of $350 million. Falconbridge also agreed to pay a $450 million break-up fee.
Brett Steenbarger: "We had two consecutive days on Thursday and Friday in which 70% or more of traded issues declined on the day. Since 1990 (N = 4124 trading days), that has only occurred 13 times.The next day, the S&P 500 Index ($SPX) was up by an average .59% (9 up, 4 down)--much stronger than the average daily gain of .04% (2174 up, 1950 down) for the sample overall.Two days later, the S&P was up by an average 1.37% (10 up, 3 down)--considerably stronger than the average two-day gain of .08% (2209 up, 1915 down) for the 1990-2006 sample."
Mike Burk: "The last time there were 5 consecutive down days in the R2K was in March 2005 and before that late December 2004 / early January 2005. Both initiated short term down trends."
Cuba is partnering with companies from China, India, Norway and Canada to exploit offshore resources, according to the U.S.-Cuba Trade Association and the legislation's sponsors.
Earthfiles.com: "The Tibet plateau glaciers have one-sixth of all the world's ice. But those glaciers, which cover about 60,000 square miles at an average height of 13,000 feet above sea level, are melting at the unprecedented rate of 7% per year, triggering drought, desertification and sandstorms in other regions, including China. So far in 2006, China has had thirteen sandstorms. One in mid-April dumped 330,000 tons of sand on Beijing. More than 10 million people, mainly in northern China, are trying to survive a severe drought and lack of drinking water the past month."
Doug Noland: "So far this year, 10-year Treasury yields have jumped 80 basis points to the highest level since May 2002. Over this period, the dollar index has declined about 7%. It should be noted that, as the dollar index sank from 120 to 93 between early-2002 and mid-2003, bond yields collapsed from 5.4% to a low of just above 3%."
Is the dollar a safe haven or the Swiss franc?
Boeing raised list prices about 4 percent for most of its airplanes built in the Seattle area.
The price index of overall exports rose 0.6 percent in April as a 0.7 percent increase in nonagricultural prices more than offset a 0.6 percent decline in agricultural prices. Nonagricultural prices continued the upward trend over each of the past five months, and increased 2.5 percent for the year ended in April. Overall export prices rose 2.4 percent for the same period. The increase in nonagricultural prices was led by a 2.0 percent advance in prices for nonagricultural industrial supplies and materials, the largest monthly increase since October. A sharp rise in fuel prices drove the increase, but higher metals prices were also a contributing factor. The price index for nonagricultural industrial supplies and materials advanced 8.0 percent over the past 12 months.
Iran's President states he considers "invalid" any European proposals that ask Iran to halt uranium enrichment.
Inco said it's raised the cash component of its Falconbridge bid by C$5 a share more by boosting the value of the cash component of the bid, and also said that it now sees $375 million in synergies a year, vs. an earlier estimate of $350 million. Falconbridge also agreed to pay a $450 million break-up fee.
Brett Steenbarger: "We had two consecutive days on Thursday and Friday in which 70% or more of traded issues declined on the day. Since 1990 (N = 4124 trading days), that has only occurred 13 times.The next day, the S&P 500 Index ($SPX) was up by an average .59% (9 up, 4 down)--much stronger than the average daily gain of .04% (2174 up, 1950 down) for the sample overall.Two days later, the S&P was up by an average 1.37% (10 up, 3 down)--considerably stronger than the average two-day gain of .08% (2209 up, 1915 down) for the 1990-2006 sample."
Mike Burk: "The last time there were 5 consecutive down days in the R2K was in March 2005 and before that late December 2004 / early January 2005. Both initiated short term down trends."
Cuba is partnering with companies from China, India, Norway and Canada to exploit offshore resources, according to the U.S.-Cuba Trade Association and the legislation's sponsors.
Friday, May 12, 2006
The Data
5/13/06 The Data
The talking heads got all excited after the March trade deficit only came in at $62+ billion against an expected $66 billion. Unfortunately, crude prices in April and May are higher than they were in March. As such, unless Boeing delivered a zillion planes in April and zillions more in May, the trade deficit will be more than $66 billion in both April and May. In sum, we are still on target for a $800 billion trade deficit this year. It's no wonder the bond market is in the soup and the dollar continues to tank. As I have said for so long, only someone who wants to lose money will be long dollars and U.S. treasury bonds.
You know foreigners will lighten up on dollar-denominated assets, and that means on-going supply for equities and bonds. In addition, there is more attention being paid to corn, wheat, and soybeans, and for good reason. Demand is rising and will create lower supply levels. I mentioned this at the turn of the year. I believe there is a place for these commodities in long-term accounts.
The University of Michigan's preliminary May index of consumer sentiment was 79.0, down from April's final reading of 87.4. The May reading was the weakest since October 2005, when sentiment hit a 12-year low just after hurricanes Katrina and Rita devastated U.S. southeast petroleum refining capacity and gasoline prices spiked.
"If investments (assets) are passed to a different owner, they need to be compensated," Celso Amorim told reporters Friday at a summit of EU, Latin American and Caribbean leaders.
Bolivia's President Evo Morales warned Thursday that companies including Brazil's Petroleo Brasileiro SA may not be compensated following the forced nationalization of their Bolivian operations.
One should ask-- if business is so strong, why is the consumer sentiment dropping so sharply? What's more important corporate earnings for 5,000+ public companies or millions of folks on Main Street struggling to make ends meet? Wall Street mystics can't see past Wall and Broad Streets. There's a whole world out there and it's not sitting pretty. Don't take my word for it. Take a gander on your own time. As for the Fed, they need to look at the data. Look at the people, you twits! Stop printing the money at alarming rates and making the dollar worthless.
CHC Helicopter Corp. has won three new contracts worth $200 million from Statoil ASA to provide helicopter services in the Norwegian Sea, plus renewal of a $74-million contract to provide the Irish Coast Guard with search-and-rescue service through 2010.
In the latest Harris Interactive poll, of 1,003 U.S. adults surveyed in a telephone poll, 29% think Mr. Bush is doing an “excellent or pretty good” job as president, down from 35% in April and significantly lower than 43% in January. Approval ratings for Congress overall also sank, and now stand at 18%. In sum, 29% are found to be brain dead.
Yesterday, mid-way thru the trading session, the talking heads were grasping for straws--
the dollar index had rallied back up to 84(but didn't hold it) and crude was down to $72. Meanwhile, the VIX is running wild on the upside and the yield curve is steepening with the 2-year at 5.01%, the 10-year at 5.19%, and the 30-year at 5.30%. Those folks with the $2.25 trillion in ARMS are about to feel a great deal of pain.
Can you tell me what jerk is going to buy a 50-year Treasury bond? There was a time when a baby was born, you would buy a savings bond for the child. Would you do that now? Then why buy a 50-year Treasury?
Marc Faber: "To summarize, the higher the S&P 500 goes the more the US dollar will lose its value against gold and foreign currencies. In our opinion, the underperformance of US assets against foreign assets and precious metals, which began in 2002, will continue for as far as the eye can see."
The Department of Justice said Friday Microsoft Corp. has agreed to extend oversight of the software company's final antitrust judgment by at least two years. If the extension is approved by the court, it would expire in fall of 2009. Microsoft has agreed to a 2-year extension of the communications protocol licensing program of the final judgment, along with all its enforcement provisions. Microsoft has also agreed that the government may apply for an additional extension for up to three additional years, through November 2012.
Here's some data for the Fed. The US dollar suffered a severe sell-off on Friday, taking it to its weakest level against a trade-weighted basket of currencies since October 1997. As they say in the trading pits, it's the pause-to-be that refreshes! Naturally, the talking heads will say a weak dollar makes our exports cheaper. Unfortuately, since we depend on foreign capital to fund our deficits, a weak dollar is a bitter pill and a detractor for attracting foreign capital.
Most Mideast currencies are pegged to the dollar which means the value of stock investments held by foreigners has been plummeting in line with the U.S. currency. The Dubai stock market shed 14.35% for the week, while the Abu Dhabi market gave up 10.49%.
The talking heads got all excited after the March trade deficit only came in at $62+ billion against an expected $66 billion. Unfortunately, crude prices in April and May are higher than they were in March. As such, unless Boeing delivered a zillion planes in April and zillions more in May, the trade deficit will be more than $66 billion in both April and May. In sum, we are still on target for a $800 billion trade deficit this year. It's no wonder the bond market is in the soup and the dollar continues to tank. As I have said for so long, only someone who wants to lose money will be long dollars and U.S. treasury bonds.
You know foreigners will lighten up on dollar-denominated assets, and that means on-going supply for equities and bonds. In addition, there is more attention being paid to corn, wheat, and soybeans, and for good reason. Demand is rising and will create lower supply levels. I mentioned this at the turn of the year. I believe there is a place for these commodities in long-term accounts.
The University of Michigan's preliminary May index of consumer sentiment was 79.0, down from April's final reading of 87.4. The May reading was the weakest since October 2005, when sentiment hit a 12-year low just after hurricanes Katrina and Rita devastated U.S. southeast petroleum refining capacity and gasoline prices spiked.
"If investments (assets) are passed to a different owner, they need to be compensated," Celso Amorim told reporters Friday at a summit of EU, Latin American and Caribbean leaders.
Bolivia's President Evo Morales warned Thursday that companies including Brazil's Petroleo Brasileiro SA may not be compensated following the forced nationalization of their Bolivian operations.
One should ask-- if business is so strong, why is the consumer sentiment dropping so sharply? What's more important corporate earnings for 5,000+ public companies or millions of folks on Main Street struggling to make ends meet? Wall Street mystics can't see past Wall and Broad Streets. There's a whole world out there and it's not sitting pretty. Don't take my word for it. Take a gander on your own time. As for the Fed, they need to look at the data. Look at the people, you twits! Stop printing the money at alarming rates and making the dollar worthless.
CHC Helicopter Corp. has won three new contracts worth $200 million from Statoil ASA to provide helicopter services in the Norwegian Sea, plus renewal of a $74-million contract to provide the Irish Coast Guard with search-and-rescue service through 2010.
In the latest Harris Interactive poll, of 1,003 U.S. adults surveyed in a telephone poll, 29% think Mr. Bush is doing an “excellent or pretty good” job as president, down from 35% in April and significantly lower than 43% in January. Approval ratings for Congress overall also sank, and now stand at 18%. In sum, 29% are found to be brain dead.
Yesterday, mid-way thru the trading session, the talking heads were grasping for straws--
the dollar index had rallied back up to 84(but didn't hold it) and crude was down to $72. Meanwhile, the VIX is running wild on the upside and the yield curve is steepening with the 2-year at 5.01%, the 10-year at 5.19%, and the 30-year at 5.30%. Those folks with the $2.25 trillion in ARMS are about to feel a great deal of pain.
Can you tell me what jerk is going to buy a 50-year Treasury bond? There was a time when a baby was born, you would buy a savings bond for the child. Would you do that now? Then why buy a 50-year Treasury?
Marc Faber: "To summarize, the higher the S&P 500 goes the more the US dollar will lose its value against gold and foreign currencies. In our opinion, the underperformance of US assets against foreign assets and precious metals, which began in 2002, will continue for as far as the eye can see."
The Department of Justice said Friday Microsoft Corp. has agreed to extend oversight of the software company's final antitrust judgment by at least two years. If the extension is approved by the court, it would expire in fall of 2009. Microsoft has agreed to a 2-year extension of the communications protocol licensing program of the final judgment, along with all its enforcement provisions. Microsoft has also agreed that the government may apply for an additional extension for up to three additional years, through November 2012.
Here's some data for the Fed. The US dollar suffered a severe sell-off on Friday, taking it to its weakest level against a trade-weighted basket of currencies since October 1997. As they say in the trading pits, it's the pause-to-be that refreshes! Naturally, the talking heads will say a weak dollar makes our exports cheaper. Unfortuately, since we depend on foreign capital to fund our deficits, a weak dollar is a bitter pill and a detractor for attracting foreign capital.
Most Mideast currencies are pegged to the dollar which means the value of stock investments held by foreigners has been plummeting in line with the U.S. currency. The Dubai stock market shed 14.35% for the week, while the Abu Dhabi market gave up 10.49%.
Ammo
5/12/06 Ammo
For the last several years money managers and traders have been buying on the dips,
and that has been a winning strategy. So I ask you. Will you use your ammo today or
ride it out over the weekend? There's no reason for you to be scared. There's nothing new--
gold, copper, and nickel are hitting highs and crude is bouncing around the $73 level, and
interest rates are trending higher, and the trade deficit will exceed $66 billion for the latest month's report. The dollar is getting trampled and the yen is below 110-- it's only the worst in 8 months and the dollar is 129 to the euro--only the worst in a year.
China's trade surplus in April was $10.5 billion-- we've seen it before.
Robert McHugh stated he received the 9th Hindenburg Omen since April 7th yesterday on May 11.
Don't be scared. You didn't give a crap about the other eight. Step up to the plate. I still
want to sell into strength. Make my day.
Now there is something new. Did you notice the voting at the Ford annual meeting? The support
for management was not there. Trouble is circling the company. At the beginning of the year I predicted the company could be sold. I believe that more strongly today. Despite all the difficulties in the U.S. car business, Ford still has plenty of cash flow. It is, in my view, significantly undervalued on a cash flow basis. A private equity combine could have a field day with Ford.
For the last several years money managers and traders have been buying on the dips,
and that has been a winning strategy. So I ask you. Will you use your ammo today or
ride it out over the weekend? There's no reason for you to be scared. There's nothing new--
gold, copper, and nickel are hitting highs and crude is bouncing around the $73 level, and
interest rates are trending higher, and the trade deficit will exceed $66 billion for the latest month's report. The dollar is getting trampled and the yen is below 110-- it's only the worst in 8 months and the dollar is 129 to the euro--only the worst in a year.
China's trade surplus in April was $10.5 billion-- we've seen it before.
Robert McHugh stated he received the 9th Hindenburg Omen since April 7th yesterday on May 11.
Don't be scared. You didn't give a crap about the other eight. Step up to the plate. I still
want to sell into strength. Make my day.
Now there is something new. Did you notice the voting at the Ford annual meeting? The support
for management was not there. Trouble is circling the company. At the beginning of the year I predicted the company could be sold. I believe that more strongly today. Despite all the difficulties in the U.S. car business, Ford still has plenty of cash flow. It is, in my view, significantly undervalued on a cash flow basis. A private equity combine could have a field day with Ford.
Ammo
5/12/06 Ammo
For the last several years money managers and traders have been buying on the dips,
and that has been a winning strategy. So I ask you. Will you use your ammo today or
ride it out over the weekend? There's no reason for you to be scared. There's nothing new--
gold, copper, and nickel are hitting highs and crude is bouncing around the $73 level, and
interest rates are trending higher, and the trade deficit will exceed $66 billion for the latest month's report. The dollar is getting trampled and the yen is below 110-- it's only the worst in 8 months and the dollar is 129 to the euro--only the worst in a year.
China's trade surplus in April was $10.5 billion-- we've seen it before.
Robert McHugh stated he received the 9th Hindenburg Omen since April 7th yesterday on May 11.
Don't be scared. You didn't give a crap about the other eight. Step up to the plate. I still
want to sell into strength. Make my day.
Now there is something new. Did you notice the voting at the Ford annual meeting? The support
for management was not there. Trouble is circling the company. At the beginning of the year I predicted the company could be sold. I believe that more strongly today. Despite all the difficulties in the U.S. car business, Ford still has plenty of cash flow. It is, in my view, significantly undervalued on a cash flow basis. A private equity combine could have a field day with Ford.
For the last several years money managers and traders have been buying on the dips,
and that has been a winning strategy. So I ask you. Will you use your ammo today or
ride it out over the weekend? There's no reason for you to be scared. There's nothing new--
gold, copper, and nickel are hitting highs and crude is bouncing around the $73 level, and
interest rates are trending higher, and the trade deficit will exceed $66 billion for the latest month's report. The dollar is getting trampled and the yen is below 110-- it's only the worst in 8 months and the dollar is 129 to the euro--only the worst in a year.
China's trade surplus in April was $10.5 billion-- we've seen it before.
Robert McHugh stated he received the 9th Hindenburg Omen since April 7th yesterday on May 11.
Don't be scared. You didn't give a crap about the other eight. Step up to the plate. I still
want to sell into strength. Make my day.
Now there is something new. Did you notice the voting at the Ford annual meeting? The support
for management was not there. Trouble is circling the company. At the beginning of the year I predicted the company could be sold. I believe that more strongly today. Despite all the difficulties in the U.S. car business, Ford still has plenty of cash flow. It is, in my view, significantly undervalued on a cash flow basis. A private equity combine could have a field day with Ford.
Tuesday, May 09, 2006
Buying Time
5/11/06 Buying Time
The Fed wants to buy time for the next six weeks to analyze the economic data in an effort to determine whether it is appropriate to raise rates for the 17th time or maintain the Fed Funds at 5%. Unfortunately, time costs money. Puts and calls and other derivatives carry a cost. Who does the Fed think will pay for this time? Clearly, the Fed thinks it will involve no cost for them. I assure you there will be a payment. Markets have some degree of uncertainty and some volatility. Despite what market mavens may believe, our currency is now in the control of foreigners. Money flows determine the direction of all markets, and the cash flow can be found in Asean countries as well as Petro countries. Continued printing of U.S. dollars by the Fed will only fuel inflation. It will not provide a sound platform for our twin tower deficits.
The talking heads on TV want to mesmerize you with the Dow approaching the highs of 2000. We are talking about 30 stocks. How about the dollar index at a one-year low, gold at a 26-year high, treasuries at a 5-year high yield, unleaded gasoline at the wholesale level at $2.16, and crude baove $72. How about a cooling housing market sitting on top of $9 trillion in mortgage debt with 25% of that debt in ARMs? How about 3.8% less gasoline available today than 1 year ago, and that's with $3 gasoline? Time never comes cheap. It can be less expensive than some periods but never cheap. It evaporates and you can't get it back. You can't beat time and you can't outsmart the unknown. If you want to rely on the Fed to sort it all out, be my guest. I will appoint you the president of the Schmuck Club.
Medtronic Begins Landmark Clinical Trial: Cardiac Device Combines Defibrillation and Heart Monitoring; Heart-Failure Device Demonstrates Medtronic's Focus on Cardiac Disease Management
The Bank of England stated growth may accelerate to about 3 percent in the fourth quarter before slowing to about 2.75 percent by the final three months of 2007, the central bank estimated in its quarterly inflation report, released in London today. Consumer-price inflation will accelerate to above 2 percent this year before moderating to target by the end of 2007, it said.
For the first time copper sold above $8000 a ton. Meanwhile, gold traded higher to the $709 level.
More than two in three Houston-area residents believe the country is headed for harder times, the highest pessimism level in the 18 years that the Houston Area Survey has asked the question.
StockTradingGuy: "Going back to 1980, the DJI has been up 17 of the last 26 Mays. Over the last 16 years, there have only been 4 down May months. If anything, May seems to be a decent month to be on the long side."
After acquiring Maytag, Whirlool is laying off 4,500 workers.
DaimlerChrysler on Wednesday said that it will add a third work shift to its manufacturing operations in Illinois, where the German-American car giant currently builds the 2007 Dodge Caliber. The plant will begin making the all-new Jeep Compass this month with the 2007 Jeep Patriot on tap for later this year.
The Fed wants to buy time for the next six weeks to analyze the economic data in an effort to determine whether it is appropriate to raise rates for the 17th time or maintain the Fed Funds at 5%. Unfortunately, time costs money. Puts and calls and other derivatives carry a cost. Who does the Fed think will pay for this time? Clearly, the Fed thinks it will involve no cost for them. I assure you there will be a payment. Markets have some degree of uncertainty and some volatility. Despite what market mavens may believe, our currency is now in the control of foreigners. Money flows determine the direction of all markets, and the cash flow can be found in Asean countries as well as Petro countries. Continued printing of U.S. dollars by the Fed will only fuel inflation. It will not provide a sound platform for our twin tower deficits.
The talking heads on TV want to mesmerize you with the Dow approaching the highs of 2000. We are talking about 30 stocks. How about the dollar index at a one-year low, gold at a 26-year high, treasuries at a 5-year high yield, unleaded gasoline at the wholesale level at $2.16, and crude baove $72. How about a cooling housing market sitting on top of $9 trillion in mortgage debt with 25% of that debt in ARMs? How about 3.8% less gasoline available today than 1 year ago, and that's with $3 gasoline? Time never comes cheap. It can be less expensive than some periods but never cheap. It evaporates and you can't get it back. You can't beat time and you can't outsmart the unknown. If you want to rely on the Fed to sort it all out, be my guest. I will appoint you the president of the Schmuck Club.
Medtronic Begins Landmark Clinical Trial: Cardiac Device Combines Defibrillation and Heart Monitoring; Heart-Failure Device Demonstrates Medtronic's Focus on Cardiac Disease Management
The Bank of England stated growth may accelerate to about 3 percent in the fourth quarter before slowing to about 2.75 percent by the final three months of 2007, the central bank estimated in its quarterly inflation report, released in London today. Consumer-price inflation will accelerate to above 2 percent this year before moderating to target by the end of 2007, it said.
For the first time copper sold above $8000 a ton. Meanwhile, gold traded higher to the $709 level.
More than two in three Houston-area residents believe the country is headed for harder times, the highest pessimism level in the 18 years that the Houston Area Survey has asked the question.
StockTradingGuy: "Going back to 1980, the DJI has been up 17 of the last 26 Mays. Over the last 16 years, there have only been 4 down May months. If anything, May seems to be a decent month to be on the long side."
After acquiring Maytag, Whirlool is laying off 4,500 workers.
DaimlerChrysler on Wednesday said that it will add a third work shift to its manufacturing operations in Illinois, where the German-American car giant currently builds the 2007 Dodge Caliber. The plant will begin making the all-new Jeep Compass this month with the 2007 Jeep Patriot on tap for later this year.
Real Time Reality
5/10/06 Real Time Reality
"It is not the fact that gold is close to breaking above $700 that has surprised us, but rather the pace at which it is expanding," said Matthew Parry, an economist at Moody's Economy.com. He emphasized, however, that his company "does not ... envisage the current bull-run having much further to go once $700 has been broken." If Greenspan were now head of the Fed, do you think he'd be concerned with $700 gold and the dollar index at 84.55? Do you think he'd be talking even the remote possibility of a pause?
The NAR forecast for 2006 was something to behold. They predict a 30-year fixed rate mortgage at 7%. The 30-year is now 6.50% with the 10-year Treasury at 5.13% and the 30-year Treasury at 5.21%. What does that tell you about interest rates for the 10-year and the 30-year by year-end? Sounds to me like 5.65% and 5.75% are distinct possibilities. The equity market is not trading on this possibility. Bad endings rarely are projected in advance. Continuing with the NAR forecast, they predict existing home sales to decline 6.4% in 2006, new home sales to drop 11.6%, and starts to dip by 5.4%. Despite all this negativity, the NAR thinks existing home prices will increase by 5.7%. I wouldn't want to stake the equity in one's home on that.
Gary Dorsch: "The Euro zone's M3 money supply is 8.6% higher from a year ago, and the UK's M4 is 12.2% higher. China's M2 money measure is 18.8% higher. The US M3 is off the charts."
Time Warner Inc.'s AOL unit is laying off 1,300 employees, or roughly 7% of its workforce, and closing its call center in Jacksonville, Fla., according to a published report Tuesday.
A new Harris Poll finds that about half of all U.S. adults think it is likely or very likely that there will be a major new war involving many American soldiers (52%) a major terrorist attack like 9/11 in the United States (49%) in the next 10 years. Slightly fewer adults (45%) think that it is likely or very likely that Social Security benefits will be eliminated or sharply reduced, while slightly more than one-third (35%) think it likely or very likely that we will see a woman become president. Approximately one in six (16%) thinks it is likely or very likely that there will be a stock market crash like the one that happened in 1929.
Palatin Technologies,Inc. announced today financial results for the third quarterended March 31, 2006. Total revenues in the quarter ended March 31, 2006were $5.0 million, compared to $2.8 million for the same period in 2005.Palatin reported a net loss of $7.6 million, or ($0.13) per basic anddiluted share, for the quarter ended March 31, 2006, compared to a net lossof $3.9 million, or ($0.07) per basic and diluted share, for the sameperiod in 2005. The increase in the net loss for the quarter ended March 31, 2006 versus the quarter ended March 31, 2005 was primarily attributable toincreased development costs related to bremelanotide, a drug underdevelopment for the treatment of erectile dysfunction (ED) and femalesexual dysfunction (FSD). The Company is currently conducting five clinicalstudies with bremelanotide that were initiated in the current fiscal year. COSTS AND EXPENSES :Total operating expenses for the quarter ended March 31, 2006 were$12.8 million, compared to $6.9 million for the same period in 2005. Development costs directly related to bremelanotide increased by $4.8 million, primarily reflecting costs associated with clinical trials thatwere initiated in the current fiscal year. Costs of other research and development programs also increased, as did spending for research personneland facilities. CASH POSITION :Palatin's cash, cash equivalents and investments totaled $16.3 millionas of March 31, 2006, compared to $18.1 million at June 30, 2005. In April 2006, the Company received $25 million of net proceeds from the sale ofcommon stock and warrants.
Bloomberg's Andy Mukherjee: "Even as they continue to pile up U.S. debt in their foreign- exchange reserves to keep their currencies stable against the dollar, Asian nations, China among them, are preparing for a scenario where the dollar does indeed collapse under the weight of a record U.S. current account deficit. At the Hyderabad meeting, finance ministers of China, Japan and South Korea got together with their counterparts from the Association of Southeast Asian Nations, or Asean. The 13-nation group said it would sponsor a research project, titled ``Toward greater financial stability in the Asian region: Exploring steps to create regional monetary units.''
I would like to take an additional moment to discuss CASCADE NATURAL Gas. With the Oregon decoupling taking effect May 1, with the Washington rate increase most likely taking effect in late 2006, and continued 4-5% growth in their customer base, I envision Cascade earning at least $1.60 per share in the 12 months beginning 1/1/07 with a significant increase in the 24 cent quarterly dividend. That to me is the worst case scenario. The other real possibility is the purchase by a larger northwest gas suppler in the near term. From the 10Q report hot off the press: "To assist the Company in evaluating all available options to maximize shareholder value, the Company has retained J.P. Morgan Securities, Inc., to provide strategic and financial advice as well as regulatory support. In addition, the Company is considering other strategic alternatives, including a possible business combination." The company has never previously stated "a possible business combination." Do you need to be hit over the head to get it?
Ashraf Laidi: "Today's auction of $21 bln in 3-year treasury notes drew 24% participation from foreign investors (indirect bidders), which was above February's 22% but lower than the 2003 and 2004 averages of 27% and 45%. Last month's 2-year auction drew 24% participation -- the lowest since November 2004, while the 5-year auction drew 21% participation -- the lowest since the records began in February 2003."
Investor's Business Daily and TechnoMetrica Market Intelligence said their economic optimism index declined for the third month in a row to 46.1 in May from 48.6 in April. A reading below 50 indicates pessimism.
The Dow reached its all-time high of 11,723 in early 2000. Adjusted for inflation, what would that high be today? In real inflation terms at least 2000 points higher.
The following are the corrected numbers provided by the BLS:
"In manufacturing, productivity changes in the first quarter were: 4.2 percent in manufacturing, 3.8 percent in durable goods manufacturing, and 4.4 percent in nondurable goods manufacturing. Productivity growth in manufacturing in the first quarter of 2006 reflected a 5.8-percent increase in output and a 1.6-percent increase in hours worked in the sector. Output and hours in manufacturing, which includes about 13 percent of U.S. business sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors." Please note the increase in hours worked in the manufacturing sector, an indication of the growing strength in this area.
"It is not the fact that gold is close to breaking above $700 that has surprised us, but rather the pace at which it is expanding," said Matthew Parry, an economist at Moody's Economy.com. He emphasized, however, that his company "does not ... envisage the current bull-run having much further to go once $700 has been broken." If Greenspan were now head of the Fed, do you think he'd be concerned with $700 gold and the dollar index at 84.55? Do you think he'd be talking even the remote possibility of a pause?
The NAR forecast for 2006 was something to behold. They predict a 30-year fixed rate mortgage at 7%. The 30-year is now 6.50% with the 10-year Treasury at 5.13% and the 30-year Treasury at 5.21%. What does that tell you about interest rates for the 10-year and the 30-year by year-end? Sounds to me like 5.65% and 5.75% are distinct possibilities. The equity market is not trading on this possibility. Bad endings rarely are projected in advance. Continuing with the NAR forecast, they predict existing home sales to decline 6.4% in 2006, new home sales to drop 11.6%, and starts to dip by 5.4%. Despite all this negativity, the NAR thinks existing home prices will increase by 5.7%. I wouldn't want to stake the equity in one's home on that.
Gary Dorsch: "The Euro zone's M3 money supply is 8.6% higher from a year ago, and the UK's M4 is 12.2% higher. China's M2 money measure is 18.8% higher. The US M3 is off the charts."
Time Warner Inc.'s AOL unit is laying off 1,300 employees, or roughly 7% of its workforce, and closing its call center in Jacksonville, Fla., according to a published report Tuesday.
A new Harris Poll finds that about half of all U.S. adults think it is likely or very likely that there will be a major new war involving many American soldiers (52%) a major terrorist attack like 9/11 in the United States (49%) in the next 10 years. Slightly fewer adults (45%) think that it is likely or very likely that Social Security benefits will be eliminated or sharply reduced, while slightly more than one-third (35%) think it likely or very likely that we will see a woman become president. Approximately one in six (16%) thinks it is likely or very likely that there will be a stock market crash like the one that happened in 1929.
Palatin Technologies,Inc. announced today financial results for the third quarterended March 31, 2006. Total revenues in the quarter ended March 31, 2006were $5.0 million, compared to $2.8 million for the same period in 2005.Palatin reported a net loss of $7.6 million, or ($0.13) per basic anddiluted share, for the quarter ended March 31, 2006, compared to a net lossof $3.9 million, or ($0.07) per basic and diluted share, for the sameperiod in 2005. The increase in the net loss for the quarter ended March 31, 2006 versus the quarter ended March 31, 2005 was primarily attributable toincreased development costs related to bremelanotide, a drug underdevelopment for the treatment of erectile dysfunction (ED) and femalesexual dysfunction (FSD). The Company is currently conducting five clinicalstudies with bremelanotide that were initiated in the current fiscal year. COSTS AND EXPENSES :Total operating expenses for the quarter ended March 31, 2006 were$12.8 million, compared to $6.9 million for the same period in 2005. Development costs directly related to bremelanotide increased by $4.8 million, primarily reflecting costs associated with clinical trials thatwere initiated in the current fiscal year. Costs of other research and development programs also increased, as did spending for research personneland facilities. CASH POSITION :Palatin's cash, cash equivalents and investments totaled $16.3 millionas of March 31, 2006, compared to $18.1 million at June 30, 2005. In April 2006, the Company received $25 million of net proceeds from the sale ofcommon stock and warrants.
Bloomberg's Andy Mukherjee: "Even as they continue to pile up U.S. debt in their foreign- exchange reserves to keep their currencies stable against the dollar, Asian nations, China among them, are preparing for a scenario where the dollar does indeed collapse under the weight of a record U.S. current account deficit. At the Hyderabad meeting, finance ministers of China, Japan and South Korea got together with their counterparts from the Association of Southeast Asian Nations, or Asean. The 13-nation group said it would sponsor a research project, titled ``Toward greater financial stability in the Asian region: Exploring steps to create regional monetary units.''
I would like to take an additional moment to discuss CASCADE NATURAL Gas. With the Oregon decoupling taking effect May 1, with the Washington rate increase most likely taking effect in late 2006, and continued 4-5% growth in their customer base, I envision Cascade earning at least $1.60 per share in the 12 months beginning 1/1/07 with a significant increase in the 24 cent quarterly dividend. That to me is the worst case scenario. The other real possibility is the purchase by a larger northwest gas suppler in the near term. From the 10Q report hot off the press: "To assist the Company in evaluating all available options to maximize shareholder value, the Company has retained J.P. Morgan Securities, Inc., to provide strategic and financial advice as well as regulatory support. In addition, the Company is considering other strategic alternatives, including a possible business combination." The company has never previously stated "a possible business combination." Do you need to be hit over the head to get it?
Ashraf Laidi: "Today's auction of $21 bln in 3-year treasury notes drew 24% participation from foreign investors (indirect bidders), which was above February's 22% but lower than the 2003 and 2004 averages of 27% and 45%. Last month's 2-year auction drew 24% participation -- the lowest since November 2004, while the 5-year auction drew 21% participation -- the lowest since the records began in February 2003."
Investor's Business Daily and TechnoMetrica Market Intelligence said their economic optimism index declined for the third month in a row to 46.1 in May from 48.6 in April. A reading below 50 indicates pessimism.
The Dow reached its all-time high of 11,723 in early 2000. Adjusted for inflation, what would that high be today? In real inflation terms at least 2000 points higher.
The following are the corrected numbers provided by the BLS:
"In manufacturing, productivity changes in the first quarter were: 4.2 percent in manufacturing, 3.8 percent in durable goods manufacturing, and 4.4 percent in nondurable goods manufacturing. Productivity growth in manufacturing in the first quarter of 2006 reflected a 5.8-percent increase in output and a 1.6-percent increase in hours worked in the sector. Output and hours in manufacturing, which includes about 13 percent of U.S. business sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors." Please note the increase in hours worked in the manufacturing sector, an indication of the growing strength in this area.
Monday, May 08, 2006
Sharing The Wealth
5/9/06 Sharing The Wealth
From AFX News Limited: "Venezuelan President Hugo Chavez said that the government would create a new royalties tax for oil companies and raise the income tax on heavy crude oil producers in the Faja region. 'We are going to create a new oil tax, called an extraction tax,' raising state income by 885 mln usd, Chavez said in his weekly program 'Hello, President' on Sunday. Chavez said during his six-hour talk that the new tax on producers would be 33 pct, and replace an existing oil royalty of 16.7 pct. He also said income tax on the four Faja producer groups would be raised from the current 34 pct to 50 pct, the level for producers in the rest of the country."
Inco said it remains committed to its "friendly, value-creating" deal to acquire Falconbridge Ltd. and to meeting its obligations under their support agreement.
Falconbridge stated it is 'determined to complete' transaction with Inco. Falconbridge Ltd. on Monday said it continues to believe there is "strong value proposition" in its proposed acquisition by Inco Ltd., and that the companies are determined to complete the transaction in accordance with the existing agreement.
Yesterday, senior management of both Cascade Natural Gas and Northwest Natural Gas made presentations at the American Gas Association Financial Forum in Scottsdale, AZ.
Rep. Ron Paul: "If we want to do something about gas prices, we should demand greatly reduced welfare and military spending, a balanced budget, and fewer regulations that interfere with the market development of alternative fuels. All subsidies and special benefits to energy companies should be ended. We also should demand a return to a sound commodity monetary system. And in the meantime, let's eliminate federal gas taxes at the pump. That alone would save Americans 18.4 cents per gallon. By contrast, oil companies only make about 10 cents per gallon. So maybe it's government that's being greedy."
Dell Inc. said Monday that it expects to report a fiscal first-quarter profit below it previous forecast, while revenue will be at the low end of its prior estimate, due to stiffer price competition from rival computer makers.
The National Coffee Association's Joe DeRupo stated that in 2006 82% of adult Americans will drink coffee, up from 79% two years ago.
eBay and United Health both made new 52-week lows on Monday. Both companies have provided superior long-term results for its shareholders.
Brett Steenbarger: "A narrow day after a market rise is not a pause that refreshes, but rather may indicate an exhaustion of the rally. Incredibly, 10 of the last 11 times this pattern has occurred (since 2/05), the market (SPY) has been down three days later."
Larry's Markets filed for chapter 11 bankruptcy. The company runs stores in Seattle, Redmond, Bellevue, Kirkland and Tukwila. Larry's has 550 employees.
Mittal Steel on Tuesday said it's willing to increase its offer for the world's second-largest steelmaker, Arcelor, and has made preliminary contact with Arcelor's chairman, Joseph Kinsch.
In the new Gallup poll, Bush's approval rating fell to 31%.
Texas and five other states, concerned about summer gasoline supplies, have asked federal officials about possible waivers from clean fuel rules, the head of the Environmental Protection Agency said Monday.
Mike Shedlock: "Long term prices of houses simply can not rise above people's means to pay for them. That is a simple economic fact. Here is another simple economic fact: Family incomes are falling. The negative savings rate and rising foreclosures are more proof of stress in the system."
China and India have jointly bid for a stake in an oil venture in Colombia for some US $800 million, said an Indian official Friday.
"It's going from a seller's market to a buyer's market," said David Lereah, the chief economist for the National Association of Realtors. In March, "price appreciation went down to 7.4 percent, from over 10 percent," he added. "That most probably reflects that sellers are bringing their prices down."
The Detroit News pointed out the three-day hearing, beginning today in New York with U.S. Bankruptcy Judge Robert Drain, is a pivotal event in Delphi's bankruptcy case since it zeroes in on one of the most contentious pieces of the supplier's turnaround plan -- major wage and benefit cuts for active workers and retirees.
The PlayStation 3 video game console will be available for $499 in the United States starting Nov. 17, Sony executives said Monday.
From AFX News Limited: "Venezuelan President Hugo Chavez said that the government would create a new royalties tax for oil companies and raise the income tax on heavy crude oil producers in the Faja region. 'We are going to create a new oil tax, called an extraction tax,' raising state income by 885 mln usd, Chavez said in his weekly program 'Hello, President' on Sunday. Chavez said during his six-hour talk that the new tax on producers would be 33 pct, and replace an existing oil royalty of 16.7 pct. He also said income tax on the four Faja producer groups would be raised from the current 34 pct to 50 pct, the level for producers in the rest of the country."
Inco said it remains committed to its "friendly, value-creating" deal to acquire Falconbridge Ltd. and to meeting its obligations under their support agreement.
Falconbridge stated it is 'determined to complete' transaction with Inco. Falconbridge Ltd. on Monday said it continues to believe there is "strong value proposition" in its proposed acquisition by Inco Ltd., and that the companies are determined to complete the transaction in accordance with the existing agreement.
Yesterday, senior management of both Cascade Natural Gas and Northwest Natural Gas made presentations at the American Gas Association Financial Forum in Scottsdale, AZ.
Rep. Ron Paul: "If we want to do something about gas prices, we should demand greatly reduced welfare and military spending, a balanced budget, and fewer regulations that interfere with the market development of alternative fuels. All subsidies and special benefits to energy companies should be ended. We also should demand a return to a sound commodity monetary system. And in the meantime, let's eliminate federal gas taxes at the pump. That alone would save Americans 18.4 cents per gallon. By contrast, oil companies only make about 10 cents per gallon. So maybe it's government that's being greedy."
Dell Inc. said Monday that it expects to report a fiscal first-quarter profit below it previous forecast, while revenue will be at the low end of its prior estimate, due to stiffer price competition from rival computer makers.
The National Coffee Association's Joe DeRupo stated that in 2006 82% of adult Americans will drink coffee, up from 79% two years ago.
eBay and United Health both made new 52-week lows on Monday. Both companies have provided superior long-term results for its shareholders.
Brett Steenbarger: "A narrow day after a market rise is not a pause that refreshes, but rather may indicate an exhaustion of the rally. Incredibly, 10 of the last 11 times this pattern has occurred (since 2/05), the market (SPY) has been down three days later."
Larry's Markets filed for chapter 11 bankruptcy. The company runs stores in Seattle, Redmond, Bellevue, Kirkland and Tukwila. Larry's has 550 employees.
Mittal Steel on Tuesday said it's willing to increase its offer for the world's second-largest steelmaker, Arcelor, and has made preliminary contact with Arcelor's chairman, Joseph Kinsch.
In the new Gallup poll, Bush's approval rating fell to 31%.
Texas and five other states, concerned about summer gasoline supplies, have asked federal officials about possible waivers from clean fuel rules, the head of the Environmental Protection Agency said Monday.
Mike Shedlock: "Long term prices of houses simply can not rise above people's means to pay for them. That is a simple economic fact. Here is another simple economic fact: Family incomes are falling. The negative savings rate and rising foreclosures are more proof of stress in the system."
China and India have jointly bid for a stake in an oil venture in Colombia for some US $800 million, said an Indian official Friday.
"It's going from a seller's market to a buyer's market," said David Lereah, the chief economist for the National Association of Realtors. In March, "price appreciation went down to 7.4 percent, from over 10 percent," he added. "That most probably reflects that sellers are bringing their prices down."
The Detroit News pointed out the three-day hearing, beginning today in New York with U.S. Bankruptcy Judge Robert Drain, is a pivotal event in Delphi's bankruptcy case since it zeroes in on one of the most contentious pieces of the supplier's turnaround plan -- major wage and benefit cuts for active workers and retirees.
The PlayStation 3 video game console will be available for $499 in the United States starting Nov. 17, Sony executives said Monday.
Sunday, May 07, 2006
Majority Opinions
5/8/06 Majority Opinions
Economists at all 22 securities firms that trade with the central bank stated last week that Fed officials will boost their target rate a quarter-percentage point to 5 percent when they meet May 10. Seventeen of the so-called primary dealers said that will be the last increase until at least August.
Sixty-five percent of 51 traders, strategists and investors surveyed May 5 from Mumbai to New York advised buying the yen against the dollar this week, a Bloomberg survey showed.
I'm not too comfortable being with such a majority. I believe there will be other rate increases after May 10, and I believe these increases will place a near-term floor under the dollar against the yen and the euro. That does not mean I am bullish on the dollar. It simply means things don't go down in a straight line.
Wachovia Corp, the No. 4 U.S. bank, is near an agreement to buy Golden West Financial Corp. of Oakland for roughly $26 billion, The Wall Street Journal said in its online edition Sunday, citing unnamed people familiar with the matter. Golden West owns World Savings and is best known as an ARM lender.
"In general, for most of the plastic surgeons in cosmetic surgery, the numbers are down. It's the economy for men and women. It's trickle-down economics. We are luxury items," said Dr. William Vasileff of Michigan's Birmingham Institute of Plastic Surgery, adding that collections on surgeries already performed have dropped off as well. "Patients have co-pays they don't want to co-pay."
Stanford's medical school has joined a deal to provide U.S. medical research information to consumers and doctors in China. Bridgetech Holdings International of San Diego will build a web site that it hopes will become a prime source for health-related information in China, according to a news report. The Texas A&M Health Center and China's Wu Jieping Medical Foundation have also signed onto the project. "The Internet is now beginning to have new avenues of access within the People's Republic of China,'' Stanford medical school spokesman Paul Costello told Knight Ridder. "We thought it was a powerful way to extend our hand across to the people of China and the health professionals of China.''
Stanford will provide access to university publications and information on a variety of topics including stem cell research and pediatrics. Bridgetech said it expects the site to draw 100 million visitors in its first 18 months after launching this summer.
Brett Steenbearger: "We have had five consecutive up weeks in the Dow Jones Industrial Average, gaining over 4% during that time...It turns out that the event is quite unusual: it's only occurred 69 times since January, 1978 (N = 1474 weeks)...When the Dow has been up five weeks in a row, the *next* five weeks have averaged a gain of only .02% (39 up, 30 down)."
Buffett said Berkshire will get more opportunities to acquire utility businesses. In my view, utility businesses are frequently under appreciated. Their cash flow is more dependable than most other businesses and much more resilient during recessionary periods.
Thermo Electron Corp., the world's biggest maker of medical-laboratory instruments, agreed to buy Fisher Scientific International Inc. for $10.6 billion in stock to expand in the market for equipment used in drug research.
Fisher investors will get 2 Thermo shares, or $78.90, for each of their shares, about 7 percent more than the Hampton, New Hampshire-based company's closing price last week, Waltham, Massachusetts-based Thermo said in a Business Wire statement today. Fisher investors will own about 61 percent of the company.
The dollar slid to its lowest in a year against the euro and the weakest in eight months versus the yen.
John Hussman: " Analysts might benefit investors by noting that stocks have lagged the return on lowly Treasury bills for nearly eight years, and thereby remind them that valuations matter.
From mid-1998 through Friday's close, the S&P 500 index has delivered total returns of just 3% annually. The index remains well short of the all-time high it achieved in 2000. "
According to a report in UK's Daily Mail, scientists have pinned down one variant of this piece of the genome on Chromosome 8, one of the strings of DNA in which the genetic code is written, is linked to 8 per cent of prostate cancers in Europeans and 16 per cent in people of African descent. Africans are 1.6 times more likely to develop prostate cancer than Europeans, and 2.4 times more likely to die from the disease. The new findings, published in the journal Nature Genetics, suggest the Chromosome 8 variant not only plays a role in aggressive cancers but may be largely responsible for the ethnic differences.
Teck Cominco bids C$17.8B cash and stock for Inco, and that equates to $78.50 Canadian.
The bid is conditional upon Inco not completing its takeover deal for Falconbridge Ltd. As such, I place a low probability of success for Teck Cominco.
James Montier: "Nasdaq stocks are trading at a nose-bleed high of 40 times trailing earnings. But short interest on the exchange-traded index fund that tracks the Nasdaq (ticker:QQQQ) is less than two days of trading volume. Since investors sell short in hope of buying back later at a lower price, it's clear that few are betting that Nasdaq stocks are overvalued at 40 times trailing earnings."
Economists at all 22 securities firms that trade with the central bank stated last week that Fed officials will boost their target rate a quarter-percentage point to 5 percent when they meet May 10. Seventeen of the so-called primary dealers said that will be the last increase until at least August.
Sixty-five percent of 51 traders, strategists and investors surveyed May 5 from Mumbai to New York advised buying the yen against the dollar this week, a Bloomberg survey showed.
I'm not too comfortable being with such a majority. I believe there will be other rate increases after May 10, and I believe these increases will place a near-term floor under the dollar against the yen and the euro. That does not mean I am bullish on the dollar. It simply means things don't go down in a straight line.
Wachovia Corp, the No. 4 U.S. bank, is near an agreement to buy Golden West Financial Corp. of Oakland for roughly $26 billion, The Wall Street Journal said in its online edition Sunday, citing unnamed people familiar with the matter. Golden West owns World Savings and is best known as an ARM lender.
"In general, for most of the plastic surgeons in cosmetic surgery, the numbers are down. It's the economy for men and women. It's trickle-down economics. We are luxury items," said Dr. William Vasileff of Michigan's Birmingham Institute of Plastic Surgery, adding that collections on surgeries already performed have dropped off as well. "Patients have co-pays they don't want to co-pay."
Stanford's medical school has joined a deal to provide U.S. medical research information to consumers and doctors in China. Bridgetech Holdings International of San Diego will build a web site that it hopes will become a prime source for health-related information in China, according to a news report. The Texas A&M Health Center and China's Wu Jieping Medical Foundation have also signed onto the project. "The Internet is now beginning to have new avenues of access within the People's Republic of China,'' Stanford medical school spokesman Paul Costello told Knight Ridder. "We thought it was a powerful way to extend our hand across to the people of China and the health professionals of China.''
Stanford will provide access to university publications and information on a variety of topics including stem cell research and pediatrics. Bridgetech said it expects the site to draw 100 million visitors in its first 18 months after launching this summer.
Brett Steenbearger: "We have had five consecutive up weeks in the Dow Jones Industrial Average, gaining over 4% during that time...It turns out that the event is quite unusual: it's only occurred 69 times since January, 1978 (N = 1474 weeks)...When the Dow has been up five weeks in a row, the *next* five weeks have averaged a gain of only .02% (39 up, 30 down)."
Buffett said Berkshire will get more opportunities to acquire utility businesses. In my view, utility businesses are frequently under appreciated. Their cash flow is more dependable than most other businesses and much more resilient during recessionary periods.
Thermo Electron Corp., the world's biggest maker of medical-laboratory instruments, agreed to buy Fisher Scientific International Inc. for $10.6 billion in stock to expand in the market for equipment used in drug research.
Fisher investors will get 2 Thermo shares, or $78.90, for each of their shares, about 7 percent more than the Hampton, New Hampshire-based company's closing price last week, Waltham, Massachusetts-based Thermo said in a Business Wire statement today. Fisher investors will own about 61 percent of the company.
The dollar slid to its lowest in a year against the euro and the weakest in eight months versus the yen.
John Hussman: " Analysts might benefit investors by noting that stocks have lagged the return on lowly Treasury bills for nearly eight years, and thereby remind them that valuations matter.
From mid-1998 through Friday's close, the S&P 500 index has delivered total returns of just 3% annually. The index remains well short of the all-time high it achieved in 2000. "
According to a report in UK's Daily Mail, scientists have pinned down one variant of this piece of the genome on Chromosome 8, one of the strings of DNA in which the genetic code is written, is linked to 8 per cent of prostate cancers in Europeans and 16 per cent in people of African descent. Africans are 1.6 times more likely to develop prostate cancer than Europeans, and 2.4 times more likely to die from the disease. The new findings, published in the journal Nature Genetics, suggest the Chromosome 8 variant not only plays a role in aggressive cancers but may be largely responsible for the ethnic differences.
Teck Cominco bids C$17.8B cash and stock for Inco, and that equates to $78.50 Canadian.
The bid is conditional upon Inco not completing its takeover deal for Falconbridge Ltd. As such, I place a low probability of success for Teck Cominco.
James Montier: "Nasdaq stocks are trading at a nose-bleed high of 40 times trailing earnings. But short interest on the exchange-traded index fund that tracks the Nasdaq (ticker:QQQQ) is less than two days of trading volume. Since investors sell short in hope of buying back later at a lower price, it's clear that few are betting that Nasdaq stocks are overvalued at 40 times trailing earnings."
Saturday, May 06, 2006
The Future
5/7/06 The Future
Northwest Natural Gas is headquartered in Portland, Ore., and serves over 624,000 residential and business customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Pacific Northwest. With customer growth in excess of 3 percent for 19 consecutive years, it is also one of the fastest-growing local distribution companies in the nation. NW Natural has over $1.8 billion in total assets, which includes nearly 14 bcf of underground gas storage capacity within its service territory at Mist, Ore. The company has in place rate mechanisms that help to protect revenues from warmer than average weather and declining consumption. NW Natural has increased its dividends paid on common stock for 50 consecutive years. In my view, this company would make an excellent buyer for Cascade Natural Gas. The fit would be perfect.
``My views are as strong as ever, perhaps stronger,'' Warren Buffett said Saturday about his expectation that the dollar will weaken and that growing trade and current-account imbalances in the U.S. may eventually cause a painful correction in the dollar that could lead to higher inflation.
Robert McHugh: "Worse, the Dollar's 50 day moving average is 88.97, and has broken decisively below the declining 200 day moving average at 89.44. The last time the 50 day crossed decisively below the 200 day, after being significantly above it, was in 2002. What followed was a 30 percent decline in the value of the Dollar. "
Facing an April 1 deadline, 16 foreign firms active in Venezuela's oil and gas sector agreed to convert their existing operating agreements into contracts that will make them minority partners in joint ventures with PDVSA. Among the companies accepting the new arrangements were Chevron, BP, Spain's Repsol YPF, China National Petroleum, and Brazilian state-owned giant Petrobras.
George Ure: "The real fireworks will come later on this year if the dollar continues to decline. That's because the stock market is presently being priced like a piece of real estate (say a fourplex) would be valued in an inflationary market. As inflation comes along, the market price of the fourplex goes up (and so did the market this week). But at some point, the fourplex stops going up in price because the rents can't be increased enough to make it cashflow out. Well, the same kind of logic applies to this market."
The Iranian parliament threatened Sunday to force the government to withdraw from the Nuclear Nonproliferation Treaty if the United States continues pressuring Tehran to suspend uranium enrichment.
Mike Burk: "Widespread multi year and all time highs can lead one to question his bearhood. I entertained the idea of writing this report from a bullish perspective, but could not do it. Leadership is narrowing and downside volume is approaching the levels of the 2002 low. Prices are being held up by a lot of upside volume going into diminishing number of issues. That pattern is consistent with a top and it is likely the date of that top is near.
I expect the major indices to be lower on Friday May 12 than they were on Friday May 5."
When discussing risk factors, I frequently receive emails suggesting I am a doomsayer. I respond with examples of my bullishness in late 1974, in 1982, the period shortly after 9/11, and then again in 2003. In sum, I am enthusiastic when I see the risk/reward clearly in my favor. At this time, I will continue to sell into strength.
Gary Lammert: "The nonlinear end of the US second equity valuation growth fractal period beginning in 1858, will have a suddenness andunexpectedness that will be proportional to the magnitude of theunprecedented string of nearly fifty years of continuous annual positive US GDP growths. These last fifty years, unprecedented intheir continuity and magnitude are in the nth degree so antipodal tothe balanced annual negative and positive GDP annual growths that characterized the preceding 175 years of US economic activity. The fifty years started with American engineering greatness and manufacturing dominance. Inflows of world currencies seeking US madeproducts built aggregates of US savings. In the last twenty-fivey years, politicians and CEO profiteers have placed the US in a manufacturing less position - a hobo with empty out turned pockets. Borrowed money for 800 billion dollars of imports and 700 billion dollars of new federal governmental debt are responsible for 4.7 percent or 650 billion dollars of GDP growth. The numbers don't compute."
Northwest Natural Gas is headquartered in Portland, Ore., and serves over 624,000 residential and business customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Pacific Northwest. With customer growth in excess of 3 percent for 19 consecutive years, it is also one of the fastest-growing local distribution companies in the nation. NW Natural has over $1.8 billion in total assets, which includes nearly 14 bcf of underground gas storage capacity within its service territory at Mist, Ore. The company has in place rate mechanisms that help to protect revenues from warmer than average weather and declining consumption. NW Natural has increased its dividends paid on common stock for 50 consecutive years. In my view, this company would make an excellent buyer for Cascade Natural Gas. The fit would be perfect.
``My views are as strong as ever, perhaps stronger,'' Warren Buffett said Saturday about his expectation that the dollar will weaken and that growing trade and current-account imbalances in the U.S. may eventually cause a painful correction in the dollar that could lead to higher inflation.
Robert McHugh: "Worse, the Dollar's 50 day moving average is 88.97, and has broken decisively below the declining 200 day moving average at 89.44. The last time the 50 day crossed decisively below the 200 day, after being significantly above it, was in 2002. What followed was a 30 percent decline in the value of the Dollar. "
Facing an April 1 deadline, 16 foreign firms active in Venezuela's oil and gas sector agreed to convert their existing operating agreements into contracts that will make them minority partners in joint ventures with PDVSA. Among the companies accepting the new arrangements were Chevron, BP, Spain's Repsol YPF, China National Petroleum, and Brazilian state-owned giant Petrobras.
George Ure: "The real fireworks will come later on this year if the dollar continues to decline. That's because the stock market is presently being priced like a piece of real estate (say a fourplex) would be valued in an inflationary market. As inflation comes along, the market price of the fourplex goes up (and so did the market this week). But at some point, the fourplex stops going up in price because the rents can't be increased enough to make it cashflow out. Well, the same kind of logic applies to this market."
The Iranian parliament threatened Sunday to force the government to withdraw from the Nuclear Nonproliferation Treaty if the United States continues pressuring Tehran to suspend uranium enrichment.
Mike Burk: "Widespread multi year and all time highs can lead one to question his bearhood. I entertained the idea of writing this report from a bullish perspective, but could not do it. Leadership is narrowing and downside volume is approaching the levels of the 2002 low. Prices are being held up by a lot of upside volume going into diminishing number of issues. That pattern is consistent with a top and it is likely the date of that top is near.
I expect the major indices to be lower on Friday May 12 than they were on Friday May 5."
When discussing risk factors, I frequently receive emails suggesting I am a doomsayer. I respond with examples of my bullishness in late 1974, in 1982, the period shortly after 9/11, and then again in 2003. In sum, I am enthusiastic when I see the risk/reward clearly in my favor. At this time, I will continue to sell into strength.
Gary Lammert: "The nonlinear end of the US second equity valuation growth fractal period beginning in 1858, will have a suddenness andunexpectedness that will be proportional to the magnitude of theunprecedented string of nearly fifty years of continuous annual positive US GDP growths. These last fifty years, unprecedented intheir continuity and magnitude are in the nth degree so antipodal tothe balanced annual negative and positive GDP annual growths that characterized the preceding 175 years of US economic activity. The fifty years started with American engineering greatness and manufacturing dominance. Inflows of world currencies seeking US madeproducts built aggregates of US savings. In the last twenty-fivey years, politicians and CEO profiteers have placed the US in a manufacturing less position - a hobo with empty out turned pockets. Borrowed money for 800 billion dollars of imports and 700 billion dollars of new federal governmental debt are responsible for 4.7 percent or 650 billion dollars of GDP growth. The numbers don't compute."
Friday, May 05, 2006
My Take On Things
5/6/06 My Take On Things
First, we'll get the April employment report out of the way.
Nonfarm payroll employment increased by 138,000 in April, and the unemployment rate was unchanged at 4.7 percent. Over the year, nonfarm employment has risen by about 2 million. Average hourly earnings were up by 9 cents over the month, and over the past 12 months, have risen 3.8%, the fastest pace in 5 years but still trailing what I believe is the real inflation rate of 7%. In the service-providing sector, the health care industry remained a steady source of job growth in April,as employment rose by 23,000. Job gains were spread among nursing and residential care facilities, hospitals, and doctors' offices. Employment in finance and insurance continued to expand over the month. The credit intermediation industry added 9,000 jobs, and the insurance industry grew by 10,000 jobs. Since last September, employment growth in the insurance industry has strengthened; 55,000 jobs were added over this period. Employment in professional and business services and in food services and drinking establishments continued to trend up. Retail trade employment was down over the month. Employment in general merchandise stores declined by 34,000, following a large increase in March. Overall, the number of retail jobs has changed little, on net, since the middle of last year. In the goods-producing sector, manufacturing employment increased by 19,000 over the month, with gains occurring in several durable goods industries. Motor vehicles employment was up by 12,000 over the month. Despite the gain, motor vehicles employment in April was about the same as in January of this year. Over the month, there also were job gains in computer and electronic products and in fabricatedmetals. Manufacturing hours were unchanged in April, and factory overtime edged down.
The dollar slumped to one-year lows versus the euro, pound and Swiss franc and a seven-month low against the yen Friday. The U.S. dollar index traded below the 85 level, the lowest in one year. If things are so rosy in the U.S. and the economy so strong, then why is the dollar getting creamed? Why are foreign countries running from dollar assets? We will return to this in a few paragraphs.
June gold climbed $7.80 to close at $684.30 an ounce in New York. It finished Friday at the highest futures price in almost 26 years and tallied a gain of $29.80, or 4.6%, from the week-ago close of $654.50.
Results of the latest AP/IPSOS poll:
Just 33 percent of the public approves of Bush’s job performance, the lowest of his presidency. That compares with 36 percent approval in early April. Forty-five percent of self-described conservatives now disapprove of the president.
Just one-fourth of the public approves of the job Congress is doing, a new low in AP-Ipsos polling and down 5 percentage points since last month. A whopping 65 percent of conservatives disapprove of Congress.
A majority of Americans say they want Democrats rather than Republicans to control Congress (51 percent to 34 percent). That’s the largest gap recorded by AP-Ipsos since Bush took office. Even 31 percent of conservatives want Republicans out of power.
The souring of the nation’s mood has accelerated in the past three months, with the percentage of people describing the nation on the wrong track rising 12 points to a new high of 73 percent. Six of 10 conservatives say America is headed in the wrong direction.
This should come as no surprise. Sam Bodman, the US energy secretary, said on Thursday that the administration was considering supporting an end to the tariff, for example from Brazil, which adds $0.54 per gallon to the cost of refined petrol containing foreign ethanol.
Tight domestic supplies of ethanol have contributed to the rising price of petrol in the US because of bans on the use of MTBE, an alternative fuel additive that is being phased out because of environmental concerns over groundwater contamination.
Let me return to the employment report. The average number of hours worked in a week increased from 33.8 hours to 33.9 hours. That increase translates to an additional 130,000 jobs added. As such, the employment report was quite strong and suggests that second quarter GDP will be at least 4%. It would be a significant mistake in error for the Fed to pause any time soon. Rates need to go higher to cool the economy and the inflation flames. In addition, it is imperative that the dollar be provided some underpinnings, and they are lacking now. We need funds to feed our daily deficits, and that need will soon approach $3 billion a day. A stronger dollar is required to attract foreign capital. Due to our deficits, there is a risk premium the investors want. I believe the sooner we get to 6% Fed funds the greater the opportunity to put our economy on a more stable basis. People cried we could not handle $3 gas. That has pinched the wallets of those on Main Street. It should be noted that 6% Fed rates are still relatively modest by all historical standards. It is time to clamp down on the excessive liquidity within our economic pipeline.
Americans are driving less, trimming vacations and cutting back on heating and air conditioning, according to an AP-Ipsos poll taken as gasoline prices in many areas have topped $3 a gallon.
Seven in 10 say gas prices are causing a financial pinch. And that pressure is being felt increasingly by middle-income and higher-income families.
Al Gore visited Kazakhstan in 1993. Until yesterday, no other high ranking member of the Administration had been there. Cheney was there to meet with Kazakhstan's President Nazarbayev, who stated
" theUnited States is the largest foreign investor in Kazakhstan that invested 12 billion U.S. dollars to our economy so far, and our tradevolume has reached 2 billion U.S. dollars, and 374 ventures and enterprises of the United States work in Kazakhstan currently." The attraction for the U.S. is oil.
The shop chairman at a Delphi Corp. brake plant in Dayton, Ohio, was fired Friday evening and the union local's president was escorted from the plant in a police cruiser, leaving 1,500 hourly workers to talk about a wildcat strike.
Doug Noland: "But I would venture a prediction this evening that the more significant dynamic will be the degradation of at least some of the inflated asset-market-based ("Wall Street Finance") dollar-denominated "money" into much less precious non-money. That's the nature of bursting monetary Bubbles. And the longer the Wall Street "printing press" is left to its own devices To Inflate Scores of Bubbles at Home and Abroad, the more emasculated Dr. Bernanke's printing efforts will play down the road."
First, we'll get the April employment report out of the way.
Nonfarm payroll employment increased by 138,000 in April, and the unemployment rate was unchanged at 4.7 percent. Over the year, nonfarm employment has risen by about 2 million. Average hourly earnings were up by 9 cents over the month, and over the past 12 months, have risen 3.8%, the fastest pace in 5 years but still trailing what I believe is the real inflation rate of 7%. In the service-providing sector, the health care industry remained a steady source of job growth in April,as employment rose by 23,000. Job gains were spread among nursing and residential care facilities, hospitals, and doctors' offices. Employment in finance and insurance continued to expand over the month. The credit intermediation industry added 9,000 jobs, and the insurance industry grew by 10,000 jobs. Since last September, employment growth in the insurance industry has strengthened; 55,000 jobs were added over this period. Employment in professional and business services and in food services and drinking establishments continued to trend up. Retail trade employment was down over the month. Employment in general merchandise stores declined by 34,000, following a large increase in March. Overall, the number of retail jobs has changed little, on net, since the middle of last year. In the goods-producing sector, manufacturing employment increased by 19,000 over the month, with gains occurring in several durable goods industries. Motor vehicles employment was up by 12,000 over the month. Despite the gain, motor vehicles employment in April was about the same as in January of this year. Over the month, there also were job gains in computer and electronic products and in fabricatedmetals. Manufacturing hours were unchanged in April, and factory overtime edged down.
The dollar slumped to one-year lows versus the euro, pound and Swiss franc and a seven-month low against the yen Friday. The U.S. dollar index traded below the 85 level, the lowest in one year. If things are so rosy in the U.S. and the economy so strong, then why is the dollar getting creamed? Why are foreign countries running from dollar assets? We will return to this in a few paragraphs.
June gold climbed $7.80 to close at $684.30 an ounce in New York. It finished Friday at the highest futures price in almost 26 years and tallied a gain of $29.80, or 4.6%, from the week-ago close of $654.50.
Results of the latest AP/IPSOS poll:
Just 33 percent of the public approves of Bush’s job performance, the lowest of his presidency. That compares with 36 percent approval in early April. Forty-five percent of self-described conservatives now disapprove of the president.
Just one-fourth of the public approves of the job Congress is doing, a new low in AP-Ipsos polling and down 5 percentage points since last month. A whopping 65 percent of conservatives disapprove of Congress.
A majority of Americans say they want Democrats rather than Republicans to control Congress (51 percent to 34 percent). That’s the largest gap recorded by AP-Ipsos since Bush took office. Even 31 percent of conservatives want Republicans out of power.
The souring of the nation’s mood has accelerated in the past three months, with the percentage of people describing the nation on the wrong track rising 12 points to a new high of 73 percent. Six of 10 conservatives say America is headed in the wrong direction.
This should come as no surprise. Sam Bodman, the US energy secretary, said on Thursday that the administration was considering supporting an end to the tariff, for example from Brazil, which adds $0.54 per gallon to the cost of refined petrol containing foreign ethanol.
Tight domestic supplies of ethanol have contributed to the rising price of petrol in the US because of bans on the use of MTBE, an alternative fuel additive that is being phased out because of environmental concerns over groundwater contamination.
Let me return to the employment report. The average number of hours worked in a week increased from 33.8 hours to 33.9 hours. That increase translates to an additional 130,000 jobs added. As such, the employment report was quite strong and suggests that second quarter GDP will be at least 4%. It would be a significant mistake in error for the Fed to pause any time soon. Rates need to go higher to cool the economy and the inflation flames. In addition, it is imperative that the dollar be provided some underpinnings, and they are lacking now. We need funds to feed our daily deficits, and that need will soon approach $3 billion a day. A stronger dollar is required to attract foreign capital. Due to our deficits, there is a risk premium the investors want. I believe the sooner we get to 6% Fed funds the greater the opportunity to put our economy on a more stable basis. People cried we could not handle $3 gas. That has pinched the wallets of those on Main Street. It should be noted that 6% Fed rates are still relatively modest by all historical standards. It is time to clamp down on the excessive liquidity within our economic pipeline.
Americans are driving less, trimming vacations and cutting back on heating and air conditioning, according to an AP-Ipsos poll taken as gasoline prices in many areas have topped $3 a gallon.
Seven in 10 say gas prices are causing a financial pinch. And that pressure is being felt increasingly by middle-income and higher-income families.
Al Gore visited Kazakhstan in 1993. Until yesterday, no other high ranking member of the Administration had been there. Cheney was there to meet with Kazakhstan's President Nazarbayev, who stated
" theUnited States is the largest foreign investor in Kazakhstan that invested 12 billion U.S. dollars to our economy so far, and our tradevolume has reached 2 billion U.S. dollars, and 374 ventures and enterprises of the United States work in Kazakhstan currently." The attraction for the U.S. is oil.
The shop chairman at a Delphi Corp. brake plant in Dayton, Ohio, was fired Friday evening and the union local's president was escorted from the plant in a police cruiser, leaving 1,500 hourly workers to talk about a wildcat strike.
Doug Noland: "But I would venture a prediction this evening that the more significant dynamic will be the degradation of at least some of the inflated asset-market-based ("Wall Street Finance") dollar-denominated "money" into much less precious non-money. That's the nature of bursting monetary Bubbles. And the longer the Wall Street "printing press" is left to its own devices To Inflate Scores of Bubbles at Home and Abroad, the more emasculated Dr. Bernanke's printing efforts will play down the road."
Thursday, May 04, 2006
The Dollar
5/5/06 The Dollar
There was much excitement when crude declined below $70 and gasoline dropped 5%. I saw the same type of excitement at the $60 level. Nothing goes up in a straight line, and nothing goes down in a straight line. Although oil and gasoline are terribly important for each American, I think it would be wise to focus more on the dollar. The dollar index is flirting with the 85 level, and that is down from 91 at the beginning of the year. In other words, in dollar terms, the value of equities has declined 6.6% for foreign investors since the beginning of the year. Thus, rises in the Dow and the S&P 500 in 2006 have produced no gains for a foreigner. In addition, there is absolutely no reason for the dollar to have a sustained rally. That occurred in 2005 while the Fed was busy raising rates, and now they are looking to pause. Meanwhile, the 10-year and the 30-year treasury bonds have their highest rates in four years, and, in my view, they are low in relation to our trade deficit, current account deficit, and budget deficit. They are low when viewing rising costs for Medicare and Medicaid and Social Security. Our country is in trouble. The Fed cannot reflate its way out of deficits and the government will not cut expenditures. The cost for Iraq and Afghanistan accumulate daily. The talking heads on TV discuss earnings above expectations. How much is due to inflation and price increases. How much is due to cutting long time employees from the payroll and replacing them with inexperienced workers? If earnings are so great, then why do so many companies underperform on the revenue side?
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today that the companies have completed enrollment in two Phase IIb clinical trials of bremelanotide in patients with erectile dysfunction (ED). Bremelanotide is a melanocortin agonist that Palatin and King are jointly developing for the treatment of both male and female sexual dysfunction. The primary objective of these two dose-ranging clinical trials is to identify safe and efficacious doses for evaluation in Phase III pivotal trials slated to begin in the first quarter of 2007.
Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin, stated, "Together with our colleagues at King, we are very pleased to achieve this significant milestone for these two critically important clinical trials. The data from these two studies should allow the companies to develop a robust Phase III pivotal trial program for consideration by the U.S. Food and Drug Administration."
Michael Dell: "During the last 22 years, we have had a pretty remarkable track record of growth in our business. There's no kind of perfect, linear path to success. I do believe that what you'll see is that we have a great business model. We're focused on building a great company over a long period of time."
Dell has been one of the greatest success stories in American business. Their best years are, in my view, yet to come. Management has too much pride to let success slip.
The Treasury stated that productivity rose 3.2% in the first quarter; however, unit labor costs rose 2.5%. Both numbers were higher than predicted. Ian Shepherdson, chief U.S. economist at High Frequency Economics, stated the unit labor cost increas "is much faster than hourly earnings, so it presumably reflects increases in items like stock options, which have boosted costs in the past."
Our gasoline supplies are 5% below year ago levels. Our daily usage has risen slightly.
Medtronic traded at $48.20, a new 52-week low. As you all know, I have owned shares in this company for many decades. During this time it has risen several ten-fold in price. Adding to positions on weakness has been a successful long-term strategy.
Initial jobless claims in the latest week increased by 5,000 to 322,000, the highest level since November. Most analysts predict the economy will have added approximately 200,000 net new jobs in the month of April. The usual suspects will be in construction, healthcare, retail, the financial sector and other service related positions. Will the earnings per hour be less than the inflation rate? Will the hours worked per week increase? How about the overtime hours? I figure all these questions will have results that disappoint.
Cascade Natural Gas has not traded above $21 since the first week of November 2005. It closed at $20.95, and traded at twice its normal daily volume yesterday. I feel confident that a buyout of this company will prove rewarding to shareholders. Meanwhile, on an operational basis the company is making excellent progress.
Yong Li, China’s vice-minister of finance: "I heard rumours that the US dollar might depreciate by 25 per cent.This would have a big impact on countries like China because it would not only affect the value of assets invested in the US."
Copper hit another all-time high. General Motors uses less than 1% of the total global production of new copper per year, and the global OEM automotive industry uses less than 10%. The housing industry is by far the largest end user of copper, around 40%, with electrical and electronic together adding another 35% of the total. If there is a housing slowdown, and there is every indication there is one on the way, I firmly believe the price of copper will decline sharply and I would suggest you consider eliminating all copper stocks from your portfolio.
There was much excitement when crude declined below $70 and gasoline dropped 5%. I saw the same type of excitement at the $60 level. Nothing goes up in a straight line, and nothing goes down in a straight line. Although oil and gasoline are terribly important for each American, I think it would be wise to focus more on the dollar. The dollar index is flirting with the 85 level, and that is down from 91 at the beginning of the year. In other words, in dollar terms, the value of equities has declined 6.6% for foreign investors since the beginning of the year. Thus, rises in the Dow and the S&P 500 in 2006 have produced no gains for a foreigner. In addition, there is absolutely no reason for the dollar to have a sustained rally. That occurred in 2005 while the Fed was busy raising rates, and now they are looking to pause. Meanwhile, the 10-year and the 30-year treasury bonds have their highest rates in four years, and, in my view, they are low in relation to our trade deficit, current account deficit, and budget deficit. They are low when viewing rising costs for Medicare and Medicaid and Social Security. Our country is in trouble. The Fed cannot reflate its way out of deficits and the government will not cut expenditures. The cost for Iraq and Afghanistan accumulate daily. The talking heads on TV discuss earnings above expectations. How much is due to inflation and price increases. How much is due to cutting long time employees from the payroll and replacing them with inexperienced workers? If earnings are so great, then why do so many companies underperform on the revenue side?
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today that the companies have completed enrollment in two Phase IIb clinical trials of bremelanotide in patients with erectile dysfunction (ED). Bremelanotide is a melanocortin agonist that Palatin and King are jointly developing for the treatment of both male and female sexual dysfunction. The primary objective of these two dose-ranging clinical trials is to identify safe and efficacious doses for evaluation in Phase III pivotal trials slated to begin in the first quarter of 2007.
Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin, stated, "Together with our colleagues at King, we are very pleased to achieve this significant milestone for these two critically important clinical trials. The data from these two studies should allow the companies to develop a robust Phase III pivotal trial program for consideration by the U.S. Food and Drug Administration."
Michael Dell: "During the last 22 years, we have had a pretty remarkable track record of growth in our business. There's no kind of perfect, linear path to success. I do believe that what you'll see is that we have a great business model. We're focused on building a great company over a long period of time."
Dell has been one of the greatest success stories in American business. Their best years are, in my view, yet to come. Management has too much pride to let success slip.
The Treasury stated that productivity rose 3.2% in the first quarter; however, unit labor costs rose 2.5%. Both numbers were higher than predicted. Ian Shepherdson, chief U.S. economist at High Frequency Economics, stated the unit labor cost increas "is much faster than hourly earnings, so it presumably reflects increases in items like stock options, which have boosted costs in the past."
Our gasoline supplies are 5% below year ago levels. Our daily usage has risen slightly.
Medtronic traded at $48.20, a new 52-week low. As you all know, I have owned shares in this company for many decades. During this time it has risen several ten-fold in price. Adding to positions on weakness has been a successful long-term strategy.
Initial jobless claims in the latest week increased by 5,000 to 322,000, the highest level since November. Most analysts predict the economy will have added approximately 200,000 net new jobs in the month of April. The usual suspects will be in construction, healthcare, retail, the financial sector and other service related positions. Will the earnings per hour be less than the inflation rate? Will the hours worked per week increase? How about the overtime hours? I figure all these questions will have results that disappoint.
Cascade Natural Gas has not traded above $21 since the first week of November 2005. It closed at $20.95, and traded at twice its normal daily volume yesterday. I feel confident that a buyout of this company will prove rewarding to shareholders. Meanwhile, on an operational basis the company is making excellent progress.
Yong Li, China’s vice-minister of finance: "I heard rumours that the US dollar might depreciate by 25 per cent.This would have a big impact on countries like China because it would not only affect the value of assets invested in the US."
Copper hit another all-time high. General Motors uses less than 1% of the total global production of new copper per year, and the global OEM automotive industry uses less than 10%. The housing industry is by far the largest end user of copper, around 40%, with electrical and electronic together adding another 35% of the total. If there is a housing slowdown, and there is every indication there is one on the way, I firmly believe the price of copper will decline sharply and I would suggest you consider eliminating all copper stocks from your portfolio.
Wednesday, May 03, 2006
Minor Relief
5/4/06 Minor Relief
The Energy Department said motor gasoline inventories rose 2.1 million barrels for the week ended April 28 to total 202.7 million. It was the first climb in the fuel's supply in nine weeks after losing a total of 25.3 million barrels in eight weeks. They are still 4.8% below the year-ago level, the government data showed. Crude stocks rose 1.7 million barrels to total 346.7 million barrels -- 5.3% above the year-ago level. Distillate supplies fell 1.1 million barrels to 114.5 million. They're 9.6% above the year-ago level.
Brad DeLong: "The current-account deficit is equal to the trade deficit plus the cost of servicing the net international asset position: the net rent, interest, and dividends owed to foreigners who have invested their capital in the US. As time passes, deficits accumulate. As deficits accumulate, the cost of servicing the net international asset position grows. Thus, in order to keep the current-account deficit stable, the trade deficit must shrink. And the only way for the trade deficit to shrink substantially is for net imports to fall, which requires either a relatively sharp decline in the value of the dollar, thereby raising import prices, or a depression in the US." Brad states that the chance of a soft landing for the dollar lessens every day.
The ISM nonmanufacturing index rose to 63.0% from 60.5% in March.index to slip to 59.6%. New orders rose to 64.6. The employment index rose to 56.5% from 54.6%. Inflation pressures increased. The price index soared to 70.5% from 60.5% in the previous month. These unexpected strong numbers caused the treasury bond yields to rise with the 10-year jumping to 5.16%.
During the trading day, Dow Transports rose to an all-time high.
John Hussman: "At present, it makes sense to walk away from exposure to broad stock market fluctuations, for reasons including valuation, persistent distribution, internal dispersion, hostile interest rate pressures, inflation and other trends."
The Postal Service has indicated the price of a stamp will rise from 39 cents to 42 cents. In addition, they are discussing introducing a forever stamp where the rate will not change.
New orders for U.S.-made factory goods increased 4.2% in March, led by strong demand for airplanes, machinery, electronics and petroleum, the Commerce Department reported Wednesday. It was the largest gain in factory orders in 10 months and follows a revised 0.4% gain in February.
Barry Ritholtz: "The advance decline line has not confirmed recent Dow highs; the NYSE A/D line topped out in March. Meanwhile, mutual fund cash levels are down to low levels. And, we are about to enter the seasonally weakest period of the year. We have been positioned as “uncomfortably” bullish these past few months -- our view remains first half rally, second half trouble -- and we note that these elements mean risk is rising. We strongly urge increased caution."
After rising quickly in the early hours to almost $580, gold retreated close to the $570 level. In addiiton, the energy data generated a pullback in crude to the $72+ level.
Ed Easterling: "The current state of volatility is an indicator of a potentially sharp stock market decline based upon (i) the currently low level of volatility, (ii) the tendency for upward spikes to follow extreme low volatility, (iii) the relationship of market direction to volatility trends, and (iv) the propensity for downside volatility during secular bear markets. Volatility could decline further and could remain low for some time longer; however, based upon history, it has not stayed low without subsequently spiking and, as it goes lower, the likelihood of a spike increases significantly."
12,000 GM workers have reportedly signed up for the buyout since the automaker began offering them in April. The new deadline for taking the buyout is June 23, with workers having an additional seven days to change their minds and rescind the buyout.The buyout packages range from a lump-sum payment of $35,000 to coax hourly workers with 30 years' seniority to retire to a lump sum of $140,000 for workers with more than 10 years' seniority but less than 27 years who are willing to give up rights to post-retirement health care and other benefits.
Andersons said it expects 2006 earnings of $3.40 to $3.80 a share.
I would like to close by discussing Microsoft once again. The shares sold down on 200+ million shares to a new low of $23.19, a level last seen in 2003. One can analyze this company from many standpoints. Its return on equity is absolutely outstanding and its free cash flow is outstanding. At the same time the shares are selling at 5+ times sales with a 1.5% yield and minimal earnings growth over the horizon. Yet the stock has a p/e ratio of about 18. There are some contrarians who will be sold on this story; however, one needs to focus on management ability with the company facing increasing competition. I think this is the rub.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
The Energy Department said motor gasoline inventories rose 2.1 million barrels for the week ended April 28 to total 202.7 million. It was the first climb in the fuel's supply in nine weeks after losing a total of 25.3 million barrels in eight weeks. They are still 4.8% below the year-ago level, the government data showed. Crude stocks rose 1.7 million barrels to total 346.7 million barrels -- 5.3% above the year-ago level. Distillate supplies fell 1.1 million barrels to 114.5 million. They're 9.6% above the year-ago level.
Brad DeLong: "The current-account deficit is equal to the trade deficit plus the cost of servicing the net international asset position: the net rent, interest, and dividends owed to foreigners who have invested their capital in the US. As time passes, deficits accumulate. As deficits accumulate, the cost of servicing the net international asset position grows. Thus, in order to keep the current-account deficit stable, the trade deficit must shrink. And the only way for the trade deficit to shrink substantially is for net imports to fall, which requires either a relatively sharp decline in the value of the dollar, thereby raising import prices, or a depression in the US." Brad states that the chance of a soft landing for the dollar lessens every day.
The ISM nonmanufacturing index rose to 63.0% from 60.5% in March.index to slip to 59.6%. New orders rose to 64.6. The employment index rose to 56.5% from 54.6%. Inflation pressures increased. The price index soared to 70.5% from 60.5% in the previous month. These unexpected strong numbers caused the treasury bond yields to rise with the 10-year jumping to 5.16%.
During the trading day, Dow Transports rose to an all-time high.
John Hussman: "At present, it makes sense to walk away from exposure to broad stock market fluctuations, for reasons including valuation, persistent distribution, internal dispersion, hostile interest rate pressures, inflation and other trends."
The Postal Service has indicated the price of a stamp will rise from 39 cents to 42 cents. In addition, they are discussing introducing a forever stamp where the rate will not change.
New orders for U.S.-made factory goods increased 4.2% in March, led by strong demand for airplanes, machinery, electronics and petroleum, the Commerce Department reported Wednesday. It was the largest gain in factory orders in 10 months and follows a revised 0.4% gain in February.
Barry Ritholtz: "The advance decline line has not confirmed recent Dow highs; the NYSE A/D line topped out in March. Meanwhile, mutual fund cash levels are down to low levels. And, we are about to enter the seasonally weakest period of the year. We have been positioned as “uncomfortably” bullish these past few months -- our view remains first half rally, second half trouble -- and we note that these elements mean risk is rising. We strongly urge increased caution."
After rising quickly in the early hours to almost $580, gold retreated close to the $570 level. In addiiton, the energy data generated a pullback in crude to the $72+ level.
Ed Easterling: "The current state of volatility is an indicator of a potentially sharp stock market decline based upon (i) the currently low level of volatility, (ii) the tendency for upward spikes to follow extreme low volatility, (iii) the relationship of market direction to volatility trends, and (iv) the propensity for downside volatility during secular bear markets. Volatility could decline further and could remain low for some time longer; however, based upon history, it has not stayed low without subsequently spiking and, as it goes lower, the likelihood of a spike increases significantly."
12,000 GM workers have reportedly signed up for the buyout since the automaker began offering them in April. The new deadline for taking the buyout is June 23, with workers having an additional seven days to change their minds and rescind the buyout.The buyout packages range from a lump-sum payment of $35,000 to coax hourly workers with 30 years' seniority to retire to a lump sum of $140,000 for workers with more than 10 years' seniority but less than 27 years who are willing to give up rights to post-retirement health care and other benefits.
Andersons said it expects 2006 earnings of $3.40 to $3.80 a share.
I would like to close by discussing Microsoft once again. The shares sold down on 200+ million shares to a new low of $23.19, a level last seen in 2003. One can analyze this company from many standpoints. Its return on equity is absolutely outstanding and its free cash flow is outstanding. At the same time the shares are selling at 5+ times sales with a 1.5% yield and minimal earnings growth over the horizon. Yet the stock has a p/e ratio of about 18. There are some contrarians who will be sold on this story; however, one needs to focus on management ability with the company facing increasing competition. I think this is the rub.
Charles Tremper: "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning."
Tuesday, May 02, 2006
Good To Know
5/3/06 Good To Know
Another terrific article on Palatin's PT 141. This one in the UK Observer. This is the link: http://www.guardian.co.uk/medicine/story/0,,1759113,00.html The dollar hit a 7-month low against the yen and an 11-month low versus the euro. Don't try to bottom fish. The dollar is not a flounder. It is floundering and will continue, in my view, to do so. I believe the bottom could be 20,000 leagues under the sea.
Planned corporate layoffs declined by 8.1% in April to 59,688, the lowest level in a year, according to a monthly survey of job-reduction announcements released Tuesday by Challenger Gray & Christmas,.
Total job reductions so far in 2006 have amounted to 315,566, down 8.5% in the year to date, the outplacement firm said.
March pending home sales declined 1.2%.
Bolivia moved to nationalize the nation's hydrocarbon resources. Bolivian Minister of Mines and Metallurgy emphasized that "the mining policy does not contemplate nationalization and even less incorporation of private companies such as San Cristobal." Apex Silver is developing its 100%-owned San Cristobal silver-zinc-leadproject in southwestern Bolivia. The project is expected to commence production in the third quarter 2007. Apex Silver stock got hit hard due to nationalization worries.
Chrysler's sales declined 8% and Ford's dropped 6.6%. GM's April sales were 7% lower but the company sees production of 502,000 vehicles in Europe in the second quarter, up 12,000 units from last month's outlook. For the Asia Pacific region, GM now sees production of 504,000 vehicles, up 30,000 units from the previous outlook.
Gold is climbing closer to $670. Crude has topped $74 again. The price of gas in San Francisco took another spike and is approaching $3.50 a gallon.
Steve Spurrier: "If people like you too much, it's probably because they're beating you."
This month Swaptree.com will unveil the beta version of its service, which barters direct trades between two or more entities for no fee. Revenues will come from ads.
More research is being focused on myelin, a fatty coating that protects nerve cells. People will MS lack myelin.
Microsoft broke below $24 to a new 52-week low. The complex testing that still needs to be carried out on the next version of Windows means the Vista operating system is likely to be hit by further delays before it finally goes on sale next year, Gartner, the technology research firm, said on Tuesday.
Adobe Systems Inc. said late Tuesday its results for the quarter ending June 2 will be "toward the low end" of its prior forecasts.
Reserve Bank of Australia Governor Ian Macfarlane and his board today raised the overnight cash rate target for the first time in 14 months to 5.75 percent, the highest in more than five years.
The parent company of Ameriquest Mortgage Co. and Town & Country Credit said Tuesday it will close 229 branch offices and lay off 3,800 employees nationwide as part of a plan to consolidate its retail mortgage lending operations.
Dow Jones Industrial Average rose to a six-year high and the S&P 500 Index to its best level in more than five years.
Buddha: "Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything simply because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders. Do not believe in traditions because they have been handed down for many generations. But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all, then accept it and live up to it."
Another terrific article on Palatin's PT 141. This one in the UK Observer. This is the link: http://www.guardian.co.uk/medicine/story/0,,1759113,00.html The dollar hit a 7-month low against the yen and an 11-month low versus the euro. Don't try to bottom fish. The dollar is not a flounder. It is floundering and will continue, in my view, to do so. I believe the bottom could be 20,000 leagues under the sea.
Planned corporate layoffs declined by 8.1% in April to 59,688, the lowest level in a year, according to a monthly survey of job-reduction announcements released Tuesday by Challenger Gray & Christmas,.
Total job reductions so far in 2006 have amounted to 315,566, down 8.5% in the year to date, the outplacement firm said.
March pending home sales declined 1.2%.
Bolivia moved to nationalize the nation's hydrocarbon resources. Bolivian Minister of Mines and Metallurgy emphasized that "the mining policy does not contemplate nationalization and even less incorporation of private companies such as San Cristobal." Apex Silver is developing its 100%-owned San Cristobal silver-zinc-leadproject in southwestern Bolivia. The project is expected to commence production in the third quarter 2007. Apex Silver stock got hit hard due to nationalization worries.
Chrysler's sales declined 8% and Ford's dropped 6.6%. GM's April sales were 7% lower but the company sees production of 502,000 vehicles in Europe in the second quarter, up 12,000 units from last month's outlook. For the Asia Pacific region, GM now sees production of 504,000 vehicles, up 30,000 units from the previous outlook.
Gold is climbing closer to $670. Crude has topped $74 again. The price of gas in San Francisco took another spike and is approaching $3.50 a gallon.
Steve Spurrier: "If people like you too much, it's probably because they're beating you."
This month Swaptree.com will unveil the beta version of its service, which barters direct trades between two or more entities for no fee. Revenues will come from ads.
More research is being focused on myelin, a fatty coating that protects nerve cells. People will MS lack myelin.
Microsoft broke below $24 to a new 52-week low. The complex testing that still needs to be carried out on the next version of Windows means the Vista operating system is likely to be hit by further delays before it finally goes on sale next year, Gartner, the technology research firm, said on Tuesday.
Adobe Systems Inc. said late Tuesday its results for the quarter ending June 2 will be "toward the low end" of its prior forecasts.
Reserve Bank of Australia Governor Ian Macfarlane and his board today raised the overnight cash rate target for the first time in 14 months to 5.75 percent, the highest in more than five years.
The parent company of Ameriquest Mortgage Co. and Town & Country Credit said Tuesday it will close 229 branch offices and lay off 3,800 employees nationwide as part of a plan to consolidate its retail mortgage lending operations.
Dow Jones Industrial Average rose to a six-year high and the S&P 500 Index to its best level in more than five years.
Buddha: "Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything simply because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders. Do not believe in traditions because they have been handed down for many generations. But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all, then accept it and live up to it."
Monday, May 01, 2006
A Close Look
5/2/06 A Close LookIf you take a step back and look unemotionally at the bond, equity, commodity, and currency markets, it will become clear that equities may very well have the greatest potential for a freefall since 2000. Let's examine where we are positioned. The dollar index is at its lowest point since May 2005. The yield on 10-year Treasury bonds at 5.14% and the 30-year at 5.23% are at their highest level in 4 years. In sum, yields are rising but the dollar is falling. In the background, gold has hit a 25-year high at $660, while silver and platinum have also reached multi-year highs. Copper and zinc recently traded at all-time highs. Crude holds above $73 a barrel and gasoline has topped $3 a gallon at the pump. It is not surprising that Phelps Dodge, Goldcorp, Schlumberger, and Arch Coal are standout performers. However, the VIX remains not far from its recent low point and that reflects complacency on the past of investors. It's easy to see why. The major averages are showing above average gains for the year-to-date. That is further reflected in low premiums for out-of-the-money put options on even highly volatile stocks like Apple and Rambus. What will change this complacency? Sharp losses like theone suffered by the Microsoft surprise and some unexpected bad news. Will it be the two tier dollar I recently described as a possibility? I believe geo-political wars will be fought on economic turf rather than with guns and bombs. (That is not to minimize the seriousness of the Iraqi situation.) I have written about Robert McHugh's frequent Hindenburg Omens in the month of April. It would be foolish to ignore them. We have a consumer-based economy. The lates figures reflect, once again, that spending is rising faster than wages. Government spending is rising faster than receipts. Our exports are rising but much slower than our imports. The disparity between those on Main Street and the top 2% of income earners is widening. Real inflation (not the BS government numbers) continues to exceed wages and benefits. The cost of haealthcare, education, and energy make it all but impossible for those on Main Street to meet their current expenses without incurring additional debt. The argument is that, with high home prices, home equity comfortably covers debt obligations. However, I am referring to day-to-day cash flow and not home equity loans. Today it is not so easy to sell a dwelling. There is plenty of inventory on the market. Since Nov 1, 2005, I-Bonds, tied to inflation, have been paying 6.73%. The rate for the next 6 months is 2.41%. That is legalized theft. Since when is the inflation rate 2.41%? Teddy Roosevelt: "We can have no "50-50" allegiance in this country. Either a man is an American and nothing else, or he is not an American at all." Freddie Mac said rates on 30-year, fixed-rate mortgages averaged 6.58% this week, up from 6.53% last week. The new rate was the highest since 30-mortgages stood at 6.63% the week of June 20, 2002. Schlumberger made a new 52-week high and Ford made a new 52-week low. Hovnanian, a homebuilder, statedlvj fiscal 2006 earnings will be in the range of $7.20 a share to $7.40 a share, down from a previous target of $8.05 a share to $8.40 a share. Ara Hovnanian, chief executive Hovnanian, said the company cut estimates because of "continuing production delays in several markets that have postponed deliveries, a slower recent sales pace, higher cancellation rates, more pronounced use of concessions and incentives, and material price increases.While we experienced a 22% increase in the dollar value of net contracts in our first quarter compared to the prior year, when we release results for our 2006 second quarter on May 31st, we expect to report approximately a 20% decline in net contracts. As discussed above, one factor that has negatively influenced our recent pace of net contracts isthe sequential increase in our cancellation rates over the past two quarters," commented Mr. Hovnanian. "Typically our second quarter cancellation rates are lower than those of our first quarter, which was not the case this year. While the number of net contracts recorded in our second quarter increased compared to our first quarter net contract results, market conditions have slowed in certain markets and we did not experience as strong a second quarter sales season as we have traditionally seen. We believe the higher cancellation rates, in addition to an increase in resale listings and increased use of sales incentives in certain markets are temporary aberrations as certain markets work through the increased level of resale homes for sale. However, we remain encouraged that supported by job creation and household formation the long-term fundamentals of housing remain solid. As the housing market has continued to cool off from white-hot levels of previous years, we have renegotiated and even walked away from deposits on several parcels of land that we control through options. Approximately$5 million of write-offs of deposits and related costs is built into our revised second quarter guidance. Although we have not needed to use this tactic as much in recent years, we have employed it successfully in prior slowdowns. We are confident that our strategy to control land predominantly with options will allow us to better manage our inventories in a slowing housing market," Mr. Hovnanian continued. "Fortunately, contract backlog asof March 31, 2006, including unconsolidated joint ventures, was 13,898 homes with a sales value of $4.9 billion. Based on this, approximately 82% of our projected deliveries for fiscal 2006 have either been delivered or are in backlog," concluded Mr. Hovnanian. Teddy Roosevelt: "Every immigrant who comes here should be required within five years to learn English or leave the country." Goldman Sachs Group Inc. dropped Google from its list of favored technology stocks, replacing it with Cisco Systems Inc.
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