8/14/09 Sentiment
U.S. consumer prices were unchanged in July, after seasonal adjustments, and were down 2.1% year-over-year in the sharpest annual decline since 1950, the Labor Department reported Friday.Most of the past year's decline reflects energy prices falling 28.1 percent since peaking in July 2008. For July, energy prices fell 0.4%, and food prices fell 0.3%, while prices rose for goods such as new vehicles, tobacco, medical care and apparel. The core CPI, which excludes often-volatile food and energy prices, rose 0.1% in July, matching analysts' expectations. Of note, shelter prices in July fell 0.2%, the largest decline since 1982, while prices for meat, poultry, fish and eggs fell 1.3%, the largest decline since 1979. In June the overall CPI rose 0.7%, while the core gained 0.2%.
Boeing Co. has stopped production at a 787 Dreamliner facility in Italy that was making parts of the plane's fuselage, the Wall Street Journal reported late Thursday. The Chicago-based manufacturer ordered its subcontractor, Alenia Aeronautic in Naples, to stop work two months ago after structural flaws were discovered at where the wing and the fuselage meet, the newspaper reported. Engineers have discovered wrinkles in the fuselage skin just behind the wing that will require repair work on all the completed fuselage barrels.
Bloomberg: “More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.
The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.”
Republic Airways Holdings won the bankruptcy court auction for Frontier Airlines on Thursday, buying the Denver-based carrier for almost $108.8 million after Southwest Airlines' bid was rejected.
In dollar terms, debit cards are now used for 50.4 percent of all noncash sales, though they have a lower average dollar amount per transaction, according to research from TowerGroup, a subsidiary of MasterCard Worldwide. Those smaller sales are key: debit card sales dominate small purchases like those made in convenience stores, coffee shops and gas stations.
Big ticket items like wide-screen TVs are still more often paid for using credit cards, said Brian Riley, a TowerGroup research director and co-author of the study.
Biotech leader Amgen Inc. cleared a major hurdle in its push to win approval for its experimental osteoporosis drug from the Food and Drug.
Port of Long Beach: July of this year saw loaded inbound containers down 23% from year ago levels. And loaded outbound was down 27.2%. Port of Los Angeles was down 16.94%, in the month of July.
Floyd Norris: "It appears that Colonial BancGroup, which Mr. Lowder started with the acquisition of a small bank in Alabama in 1981, may soon become the largest bank failure of 2009, with more than $25 billion in assets. Alabama regulators have raised the possibility the Federal Deposit Insurance Corporation may take over Colonial."
The European Union's statistics office Eurostat said consumer prices in the euro zone fell by 0.7 percent in July from the previous year, 0.1 percentage point more than it had previously estimated and ahead of June's 0.1 percent fall. The monthly decline was also 0.7 percent.
Eurostat said the biggest drops were recorded in Ireland and Belgium.
It said a 5.5 percent decline in transport cost, related to lower year-on-year energy prices, was the main influence behind the further fall in overall prices.
Macy’s, the second-biggest U.S. department store chain, said yesterday it cut inventories 7.5 percent in the second quarter from a year ago as sales dropped. Walmart will accelerate efforts to cut costs after U.S. stores reduced inventory by almost 6 percent, Chief Executive Officer Mike Duke said.
Mike Shedlock: "Retail sales, frugal shoppers, and price slashing efforts at Wal-Mart, Safeway, Whole Foods and Giant, along with their Canadian counterparts, are all peas in the same deflationary pod.
Consumer attitudes towards spending have changed for good. So have banks' attitudes towards lending. It's tough to raise prices in this kind of environment. Deflation is alive and well in regard to consumer credit, bank lending standards, consumer attitudes, retail sales, and even store prices."
Capacity utilization increased to 68.5% from a record-low 68.1% in June. The gain in industrial output in July was entirely due to increased motor vehicle production, which jumped 20.1%. Thank you clunker program.
Sales in stores open at least one year, or same-store sales, fell 12.3 percent, but rose 0.8 percent at the company's off-price store — Nordstrom Rack.
Schlumberger estimates the world’s heavy oil and bitumen resources. Canada’s 400 billion cubic meters of bitumen translates into something like 1.4 trillion barrels of oil equivalent. How much is that? That's about 7 times the total oil reserves of Saudi Arabia.
U.S. Aug. UMich consumer sentiment falls to 63.2. Expectations were for a 69 reading. It was 66 in July. It is the lowest reading since March. The measure reached a three-decade low of 55.3 in November. The shoots of wrath.
Abraham Lincoln: "He who molds the public sentiment... makes statues and decisions possible or impossible to make. "
Oil futures down $1.21 to $69.30/brl on Globex.
We could have our first hurricane of the season in a few days. It would be Ana.
Storms can also occur in financial markets. It might be wise to have an evacuation
plan in place when the deluge hits. In my view, the next leg down will be ugly.
U.S. homeowners cut their asking prices by $27.8 billion with some of the biggest reductions in Nevada and Florida, states hardest hit by the property slump, Trulia Inc. said.
Owners slashed prices by 15 percent in Nevada and by 13 percent in Florida and Arizona in the year through Aug. 1, the San Francisco-based real estate data provider said today. A quarter of home sellers lowered prices at least once, by an average of 10 percent.
Connecticut, Massachusetts, Rhode Island and Illinois had the highest share of homes with price reductions at 33 percent, followed by six states at 29 percent: Oregon, Washington, New Jersey, Minnesota, New Hampshire and Maryland.
Jacksonville, Florida, had the highest rate of reductions among cities tracked as 38 percent of listings there had been cut. Portland, Oregon, followed at 35 percent. Milwaukee, Minneapolis, Boston and Seattle each had 34 percent and Albuquerque, New Mexico, and Chicago had 33 percent.
Prices were cut 22 percent in Detroit; 16 percent in Las Vegas; 15 percent in Miami; 13 percent in New York City and Phoenix; 12 percent in San Francisco and Los Angeles; and 10 percent in Washington and Honolulu, Trulia said.
The largest asset individuals have is their home. With prices eroding, jobs disappearing, hours worked declining, and wages stagnating, it is not surprising that optimism is falling. I wonder why it's not lower. This holiday season is going to be bleak for retailers.
U.S. videogame industry revenue fell more than expected in July led by a sharp drop in console sales. Sales fell 29% to $848M, the fifth straight double-digit drop and nearly twice the -15% analysts predicted.
The stock market has gotten ahead of reality, Pimco's Mohamed El-Erian told CNBC Friday. The co-chief executive officer of the largest bond fund manager in the world, said the US has yet to see a durable and sustainable recovery.
BB&T Corp. is expected to take over Colonial BancGroup Inc. as early as today in what would be the largest bank failure of 2009, according to Bloomberg News Friday, citing an unidentified source close to the matter. The Federal Deposit Insurance Corp.-backed takeover may come as soon as today, Bloomberg reported.
Light sweet crude for September delivery fell $3.01, or 4.3%, to end at $67.51 a barrel on the New York Mercantile Exchange.
U.S. commercial real estate market values fell by more than 17 percent in the first half of the year, outstripping their decline for all of 2008, according to the Investment Property Databank (IPD).
The S&P 500 sank 9 points, or 0.9%, to 1,004. The Dow Jones Industrial Average fell 77 points, or 0.8%, to 9,321. The Nasdaq Compsite sank 24 points, or 1.2%, to 1,986. For the week, the S&P 500 lost 0.6%, the Dow-30 fell 0.5% and the Nasdaq slid 0.7%.
Friday, August 14, 2009
Thursday, August 13, 2009
Foreclosures
8/13/09 Foreclosures
Insider sales outpaced insider buys last week 136 to 10. In two weeks, insider sales have topped $2.1B.
Wal-Mart Stores Inc.said Thursday that its fiscal second-quarter profit rose to $3.45 billion, or 88 cents a share, from $3.4 billion, or 87 cents a share, a year earlier. Sales in the quarter ended July 31 fell to $100.9 billion from $102.3 billion. Same-store sales dropped 1.2%, when the retailer had projected sales to be flat to up 3%. Wal-Mart raised the bottom end of its full-year profit forecast to $3.50 to $3.60 a share from $3.45 to $3.60.
U.S. foreclosures rose 7% in July compared to the prior month, a 32% rise from July 2008, RealtyTrac said Thursday. "July marks the third time in the last five months where we've seen a new record set for foreclosure activity," noted James J. Saccacio, chief executive officer of RealtyTrac. "Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."
The Labor Department says initial claims increased to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts expected new claims to drop to 545,000, according to Thomson Reuters.
The number of people remaining on the benefit rolls, meanwhile, fell to 6.2 million from 6.34 million the previous week. Analysts had expected a smaller decline. The continuing claims data lags initial claims by one week.
The four-week average of initial claims, which smooths out fluctuations, rose by 8,500 to 565,000. That reverses six straight weeks of decline.
The Commerce Department said retail sales fell 0.1 percent last month. Economists had expected a gain of 0.7 percent.
While autos, helped by the start of the Cash for Clunkers program, showed a 2.4 percent jump — the biggest in six months — there was widespread weakness elsewhere. Gasoline stations, department stores, electronics outlets and furniture stores all reported declines.
The July dip was the first setback following two months of modest sales gains. Excluding autos, sales fell 0.6 percent, worse than the 0.1 percent rise economists had forecast.
Gas station sales plunged 2.1 percent, due more to falling pump prices than weak demand. Excluding that drop, retail sales would have posted a modest 0.1 percent increase.
Department store sales fell 1.6 percent and the broader category of general merchandise stores, which includes big chains such as Wal-Mart Stores Inc. and Target Corp., posted a decline of 0.8 percent.
- Euro-zone gross domestic product shrank by 0.1% in the second quarter compared to the first three months of the year, the statistics agency Eurostat reported Thursday. Compared to the second quarter of last year, GDP fell 4.6%.
The Oil Drum: "Mexico's finance secretary is warning that falling oil production and prices may push the already cash-strapped nation into its worst economic recession in 30 years.
Mexico's state-owned oil company Pemex currently pumps about 2.6 million barrels a day, down from about 2.8 billion a day last year, Finance Secretary Agustin Carstens told a Senate committee Tuesday. Carstens said he expects output to slide to about 2.5 million barrels a day next year.
Mexico is the third-largest oil supplier to the United States but its reserves are drying up, and Petroleos Mexicanos has been slow to explore deep-water deposits."
General Motors has cast doubt over the long-term future of the Chevrolet Volt by claiming it may not be commercially viable and other rivals may overtake it with superior and more advanced technology.
GM submitted a regulatory filing report to the US Treasury yesterday and CEO Fritz Henderson claimed its “disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress”.
Nouriel Roubini: "Looking at the recessions of the post-war period, average monthly job losses ranged between 150,000 and 260,000. Average monthly losses in this recession are still at 350,000. For the first four months of the year, the average was at 648,000. The improvement with respect to the first part of the year is clear. The improvement with respect to what we are used to seeing in recessionary periods is much less clear cut. The latest numbers are not exactly what you'd call good news, at least not in absolute terms. In relative terms, however--after skirting a near-depression--markets seem to consider 247,000 payroll losses a breath of fresh air... So hiring is still a long way ahead. The decline in the unemployment rate from 9.5% in June to 9.4% in July was not due to an improvement in the employment situation but is explained by the large decline in the labor force (-422,000). Workers facing hiring freezes, fewer full-time jobs and jobs at lower wages are leaving the labor force....Unemployed workers are falling behind their debt payments, raising defaults on loans and making government mortgage modification programs ineffective. Default rates on various loans have already surpassed the unemployment rate.... Even as borrowing conditions remain tight and home prices continue to fall, the dip in labor compensation will continue to constrain consumer spending, notwithstanding any fiscal stimulus.In a severe, consumer-led recession like this one, the labor market is a leading (rather than lagging) indicator of economic recovery, and the consumer still drives the U.S. economy (private consumption still makes up over 70% of GDP)....Private sector labor compensation slowed to 1.5% in the 12 months ending June 2009, the smallest increase on record. Firms are reducing benefits significantly in the service sector while employers in manufacturing are largely cutting wages....However, the bid to maintain profit margins will backfire on companies in the form of subdued sales as labor incomes suffer....About 53% of the unemployed have been jobless for over three months and around 34% of them for over six months, which is the highest on record. Over 50% of the unemployed have lost their jobs permanently, again the highest on record. Underutilization of workers will lead to an erosion of human capital and a deterioration of labor productivity going forward and will negatively affect the potential growth rate of the economy. Inadequate safety nets, the dearth of labor retraining programs and tight access to student loans suggest that when workers begin looking for work during the recovery, they will face the possibility of skill mismatches. These factors might raise the structural unemployment in the economy from below 5% in 2007 to close to 7% ahead."
The U.S. dollar index stood at 78.24.
"Households are in no position to drive a decent economic recovery," Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients.
Including federal emergency benefit programs, 9.25 million people received unemployment compensation in the week ending July 25, the latest data available. That's down from a record of 9.35 million the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Barry Ritholtz: "In Real Inflation adjusted terms, these consumers are worse off — much worse off the lower you go down the pay scale — then they were 10 years ago."
Employers initiated 2,994 extended mass layoff events in the second quarter of 2009 that resulted in 534,881 job separations. Both the number of events and separations were record second quarter highs.
Natural-gas futures turned higher Thursday, erasing their losses after the Energy Information Administration reported that supplies rose by 63 billion cubic feet during the week ended Aug. 7. Analysts polled by Platts expected an addition of 65 billion to 69 billion cubic feet. IHS Global Insight projected a storage increase of 62 billion cubic feet. After the data, September natural-gas futures rose 0.1% to $3.481 per million British thermal units. Before the data, the contract was trading down 2% at $3.408 per million British thermal units.
U.S. businesses reduced inventories for a 10th straight month in June, although total business sales posted the first increase in nearly a year.
The Commerce Department said Thursday that businesses cut stockpiles 1.1 percent in June, slightly larger than the 0.9 percent drop economists expected.
CIT Group Inc. said Thursday that it signed an agreement with the Federal Reserve that forces the troubled lender to get permission before paying dividends, borrowing money or buying back shares.
Tom Petruno: "The government has spent $3.01 trillion so far this fiscal year, a jump of $524 billion, or 21%, compared with the first 10 months of fiscal 2008. But that’s only half the problem. The other side is the plunge in taxes and other receipts amid the deep recession. Receipts through July totaled $1.74 trillion, down $354 billion, or 17%, from the same period in fiscal 2008. Personal income tax payments have crashed to $750 billion this fiscal year, a drop of 20.5% from $944 billion in the comparable period of last year. The drop in corporate income taxes has been far more dramatic, as the recession has slashed companies’ bottom lines. Total corporate tax receipts are down 58% this year, to $105 billion....
And spending by Congress itself is up 7.4% in fiscal '09, to $3.97 billion.
There’s no recession in Washington."
Short interests sink to six-month lows after their steepest drop since Sept. 30, and shorted financials declined by 31%.
Gold for December delivery gained $4, or 0.4%, to end at $956.50 an ounce on the Comex division of the New York Mercantile Exchange.
Light sweet crude for September delivery rose 36 cents to end at $70.52 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average rose 35.9 points, or 0.4%, to 9,397.51. The S&P 500 Index advanced 6.91 points, or 0.7%, to 1,012.72, its highest finish since early October, while the Nasdaq Composite climbed 10.63 points, or 0.5%, to stand at 2,009.35.
Insider sales outpaced insider buys last week 136 to 10. In two weeks, insider sales have topped $2.1B.
Wal-Mart Stores Inc.said Thursday that its fiscal second-quarter profit rose to $3.45 billion, or 88 cents a share, from $3.4 billion, or 87 cents a share, a year earlier. Sales in the quarter ended July 31 fell to $100.9 billion from $102.3 billion. Same-store sales dropped 1.2%, when the retailer had projected sales to be flat to up 3%. Wal-Mart raised the bottom end of its full-year profit forecast to $3.50 to $3.60 a share from $3.45 to $3.60.
U.S. foreclosures rose 7% in July compared to the prior month, a 32% rise from July 2008, RealtyTrac said Thursday. "July marks the third time in the last five months where we've seen a new record set for foreclosure activity," noted James J. Saccacio, chief executive officer of RealtyTrac. "Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."
The Labor Department says initial claims increased to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts expected new claims to drop to 545,000, according to Thomson Reuters.
The number of people remaining on the benefit rolls, meanwhile, fell to 6.2 million from 6.34 million the previous week. Analysts had expected a smaller decline. The continuing claims data lags initial claims by one week.
The four-week average of initial claims, which smooths out fluctuations, rose by 8,500 to 565,000. That reverses six straight weeks of decline.
The Commerce Department said retail sales fell 0.1 percent last month. Economists had expected a gain of 0.7 percent.
While autos, helped by the start of the Cash for Clunkers program, showed a 2.4 percent jump — the biggest in six months — there was widespread weakness elsewhere. Gasoline stations, department stores, electronics outlets and furniture stores all reported declines.
The July dip was the first setback following two months of modest sales gains. Excluding autos, sales fell 0.6 percent, worse than the 0.1 percent rise economists had forecast.
Gas station sales plunged 2.1 percent, due more to falling pump prices than weak demand. Excluding that drop, retail sales would have posted a modest 0.1 percent increase.
Department store sales fell 1.6 percent and the broader category of general merchandise stores, which includes big chains such as Wal-Mart Stores Inc. and Target Corp., posted a decline of 0.8 percent.
- Euro-zone gross domestic product shrank by 0.1% in the second quarter compared to the first three months of the year, the statistics agency Eurostat reported Thursday. Compared to the second quarter of last year, GDP fell 4.6%.
The Oil Drum: "Mexico's finance secretary is warning that falling oil production and prices may push the already cash-strapped nation into its worst economic recession in 30 years.
Mexico's state-owned oil company Pemex currently pumps about 2.6 million barrels a day, down from about 2.8 billion a day last year, Finance Secretary Agustin Carstens told a Senate committee Tuesday. Carstens said he expects output to slide to about 2.5 million barrels a day next year.
Mexico is the third-largest oil supplier to the United States but its reserves are drying up, and Petroleos Mexicanos has been slow to explore deep-water deposits."
General Motors has cast doubt over the long-term future of the Chevrolet Volt by claiming it may not be commercially viable and other rivals may overtake it with superior and more advanced technology.
GM submitted a regulatory filing report to the US Treasury yesterday and CEO Fritz Henderson claimed its “disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress”.
Nouriel Roubini: "Looking at the recessions of the post-war period, average monthly job losses ranged between 150,000 and 260,000. Average monthly losses in this recession are still at 350,000. For the first four months of the year, the average was at 648,000. The improvement with respect to the first part of the year is clear. The improvement with respect to what we are used to seeing in recessionary periods is much less clear cut. The latest numbers are not exactly what you'd call good news, at least not in absolute terms. In relative terms, however--after skirting a near-depression--markets seem to consider 247,000 payroll losses a breath of fresh air... So hiring is still a long way ahead. The decline in the unemployment rate from 9.5% in June to 9.4% in July was not due to an improvement in the employment situation but is explained by the large decline in the labor force (-422,000). Workers facing hiring freezes, fewer full-time jobs and jobs at lower wages are leaving the labor force....Unemployed workers are falling behind their debt payments, raising defaults on loans and making government mortgage modification programs ineffective. Default rates on various loans have already surpassed the unemployment rate.... Even as borrowing conditions remain tight and home prices continue to fall, the dip in labor compensation will continue to constrain consumer spending, notwithstanding any fiscal stimulus.In a severe, consumer-led recession like this one, the labor market is a leading (rather than lagging) indicator of economic recovery, and the consumer still drives the U.S. economy (private consumption still makes up over 70% of GDP)....Private sector labor compensation slowed to 1.5% in the 12 months ending June 2009, the smallest increase on record. Firms are reducing benefits significantly in the service sector while employers in manufacturing are largely cutting wages....However, the bid to maintain profit margins will backfire on companies in the form of subdued sales as labor incomes suffer....About 53% of the unemployed have been jobless for over three months and around 34% of them for over six months, which is the highest on record. Over 50% of the unemployed have lost their jobs permanently, again the highest on record. Underutilization of workers will lead to an erosion of human capital and a deterioration of labor productivity going forward and will negatively affect the potential growth rate of the economy. Inadequate safety nets, the dearth of labor retraining programs and tight access to student loans suggest that when workers begin looking for work during the recovery, they will face the possibility of skill mismatches. These factors might raise the structural unemployment in the economy from below 5% in 2007 to close to 7% ahead."
The U.S. dollar index stood at 78.24.
"Households are in no position to drive a decent economic recovery," Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients.
Including federal emergency benefit programs, 9.25 million people received unemployment compensation in the week ending July 25, the latest data available. That's down from a record of 9.35 million the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Barry Ritholtz: "In Real Inflation adjusted terms, these consumers are worse off — much worse off the lower you go down the pay scale — then they were 10 years ago."
Employers initiated 2,994 extended mass layoff events in the second quarter of 2009 that resulted in 534,881 job separations. Both the number of events and separations were record second quarter highs.
Natural-gas futures turned higher Thursday, erasing their losses after the Energy Information Administration reported that supplies rose by 63 billion cubic feet during the week ended Aug. 7. Analysts polled by Platts expected an addition of 65 billion to 69 billion cubic feet. IHS Global Insight projected a storage increase of 62 billion cubic feet. After the data, September natural-gas futures rose 0.1% to $3.481 per million British thermal units. Before the data, the contract was trading down 2% at $3.408 per million British thermal units.
U.S. businesses reduced inventories for a 10th straight month in June, although total business sales posted the first increase in nearly a year.
The Commerce Department said Thursday that businesses cut stockpiles 1.1 percent in June, slightly larger than the 0.9 percent drop economists expected.
CIT Group Inc. said Thursday that it signed an agreement with the Federal Reserve that forces the troubled lender to get permission before paying dividends, borrowing money or buying back shares.
Tom Petruno: "The government has spent $3.01 trillion so far this fiscal year, a jump of $524 billion, or 21%, compared with the first 10 months of fiscal 2008. But that’s only half the problem. The other side is the plunge in taxes and other receipts amid the deep recession. Receipts through July totaled $1.74 trillion, down $354 billion, or 17%, from the same period in fiscal 2008. Personal income tax payments have crashed to $750 billion this fiscal year, a drop of 20.5% from $944 billion in the comparable period of last year. The drop in corporate income taxes has been far more dramatic, as the recession has slashed companies’ bottom lines. Total corporate tax receipts are down 58% this year, to $105 billion....
And spending by Congress itself is up 7.4% in fiscal '09, to $3.97 billion.
There’s no recession in Washington."
Short interests sink to six-month lows after their steepest drop since Sept. 30, and shorted financials declined by 31%.
Gold for December delivery gained $4, or 0.4%, to end at $956.50 an ounce on the Comex division of the New York Mercantile Exchange.
Light sweet crude for September delivery rose 36 cents to end at $70.52 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average rose 35.9 points, or 0.4%, to 9,397.51. The S&P 500 Index advanced 6.91 points, or 0.7%, to 1,012.72, its highest finish since early October, while the Nasdaq Composite climbed 10.63 points, or 0.5%, to stand at 2,009.35.
Wednesday, August 12, 2009
The Level
8/12/09 The Level
The U.S. posted a budget deficit of $180.6 billion in July, the Treasury Department reported Wednesday, pushing the cumulative deficit so far this year up to $1.26 trillion. Outlays were $332 billion in July, the Treasury said, up 26% from last year. Receipts were $151 billion in July, down from $215 billion in June and down 6% from a year ago.
Imports of goods and services into the United States rose for the first time in nearly a year in June, driven by higher oil prices, the government said Wednesday. Excluding oil, however, imports fell to the lowest level in five and a half years. The U.S. trade deficit rose to $27 billion in June from a 10-year low of $26 billion in May, the Commerce Department estimated. Most of the increase in imports and exports in June was driven by higher prices, not higher volumes. In inflation-adjusted terms, the trade deficit fell to the lowest level in nearly 10 years. In June, the goods and services deficit decreased $33.2 billion from June 2008. Exports were down $35.8 billion, or 22.2 percent, and imports were down $69.0 billion, or 31.1 percent.
The International Energy Agency Wednesday raised its forecast for this and next year's global oil demand, citing strong consumption from Asia especially China, the world's second-biggest oil consumer. In a monthly report, the energy adviser to 28 developed countries revised up this and next year's demand forecast by 190,000 barrels a day and 70,000 barrels a day, respectively. Despite the revision, this year's demand is still expected to be 2.7% lower than last year's, the IEA said.
House builder Toll Brothers Inc.said Wednesday that fiscal third-quarter home building revenue fell 42% to $461.3 million, with units down 36% to 792. Net signed contracts in the quarter ended July 31 rose 3% to 837 units, though the value of those contracts fell 5% to $447.7 million. The group's backlog at the end of the quarter was down 47% at $930.7 million. The group said it was the first time in sixteen quarters that its net contracts signed exceeded the prior year's level. "While we have to work very hard for our sales, it does feel as if the fence-sitters are looking for reasons to jump in on the side of buying. Price is no longer the overwhelmingly dominant factor," said CEO Robert Toll.
China's Shanghai Composite Index ended 4.7% lower at 3112.72 Wednesday, a one-month low, as investors took flight amid mounting concerns government-led investment and lending growth are beginning to moderate. The share-price decline comes a day after the People's Bank of China said lending by Chinese banks totaled 355.9 billion yuan ($52.1 billion) in July, a decline of 77% from the prior month, and fixed-asset investment growth eased to 30% in July from a rise of 35% in June. Shenzhen's Composite Index ended 4.4% lower at 1,052.51.
Guy Lerner: "As of yesterday's close, the amount of assets in the bullish and leveraged funds was 2.53 times that in the bearish and leveraged funds, and this represents the highest value since November, 2004."
U.K. unemployment rose to the highest level in 14 years as companies continue to cut jobs even as the worst recession in at least a generation begins to ease.
The number of people seeking work in the three months through June rose 220,000 to 2.44 million, the most since 1995, the Office for National Statistics said in London today. A separate measure showing claims for jobless benefit climbed by 24,900 in July to 1.58 million. The median forecast of 24 economists in a Bloomberg News survey was for a 28,000 increase.
Macy’s Inc., the second-biggest U.S. department-store chain, increased its full-year profit forecast and posted earnings that beat analysts’ estimates after it cut expenses and inventories. Macy’s raised its forecast for annual profit before restructuring costs to as much as 80 cents a share from a maximum of 55 cents predicted earlier.
In the year through the end of March 2009, the number of births in Japan fell for the first time since 2006 to 1.08 million, while there were 1.13 million deaths. Put together, that adds up to a record decline in the population of 45,914. That bests (if that’s the right word) the previous biggest decline of 29,119 in 2007. Just as worrying, the number of Japanese 65 or older increased to a record 28.21 million out of total population of 127 million. Meanwhile, the current recession—Japan’s GDP may shrink 6% this year—will likely make things worse as couples decide to delay or have fewer children.
The Bank of Israel stopped its daily dollar purchase program.
Corn supplies in the U.S., the world's biggest producer, are expected to hit a record high in the market year that begins Sept. 1 as higher yields push up production, the United States Agriculture Department reported Wednesday. Corn production for the market year is projected to rise to 12.8 billion bushels, 471 million bushels higher than the USDA had expected a month ago, as higher yields are expected to more than offset a small reduction in harvested area. Adding stockpiles left from the previous market year, this year's total corn supplies will rise to 14.5 billion bushels, the highest level on record, the USDA said. Front-month corn futures traded around $3.30 a bushel Wednesday, down nearly 20% this year.
Shopping mall operator General Growth Properties Inc. said Tuesday night that a bankruptcy judge has denied a motion by a group of lenders to keep a handful of its subsidiaries out of bankruptcy.
Taylor, Bean & Whitaker, the country's 12th-largest mortgage lender, said in court papers last week a 'bankruptcy filing is imminent' after it was forced to stop mortgage lending on Aug. 5.
Mortgage applications fell 3.5% from last week, MBA says. The average interest rate on 30-year fixed-rate mortgages rose to 5.38% from 5.17%.
The U.S. and Switzerland settled a Justice Department lawsuit against UBS AG seeking the names of Americans suspected of evading taxes through 52,000 secret Swiss accounts.
The governments have initialed agreements and will later sign a final accord, Justice Department lawyer Stuart Gibson told U.S. District Judge Alan Gold in Miami today. Gibson didn’t disclose details of the settlement or say when it would be delivered to Gold. Gibson told the judge July 31 that the countries reached an agreement in principle to settle the case and asked Aug. 7 for more time to negotiate unspecified issues.
Taleb, principal at Universa Investments and coiner of the "Black Swan" term to explain drastic, unpredictable events, said in a live interview that choking debt, continued high unemployment and a system that rewards bad behavior will hamstring an economic recovery.
"It is a matter of risk and responsibility, and I think the risks that were there before, these problems are still there," he said. "We still have a very high level of debt, we still have leadership that's literally incompetent ..."
"They did not see the problem, the don't look at the core of problem. There's an elephant in the room and they did not identify it...Long-term, I'm not comfortable treating a patient for his headaches when he has lung cancer."
The EIA said supplies rose by 2.5 million barrels during the week ended Aug. 7, higher than the rise of 1.2 million barrels expected by analysts polled by Platts. After the data, September crude futures were last up 69 cents to $70.11 a barrel on Globex. Before the data, oil futures traded just above $71 a barrel. The EIA also said that gasoline stocks fell by 1 million barrels and distillate inventories rose by 800,000 barrels last week. Analysts polled by Platts expected a decline in gasoline stocks of 1.7 million barrels as well as a rise in distillate stocks of 900,000 barrels.
Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today.
Total existing home sales in the U.S., including single-family houses and condos, fell 2.9% in the second quarter from the year-earlier period, the National Association of Realtors said Wednesday. Sales rose 3.8% from the first quarter, the realtors group said.
“Seniors are one of the most attentive and engaged constituencies, especially on health care issues, and we’ve seen that in the Medicare Advantage programs,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.
A July 31 Gallup Poll found that just 20 percent of Americans aged 65 and older believe health care reform would improve their own situation, noticeably lower than the 27 percent of 18- to 49-year olds and 26 percent of 50-to-64-year-olds who say the same.
The senior citizen problem could pose a serious problem for the 2010 election cycle.
Older Americans turn out in much higher numbers than other age groups during midterm elections. In 2006, the 55-and-older age group still had the highest voting rate of any age group, at 63 percent, even though younger voters turned out in record numbers for a midterm, according to census data. Half of all votes cast in the 2006 midterms were from voters age 50 or older, according to AARP. And one out of four were AARP members.
The Dow Jones Industrial Average ended at 9,361.61, up 120.16, or 1.3%. The S&P 500 Index gained 11.46 points, or 1.2%, to stand at 1,005.81, while the Nasdaq Composite rose 28.99 points, or 1.5%, to 1,998.72.
Crude for September delivery rose 71 cents to $70.16 a barrel on the New York Mercantile Exchange.
"Economic activity is leveling out," the FOMC said. I guess it depends what level is used.
U.S. Natural Gas Fund said although it received regulatory clearance to register an additional 1 billion shares, the ETF's management has decided the fund won't resume issuing shares for now, according to a filing Wednesday. In explaining the move, management cited "current and anticipated new regulatory restrictions and limitations that have been and may be imposed by the Commodity Futures Trading Commission" and commodity exchanges. The ETF has seen its assets surge to more than $4 billion, fueling speculation the fund is pushing natural-gas prices higher. The fund grew so fast that earlier this summer it was forced to halt the creation of new shares while it waited for regulatory approval to increase the number of shares outstanding.
The U.S. posted a budget deficit of $180.6 billion in July, the Treasury Department reported Wednesday, pushing the cumulative deficit so far this year up to $1.26 trillion. Outlays were $332 billion in July, the Treasury said, up 26% from last year. Receipts were $151 billion in July, down from $215 billion in June and down 6% from a year ago.
Imports of goods and services into the United States rose for the first time in nearly a year in June, driven by higher oil prices, the government said Wednesday. Excluding oil, however, imports fell to the lowest level in five and a half years. The U.S. trade deficit rose to $27 billion in June from a 10-year low of $26 billion in May, the Commerce Department estimated. Most of the increase in imports and exports in June was driven by higher prices, not higher volumes. In inflation-adjusted terms, the trade deficit fell to the lowest level in nearly 10 years. In June, the goods and services deficit decreased $33.2 billion from June 2008. Exports were down $35.8 billion, or 22.2 percent, and imports were down $69.0 billion, or 31.1 percent.
The International Energy Agency Wednesday raised its forecast for this and next year's global oil demand, citing strong consumption from Asia especially China, the world's second-biggest oil consumer. In a monthly report, the energy adviser to 28 developed countries revised up this and next year's demand forecast by 190,000 barrels a day and 70,000 barrels a day, respectively. Despite the revision, this year's demand is still expected to be 2.7% lower than last year's, the IEA said.
House builder Toll Brothers Inc.said Wednesday that fiscal third-quarter home building revenue fell 42% to $461.3 million, with units down 36% to 792. Net signed contracts in the quarter ended July 31 rose 3% to 837 units, though the value of those contracts fell 5% to $447.7 million. The group's backlog at the end of the quarter was down 47% at $930.7 million. The group said it was the first time in sixteen quarters that its net contracts signed exceeded the prior year's level. "While we have to work very hard for our sales, it does feel as if the fence-sitters are looking for reasons to jump in on the side of buying. Price is no longer the overwhelmingly dominant factor," said CEO Robert Toll.
China's Shanghai Composite Index ended 4.7% lower at 3112.72 Wednesday, a one-month low, as investors took flight amid mounting concerns government-led investment and lending growth are beginning to moderate. The share-price decline comes a day after the People's Bank of China said lending by Chinese banks totaled 355.9 billion yuan ($52.1 billion) in July, a decline of 77% from the prior month, and fixed-asset investment growth eased to 30% in July from a rise of 35% in June. Shenzhen's Composite Index ended 4.4% lower at 1,052.51.
Guy Lerner: "As of yesterday's close, the amount of assets in the bullish and leveraged funds was 2.53 times that in the bearish and leveraged funds, and this represents the highest value since November, 2004."
U.K. unemployment rose to the highest level in 14 years as companies continue to cut jobs even as the worst recession in at least a generation begins to ease.
The number of people seeking work in the three months through June rose 220,000 to 2.44 million, the most since 1995, the Office for National Statistics said in London today. A separate measure showing claims for jobless benefit climbed by 24,900 in July to 1.58 million. The median forecast of 24 economists in a Bloomberg News survey was for a 28,000 increase.
Macy’s Inc., the second-biggest U.S. department-store chain, increased its full-year profit forecast and posted earnings that beat analysts’ estimates after it cut expenses and inventories. Macy’s raised its forecast for annual profit before restructuring costs to as much as 80 cents a share from a maximum of 55 cents predicted earlier.
In the year through the end of March 2009, the number of births in Japan fell for the first time since 2006 to 1.08 million, while there were 1.13 million deaths. Put together, that adds up to a record decline in the population of 45,914. That bests (if that’s the right word) the previous biggest decline of 29,119 in 2007. Just as worrying, the number of Japanese 65 or older increased to a record 28.21 million out of total population of 127 million. Meanwhile, the current recession—Japan’s GDP may shrink 6% this year—will likely make things worse as couples decide to delay or have fewer children.
The Bank of Israel stopped its daily dollar purchase program.
Corn supplies in the U.S., the world's biggest producer, are expected to hit a record high in the market year that begins Sept. 1 as higher yields push up production, the United States Agriculture Department reported Wednesday. Corn production for the market year is projected to rise to 12.8 billion bushels, 471 million bushels higher than the USDA had expected a month ago, as higher yields are expected to more than offset a small reduction in harvested area. Adding stockpiles left from the previous market year, this year's total corn supplies will rise to 14.5 billion bushels, the highest level on record, the USDA said. Front-month corn futures traded around $3.30 a bushel Wednesday, down nearly 20% this year.
Shopping mall operator General Growth Properties Inc. said Tuesday night that a bankruptcy judge has denied a motion by a group of lenders to keep a handful of its subsidiaries out of bankruptcy.
Taylor, Bean & Whitaker, the country's 12th-largest mortgage lender, said in court papers last week a 'bankruptcy filing is imminent' after it was forced to stop mortgage lending on Aug. 5.
Mortgage applications fell 3.5% from last week, MBA says. The average interest rate on 30-year fixed-rate mortgages rose to 5.38% from 5.17%.
The U.S. and Switzerland settled a Justice Department lawsuit against UBS AG seeking the names of Americans suspected of evading taxes through 52,000 secret Swiss accounts.
The governments have initialed agreements and will later sign a final accord, Justice Department lawyer Stuart Gibson told U.S. District Judge Alan Gold in Miami today. Gibson didn’t disclose details of the settlement or say when it would be delivered to Gold. Gibson told the judge July 31 that the countries reached an agreement in principle to settle the case and asked Aug. 7 for more time to negotiate unspecified issues.
Taleb, principal at Universa Investments and coiner of the "Black Swan" term to explain drastic, unpredictable events, said in a live interview that choking debt, continued high unemployment and a system that rewards bad behavior will hamstring an economic recovery.
"It is a matter of risk and responsibility, and I think the risks that were there before, these problems are still there," he said. "We still have a very high level of debt, we still have leadership that's literally incompetent ..."
"They did not see the problem, the don't look at the core of problem. There's an elephant in the room and they did not identify it...Long-term, I'm not comfortable treating a patient for his headaches when he has lung cancer."
The EIA said supplies rose by 2.5 million barrels during the week ended Aug. 7, higher than the rise of 1.2 million barrels expected by analysts polled by Platts. After the data, September crude futures were last up 69 cents to $70.11 a barrel on Globex. Before the data, oil futures traded just above $71 a barrel. The EIA also said that gasoline stocks fell by 1 million barrels and distillate inventories rose by 800,000 barrels last week. Analysts polled by Platts expected a decline in gasoline stocks of 1.7 million barrels as well as a rise in distillate stocks of 900,000 barrels.
Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today.
Total existing home sales in the U.S., including single-family houses and condos, fell 2.9% in the second quarter from the year-earlier period, the National Association of Realtors said Wednesday. Sales rose 3.8% from the first quarter, the realtors group said.
“Seniors are one of the most attentive and engaged constituencies, especially on health care issues, and we’ve seen that in the Medicare Advantage programs,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.
A July 31 Gallup Poll found that just 20 percent of Americans aged 65 and older believe health care reform would improve their own situation, noticeably lower than the 27 percent of 18- to 49-year olds and 26 percent of 50-to-64-year-olds who say the same.
The senior citizen problem could pose a serious problem for the 2010 election cycle.
Older Americans turn out in much higher numbers than other age groups during midterm elections. In 2006, the 55-and-older age group still had the highest voting rate of any age group, at 63 percent, even though younger voters turned out in record numbers for a midterm, according to census data. Half of all votes cast in the 2006 midterms were from voters age 50 or older, according to AARP. And one out of four were AARP members.
The Dow Jones Industrial Average ended at 9,361.61, up 120.16, or 1.3%. The S&P 500 Index gained 11.46 points, or 1.2%, to stand at 1,005.81, while the Nasdaq Composite rose 28.99 points, or 1.5%, to 1,998.72.
Crude for September delivery rose 71 cents to $70.16 a barrel on the New York Mercantile Exchange.
"Economic activity is leveling out," the FOMC said. I guess it depends what level is used.
U.S. Natural Gas Fund said although it received regulatory clearance to register an additional 1 billion shares, the ETF's management has decided the fund won't resume issuing shares for now, according to a filing Wednesday. In explaining the move, management cited "current and anticipated new regulatory restrictions and limitations that have been and may be imposed by the Commodity Futures Trading Commission" and commodity exchanges. The ETF has seen its assets surge to more than $4 billion, fueling speculation the fund is pushing natural-gas prices higher. The fund grew so fast that earlier this summer it was forced to halt the creation of new shares while it waited for regulatory approval to increase the number of shares outstanding.
Tuesday, August 11, 2009
Fire Away
8/11/09 Fire Away
The Labor Department said second-quarter productivity jumped 6.4% and unit labor costs fell 5.8% and were due to hours worked declining faster than output.The rise in productivity was the fastest in the nonfarm business sector in nearly six years. Unit labor costs -a key indicator of inflationary pressures - plunged at a 5.8% rate, the largest decline in nine years.
George Ure: "If productivity is up 6.4% annualized, and sales are flat (after backing out inflation) or even down then you tell me, do you need more people, or less, to make things?
The answer? Hooray! We can fire more people! "
Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said.
Chain-store sales for the week ended Aug. 8 rose 0.4% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales were flat. Sales "were helped by the confluence of the later back-to-school starts and the 10 states that had later and non-comparable state sales tax holiday periods compared with last year," said Michael Niemira, ICSC's chief economist. "The sales performance should improve as comparisons begin to get easier and the economy is showing signs of recovery." ICSC forecast August comparable sales to decline 3.5% to 4%.
China's money supply, as measured by M2, expanded 28.4% in July from the same month a year earlier, according to data released Tuesday by the People's Bank of China. The central bank also said new loans for July totaled 355.9 billion yuan ($52 billion), easing from June's issuance of 1.53 billion yuan, and bringing total lending growth this year to 7.7 trillion yuan, a rise of 173.2% from the first seven months of last year.
China’s exports and new loans tumbled in July and industrial output rose less than estimates, underscoring government concern that the world’s third-biggest economy is yet to establish a solid recovery.
Exports fell 23 percent from a year earlier, the customs bureau said. Industrial production gained 10.8 percent, the statistics bureau reported. New loans plunged to 355.9 billion yuan ($52 billion), less than a quarter of June’s level, the central bank said.
China's imports of crude oil and iron ore hit a record high in July, customs data showed Tuesday, as the nation's $586 billion stimulus plan continued to push up commodities demand. Crude oil imports jumped 18% from a month ago to 19.63 million metric tons last month, or about 4.8 million barrels a day, according to monthly data released by China's General Administration of Customs. Iron ore imports rose 5% to 58.08 million metric tons. China, the world's second biggest oil consumer and the No. 1 user of iron ore, spent $13.8 billion in the imports of the two commodities.
In its latest assessment of the $700 billion financial system bailout, the Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses - as many economists fear - the banking system could again lose its footing, the panel says in a report to be released Tuesday.
"The financial system (remains) vulnerable to the crisis conditions that (the bailout) was meant to fix," the panel wrote in a draft copy of Tuesday's report.
The Congressional Oversight Panel was created as part of the Troubled Asset Relief Program, or TARP. It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.
Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
July's number is the highest monthly bankruptcy total since the October 2005 bankruptcy reform aka the Bankruptcy Abuse Prevention and Consumer Protection Act.
Demand for OPEC crude will average 27.97 million barrels per day (bpd), down 480,000 bpd from 2009, the Organization of the Petroleum Exporting Countries said in a monthly report. It previously expected a fall of 380,000 bpd.
China National Petroleum Corp. and Cnooc Ltd. have proposed paying at least US $17 billion for all of Repsol YPF SA's stake in its Argentine unit YPF SA, two people close to the talks said.
Bill Bonner: "The stock market is in a bear market rally, not a genuine bull market. The economy is entering a long depression…possibly a ‘great’ one."
The downward trajectory of Bay Area home values was slightly less steep in June than it was a year ago, according to a study being released today by Zillow.com.
The grinding recession, however, is denting home prices in areas that once seemed immune - such as San Francisco and Marin counties - where values have slid more than 15 percent for the past two quarters compared with the previous year.
Zillow.com, a real estate valuation site, reported that the nine-county Bay Area saw the sharpest home-value declines in January, when houses were valued at about 20 percent lower than the previous year.
But the erosion was slower in the second quarter, which concluded at the end of June, as Zillow estimated a 17.7 percent drop compared with last year.
Marin County's mid-range home value through June was $687,661, San Francisco's was $657,180, and San Mateo's was $629,800, Zillow reported.
In contrast, the Bay Area mid-range value for last quarter came in at $466,757, and the national mid-range value was $186,500. Zillow calculated that in the second quarter, 30 percent of all single-family homeowners with a mortgage were "underwater," meaning that they owe more on the mortgage than their home is currently worth. That number was 29 percent in the first quarter of 2009.
Maguire Properties Inc., one of the region's largest commercial landlords, posted widening losses Monday and said it was about to default on seven prime office buildings in Los Angeles and Orange counties. It is defaulting on loans worth more than $1 billion.
Maguire Properties hopes that by giving back the keys to properties for which it overpaid at the peak of the last boom, it can reduce debt enough to keep the company solvent, Chief Executive Nelson Rising said in an interview Monday.
Troubled lender CIT Group Inc said on Tuesday it has delayed filing its second-quarter report with regulators and said if it could not complete its debt tender or arrange other financing, it would file for bankruptcy.
Britain's trade deficit widened a little more than forecast in June, official figures showed Tuesday, suggesting that weakness in the pound is not benefiting exporters quite as much as expected.
The Office for National Statistics said that the goods trade gap rose to 6.45 billion pounds ($10.60 billion) from 6.17 billion pounds in May. Economists had forecast a deficit of 6.2 billion pounds.
For its second quarter Wal-Mart is expected to earn about 86 cents a share.
Wholesale inventories for June decreased 1.7%, which is a sharper decrease than the 0.9% decrease that had been widely expected. The previous figure was revised downward to reflect a 1.2% decrease. Inventories have fallen in each of the past 10 months.
Typhoon Morakot "dumped more rain on Taiwan than in any 48-hour period since records began 100 years ago."
The September crude-oil futures contract was off $1.10 at $69.50 a barrel in New York while September natural gas was off 9 cents at $3.55 per million British thermal units.
Russia's economy shrank by 10.9% in the second quarter compared with the same period a year ago, according to media reports Tuesday that cited initial data from the Russian statistics office. In the first quarter, gross domestic product declined by 9.8% year-on-year.
More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24. Foreclosure re-sales made up 22 percent of all home sales in June. 29.2 percent of sellers sold homes in June for less than the previous purchase price.
“Buy American” rules that Congress included in the U.S. economic stimulus package don’t endanger free trade with Canada, President Barack Obama said after meeting with the leaders of Canada and Mexico.
“This has in no way endangered the billions of dollars of trade taking place between our two countries,” Obama said yesterday, noting that Canadian Prime Minister Stephen Harper raises the issue “every time I see him.”
The $787 billion stimulus measure approved in February stipulates that products purchased with the funds must be made in the U.S. That’s caused friction between the U.S. and Canada, its largest trading partner.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index rose to 50.3 in August from 46.3 in July.
The Dow Jones Industrial Average stood at 9,241.45, off 96.5 points, or 1%. The S&P 500 Index fell 12.75 points, or 1.3%, to 994.35, with the broad market gauge finishing under 1,000 for the first session in three. The Nasdaq Composite declined 22.51 points, or 1.1%, to 1,969.73.
Realogy Chief Executive Richard Smith said it is unclear the U.S. housing market is recovering.
"While the rate of decline in home sales is slowing and there are emerging positive signals, given the macroeconomic headwinds it is premature to conclude that the housing market has started its rebound," he said.
The Labor Department said second-quarter productivity jumped 6.4% and unit labor costs fell 5.8% and were due to hours worked declining faster than output.The rise in productivity was the fastest in the nonfarm business sector in nearly six years. Unit labor costs -a key indicator of inflationary pressures - plunged at a 5.8% rate, the largest decline in nine years.
George Ure: "If productivity is up 6.4% annualized, and sales are flat (after backing out inflation) or even down then you tell me, do you need more people, or less, to make things?
The answer? Hooray! We can fire more people! "
Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said.
Chain-store sales for the week ended Aug. 8 rose 0.4% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales were flat. Sales "were helped by the confluence of the later back-to-school starts and the 10 states that had later and non-comparable state sales tax holiday periods compared with last year," said Michael Niemira, ICSC's chief economist. "The sales performance should improve as comparisons begin to get easier and the economy is showing signs of recovery." ICSC forecast August comparable sales to decline 3.5% to 4%.
China's money supply, as measured by M2, expanded 28.4% in July from the same month a year earlier, according to data released Tuesday by the People's Bank of China. The central bank also said new loans for July totaled 355.9 billion yuan ($52 billion), easing from June's issuance of 1.53 billion yuan, and bringing total lending growth this year to 7.7 trillion yuan, a rise of 173.2% from the first seven months of last year.
China’s exports and new loans tumbled in July and industrial output rose less than estimates, underscoring government concern that the world’s third-biggest economy is yet to establish a solid recovery.
Exports fell 23 percent from a year earlier, the customs bureau said. Industrial production gained 10.8 percent, the statistics bureau reported. New loans plunged to 355.9 billion yuan ($52 billion), less than a quarter of June’s level, the central bank said.
China's imports of crude oil and iron ore hit a record high in July, customs data showed Tuesday, as the nation's $586 billion stimulus plan continued to push up commodities demand. Crude oil imports jumped 18% from a month ago to 19.63 million metric tons last month, or about 4.8 million barrels a day, according to monthly data released by China's General Administration of Customs. Iron ore imports rose 5% to 58.08 million metric tons. China, the world's second biggest oil consumer and the No. 1 user of iron ore, spent $13.8 billion in the imports of the two commodities.
In its latest assessment of the $700 billion financial system bailout, the Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses - as many economists fear - the banking system could again lose its footing, the panel says in a report to be released Tuesday.
"The financial system (remains) vulnerable to the crisis conditions that (the bailout) was meant to fix," the panel wrote in a draft copy of Tuesday's report.
The Congressional Oversight Panel was created as part of the Troubled Asset Relief Program, or TARP. It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.
Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
July's number is the highest monthly bankruptcy total since the October 2005 bankruptcy reform aka the Bankruptcy Abuse Prevention and Consumer Protection Act.
Demand for OPEC crude will average 27.97 million barrels per day (bpd), down 480,000 bpd from 2009, the Organization of the Petroleum Exporting Countries said in a monthly report. It previously expected a fall of 380,000 bpd.
China National Petroleum Corp. and Cnooc Ltd. have proposed paying at least US $17 billion for all of Repsol YPF SA's stake in its Argentine unit YPF SA, two people close to the talks said.
Bill Bonner: "The stock market is in a bear market rally, not a genuine bull market. The economy is entering a long depression…possibly a ‘great’ one."
The downward trajectory of Bay Area home values was slightly less steep in June than it was a year ago, according to a study being released today by Zillow.com.
The grinding recession, however, is denting home prices in areas that once seemed immune - such as San Francisco and Marin counties - where values have slid more than 15 percent for the past two quarters compared with the previous year.
Zillow.com, a real estate valuation site, reported that the nine-county Bay Area saw the sharpest home-value declines in January, when houses were valued at about 20 percent lower than the previous year.
But the erosion was slower in the second quarter, which concluded at the end of June, as Zillow estimated a 17.7 percent drop compared with last year.
Marin County's mid-range home value through June was $687,661, San Francisco's was $657,180, and San Mateo's was $629,800, Zillow reported.
In contrast, the Bay Area mid-range value for last quarter came in at $466,757, and the national mid-range value was $186,500. Zillow calculated that in the second quarter, 30 percent of all single-family homeowners with a mortgage were "underwater," meaning that they owe more on the mortgage than their home is currently worth. That number was 29 percent in the first quarter of 2009.
Maguire Properties Inc., one of the region's largest commercial landlords, posted widening losses Monday and said it was about to default on seven prime office buildings in Los Angeles and Orange counties. It is defaulting on loans worth more than $1 billion.
Maguire Properties hopes that by giving back the keys to properties for which it overpaid at the peak of the last boom, it can reduce debt enough to keep the company solvent, Chief Executive Nelson Rising said in an interview Monday.
Troubled lender CIT Group Inc said on Tuesday it has delayed filing its second-quarter report with regulators and said if it could not complete its debt tender or arrange other financing, it would file for bankruptcy.
Britain's trade deficit widened a little more than forecast in June, official figures showed Tuesday, suggesting that weakness in the pound is not benefiting exporters quite as much as expected.
The Office for National Statistics said that the goods trade gap rose to 6.45 billion pounds ($10.60 billion) from 6.17 billion pounds in May. Economists had forecast a deficit of 6.2 billion pounds.
For its second quarter Wal-Mart is expected to earn about 86 cents a share.
Wholesale inventories for June decreased 1.7%, which is a sharper decrease than the 0.9% decrease that had been widely expected. The previous figure was revised downward to reflect a 1.2% decrease. Inventories have fallen in each of the past 10 months.
Typhoon Morakot "dumped more rain on Taiwan than in any 48-hour period since records began 100 years ago."
The September crude-oil futures contract was off $1.10 at $69.50 a barrel in New York while September natural gas was off 9 cents at $3.55 per million British thermal units.
Russia's economy shrank by 10.9% in the second quarter compared with the same period a year ago, according to media reports Tuesday that cited initial data from the Russian statistics office. In the first quarter, gross domestic product declined by 9.8% year-on-year.
More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24. Foreclosure re-sales made up 22 percent of all home sales in June. 29.2 percent of sellers sold homes in June for less than the previous purchase price.
“Buy American” rules that Congress included in the U.S. economic stimulus package don’t endanger free trade with Canada, President Barack Obama said after meeting with the leaders of Canada and Mexico.
“This has in no way endangered the billions of dollars of trade taking place between our two countries,” Obama said yesterday, noting that Canadian Prime Minister Stephen Harper raises the issue “every time I see him.”
The $787 billion stimulus measure approved in February stipulates that products purchased with the funds must be made in the U.S. That’s caused friction between the U.S. and Canada, its largest trading partner.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index rose to 50.3 in August from 46.3 in July.
The Dow Jones Industrial Average stood at 9,241.45, off 96.5 points, or 1%. The S&P 500 Index fell 12.75 points, or 1.3%, to 994.35, with the broad market gauge finishing under 1,000 for the first session in three. The Nasdaq Composite declined 22.51 points, or 1.1%, to 1,969.73.
Realogy Chief Executive Richard Smith said it is unclear the U.S. housing market is recovering.
"While the rate of decline in home sales is slowing and there are emerging positive signals, given the macroeconomic headwinds it is premature to conclude that the housing market has started its rebound," he said.
Monday, August 10, 2009
Structural Difficulties
8/10/09 Structural Difficulties
China is now Africa’s largest trading partner.
John Hussman: "Call me skeptical. But if you look carefully at the economic data that shows improvement, and correct for the impact of government outlays, it is difficult to find anything but continued deterioration in private demand and investment. What we do see is a government that has run what is now a trillion dollar deficit year-to-date, representing some 7% of GDP. That sort of tab will undoubtedly buy some amount of Cool-Aid, but it has been something of a disappointment to watch how eagerly investors have guzzled it down. It is not at all clear that short-term, deficit-financed improvement necessarily implies sustained growth in the context of a deleveraging cycle. This is like somebody borrowing money from their Uncle and then celebrating that their income has gone up...it is dangerous to infer that structural difficulties have vanished simply because a market enjoys a strong post-crash advance.."
The top U.S. commander in Afghanistan said the U.S. will increase troop levels in Afghan population centers in response to the Taliban's growing momentum. Gen. McChrystal warned U.S. casualties will remain high.
Groceries eat up 12.5 percent of American families' budgets, on average, according to the Bureau of Labor Statistics.
Dutch trading firm Van der Moolen Holding NV filed for protection from creditors on Monday, citing liquidity problems amid a slump in earnings.
It reported a net loss of euro10.5 million ($15.07 million) for the first half of 2009, compared with a profit of euro12.7 million in the same period a year earlier, as sales fell 73 percent to euro24.9 million.
Van der Moolen, once one of the larger "specialists" on the NYSE, ran into trouble this decade as electronic trading platforms took over their role.
Specialists provide liquidity and act as brokers for stocks, bonds and other securities. Van der Moolen sold its loss-making specialist operations in the U.S. to Lehman Brothers for $0 in December 2007.
Washington Post: "Senior citizens are emerging as a formidable obstacle to President Obama's ambitious health-care plans.
The discontent in the powerful, highly organized voting bloc has risen to such a level that the administration is scrambling to devise a strategy to woo older Americans."
China’s property sales surged 60 percent by value in the first seven months, adding to concern that record lending will create a real-estate bubble in the world’s fastest-growing major economy.
Sales accelerated after a 53 percent gain in the first half from a year earlier, the statistics bureau said in a statement on its Web site today. Real estate investment rose 11.6 percent, up from 9.9 percent in the six months to June 30.
Home prices in 70 major cities advanced 1 percent in July from a year earlier, the biggest increase in nine months, the National Development and Reform Commission said today in a separate statement.
The U.S. price of gasoline jumped nearly 16 cents a gallon during the past two weeks to $2.64.
That's according to the national Lundberg Survey of fuel prices released Sunday.
McDonald's said sales at U.S. restaurants open at least 13 months rose 2.6 percent, aided by its new McCafe espresso-based coffee drinks.
The Bank of England will downgrade its growth forecasts and issue a warning this week that the UK economy risks slumping into a debt deflation trap, the Telegraph reported on Monday.
Government bonds are a "very problematic" investment right now because of the large number of issuances and because they have been pushed down by the latest rally in stocks, said Uwe Parpart, chief economist and strategist at Asia Cantor Fitzgerald.
"For the moment, be very, very careful with government bonds," Parpart advised CNBC viewers Monday.
"The hotter the waitresses, the weaker the economy," Hugo Lindgren writes in New York Magazine. He has developed the Hot Waitress Index, under the theory that attractive people land great jobs in sales...when there are jobs in sales. When the economy contracts, they trade down to waiting tables.
Rob Hanna: "One notable from Friday was the extremely low reading in the CBOE Equity Put/Call Ratio. It closed at 0.49 – more than 31% below its 200-day moving average. In June I looked in detail at other times the Equity Put/Call closed more than 25% below its 200ma. It suggested a bearish edge for the following day has existed since the end of 2007."
The Hill: "Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).
Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July."
Mike Shedlock: "Right now we know that the jobs picture still sucks, that credit card defaults are still rising, that bankruptcies and foreclosures are still rising and the budget deficit is out of control.
Furthermore, we can easily see the massive $14 trillion balance sheet of the Fed while the benefit is debatable. The "unseen" is the massive set of problems down the road unwinding the Fed's positions. Those consequences are without a doubt coming down the road.
Presuming we are indeed "On the Brink of Recovery", what PE are you willing to pay given the recovery has not even started, yet we still face the seen and unseen consequences at highlighted above?"
According to Bloomberg, options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September...
Traders are betting the VIX, a gauge of expected stock swings, will increase 13 percent in the next five week....That’s the biggest spread since August 2008, right before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years...
“It’s a danger sign,” said Ronald Egalka, a 36-year options trader who oversees $8 billion as chief executive officer of Rampart Investment Management in Boston. “People expect volatility to pick up in the future, and that implies that there’s going to be a downward movement in the market.”
Prepare for plenty of volatility and a 20-30% drop in global stocks, says Templeton's Mark Mobius. "When you have these rapid increases, almost without correction, you will definitely have a correction at some point."
Rebecca Wilder: "Banks are writing down the foreclosures, where many of the loans are underwater (i.e., the loan amount exceeds the value of the home). Banks will increasingly be insolvent, as the value of the collateral (the home) is worth less than the mortgage itself. More banks will fail - I'm just surprised that the number is not greater than 97 to date."
"For the first time in more than 28 years, the raw sugar price in New York was pushed beyond the threshold of 21 cents per pound by concerns over a severe sugar supply shortage," said analysts at Commerzbank in a note to clients. "The International Sugar Organization forecasts that sugar production will be substantially lower than the demand, which proved to be recession-proof." In recent trading, ICE sugar futures were last up 2.9% to 21.42 cents a pound.
In July, The Conference Board Employment Trends Index (ETI)™ remained at the same level as the revised figures for May and June. The index stands at 88.3 and is down 20.1 percent from a year ago.
"The Employment Trends Index has been flat in the last three months," said Gad Levanon, Senior Economist at The Conference Board. "This suggests that we are getting closer to the point when employers are no longer cutting their workforce. However, since we are expecting a weak economic recovery, and given the record number of involuntary part-time workers – many of whom are likely to move to full-time positions before new employees are hired – we do not expect significant job growth over the next year."
The Federal Reserve Bank of New York bought $6.594 billion in Treasurys on Monday, the first of two operations this week. Dealers submitted $22.002 billion in debt maturing between 2012 and 2013 to the Fed. The U.S. central bank is more than two-thirds of the way through the $300 billion in U.S. debt it promised in March to buy in an effort to keep borrowing costs, particularly for companies and homebuyers, affordable.
According to the WSJ, Houston-based Apache Corp. has agreed to provide natural gas for export to Asia through a proposed project in Canada, the latest sign that huge gas discoveries in North America are reshaping global energy markets.
Kitimat LNG Inc., the Canadian company planning to build the liquefied-natural-gas export terminal in Kitimat, British Columbia, will announce Monday that Apache has become the second major North American gas producer to sign on to the project. Last month, another Houston-based gas producer, EOG Resources Inc., signed a similar deal.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-exiting debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Fluor sees 2009 EPS of $3.80 to $4.10.
Volume was low on the New York Stock Exchange, with 1.09 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq about 1.86 billion shares traded, well below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 8 to 7, while on the Nasdaq, about 14 stocks fell for every 13 that rose.
The Dow Jones Industrial Average fell 32.12 points, or 0.3%, to end at 9,337.95, off an intraday low of 9,290.34. The S&P 500 index was down 3.38 points, or 0.3%, at 1,007.1, off a low of 1,000.99. The Nasdaq Composite dipped 8.01 points, or 0.4%, to 1,992.24.
Spot gold down $1.30 to $944.30/troy ounce. Sept. crude up 12 cents to $70.72/barrel.
China is now Africa’s largest trading partner.
John Hussman: "Call me skeptical. But if you look carefully at the economic data that shows improvement, and correct for the impact of government outlays, it is difficult to find anything but continued deterioration in private demand and investment. What we do see is a government that has run what is now a trillion dollar deficit year-to-date, representing some 7% of GDP. That sort of tab will undoubtedly buy some amount of Cool-Aid, but it has been something of a disappointment to watch how eagerly investors have guzzled it down. It is not at all clear that short-term, deficit-financed improvement necessarily implies sustained growth in the context of a deleveraging cycle. This is like somebody borrowing money from their Uncle and then celebrating that their income has gone up...it is dangerous to infer that structural difficulties have vanished simply because a market enjoys a strong post-crash advance.."
The top U.S. commander in Afghanistan said the U.S. will increase troop levels in Afghan population centers in response to the Taliban's growing momentum. Gen. McChrystal warned U.S. casualties will remain high.
Groceries eat up 12.5 percent of American families' budgets, on average, according to the Bureau of Labor Statistics.
Dutch trading firm Van der Moolen Holding NV filed for protection from creditors on Monday, citing liquidity problems amid a slump in earnings.
It reported a net loss of euro10.5 million ($15.07 million) for the first half of 2009, compared with a profit of euro12.7 million in the same period a year earlier, as sales fell 73 percent to euro24.9 million.
Van der Moolen, once one of the larger "specialists" on the NYSE, ran into trouble this decade as electronic trading platforms took over their role.
Specialists provide liquidity and act as brokers for stocks, bonds and other securities. Van der Moolen sold its loss-making specialist operations in the U.S. to Lehman Brothers for $0 in December 2007.
Washington Post: "Senior citizens are emerging as a formidable obstacle to President Obama's ambitious health-care plans.
The discontent in the powerful, highly organized voting bloc has risen to such a level that the administration is scrambling to devise a strategy to woo older Americans."
China’s property sales surged 60 percent by value in the first seven months, adding to concern that record lending will create a real-estate bubble in the world’s fastest-growing major economy.
Sales accelerated after a 53 percent gain in the first half from a year earlier, the statistics bureau said in a statement on its Web site today. Real estate investment rose 11.6 percent, up from 9.9 percent in the six months to June 30.
Home prices in 70 major cities advanced 1 percent in July from a year earlier, the biggest increase in nine months, the National Development and Reform Commission said today in a separate statement.
The U.S. price of gasoline jumped nearly 16 cents a gallon during the past two weeks to $2.64.
That's according to the national Lundberg Survey of fuel prices released Sunday.
McDonald's said sales at U.S. restaurants open at least 13 months rose 2.6 percent, aided by its new McCafe espresso-based coffee drinks.
The Bank of England will downgrade its growth forecasts and issue a warning this week that the UK economy risks slumping into a debt deflation trap, the Telegraph reported on Monday.
Government bonds are a "very problematic" investment right now because of the large number of issuances and because they have been pushed down by the latest rally in stocks, said Uwe Parpart, chief economist and strategist at Asia Cantor Fitzgerald.
"For the moment, be very, very careful with government bonds," Parpart advised CNBC viewers Monday.
"The hotter the waitresses, the weaker the economy," Hugo Lindgren writes in New York Magazine. He has developed the Hot Waitress Index, under the theory that attractive people land great jobs in sales...when there are jobs in sales. When the economy contracts, they trade down to waiting tables.
Rob Hanna: "One notable from Friday was the extremely low reading in the CBOE Equity Put/Call Ratio. It closed at 0.49 – more than 31% below its 200-day moving average. In June I looked in detail at other times the Equity Put/Call closed more than 25% below its 200ma. It suggested a bearish edge for the following day has existed since the end of 2007."
The Hill: "Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).
Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July."
Mike Shedlock: "Right now we know that the jobs picture still sucks, that credit card defaults are still rising, that bankruptcies and foreclosures are still rising and the budget deficit is out of control.
Furthermore, we can easily see the massive $14 trillion balance sheet of the Fed while the benefit is debatable. The "unseen" is the massive set of problems down the road unwinding the Fed's positions. Those consequences are without a doubt coming down the road.
Presuming we are indeed "On the Brink of Recovery", what PE are you willing to pay given the recovery has not even started, yet we still face the seen and unseen consequences at highlighted above?"
According to Bloomberg, options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September...
Traders are betting the VIX, a gauge of expected stock swings, will increase 13 percent in the next five week....That’s the biggest spread since August 2008, right before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years...
“It’s a danger sign,” said Ronald Egalka, a 36-year options trader who oversees $8 billion as chief executive officer of Rampart Investment Management in Boston. “People expect volatility to pick up in the future, and that implies that there’s going to be a downward movement in the market.”
Prepare for plenty of volatility and a 20-30% drop in global stocks, says Templeton's Mark Mobius. "When you have these rapid increases, almost without correction, you will definitely have a correction at some point."
Rebecca Wilder: "Banks are writing down the foreclosures, where many of the loans are underwater (i.e., the loan amount exceeds the value of the home). Banks will increasingly be insolvent, as the value of the collateral (the home) is worth less than the mortgage itself. More banks will fail - I'm just surprised that the number is not greater than 97 to date."
"For the first time in more than 28 years, the raw sugar price in New York was pushed beyond the threshold of 21 cents per pound by concerns over a severe sugar supply shortage," said analysts at Commerzbank in a note to clients. "The International Sugar Organization forecasts that sugar production will be substantially lower than the demand, which proved to be recession-proof." In recent trading, ICE sugar futures were last up 2.9% to 21.42 cents a pound.
In July, The Conference Board Employment Trends Index (ETI)™ remained at the same level as the revised figures for May and June. The index stands at 88.3 and is down 20.1 percent from a year ago.
"The Employment Trends Index has been flat in the last three months," said Gad Levanon, Senior Economist at The Conference Board. "This suggests that we are getting closer to the point when employers are no longer cutting their workforce. However, since we are expecting a weak economic recovery, and given the record number of involuntary part-time workers – many of whom are likely to move to full-time positions before new employees are hired – we do not expect significant job growth over the next year."
The Federal Reserve Bank of New York bought $6.594 billion in Treasurys on Monday, the first of two operations this week. Dealers submitted $22.002 billion in debt maturing between 2012 and 2013 to the Fed. The U.S. central bank is more than two-thirds of the way through the $300 billion in U.S. debt it promised in March to buy in an effort to keep borrowing costs, particularly for companies and homebuyers, affordable.
According to the WSJ, Houston-based Apache Corp. has agreed to provide natural gas for export to Asia through a proposed project in Canada, the latest sign that huge gas discoveries in North America are reshaping global energy markets.
Kitimat LNG Inc., the Canadian company planning to build the liquefied-natural-gas export terminal in Kitimat, British Columbia, will announce Monday that Apache has become the second major North American gas producer to sign on to the project. Last month, another Houston-based gas producer, EOG Resources Inc., signed a similar deal.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-exiting debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Fluor sees 2009 EPS of $3.80 to $4.10.
Volume was low on the New York Stock Exchange, with 1.09 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq about 1.86 billion shares traded, well below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 8 to 7, while on the Nasdaq, about 14 stocks fell for every 13 that rose.
The Dow Jones Industrial Average fell 32.12 points, or 0.3%, to end at 9,337.95, off an intraday low of 9,290.34. The S&P 500 index was down 3.38 points, or 0.3%, at 1,007.1, off a low of 1,000.99. The Nasdaq Composite dipped 8.01 points, or 0.4%, to 1,992.24.
Spot gold down $1.30 to $944.30/troy ounce. Sept. crude up 12 cents to $70.72/barrel.
The Pause
8/9/09 The Pause
Tudor Investment Corp., the $10.8 billion hedge-fund firm run by Paul Tudor Jones, said equity markets could decline later this year, creating buying opportunities.
Slowing growth in China and the return of front-page stories on swine flu may be “further catalysts for global equity markets to pause in September,” the Greenwich, Connecticut-based firm said in an Aug. 3 client letter, a copy of which was obtained by Bloomberg News.
Tudor said the 47 percent gain in the Standard & Poor’s 500 Index of the largest U.S. companies since March 9, when it fell to a 12-year low, is a “bear-market rally.” The index topped 1,000 for the first time in nine months this week after companies reported better-than-expected profits.
“Impressive counter-trend rallies are a feature, not an oddity, of secular bear markets,” Tudor said. “We are not inclined to aggressively chase the market here. Many doubts remain about the sustainability of this recovery, most prominently the weakness of household income growth.”
Barry Ritholtz: "“Either it’s a free market and there’s no regulation and if you screw up you go out of business, or it’s a nanny state that hyper-regulates you but guarantees that you won’t go out of business. You cannot say we want to be left alone until we’ve completely screw up and then you guys have to come in and rescue us. That just doesn’t work.”
The Oil Drum: "US Secretary of State Hillary Clinton on Sunday shifts the focus of her Africa trip to business as she works to ensure a steady oil supply from key producer Angola and counter China's growing influence.
The top US diplomat was due to make a one-day visit to the southern African nation, which vies with Nigeria as the continent's biggest oil producer but where two-thirds of the population lives on less than two dollars a day."
China will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to experience fallout from the global recession, Premier Wen Jiabao said.
The effect of some of China’s stimulus policies will weaken over time, and the economy is still under pressure from declining demand for exports, Wen said in a statement on the central government’s Web site today.
“We are seeing more people with homes that were on the market for $4 million to $7 million that are not selling and they are calling us,” said Jim Gall, president of Auction Company of America.
According to rigzone, Suncor Energy reported that production at its oil sands facility during July averaged approximately 304,000 barrels per day (bpd). Year-to-date oil sands production at the end of July averaged approximately 292,000 bpd. Suncor is targeting average oil sands production of 300,000 bpd (+5%/-10%) in 2009.
Baker Hughes reported that the international rig count for July 2009 was 974, up 7 from the 967 counted in June 2009, and down 118 from the 1,092 counted in July 2008. The international offshore rig count for July 2009 was 275, up 6 from the 269 counted in June 2009 and down 37 from the 312 counted in July 2008.
The U.S. rig count for July 2009 was 931, up 36 from the 895 counted in June 2009 and down 1,001 from the 1,932 counted in July 2008. The Canadian rig count for July 2009 was 175, up 50 from the 125 counted in June 2009 and down 237 from the 412 counted in July 2008.
Publicis struck a $530 million deal with Microsoft to buy the Razorfish ad agency and boost its position in digital communications, the world's third-largest communications group said on Sunday.
Jim Kuhnhenn: "If President Barack Obama wants to take the measure of his opposition, he only has to glance across Lafayette Park from the White House. There, behind 10 massive Corinthian columns, is the headquarters of the U.S. Chamber of Commerce — a leading critic of the administration's health care and banking overhaul plans.
A fortress for the business community, the chamber has emerged as a multitasking, multimillion-dollar defender of the private sector against presidential initiatives. As lawmakers spend time at home during their August vacation hearing from constituents, the chamber is adding its own heat to the season.
There's a $2 million campaign against Obama's proposals that would make the government a competitor in the health insurance market. It's trying to make the case for insurers, which oppose a government-run insurance alternative but want to work with the White House to mandate coverage for all.
The chamber also has become a pointed critic of a White House plan to create a consumer finance protection agency and is assembling finance sector trade groups to push for a delay in legislation.
With 3 million members, the chamber is working with local and regional affiliates on letter-writing campaigns to lawmakers and plans to track their public appearances to make sure they hear the chamber's point of view.
The summer effort is just a start.
The group also is readying an ambitious $100 million campaign to advocate for businesses and a free enterprise system, which chamber officials believe is under attack. The chamber is putting lawmakers on notice: the issues campaign will be timed to lead into the 2010 congressional elections.
"You've got an administration pushing the federal government into a bigger and bigger footprint," Bruce Josten, the chamber's chief lobbyist, said in an interview. "CEOs start to get concerned when they see that. We felt we needed someone to step into this space."
According to a survey by Bigresearch, more than 1 in 3 consumers (36.2%) said they would spend less this holiday season than last year. Just 2.7% of consumers said they would spend more, and 26.1% plan to spend the same. (Other totals: 29.1% say it's too early to know, and 5.8% don't celebrate the season.)
Mike Burk: "The decline in OTC NH on an up day suggests there may be a little weakness in the next few days, however, the recent highs were confirmed by most of the indicators so higher highs in the intermediate term should be expected.
I expect the major indices to be lower on Friday August 14 than they were on Friday August 7."
Guy Lerner: "In sum, the bulls remain in control, and despite the bullish extremes in investor sentiment, it will likely be some time before the market rolls over. There may be a lot of believers, and in general, this is not good for higher prices, but these buyers won't give up so easily. As I am not one to chase prices higher, I would still wait for a more risk adjusted entry."
Tudor Investment Corp., the $10.8 billion hedge-fund firm run by Paul Tudor Jones, said equity markets could decline later this year, creating buying opportunities.
Slowing growth in China and the return of front-page stories on swine flu may be “further catalysts for global equity markets to pause in September,” the Greenwich, Connecticut-based firm said in an Aug. 3 client letter, a copy of which was obtained by Bloomberg News.
Tudor said the 47 percent gain in the Standard & Poor’s 500 Index of the largest U.S. companies since March 9, when it fell to a 12-year low, is a “bear-market rally.” The index topped 1,000 for the first time in nine months this week after companies reported better-than-expected profits.
“Impressive counter-trend rallies are a feature, not an oddity, of secular bear markets,” Tudor said. “We are not inclined to aggressively chase the market here. Many doubts remain about the sustainability of this recovery, most prominently the weakness of household income growth.”
Barry Ritholtz: "“Either it’s a free market and there’s no regulation and if you screw up you go out of business, or it’s a nanny state that hyper-regulates you but guarantees that you won’t go out of business. You cannot say we want to be left alone until we’ve completely screw up and then you guys have to come in and rescue us. That just doesn’t work.”
The Oil Drum: "US Secretary of State Hillary Clinton on Sunday shifts the focus of her Africa trip to business as she works to ensure a steady oil supply from key producer Angola and counter China's growing influence.
The top US diplomat was due to make a one-day visit to the southern African nation, which vies with Nigeria as the continent's biggest oil producer but where two-thirds of the population lives on less than two dollars a day."
China will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to experience fallout from the global recession, Premier Wen Jiabao said.
The effect of some of China’s stimulus policies will weaken over time, and the economy is still under pressure from declining demand for exports, Wen said in a statement on the central government’s Web site today.
“We are seeing more people with homes that were on the market for $4 million to $7 million that are not selling and they are calling us,” said Jim Gall, president of Auction Company of America.
According to rigzone, Suncor Energy reported that production at its oil sands facility during July averaged approximately 304,000 barrels per day (bpd). Year-to-date oil sands production at the end of July averaged approximately 292,000 bpd. Suncor is targeting average oil sands production of 300,000 bpd (+5%/-10%) in 2009.
Baker Hughes reported that the international rig count for July 2009 was 974, up 7 from the 967 counted in June 2009, and down 118 from the 1,092 counted in July 2008. The international offshore rig count for July 2009 was 275, up 6 from the 269 counted in June 2009 and down 37 from the 312 counted in July 2008.
The U.S. rig count for July 2009 was 931, up 36 from the 895 counted in June 2009 and down 1,001 from the 1,932 counted in July 2008. The Canadian rig count for July 2009 was 175, up 50 from the 125 counted in June 2009 and down 237 from the 412 counted in July 2008.
Publicis struck a $530 million deal with Microsoft to buy the Razorfish ad agency and boost its position in digital communications, the world's third-largest communications group said on Sunday.
Jim Kuhnhenn: "If President Barack Obama wants to take the measure of his opposition, he only has to glance across Lafayette Park from the White House. There, behind 10 massive Corinthian columns, is the headquarters of the U.S. Chamber of Commerce — a leading critic of the administration's health care and banking overhaul plans.
A fortress for the business community, the chamber has emerged as a multitasking, multimillion-dollar defender of the private sector against presidential initiatives. As lawmakers spend time at home during their August vacation hearing from constituents, the chamber is adding its own heat to the season.
There's a $2 million campaign against Obama's proposals that would make the government a competitor in the health insurance market. It's trying to make the case for insurers, which oppose a government-run insurance alternative but want to work with the White House to mandate coverage for all.
The chamber also has become a pointed critic of a White House plan to create a consumer finance protection agency and is assembling finance sector trade groups to push for a delay in legislation.
With 3 million members, the chamber is working with local and regional affiliates on letter-writing campaigns to lawmakers and plans to track their public appearances to make sure they hear the chamber's point of view.
The summer effort is just a start.
The group also is readying an ambitious $100 million campaign to advocate for businesses and a free enterprise system, which chamber officials believe is under attack. The chamber is putting lawmakers on notice: the issues campaign will be timed to lead into the 2010 congressional elections.
"You've got an administration pushing the federal government into a bigger and bigger footprint," Bruce Josten, the chamber's chief lobbyist, said in an interview. "CEOs start to get concerned when they see that. We felt we needed someone to step into this space."
According to a survey by Bigresearch, more than 1 in 3 consumers (36.2%) said they would spend less this holiday season than last year. Just 2.7% of consumers said they would spend more, and 26.1% plan to spend the same. (Other totals: 29.1% say it's too early to know, and 5.8% don't celebrate the season.)
Mike Burk: "The decline in OTC NH on an up day suggests there may be a little weakness in the next few days, however, the recent highs were confirmed by most of the indicators so higher highs in the intermediate term should be expected.
I expect the major indices to be lower on Friday August 14 than they were on Friday August 7."
Guy Lerner: "In sum, the bulls remain in control, and despite the bullish extremes in investor sentiment, it will likely be some time before the market rolls over. There may be a lot of believers, and in general, this is not good for higher prices, but these buyers won't give up so easily. As I am not one to chase prices higher, I would still wait for a more risk adjusted entry."
Sunday, August 09, 2009
Musical Chairs
8/8/09 Musical Chairs
Thomas Jefferson: "A government big enough to give you all you want is strong enough to take everything you have."
Martin Hutchinson: "A Chinese economic collapse, which might well be accompanied by an Indian balance of payments crisis due to that country's perpetual government overspending, would cause a sharp "second dip" in the global economy. The amount of foreign capital tied up one way or another in the Chinese economy is now so great that a Chinese market collapse would have global repercussions in an already weakened financial system. Furthermore, it is by no means certain that China would quickly resume its role of global growth engine; Japan didn't, after all.
China could be different – it always has been. But at some stage, the mysterious Chinese economy and its thoroughly opaque banking system must respond to the same constraints that affect the rest of us. Chinese economic policy has been more stimulative than ever before, its bank lending more reckless. If China's run of apparently miraculous immunity from normal economic forces is finally about to end, the result will not be pretty for any of us."
According to the WSJ, last year, House members spent about 3,000 days overseas on taxpayer-funded trips, up from about 550 in 1995, according to the Journal's analysis.
Lawmakers disclosed they spent about $13 million traveling the world last year, a tenfold increase since 1995, when travel records first were made available electronically. The travel costs are covered by an unlimited fund created by a three-decade-old law.
U.S. bank failures rose to 72 this year with the collapse of two lenders in Florida and one in Oregon amid the worst economic slump since the Great Depression. 3,069 branches have closed since the IndyMac closure last year and another 21-branches were involved in this week's closings.
Ambac Financial Group Inc., the second-largest bond insurer, posted a net loss for the second quarter of $2.4 billion after increasing its projections for claims on bonds backed by home-equity loans.
The biggest U.S. television networks are posting declines of 15% or more in advertising commitments for the prime-time season starting next month, based on results at CBS and NBC.
Doug Noland: "My secular bearish thesis rests upon a major assumption: The U.S. economy is sustained by $2.5 Trillion (or so) of new Credit. Only this amount will stem a downward spiral of asset prices, Credit, incomes, corporate cash flows and government finances. On the other hand, if forthcoming, the $2.5 Trillion of additional – chiefly government-directed and non-productive - Credit will foment problematic Monetary Disorder. In simplest terms, another bout of Credit inflation leads further down the path of unhinged market prices, destabilizing speculation, and unwieldy flows of finance. The stock market has become illustrative of what we might experience in the way of Monetary Disorder. Speculation has returned with a vengeance, galloping blindly ahead of fledgling little greenish shoots. Those of the bullish persuasion contend that the marketplace is, as it should, simply discounting a rosy future. I would counter that problematic market dynamics have taken over, with prices increasingly disconnected from reality. In short, the market is in the midst of one major short squeeze...the stock market is indicative of the current dysfunctional financial backdrop. At the end of the day, the financial system must be capable of effectively allocating finance and real resources throughout the economy. I would argue that this is not possible for a system that congenitally misprices risk and distorts financial asset prices. Today’s stock market will inherently finance mainly speculative Bubbles and fragility. And the core systemic problem, the maladjusted "Bubble economy," well, the financial backdrop only worsens the situation....I see confirmation everywhere that policy and market dynamics are working in concert to sustain the existing financial and economic structure. I have huge doubts it will work and no doubt about the risks of failure."
247Wallst: "The Administration has a bit of a problem. The cap on the national debt, which must be approved by Congress, is $12.1 trillion. The Treasury is borrowing money so fast to fund the stimulus and budget deficits, that it will push up against the level in about two months.
With many members of Congress against the rising federal red ink, the battle lines are likely to be drawn with the stakes being how much higher the limits on federal borrowing will be allowed to go.
According to Reuters, Treasury chief Geithner sent Senate majority leader Harry Reid a letter saying, “It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”
The Democrats almost certainly have the votes to move the cap higher, but they are giving the Republicans another chance to make the case that borrowing is out of control....The current request to raise the debt ceiling won’t be the last."
The Oil Drum: "Closing Utah state offices on Fridays has resulted in a 13 percent reduction in energy use according to an internal analysis of the nation’s most expansive four-day workweek program.
Since last August, about 17,000 of the state’s 24,000 executive branch employees have been working 10 hours a day, four days a week in an effort to reduce energy consumption and cut utility costs….
The state estimates that, collectively, employees will save between $5 million and $6 million annually by not commuting on Fridays and the initiative will cut greenhouse gas emissions by more than 12,000 metric tons."
Ian Morris, chief U.S. economist, HSBC: “It’s not all that often that 247,000 job losses will be met with mass celebration, but because it’s all about what actual outcomes are relative to expectations, this is one of those times. To add icing to the cake, the previous two months were revised higher by 43,000. … But the fall was attributable to a fall in the participation rate from 65.7% to 65.5%, which resulted in the labor force falling by 422k (the household measure of jobs fell by 155K). If the participation rate had stayed unchanged from June, the unemployment rate would have hit a new cycle high of 9.7% instead.”
The city of Seattle is proposing that city workers agree to take 10 days of furlough next year to prevent layoffs, according to the office of Mayor Greg Nickels.
The proposal would affect about 6,700 workers.
Sir John Templeton: "It is impossible to produce a superior performance unless you do something different from the majority."
Japanese banks should use a state- backed share purchase program to reduce stock holdings that caused $10 billion of losses at the nation’s three biggest lenders last year, the country’s top financial regulator said.
Ty Andros: "Abraham Lincoln once said:
* You cannot help the poor by destroying the rich.
* You cannot strengthen the weak by weakening the strong.
* You cannot bring about prosperity by discouraging thrift.
* You cannot lift the wage earner up by pulling the wage payer down.
* You cannot further the brotherhood of man by inciting class hatred.
* You cannot build character and courage by taking away men's initiative and independence.
* You cannot help men permanently by doing for them, what they could and should do for themselves."
The Obama administration on Friday asked the Supreme Court to block the release of disturbing pictures of detainee abuse on grounds their disclosure could incite violence in Afghanistan and Iraq and endanger U.S. troops there.
The administration took the issue to the high court after President Barack Obama in May reversed a decision to stop fighting the release of the photographs.
They were ordered released as part of a Freedom of Information Act lawsuit brought by the American Civil Liberties Union.
The Bush administration had also fought their release, and lost.
The Obama administration is considering imposing tariffs on some Chinese-made tires that could effectively ban them from the United States, a proposal that is shaping up to be the first major test trial of the White House's trade policy toward China.
The case stems from a petition filed by the United Steelworkers, who blame surging Chinese tire imports for the loss of more than 5,000 U.S. jobs since 2004.
In its investigation of the tire petition, the International Trade Commission found that between 2004 and the end of 2008, imports of passenger vehicle tires from China increased 215 percent by volume, while production by the U.S. tire industry fell 26.6 percent, net sales were down 28.1 percent, and more than 5,000 domestic jobs were lost.
Chinese tire producers and suppliers were in Washington this week to try to persuade the White House to reject the tariff hike, calling them a form of protectionism that would put 100,000 Chinese out of work without creating jobs in the United States.
"U.S. tire makers will not shift production back to the United States because they have their strategy. They want to produce high-profit tires in the United States and produce economy tires in China so even if the United States closes the border . . . they can not add more jobs," said Mary Xu, deputy secretary general of the China Rubber Industry Association.
Thomas Jefferson: "A government big enough to give you all you want is strong enough to take everything you have."
Martin Hutchinson: "A Chinese economic collapse, which might well be accompanied by an Indian balance of payments crisis due to that country's perpetual government overspending, would cause a sharp "second dip" in the global economy. The amount of foreign capital tied up one way or another in the Chinese economy is now so great that a Chinese market collapse would have global repercussions in an already weakened financial system. Furthermore, it is by no means certain that China would quickly resume its role of global growth engine; Japan didn't, after all.
China could be different – it always has been. But at some stage, the mysterious Chinese economy and its thoroughly opaque banking system must respond to the same constraints that affect the rest of us. Chinese economic policy has been more stimulative than ever before, its bank lending more reckless. If China's run of apparently miraculous immunity from normal economic forces is finally about to end, the result will not be pretty for any of us."
According to the WSJ, last year, House members spent about 3,000 days overseas on taxpayer-funded trips, up from about 550 in 1995, according to the Journal's analysis.
Lawmakers disclosed they spent about $13 million traveling the world last year, a tenfold increase since 1995, when travel records first were made available electronically. The travel costs are covered by an unlimited fund created by a three-decade-old law.
U.S. bank failures rose to 72 this year with the collapse of two lenders in Florida and one in Oregon amid the worst economic slump since the Great Depression. 3,069 branches have closed since the IndyMac closure last year and another 21-branches were involved in this week's closings.
Ambac Financial Group Inc., the second-largest bond insurer, posted a net loss for the second quarter of $2.4 billion after increasing its projections for claims on bonds backed by home-equity loans.
The biggest U.S. television networks are posting declines of 15% or more in advertising commitments for the prime-time season starting next month, based on results at CBS and NBC.
Doug Noland: "My secular bearish thesis rests upon a major assumption: The U.S. economy is sustained by $2.5 Trillion (or so) of new Credit. Only this amount will stem a downward spiral of asset prices, Credit, incomes, corporate cash flows and government finances. On the other hand, if forthcoming, the $2.5 Trillion of additional – chiefly government-directed and non-productive - Credit will foment problematic Monetary Disorder. In simplest terms, another bout of Credit inflation leads further down the path of unhinged market prices, destabilizing speculation, and unwieldy flows of finance. The stock market has become illustrative of what we might experience in the way of Monetary Disorder. Speculation has returned with a vengeance, galloping blindly ahead of fledgling little greenish shoots. Those of the bullish persuasion contend that the marketplace is, as it should, simply discounting a rosy future. I would counter that problematic market dynamics have taken over, with prices increasingly disconnected from reality. In short, the market is in the midst of one major short squeeze...the stock market is indicative of the current dysfunctional financial backdrop. At the end of the day, the financial system must be capable of effectively allocating finance and real resources throughout the economy. I would argue that this is not possible for a system that congenitally misprices risk and distorts financial asset prices. Today’s stock market will inherently finance mainly speculative Bubbles and fragility. And the core systemic problem, the maladjusted "Bubble economy," well, the financial backdrop only worsens the situation....I see confirmation everywhere that policy and market dynamics are working in concert to sustain the existing financial and economic structure. I have huge doubts it will work and no doubt about the risks of failure."
247Wallst: "The Administration has a bit of a problem. The cap on the national debt, which must be approved by Congress, is $12.1 trillion. The Treasury is borrowing money so fast to fund the stimulus and budget deficits, that it will push up against the level in about two months.
With many members of Congress against the rising federal red ink, the battle lines are likely to be drawn with the stakes being how much higher the limits on federal borrowing will be allowed to go.
According to Reuters, Treasury chief Geithner sent Senate majority leader Harry Reid a letter saying, “It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”
The Democrats almost certainly have the votes to move the cap higher, but they are giving the Republicans another chance to make the case that borrowing is out of control....The current request to raise the debt ceiling won’t be the last."
The Oil Drum: "Closing Utah state offices on Fridays has resulted in a 13 percent reduction in energy use according to an internal analysis of the nation’s most expansive four-day workweek program.
Since last August, about 17,000 of the state’s 24,000 executive branch employees have been working 10 hours a day, four days a week in an effort to reduce energy consumption and cut utility costs….
The state estimates that, collectively, employees will save between $5 million and $6 million annually by not commuting on Fridays and the initiative will cut greenhouse gas emissions by more than 12,000 metric tons."
Ian Morris, chief U.S. economist, HSBC: “It’s not all that often that 247,000 job losses will be met with mass celebration, but because it’s all about what actual outcomes are relative to expectations, this is one of those times. To add icing to the cake, the previous two months were revised higher by 43,000. … But the fall was attributable to a fall in the participation rate from 65.7% to 65.5%, which resulted in the labor force falling by 422k (the household measure of jobs fell by 155K). If the participation rate had stayed unchanged from June, the unemployment rate would have hit a new cycle high of 9.7% instead.”
The city of Seattle is proposing that city workers agree to take 10 days of furlough next year to prevent layoffs, according to the office of Mayor Greg Nickels.
The proposal would affect about 6,700 workers.
Sir John Templeton: "It is impossible to produce a superior performance unless you do something different from the majority."
Japanese banks should use a state- backed share purchase program to reduce stock holdings that caused $10 billion of losses at the nation’s three biggest lenders last year, the country’s top financial regulator said.
Ty Andros: "Abraham Lincoln once said:
* You cannot help the poor by destroying the rich.
* You cannot strengthen the weak by weakening the strong.
* You cannot bring about prosperity by discouraging thrift.
* You cannot lift the wage earner up by pulling the wage payer down.
* You cannot further the brotherhood of man by inciting class hatred.
* You cannot build character and courage by taking away men's initiative and independence.
* You cannot help men permanently by doing for them, what they could and should do for themselves."
The Obama administration on Friday asked the Supreme Court to block the release of disturbing pictures of detainee abuse on grounds their disclosure could incite violence in Afghanistan and Iraq and endanger U.S. troops there.
The administration took the issue to the high court after President Barack Obama in May reversed a decision to stop fighting the release of the photographs.
They were ordered released as part of a Freedom of Information Act lawsuit brought by the American Civil Liberties Union.
The Bush administration had also fought their release, and lost.
The Obama administration is considering imposing tariffs on some Chinese-made tires that could effectively ban them from the United States, a proposal that is shaping up to be the first major test trial of the White House's trade policy toward China.
The case stems from a petition filed by the United Steelworkers, who blame surging Chinese tire imports for the loss of more than 5,000 U.S. jobs since 2004.
In its investigation of the tire petition, the International Trade Commission found that between 2004 and the end of 2008, imports of passenger vehicle tires from China increased 215 percent by volume, while production by the U.S. tire industry fell 26.6 percent, net sales were down 28.1 percent, and more than 5,000 domestic jobs were lost.
Chinese tire producers and suppliers were in Washington this week to try to persuade the White House to reject the tariff hike, calling them a form of protectionism that would put 100,000 Chinese out of work without creating jobs in the United States.
"U.S. tire makers will not shift production back to the United States because they have their strategy. They want to produce high-profit tires in the United States and produce economy tires in China so even if the United States closes the border . . . they can not add more jobs," said Mary Xu, deputy secretary general of the China Rubber Industry Association.
Friday, August 07, 2009
Disbelief
8/7/09 Disbelief
For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period.
Job losses slowed in July to the lowest total since August as the unemployment rate unexpectedly fell back to 9.4%, the Labor Department estimated Friday. U.S. nonfarm payrolls fell by 247,000 in July, the 19th consecutive month of job losses, about in line with economists' estimates of a 275,000 decline. Most industries continued to shed jobs in July, but at a much slower pace than they did in the autumn and winter. Job losses moderated in many major industries in July. Goods-producing industries shed 128,000 jobs, the fewest since last September. Service-producing industries cut 119,000 jobs. July alternate U6 jobless rate falls slightly to 16.3% and the average hourly wages rose 0.2%.
The government revised job losses for May and June to show 43,000 fewer jobs lost than previously reported. Government employment increased 7,000 after slipping 48,000 in June.
The average work week expanded to 33.1 hours in July from 33 hours in the prior month. Average weekly hours worked by production workers increased to 39.8 hours from 39.5 hours, while overtime held at 2.9 hours for a second month. That brought the average weekly earnings up to $614.34 from $611.49.
Workers’ average hourly wages rose 3 cents, or 0.2 percent, to $18.56 from the prior month. Hourly earnings were 2.5 percent higher than July 2008. the average work week expanded to 33.1 hours in July from 33 hours in the prior month. Average weekly hours worked by production workers increased to 39.8 hours from 39.5 hours, while overtime held at 2.9 hours for a second month. That brought the average weekly earnings up to $614.34 from $611.49.
Workers’ average hourly wages rose 3 cents, or 0.2 percent, to $18.56 from the prior month. Hourly earnings were 2.5 percent higher than July 2008.
The number of people continuing to claim benefits rose by 69,000 to 6.3 million after dropping for three straight weeks.
The number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million. In July, 1 in 3 unemploy- ed persons were jobless for 27 weeks or more. While job loss is slowing, the mass of the previously unemployed are not yet finding work.
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in July at 8.8 million.
Around 34% of the unemployed workers have been so for over six months, while over 53% have been so for more than three months. (U.S. BLS)
In sum, the July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5%
The Manpower Survey shows most employers plan to hold headcount steady in Q3 2009 relative to Q2 2009. The Conference Board Help-Wanted Online Data Series revealed increased vacancies in July after remaining flat in recent months.
George Ure: "OK, so how do you lose more than a quarter million jobs and not see unemployment go up?
Welcome to jiggering numbers 101.
*
First thing you do is change the divisor. Assert that the labor force shrank by 422,000 people during the month.
Reduce the assumed unemployed by not counting people who have run out of benefits. In other words, since the number of people who have run out of benefits has increased, the number left to count as unemployed dropped 267,000.
But, wait! Employment was down 155-thousand... Right! So the only number we need to 'bury' is the delta from 267K to 155K, so all we need to do is make up 112,000 jobs.
Won't be able to hide all of them in the CES Birth/Death model, but who's going to question 43,000 jobs being statistically created in the summertime in the travel & leisure sector, right?
Then to sort of round things off, all these adjustments will keep the unemployed burger flipping PhD number (more technically the "Total unemployed plus all marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers) at 16.8%. (Table A-12, U-6)
Yeah, yeah, I know: How did 422,000 people just go 'poof!' from the labor force in July, you're asking. Well, best I can deduce from these here numbers? They all went on vacation."
Noam Scheiber: "In fact, the entire drop in the unemployment rate can be explained by the fact that previously unemployed people stopped doing the things they need to do (namely, look for jobs) to be counted as part of the labor force.
In June, by contrast, not only did we lose more jobs, but the number of people who dropped out of the labor force was much lower. That means a higher fraction of people without jobs were counted as unemployed. "
October white-sugar futures surged to a fresh record high of $531 a ton on Liffe in London, continuing their record-breaking streak.
Russia's central bank on Friday cut its key lending rate by a quarter of a percentage point to 10.75% effective Monday, its fifth cut since April.
The European Central Bank, the euro zone's 16 national central banks, the Swedish Riksbank and the Swiss National Bank on Friday released a joint statement announcing a new agreement to limit gold sales over the next five years. Under the plan, annual sales will not exceed 400 tons and total sales over the five-year period, which begins Sept. 27, will not exceed 2,000 tons. "Gold remains an important element of global monetary reserves," the banks said. The central banks also said the International Monetary Fund's intention to sell 403 tons of gold "can be accommodated" under the agreement.
Bud Conrad: "The Federal Deposit Insurance Corporation currently covers each dollar on deposit with a trivial 2/10ths of a penny.
And even that understates the seriousness of the situation: the $4.8 trillion in deposits the FDIC is providing coverage on doesn't include the expansion that now extends insurance coverage from $100,000 to $250,000 for normal bank accounts. That likely brings the exposure of the FDIC closer to $6 trillion. But that's pretty inconsequential at this point: using any reasonable accounting method, the FDIC is already bankrupt and will require hundreds of billions of dollars in government bailouts just to keep the doors open."
The U.S. Congress will consider extending unemployment benefits when it returns to work in September, Senate Majority Leader Harry Reid said on Friday.
"Soon after Congress returns to Washington we'll need to address this matter," Reid said of workers who will exhaust their unemployment benefits soon. "There is an economic case to be made for extending unemployment benefits."
FT:"But the longer that the banking pipes remain partly or fully clogged and the governments keep pouring water into the system, the more that investors and policy makers need to watch what this liquidity “backflow” might do; and not just in the gilts market, but other, less obvious corners of the global asset markets too."
The Organization of the Petroleum Exporting Countries (OPEC) increased crude oil production by 100,000 barrels per day to 28.57 million barrels a day in July, according to a Platts survey of OPEC and oil industry officials and analysts. This is an increase from the 28.47 million barrels a day pumped in June, Platts said in a statement on Friday. OPEC production had already risen in April, May and June after having fallen steadily since August 2008.
Ford Motor Co. plans to cut the number of suppliers it deals with by nearly half by the end of the year. The automaker said it plans to reduce the number of suppliers for new sourcing to 850 from a current list of 1,683 by the end of 2009. Ford said it has a long-term goal to reduce that number to 750.
Reuters looks at the companies leading the midsummer rally and finds them loaded with junk - 81 S&P companies with credit ratings of BB or lower, jumping from 21-29.5% from July 10 to Aug. 4.
Tim Iacono: "But, what doesn't make sense is when we are told that an enduring economic rebound will require these now-thriftier Americans to "regain their confidence" in a system that has failed them so miserably over the last few years and, during a period of declining incomes and rising unemployment, go out and spend more money.
In this instance, the "victims" of the confidence game are not so much "cheated" out of their money as they are coerced to spend it when doing so works against their best interests - in a few months' time, after the thrill of driving a new car has worn off, many "Cash for Clunkers" buyers will wish they could swap their monthly car payment for their old clunker.
The U.S. Government as a Confidence Game and Ponzi Scheme
Nowhere is confidence more important than at the Treasury Department and other government agencies that manage the nation's money. Come to think of it, "managing the nation's money" is probably not a good way to characterize what exactly is going on there since there is very little money to "manage" - it goes out as fast as it comes in and the process is better described as "directing the flow" of money rather than "managing" it.
Here, the U.S. government is playing a very high-stakes confidence game with its foreign creditors, many of whom must realize by now that something is seriously wrong as they grow tired of the endless cycle of American borrowing and money printing in order to make ends meet (is that still considered "making ends meet" if you have to borrow and print money to do so?)."
Fannie Mae will need another $10.7 billion from the government to continue.
-U.S. consumers reduced their debt in June for the fifth consecutive month, the Federal Reserve reported Friday. Total seasonally adjusted consumer debt fell $10.29 billion, or at a 4.9% annual rate, in June to $2.502 trillion. Consumer credit fell in eight of the past nine months. This is the longest string of declines in credit since 1991. In the subcategories, credit-card debt fell $5.04 billion, or 3.8%, to $1.59 trillion. This is the record 10th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $5.04 billion or 3.8% to $1.59 trillion.
At the close, DJIA +1.2% (+113.36) to 9369.62; S&P +1.3% (+13.40) to 1010.48; Nasdaq +1.4% (+27.09) to 2000.25. The Dow gains 2.2% on the week to finish at its 2009 high. The S&P up 2.3% for the week; Nasdaq up 1.1%. Crude -1.6% to $70.78. Gold -0.6% to $956.70.
The 30-year yield +0.07 to 4.61%; 10-year +0.09 to 3.85%; 5-year +0.10 to 2.82%; 2-year +0.09 to 1.3%.
Tyler Durden: "Foreign purchasers are starting to fall far behind in their purchases of US securities relative to the Fed's monetization rate."
The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.
The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.
If China's demand for commodities is overheated, what impact will that have on the world economy? If commodities top out, are global equities far behind? I think not. Buy on dips at your own risk.
The Baltic Dry Index has slumped 35 percent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 percent over the same period.There is a disconnect here and the disconnect will be costly to investors. Be forewarned!
Derivatives betting on the Baltic Exchange’s future assessments fell for a third day, indicating the declining spot market is causing traders’ future expectations to deteriorate.
China’s central bank has told the heads of the largest state-controlled banks to slow the pace of new lending, say people familiar with the matter, after new loan volume in the first half of the year tripled from same period a year earlier.
The pressure from the People’s Bank of China signals an unstated shift in policy and comes as it steps up its open-market operations to control liquidity and slow loan growth.
Berkshire Hathaway's operating earnings came in at $1,147 per share, down 21.7 percent from last year's second quarter, and below the average forecast of $1,238 from the handful of analysts who cover the stock.
David Kilcullen, a counterinsurgency expert who will assume a role as a senior adviser to Gen. Stanley McChrystal, has been highly critical of the war's management to date. He outlined a "best-case scenario" for a decade of further U.S. and NATO involvement in Afghanistan during an appearance at the U.S. Institute of Peace.
Under that timeline, the allied forces would turn the corner in those two years, followed by about three years of transition to a newly capable Afghan force and about five years of "overwatch."
To repeat: The labor-force participation rate fell 0.2 percentage point in July to 65.5%.
Daniel Aaronson and Lee Markowitz: "The stock market has had an impressive rally. The rally has been so large that it is now similar in magnitude to the 52% rally in the DJIA that was seen from the low in November 1930 to the bear market rally top in April 1930. However, after the rally ended in April 1930, the DJIA fell another 86% before bottoming in July 1932. If the Federal Reserve has printed enough money to "save the day" and avoid a 1930-1932 collapse, then the succeeding crisis must be a dramatic loss of the Dollar's purchasing power. A collapsing Dollar will not lead to investor optimism because the standard of living in the US will deteriorate, and with it, the consumer and business environment. Rather, economic strength and prosperity result from an environment in which savings are rewarded, not punished.
Optimism continues to rule the day in America as if we never even faced a crisis. Yet, the facts support being as pessimistic as ever as America faces many economic headwinds and the Government's funding and currency crises still lie ahead."
Two bank failures in Florida raised the number of bank failures to 71 for the year, according to the Federal Deposit Insurance Corp. late Friday. Florida regulators closed Community National Bank of Sarasota County in Venice, Fla., and First State Bank of Sarasota, Fla. Stearns Bank, N.A., of St. Cloud, Minn. will assume all the deposits of First State Bank, and assume the deposits of Community National for a 0.25% premium.
For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period.
Job losses slowed in July to the lowest total since August as the unemployment rate unexpectedly fell back to 9.4%, the Labor Department estimated Friday. U.S. nonfarm payrolls fell by 247,000 in July, the 19th consecutive month of job losses, about in line with economists' estimates of a 275,000 decline. Most industries continued to shed jobs in July, but at a much slower pace than they did in the autumn and winter. Job losses moderated in many major industries in July. Goods-producing industries shed 128,000 jobs, the fewest since last September. Service-producing industries cut 119,000 jobs. July alternate U6 jobless rate falls slightly to 16.3% and the average hourly wages rose 0.2%.
The government revised job losses for May and June to show 43,000 fewer jobs lost than previously reported. Government employment increased 7,000 after slipping 48,000 in June.
The average work week expanded to 33.1 hours in July from 33 hours in the prior month. Average weekly hours worked by production workers increased to 39.8 hours from 39.5 hours, while overtime held at 2.9 hours for a second month. That brought the average weekly earnings up to $614.34 from $611.49.
Workers’ average hourly wages rose 3 cents, or 0.2 percent, to $18.56 from the prior month. Hourly earnings were 2.5 percent higher than July 2008. the average work week expanded to 33.1 hours in July from 33 hours in the prior month. Average weekly hours worked by production workers increased to 39.8 hours from 39.5 hours, while overtime held at 2.9 hours for a second month. That brought the average weekly earnings up to $614.34 from $611.49.
Workers’ average hourly wages rose 3 cents, or 0.2 percent, to $18.56 from the prior month. Hourly earnings were 2.5 percent higher than July 2008.
The number of people continuing to claim benefits rose by 69,000 to 6.3 million after dropping for three straight weeks.
The number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million. In July, 1 in 3 unemploy- ed persons were jobless for 27 weeks or more. While job loss is slowing, the mass of the previously unemployed are not yet finding work.
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in July at 8.8 million.
Around 34% of the unemployed workers have been so for over six months, while over 53% have been so for more than three months. (U.S. BLS)
In sum, the July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5%
The Manpower Survey shows most employers plan to hold headcount steady in Q3 2009 relative to Q2 2009. The Conference Board Help-Wanted Online Data Series revealed increased vacancies in July after remaining flat in recent months.
George Ure: "OK, so how do you lose more than a quarter million jobs and not see unemployment go up?
Welcome to jiggering numbers 101.
*
First thing you do is change the divisor. Assert that the labor force shrank by 422,000 people during the month.
Reduce the assumed unemployed by not counting people who have run out of benefits. In other words, since the number of people who have run out of benefits has increased, the number left to count as unemployed dropped 267,000.
But, wait! Employment was down 155-thousand... Right! So the only number we need to 'bury' is the delta from 267K to 155K, so all we need to do is make up 112,000 jobs.
Won't be able to hide all of them in the CES Birth/Death model, but who's going to question 43,000 jobs being statistically created in the summertime in the travel & leisure sector, right?
Then to sort of round things off, all these adjustments will keep the unemployed burger flipping PhD number (more technically the "Total unemployed plus all marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers) at 16.8%. (Table A-12, U-6)
Yeah, yeah, I know: How did 422,000 people just go 'poof!' from the labor force in July, you're asking. Well, best I can deduce from these here numbers? They all went on vacation."
Noam Scheiber: "In fact, the entire drop in the unemployment rate can be explained by the fact that previously unemployed people stopped doing the things they need to do (namely, look for jobs) to be counted as part of the labor force.
In June, by contrast, not only did we lose more jobs, but the number of people who dropped out of the labor force was much lower. That means a higher fraction of people without jobs were counted as unemployed. "
October white-sugar futures surged to a fresh record high of $531 a ton on Liffe in London, continuing their record-breaking streak.
Russia's central bank on Friday cut its key lending rate by a quarter of a percentage point to 10.75% effective Monday, its fifth cut since April.
The European Central Bank, the euro zone's 16 national central banks, the Swedish Riksbank and the Swiss National Bank on Friday released a joint statement announcing a new agreement to limit gold sales over the next five years. Under the plan, annual sales will not exceed 400 tons and total sales over the five-year period, which begins Sept. 27, will not exceed 2,000 tons. "Gold remains an important element of global monetary reserves," the banks said. The central banks also said the International Monetary Fund's intention to sell 403 tons of gold "can be accommodated" under the agreement.
Bud Conrad: "The Federal Deposit Insurance Corporation currently covers each dollar on deposit with a trivial 2/10ths of a penny.
And even that understates the seriousness of the situation: the $4.8 trillion in deposits the FDIC is providing coverage on doesn't include the expansion that now extends insurance coverage from $100,000 to $250,000 for normal bank accounts. That likely brings the exposure of the FDIC closer to $6 trillion. But that's pretty inconsequential at this point: using any reasonable accounting method, the FDIC is already bankrupt and will require hundreds of billions of dollars in government bailouts just to keep the doors open."
The U.S. Congress will consider extending unemployment benefits when it returns to work in September, Senate Majority Leader Harry Reid said on Friday.
"Soon after Congress returns to Washington we'll need to address this matter," Reid said of workers who will exhaust their unemployment benefits soon. "There is an economic case to be made for extending unemployment benefits."
FT:"But the longer that the banking pipes remain partly or fully clogged and the governments keep pouring water into the system, the more that investors and policy makers need to watch what this liquidity “backflow” might do; and not just in the gilts market, but other, less obvious corners of the global asset markets too."
The Organization of the Petroleum Exporting Countries (OPEC) increased crude oil production by 100,000 barrels per day to 28.57 million barrels a day in July, according to a Platts survey of OPEC and oil industry officials and analysts. This is an increase from the 28.47 million barrels a day pumped in June, Platts said in a statement on Friday. OPEC production had already risen in April, May and June after having fallen steadily since August 2008.
Ford Motor Co. plans to cut the number of suppliers it deals with by nearly half by the end of the year. The automaker said it plans to reduce the number of suppliers for new sourcing to 850 from a current list of 1,683 by the end of 2009. Ford said it has a long-term goal to reduce that number to 750.
Reuters looks at the companies leading the midsummer rally and finds them loaded with junk - 81 S&P companies with credit ratings of BB or lower, jumping from 21-29.5% from July 10 to Aug. 4.
Tim Iacono: "But, what doesn't make sense is when we are told that an enduring economic rebound will require these now-thriftier Americans to "regain their confidence" in a system that has failed them so miserably over the last few years and, during a period of declining incomes and rising unemployment, go out and spend more money.
In this instance, the "victims" of the confidence game are not so much "cheated" out of their money as they are coerced to spend it when doing so works against their best interests - in a few months' time, after the thrill of driving a new car has worn off, many "Cash for Clunkers" buyers will wish they could swap their monthly car payment for their old clunker.
The U.S. Government as a Confidence Game and Ponzi Scheme
Nowhere is confidence more important than at the Treasury Department and other government agencies that manage the nation's money. Come to think of it, "managing the nation's money" is probably not a good way to characterize what exactly is going on there since there is very little money to "manage" - it goes out as fast as it comes in and the process is better described as "directing the flow" of money rather than "managing" it.
Here, the U.S. government is playing a very high-stakes confidence game with its foreign creditors, many of whom must realize by now that something is seriously wrong as they grow tired of the endless cycle of American borrowing and money printing in order to make ends meet (is that still considered "making ends meet" if you have to borrow and print money to do so?)."
Fannie Mae will need another $10.7 billion from the government to continue.
-U.S. consumers reduced their debt in June for the fifth consecutive month, the Federal Reserve reported Friday. Total seasonally adjusted consumer debt fell $10.29 billion, or at a 4.9% annual rate, in June to $2.502 trillion. Consumer credit fell in eight of the past nine months. This is the longest string of declines in credit since 1991. In the subcategories, credit-card debt fell $5.04 billion, or 3.8%, to $1.59 trillion. This is the record 10th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $5.04 billion or 3.8% to $1.59 trillion.
At the close, DJIA +1.2% (+113.36) to 9369.62; S&P +1.3% (+13.40) to 1010.48; Nasdaq +1.4% (+27.09) to 2000.25. The Dow gains 2.2% on the week to finish at its 2009 high. The S&P up 2.3% for the week; Nasdaq up 1.1%. Crude -1.6% to $70.78. Gold -0.6% to $956.70.
The 30-year yield +0.07 to 4.61%; 10-year +0.09 to 3.85%; 5-year +0.10 to 2.82%; 2-year +0.09 to 1.3%.
Tyler Durden: "Foreign purchasers are starting to fall far behind in their purchases of US securities relative to the Fed's monetization rate."
The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.
The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.
If China's demand for commodities is overheated, what impact will that have on the world economy? If commodities top out, are global equities far behind? I think not. Buy on dips at your own risk.
The Baltic Dry Index has slumped 35 percent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 percent over the same period.There is a disconnect here and the disconnect will be costly to investors. Be forewarned!
Derivatives betting on the Baltic Exchange’s future assessments fell for a third day, indicating the declining spot market is causing traders’ future expectations to deteriorate.
China’s central bank has told the heads of the largest state-controlled banks to slow the pace of new lending, say people familiar with the matter, after new loan volume in the first half of the year tripled from same period a year earlier.
The pressure from the People’s Bank of China signals an unstated shift in policy and comes as it steps up its open-market operations to control liquidity and slow loan growth.
Berkshire Hathaway's operating earnings came in at $1,147 per share, down 21.7 percent from last year's second quarter, and below the average forecast of $1,238 from the handful of analysts who cover the stock.
David Kilcullen, a counterinsurgency expert who will assume a role as a senior adviser to Gen. Stanley McChrystal, has been highly critical of the war's management to date. He outlined a "best-case scenario" for a decade of further U.S. and NATO involvement in Afghanistan during an appearance at the U.S. Institute of Peace.
Under that timeline, the allied forces would turn the corner in those two years, followed by about three years of transition to a newly capable Afghan force and about five years of "overwatch."
To repeat: The labor-force participation rate fell 0.2 percentage point in July to 65.5%.
Daniel Aaronson and Lee Markowitz: "The stock market has had an impressive rally. The rally has been so large that it is now similar in magnitude to the 52% rally in the DJIA that was seen from the low in November 1930 to the bear market rally top in April 1930. However, after the rally ended in April 1930, the DJIA fell another 86% before bottoming in July 1932. If the Federal Reserve has printed enough money to "save the day" and avoid a 1930-1932 collapse, then the succeeding crisis must be a dramatic loss of the Dollar's purchasing power. A collapsing Dollar will not lead to investor optimism because the standard of living in the US will deteriorate, and with it, the consumer and business environment. Rather, economic strength and prosperity result from an environment in which savings are rewarded, not punished.
Optimism continues to rule the day in America as if we never even faced a crisis. Yet, the facts support being as pessimistic as ever as America faces many economic headwinds and the Government's funding and currency crises still lie ahead."
Two bank failures in Florida raised the number of bank failures to 71 for the year, according to the Federal Deposit Insurance Corp. late Friday. Florida regulators closed Community National Bank of Sarasota County in Venice, Fla., and First State Bank of Sarasota, Fla. Stearns Bank, N.A., of St. Cloud, Minn. will assume all the deposits of First State Bank, and assume the deposits of Community National for a 0.25% premium.
Thursday, August 06, 2009
Jobless Claims
8/6/09 Jobless Claims
U.S. natural gas inventories rose 66 billion cubic feet in the week ended July 31, the Energy Information Administration reported Thursday. Analysts at IHS Global Insight had projected an increase of 50 billion cubic feet. After the data, natural gas for September delivery fell 19.7 cents, or 4.8%, to $3.847 per million British thermal units on Globex.
First-time claims for state unemployment benefits declined by 38,000 to 550,000 last week, while the number of people who continued to collect benefits rose by 69,000 to 6.31 million the prior week, the Labor Department reported Thursday. The four-week average of new claims dropped to 555,250, the lowest level since January.
Costco Wholesale said comparable store sales in July slumped 7%, including an 8% drop in the U.S. and a 5% fall overseas. Total sales fell 5% to $5.41 billion. Excluding gas deflation, U.S. comparable sales fell 2%.
The Bank of England took a far bigger step than expected to boost Britain's recession-hit economy on Thursday, stunning markets by expanding its quantitative easing plan to 175 billion pounds from 125 billion.
The central bank said Britain's downturn appeared to have been deeper than previously thought and, while the trough in output was near and some recovery was on the way, tight credit conditions would remain a considerable drag.
The Dow Jones Industrial Average fell 24.71 points, or 0.3%, to finish at 9,256.26. The S&P 500 index lost 5.64 points, or 0.6%, to 997.08, while the Nasdaq Composite fell 19.89 points, or 1%, to 1,973.16.
U.S. natural gas inventories rose 66 billion cubic feet in the week ended July 31, the Energy Information Administration reported Thursday. Analysts at IHS Global Insight had projected an increase of 50 billion cubic feet. After the data, natural gas for September delivery fell 19.7 cents, or 4.8%, to $3.847 per million British thermal units on Globex.
First-time claims for state unemployment benefits declined by 38,000 to 550,000 last week, while the number of people who continued to collect benefits rose by 69,000 to 6.31 million the prior week, the Labor Department reported Thursday. The four-week average of new claims dropped to 555,250, the lowest level since January.
Costco Wholesale said comparable store sales in July slumped 7%, including an 8% drop in the U.S. and a 5% fall overseas. Total sales fell 5% to $5.41 billion. Excluding gas deflation, U.S. comparable sales fell 2%.
The Bank of England took a far bigger step than expected to boost Britain's recession-hit economy on Thursday, stunning markets by expanding its quantitative easing plan to 175 billion pounds from 125 billion.
The central bank said Britain's downturn appeared to have been deeper than previously thought and, while the trough in output was near and some recovery was on the way, tight credit conditions would remain a considerable drag.
The Dow Jones Industrial Average fell 24.71 points, or 0.3%, to finish at 9,256.26. The S&P 500 index lost 5.64 points, or 0.6%, to 997.08, while the Nasdaq Composite fell 19.89 points, or 1%, to 1,973.16.
Layoffs
8/5/09 Layoffs
U.S. July Challenger layoffs up 31% to 97,373. Through the first seven months of the year, layoff announcements have totaled 994,048, 72% ahead of last year's pace. Layoff announcements had fallen to a 15-month low of 74,393 in June. The figures are not seasonally adjusted, and count only a small fraction of the millions of layoffs that take place each month, mostly in small- and medium-sized firms.
P&G reiterated its fiscal 2010 profit forecast for earnings of $3.65 to $3.80 a share.
Real personal income fell 1.72% in Q2 2009 after falling 2.94% in Q1 2009. (U.S. Bureau of Economic Analysis)
Insider sales now stand at levels not seen since late 2007, right before the current bear market began.
The post office says it lost $2.4 billion from April through June.That brings the year's losses so far to $4.7 billion. And the Postal Service expects to be $7 billion in the red when the fiscal year ends Sept. 30.
Lenders have modified more than 235,000 mortgages under an Obama Administration program, but 1.8 million foreclosures occurred in the first half of 2009.
U.S. non-manufacturing industries contracted for the 10th consecutive month in July, the Institute for Supply Management reported Wednesday. The ISM non-manufacturing index fell to 46.4% in July from 47.0% in June Seven of 18 industries were growing in July. The new orders index fell to 48.1% from 48.6%. The business activity index fell to 46.1% from 49.8%.
Orders for U.S.-made factory goods rose 0.4% in June. Orders for durable goods fell 2.2%, an improvement from the government's prior estimate of a 2.5% drop. Orders for nondurable goods rose 2.7%. Excluding transportation equipment, new factory orders rose 2.3%. Orders for core capital goods, which are used by businesses to expand or update their productive capacity, rose for the second consecutive month, gaining 2.6% in June. Meanwhile, overall shipments rose 1.4%, following 10 consecutive months of declines. Shipments of durable goods fell 0.1% in June, and were down for 11 consecutive months, the longest streak of declines since comparable data were first published in 1992. Inventories decreased another 1.2% to $318B, the sixth straight month of shrinkage.
The Energy Information Administration reported that crude supplies rose by 1.7 million barrels during the week ended July 31. The EIA also said that gasoline stocks fell by 200,000 barrels and distillate inventories dropped by 1.1 million barrels last week. Analysts surveyed by Platts expected the EIA data to show a rise of 1.5 million barrels in crude stocks and a decline of 2 million barrels in gasoline supplies. They also projected a build of 1.1 million barrels in distillate stocks.
ICE October raw sugar futures hit an intraday high of 19.55 cents a pound on Wednesday, marking the highest level for a front-month contract since February 2006.
U.S. July Challenger layoffs up 31% to 97,373. Through the first seven months of the year, layoff announcements have totaled 994,048, 72% ahead of last year's pace. Layoff announcements had fallen to a 15-month low of 74,393 in June. The figures are not seasonally adjusted, and count only a small fraction of the millions of layoffs that take place each month, mostly in small- and medium-sized firms.
P&G reiterated its fiscal 2010 profit forecast for earnings of $3.65 to $3.80 a share.
Real personal income fell 1.72% in Q2 2009 after falling 2.94% in Q1 2009. (U.S. Bureau of Economic Analysis)
Insider sales now stand at levels not seen since late 2007, right before the current bear market began.
The post office says it lost $2.4 billion from April through June.That brings the year's losses so far to $4.7 billion. And the Postal Service expects to be $7 billion in the red when the fiscal year ends Sept. 30.
Lenders have modified more than 235,000 mortgages under an Obama Administration program, but 1.8 million foreclosures occurred in the first half of 2009.
U.S. non-manufacturing industries contracted for the 10th consecutive month in July, the Institute for Supply Management reported Wednesday. The ISM non-manufacturing index fell to 46.4% in July from 47.0% in June Seven of 18 industries were growing in July. The new orders index fell to 48.1% from 48.6%. The business activity index fell to 46.1% from 49.8%.
Orders for U.S.-made factory goods rose 0.4% in June. Orders for durable goods fell 2.2%, an improvement from the government's prior estimate of a 2.5% drop. Orders for nondurable goods rose 2.7%. Excluding transportation equipment, new factory orders rose 2.3%. Orders for core capital goods, which are used by businesses to expand or update their productive capacity, rose for the second consecutive month, gaining 2.6% in June. Meanwhile, overall shipments rose 1.4%, following 10 consecutive months of declines. Shipments of durable goods fell 0.1% in June, and were down for 11 consecutive months, the longest streak of declines since comparable data were first published in 1992. Inventories decreased another 1.2% to $318B, the sixth straight month of shrinkage.
The Energy Information Administration reported that crude supplies rose by 1.7 million barrels during the week ended July 31. The EIA also said that gasoline stocks fell by 200,000 barrels and distillate inventories dropped by 1.1 million barrels last week. Analysts surveyed by Platts expected the EIA data to show a rise of 1.5 million barrels in crude stocks and a decline of 2 million barrels in gasoline supplies. They also projected a build of 1.1 million barrels in distillate stocks.
ICE October raw sugar futures hit an intraday high of 19.55 cents a pound on Wednesday, marking the highest level for a front-month contract since February 2006.
Tuesday, August 04, 2009
Personal Incomes
8/4/09 Personal Incomes
Personal incomes of U.S. residents fell 1.3% in June, reversing the 1.3% gain in May that was due to a one-time stimulus payment to Social Security recipients, the Commerce Department reported Tuesday. Excluding the one-time payment in May, incomes fell 0.1% in June after a decline of less than 0.1% in May. Real disposable incomes - adjusted for inflation and after taxes - fell 1.8% in June after a 1.5% gain in May. Compensation of workers fell 0.3% in June. The personal savings rate fell back to 4.6% from 6.2%. Real consumer spending dropped 0.1% in June, the third decline in the past four months.
PepsiCo has reached a deal to buy Pepsi Bottling Group for $36.50 a share and PepsiAmericas for $28.50 a share in cash and stock, CNBC reported. In April, PepsiCo offered $29.50 in cash and stock for each share of Pepsi Bottling Group and made a separate offer for PepsiAmericas at $23.27.
Chain-store sales for the week ended Aug. 1 fell 0.7% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales declined 0.2%.
Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
Since the low set in late 2008, the Shanghai Index is up nearly 100%.
Rep. Ron Paul: "As the healthcare debate rages on, there is one reality that even the proponents of this hostile takeover of healthcare by government cannot ignore ' and that is money. The government simply does not have the money for a new, expansive, public healthcare plan. The country is in a deep recession that will deepen even further with the coming collapse of the commercial real estate market. The last thing we need is for government to increase and expand taxes to pay for another damaging, wasteful program. Foreigners are becoming less enthusiastic about buying our debt, and creating another open-ended welfare program when we cannot pay for what is already in place, will not help. Champions of socialized medicine want to tax the rich, tax businesses that already cannot afford to provide health plans to employees, and tax people who don't want to participate in the government's scheme by buying an approved healthcare plan. Presumably, all these taxes are to induce compliance. This is not freedom, nor will it improve healthcare."
Bill Luby: "I thought it worth noting that yesterday, in addition to closing over the critical 1000 level for the first time since November, the SPX also closed 15% above its simple moving average for the first time since 1999."
Michael Luo: " It can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession.
“On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor at Columbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s."
"Overall, second-quarter numbers show that things are somewhat better than in a difficult first quarter, but still challenging overall," said Deutsche Bank on quarterly results from Centex and Pulte, which are in a merger agreement. "Investors will be primarily focused on net order growth, which came in significantly below our estimates," added analysts at Barclays Capital.
The NAR's pending-home-sales index rose 3.6% in June after an upwardly revised gain of 0.8% in May. The index is 6.7% above June 2008. Activity is much stronger for lower-priced homes. First-time buyers must see their contracts close by Nov. 30 to get an $8,000 tax credit. The median price dropped 15 percent from a year earlier.
Adam Liptak: "The judge in San Francisco, Vaughn R. Walker, ruled that Congress had indeed overridden the state secrets privilege when it enacted the Foreign Intelligence Surveillance Act of 1978. The judge said that by setting up a secret court to consider requests for intelligence surveillance, and by setting up other domestic regulations of foreign intelligence surveillance, “Congress intended for the executive branch to relinquish its near-total control over whether the fact of unlawful surveillance could be protected as a secret.”
The government’s recent brief cited the leading Supreme Court decision on state secrets, United States v. Reynolds in 1953, but it said nothing about Judge Walker’s reading of it.
“Reynolds itself,” Judge Walker wrote, “leaves little room for defendants’ argument that the state secrets privilege is actually rooted in the Constitution.”
The Reynolds case concerned an Air Force accident report. The government refused to turn it over in an injury lawsuit, saying that disclosure of the report would endanger national security by revealing military secrets. "
Forty-three U.S. soldiers and 31 soldiers from other Western allies were killed in Afghanistan in July, the highest monthly total for both groups in the eight-year-old war.
Moody's Investors Service lowered its outlook on the State of New Jersey, reflecting challenges to the state's financial operations and repeated use of nonrecurring revenue to plug budget gaps. The outlook was lowered to negative from stable. The outlook affects about $2.5 billion in outstanding general obligation bonds and $28.5 billion in annual appropriation debt.
The U.S. recession has zapped U.S. consumers' spending power, and sales at Simon's malls fell 10.5 percent to $442 per square foot. Sales at its outlet centers slid 3.3 percent.
Expeditors International of Washington reported that its second-quarter net income fell 24% to $54.07 million, or 25 cents a share, down from $71.25 million, or 32 cents a share, in the same period a year ago. Total revenue fell 38% to $895 million attributable to an industry-wide shipping slowdown.
TheSimon.com on the healthcare bill: "Starting with the most controversial provision first, the Democratic plan states that any underage girl (here defined using the legal drinking age of 21, rather than 18) who happens to get pregnant will be forced to undergo a mandatory abortion, with no exceptions. While this might sound like a bad thing, the good news is that abortions will be covered free of charge by government insurance – while the abortions will cost a substantial amount to perform, they’ll still cost less than bearing and raising those “accidental” children. So ultimately the plan passes the savings onto the public, which is a good thing.
As for girls getting pregnant in the first place, buried in page 2,407 is a requirement that public water systems have a tasteless and colorless contraceptive agent added to them to help lower the overall pregnancy rate. Since the young (not to mention, the lower class) don’t drink bottled water, that should keep all those unwanted kids from becoming kids in the first place. And it also encourages the rich to get rid of their bottled water (with its high carbon footprint, due to the petroleum used to make the plastic), by allowing them to indulge in a favorite Democratic pastime: nonstop, consequence-free fucking.
Another much-discussed feature on page 3,092 is the so-called “Logan’s Run” rule. In the book and movie of the same name, citizens were put to death after a number of years (21 in the novel, 30 in the film). Now, don’t worry – there’s nothing so drastic in the Democrats’ health plan; instead the age is 60 years. And you won’t be put to death, either – there is no Carrousel! Just try not to need any medical treatment, because after age 60 you won’t be covered by insurance any longer – if you get sick, I hope you have a useful home remedy. Otherwise, there will be no Renewal for you. (But with everyone living longer and longer, I’d say your odds are good to make it to at least 70 years… any longer and you better run away to Sanctuary!)"
Palatin Technologies, Inc. (NYSE Amex: PTN) announced today that it has received a Notice of Allowance from the U.S. Patent and Trademark Office for its U.S. Patent Application Number 11/694,260, titled "Cyclic Natriuretic Peptide Constructs." Allowed claims cover a family of cyclic compounds that bind to natriuretic peptide receptor A (NPRA), including PL-3994, Palatin's lead heart failure drug candidate. Palatin expects the patent will issue in the second half of 2009; the patent's 20-year term would expire in 2027.
The Dow Jones Industrial Average added 33.63 points to 9,320.19. The S&P 500 rose 3.02 points to 1,005.65, while the Nasdaq Composite gained 2.7 points to 2,011.31.
Personal incomes of U.S. residents fell 1.3% in June, reversing the 1.3% gain in May that was due to a one-time stimulus payment to Social Security recipients, the Commerce Department reported Tuesday. Excluding the one-time payment in May, incomes fell 0.1% in June after a decline of less than 0.1% in May. Real disposable incomes - adjusted for inflation and after taxes - fell 1.8% in June after a 1.5% gain in May. Compensation of workers fell 0.3% in June. The personal savings rate fell back to 4.6% from 6.2%. Real consumer spending dropped 0.1% in June, the third decline in the past four months.
PepsiCo has reached a deal to buy Pepsi Bottling Group for $36.50 a share and PepsiAmericas for $28.50 a share in cash and stock, CNBC reported. In April, PepsiCo offered $29.50 in cash and stock for each share of Pepsi Bottling Group and made a separate offer for PepsiAmericas at $23.27.
Chain-store sales for the week ended Aug. 1 fell 0.7% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales declined 0.2%.
Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
Since the low set in late 2008, the Shanghai Index is up nearly 100%.
Rep. Ron Paul: "As the healthcare debate rages on, there is one reality that even the proponents of this hostile takeover of healthcare by government cannot ignore ' and that is money. The government simply does not have the money for a new, expansive, public healthcare plan. The country is in a deep recession that will deepen even further with the coming collapse of the commercial real estate market. The last thing we need is for government to increase and expand taxes to pay for another damaging, wasteful program. Foreigners are becoming less enthusiastic about buying our debt, and creating another open-ended welfare program when we cannot pay for what is already in place, will not help. Champions of socialized medicine want to tax the rich, tax businesses that already cannot afford to provide health plans to employees, and tax people who don't want to participate in the government's scheme by buying an approved healthcare plan. Presumably, all these taxes are to induce compliance. This is not freedom, nor will it improve healthcare."
Bill Luby: "I thought it worth noting that yesterday, in addition to closing over the critical 1000 level for the first time since November, the SPX also closed 15% above its simple moving average for the first time since 1999."
Michael Luo: " It can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession.
“On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor at Columbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s."
"Overall, second-quarter numbers show that things are somewhat better than in a difficult first quarter, but still challenging overall," said Deutsche Bank on quarterly results from Centex and Pulte, which are in a merger agreement. "Investors will be primarily focused on net order growth, which came in significantly below our estimates," added analysts at Barclays Capital.
The NAR's pending-home-sales index rose 3.6% in June after an upwardly revised gain of 0.8% in May. The index is 6.7% above June 2008. Activity is much stronger for lower-priced homes. First-time buyers must see their contracts close by Nov. 30 to get an $8,000 tax credit. The median price dropped 15 percent from a year earlier.
Adam Liptak: "The judge in San Francisco, Vaughn R. Walker, ruled that Congress had indeed overridden the state secrets privilege when it enacted the Foreign Intelligence Surveillance Act of 1978. The judge said that by setting up a secret court to consider requests for intelligence surveillance, and by setting up other domestic regulations of foreign intelligence surveillance, “Congress intended for the executive branch to relinquish its near-total control over whether the fact of unlawful surveillance could be protected as a secret.”
The government’s recent brief cited the leading Supreme Court decision on state secrets, United States v. Reynolds in 1953, but it said nothing about Judge Walker’s reading of it.
“Reynolds itself,” Judge Walker wrote, “leaves little room for defendants’ argument that the state secrets privilege is actually rooted in the Constitution.”
The Reynolds case concerned an Air Force accident report. The government refused to turn it over in an injury lawsuit, saying that disclosure of the report would endanger national security by revealing military secrets. "
Forty-three U.S. soldiers and 31 soldiers from other Western allies were killed in Afghanistan in July, the highest monthly total for both groups in the eight-year-old war.
Moody's Investors Service lowered its outlook on the State of New Jersey, reflecting challenges to the state's financial operations and repeated use of nonrecurring revenue to plug budget gaps. The outlook was lowered to negative from stable. The outlook affects about $2.5 billion in outstanding general obligation bonds and $28.5 billion in annual appropriation debt.
The U.S. recession has zapped U.S. consumers' spending power, and sales at Simon's malls fell 10.5 percent to $442 per square foot. Sales at its outlet centers slid 3.3 percent.
Expeditors International of Washington reported that its second-quarter net income fell 24% to $54.07 million, or 25 cents a share, down from $71.25 million, or 32 cents a share, in the same period a year ago. Total revenue fell 38% to $895 million attributable to an industry-wide shipping slowdown.
TheSimon.com on the healthcare bill: "Starting with the most controversial provision first, the Democratic plan states that any underage girl (here defined using the legal drinking age of 21, rather than 18) who happens to get pregnant will be forced to undergo a mandatory abortion, with no exceptions. While this might sound like a bad thing, the good news is that abortions will be covered free of charge by government insurance – while the abortions will cost a substantial amount to perform, they’ll still cost less than bearing and raising those “accidental” children. So ultimately the plan passes the savings onto the public, which is a good thing.
As for girls getting pregnant in the first place, buried in page 2,407 is a requirement that public water systems have a tasteless and colorless contraceptive agent added to them to help lower the overall pregnancy rate. Since the young (not to mention, the lower class) don’t drink bottled water, that should keep all those unwanted kids from becoming kids in the first place. And it also encourages the rich to get rid of their bottled water (with its high carbon footprint, due to the petroleum used to make the plastic), by allowing them to indulge in a favorite Democratic pastime: nonstop, consequence-free fucking.
Another much-discussed feature on page 3,092 is the so-called “Logan’s Run” rule. In the book and movie of the same name, citizens were put to death after a number of years (21 in the novel, 30 in the film). Now, don’t worry – there’s nothing so drastic in the Democrats’ health plan; instead the age is 60 years. And you won’t be put to death, either – there is no Carrousel! Just try not to need any medical treatment, because after age 60 you won’t be covered by insurance any longer – if you get sick, I hope you have a useful home remedy. Otherwise, there will be no Renewal for you. (But with everyone living longer and longer, I’d say your odds are good to make it to at least 70 years… any longer and you better run away to Sanctuary!)"
Palatin Technologies, Inc. (NYSE Amex: PTN) announced today that it has received a Notice of Allowance from the U.S. Patent and Trademark Office for its U.S. Patent Application Number 11/694,260, titled "Cyclic Natriuretic Peptide Constructs." Allowed claims cover a family of cyclic compounds that bind to natriuretic peptide receptor A (NPRA), including PL-3994, Palatin's lead heart failure drug candidate. Palatin expects the patent will issue in the second half of 2009; the patent's 20-year term would expire in 2027.
The Dow Jones Industrial Average added 33.63 points to 9,320.19. The S&P 500 rose 3.02 points to 1,005.65, while the Nasdaq Composite gained 2.7 points to 2,011.31.
Monday, August 03, 2009
Declining Optimism
8/3/09 Declining Optimism
Worldwide sales of semiconductors for the second quarter of 2009 were $51.7 billion, the Semiconductor Industry Association said Monday. Sales declined by 20% compared to the same period a year ago but rose 17% from the first quarter.
New tee shirts: "A recession is when your neighbor is laid off. A Depression is when you're laid off. A Recovery is when Obama loses his job."
Small business owners’ optimism recently dropped to its lowest level in the six years of the Wells Fargo/Gallup Small Business Index history. Covering a survey period July 7 – July 14, 2009, the score now stands at negative 21 (-21), down 20 points from the previous survey (April, 2009), and 135 points lower than the Index high of 114 (November, 2006). This is the third consecutive quarter with a negative (below zero) Index score. A score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations.
The Index is the sum of “present situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. The “present situation” score dropped 12 points to negative 23 (-23), the lowest present situation score in the history of the Index. “Future expectations” dropped eight points to two, the second-lowest score since the survey’s inception.
The U.K. CIPS/Markit manufacturing purchasing manufacturing index rose to 50.8 in July, up from a revised high reading of 47.4 in June and the first leap above the 50 unchanged mark since March 2008. The rise came as manufacturing production rose to the greatest extent since December 2007. New orders rose for the first time since March 2008.
The Markit euro-zone manufacturing purchasing managers index rose to 46.3 in July, up from 42.6 in June, the second strongest rise in point terms in the history of the survey and the highest reading in 11 months.
John Hussman: "Although the stock market's advance since March is taken as evidence that the economy is on the mend, the extent of that advance represents just over one-third of the prior bear market loss, which is somewhat standard (if not reliable or predictable) for bear market rallies. Interestingly, the advance since March has almost exactly matched the size and duration of the rally that followed the initial market plunge in 1929, just before the stocks and the economy suffered fresh deterioration."
Brett Steenbarger: "In sum, while upside momentum has tailed off and we could see a normal pullback following strength, the indicators suggest underlying strength to the market rise. Since the momentum and strength measures tend to top well ahead of price, I expect to see higher prices for stocks before we have to be concerned about a fresh bear market. A move below 950 in the ES futures, accompanied by expanding new 20-day lows, would have me questioning the bull thesis."
The Oil Drum: "The Obama administration is talking with allies and Congress about the possibility of imposing an extreme economic sanction against Iran if it fails to respond to President Obama’s offer to negotiate on its nuclear program: cutting off the country’s imports of gasoline and other refined oil products.
The option of acting against companies around the world that supply Iran with 40 percent of its gasoline has been broached with European allies and Israel, officials from those countries said. Legislation that would give Mr. Obama that authority already has 71 sponsors in the Senate and similar legislation is expected to sail through the House. "
According to the WSJ, sales of low- and moderately priced homes are picking up. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate.
Oil prices leapt above $70 a barrel Monday in Asia on investor expectations a recovering global economy will boost crude demand.
The U.S. dollar index lower at 77.58. Gold futures rose Monday, topping $960 an ounce for the first time since June 11 as the U.S. dollar fell to the lowest level this year against a basket of its major rivals, boosting gold's investment appeal.
John Tamny: "The Fed is not an independent body free of political coercion, but rather an institution whose actions have long been dictated by the president and politicians in power. More important, since Congress is empowered through the Constitution "To coin Money, regulate the Value thereof," it's folly for general defenders of central bank independence to presume that this applies to our own Federal Reserve."
The United States, Europe and Japan still face the possibility of a double-dip recession and at the very least will experience below-potential economic growth for the next couple of years, economist Nouriel Roubini told CNBC Monday....If central banks continue to monetize the deficits, "long-term bond yields may go higher, and they may crowd out the economic recovery leading to a double dip," he said.
Marathon Oil Q2 net 58c vs. $1.08. Revenue fell to $13.4 billion from $22.2 billion.
Exxon forecasts that natural gas demand will rise 50 percent by 2030 and outstrip demand for coal.
"Clearly, we anticipate that natural gas will grow much faster than oil or coal. So we see a pretty healthy demand out there in the future for natural gas globally, but even here in North America," chief executive Rex Tillerson said during an analyst meeting earlier this year.
George Ure: "if you had put equal amounts of money into the Dow, the S&P 500, and the NASDAQ Composite at the beginning of 2000, as is shown in my Aggregate Index chart (here), you'd have lost almost one-half of your grub stake, and that's before cranking in the correction for the declining purchasing power of the dollar. When that's done, sorry to report, you've lost more than half. [I exclude commissions if you exclude dividends.] The Street would just as soon you get memory fogging of events prior to 9/11 and forget that huge loss many portfolios experienced in the Tech Wreck. How soon we forget, eh?"
President Barack Obama's treasury secretary said Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans as part of a health care overhaul.
Peter Boockvar, equity strategist for Miller Tabak: "Right now everyone is so bullish after a 50% rally. That should be concerning," he says.
He's bearish on the U.S. markets for two primary reasons:
Too much debt both at the consumer and federal level will stunt growth.
The eventual unwinding of our current fiscal policy will be painful. In the meantime, that same fiscal policy has the ability to prop up the market. As he puts it, "when you’re in a money printing world we’re in right now asset prices can lift."
Boockvar favors international markets. "I've been bullish on commodities, emerging markets that produce commodities and Asia - particularly China, that has driven the rally in commodities," he says. Admittedly, China may be due for a pullback after an 87% run up in the Shanghai Composite this year. If that happens Boockvar's confident the "U.S. will be following."
Boeing Co., which has delayed the delivery of its 787 Dreamliner five times, may not get it flying for another six months, said Senior Plc, a British supplier of air ducts and other parts for the plane.
Boeing failed to make good on a June 16 pledge at the Paris Air Show that the 787 would fly before the end of that month. The two-year delay in the plane’s development has allowed Toulouse, France-based rival Airbus SAS to gain ground with orders for its competing A350 model.
“Their credibility is somewhat in question,” Chief Executive Officer Mark Rollins said today in a telephone interview. “We estimate another six-month delay.”
China's manufacturing rose in July to its highest level in a year, helped by record lending and the country's generous stimulus package. If the trend continues, China could overtake the U.S. as the world's largest manufacturer by 2015.
AP: "China's growth accelerated in the latest quarter to 7.9 percent over a year earlier while the United States and Europe struggle with recession. The surge was driven by Beijing's 4 trillion yuan ($586 billion) plan to insulate China by pumping up domestic demand with heavy spending on building highways and other public works.
But the growth — up from 6.1 percent the previous quarter — highlighted China's continued reliance on stimulus spending. The big gains were in construction and other stimulus-fueled areas, while retail spending and other private sector activity lagged.
Bank credit soared to a record 7.1 trillion yuan ($1.1 trillion) in the first half of the year and the rate of lending is accelerating. Loans in June expanded to more than double the May level at 1.5 trillion yuan ($220 billion).
Economists say as much as 15 percent or 1 trillion yuan ($145 billion) of that money has been diverted into stocks and real estate despite government rules that say banks should lend only for productive investment."
Cooper-Standard Holdings Inc., said Monday it filed for bankruptcy protection in an effort to reduce its debt amid a slowdown in vehicle production and sales.
Privately held Cooper-Standard, which is a preferred automotive supplier to Ford Motor Co., makes fluid handling, body sealing and other systems for automakers. Cooper-Standard said in a statement that the Chapter 11 bankruptcy filing in a Delaware court was "voluntary."
ISM Manufacturing Index: 48.9 in July vs. 46.5 consensus, its 18th consecutive month of contraction. Nonmetallic Mineral Products and Paper Products reported growth. Machinery, Plastics & Rubber Products, and Wood Products led the laggards.
June Construction Spending: +0.3% to $966B/year, but 10.2% lower than a year ago. For H1, spending of $456B was 11.4% below last year. Spending on private-sector projects fell 0.1%, while public spending rose 1%. Spending on private housing projects increased 0.5%. Spending on nonresidential private projects fell 0.5%.
Bill King: " We will again utilize basic math to illustrate the scam. If Q4 08 GDP was 100 units, and Q1 09 was reported at -5.5% and Q2 09 GDP was expected to be -1.5%, the expectation was for GDP of 100 units minus 5.5% or 94.5 units, minus 1.5% or 93.08 units.
With the revision of Q1 09 GDP to -6.4% the Q1 GDP units become 100 minus 6.4% or 93.6 units. So Q2 is minus 1% or 92.664. Ergo aggregate GDP was worse than expected!!!!
As we warned, lower imports, a sign of economic weakness, contributed a net 1.4% to GDP.
Once again beancounters ‘fooled’ with inflation to produce higher GDP than warranted.
John Williams: The relatively narrower quarterly contraction in the second quarter reflected the impact of greater weakness being thrown back into the first quarter, in revision, and the use of artificially reduced inflation. The implicit price deflator for the second quarter was 0.2% versus a revised 1.9% (was 2.8%) in the first quarter."
Philip Davis: "Every $10 increase in the price of a barrel of oil rips $25Bn a month out of the hands of global consumers, enough money to employ 6M people a year at $50,000 each. Those jobs are torn away from other sectors as discretionary income goes to commodities and, by the time you add in refining mark-ups and the cascading effects on other raw material cost, the effect of a $10 per barrel rise in oil is doubled to what amounts to about 1M global jobs per dollar."
Ford U.S. July sales rise 2.3% to 165,279 vehicles. Thank you clunker program.
General Motors Co. said Monday that more than 6,000 of its U.S. hourly workers took part in the auto maker's special attrition program. Most of those workers left the company Aug. 1. Clunkers won't help these former employees.
Barry Ritholz: "These days, via the stimulus plan, we have the Emergency Unemployment Compensation (EUC) which is good for 20 weeks. Then, there is the Supplemental EUC, which depending upon what your state thinks of the Federal largesse of handing out money to the recently unemployed, ranges anywhere from 13 to 20 more weeks.
The most recent data run was for the week of July 11. As of that week, the Extendees — which consists of soon-to-be-Exhaustees — gained 25k, raising the total unemployed receiving extended benefits to about 2.66 million people. One year ago, there were only 127 thousand receiving extended benefits.
And, as the NYT noted yesterday, there are another 1.5 million people likely to become Exhaustees over the next few months. "
The U.S. unemployment rate may not peak until the second half of 2010, even as the broader economy shows signs of improvement, U.S. Treasury Secretary Timothy Geithner said.
Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.
The head of the president's Council of Economic Advisers, Christina Romer, said Sunday that the administration is already looking ahead at an extension of benefits as that money runs out.
Democratic Rep. Charlie Rangel of New York says people who soon will lose their unemployment benefits deserve an extension. He says they are "the true victims" of the nation's financial disaster.
Republican Sen. Jim DeMint of South Carolina says he also supports an extension of benefits.
Net official gold sales slumped to 39 metric tons in the first half of 2009, down 73% from a year ago, London-based precious metals consultancy GFMS said Monday.
The Dow Jones Industrial Average rose 114.95 points, or 1.3%, to finish at 9,286.56, its highest close since Nov. 4. The S&P 500 index rose 15.15 points, or 1.5%, to end at 1,002.63, also its highest close since Nov. 4. The Nasdaq Composite gained 30.11, or 1.5%, to end at 2,008.61, its highest close since Oct. 1.
Crude for September delivery rose $2.13, or 3%, to end at $71.58 a barrel on the New York Mercantile Exchange.
Worldwide sales of semiconductors for the second quarter of 2009 were $51.7 billion, the Semiconductor Industry Association said Monday. Sales declined by 20% compared to the same period a year ago but rose 17% from the first quarter.
New tee shirts: "A recession is when your neighbor is laid off. A Depression is when you're laid off. A Recovery is when Obama loses his job."
Small business owners’ optimism recently dropped to its lowest level in the six years of the Wells Fargo/Gallup Small Business Index history. Covering a survey period July 7 – July 14, 2009, the score now stands at negative 21 (-21), down 20 points from the previous survey (April, 2009), and 135 points lower than the Index high of 114 (November, 2006). This is the third consecutive quarter with a negative (below zero) Index score. A score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations.
The Index is the sum of “present situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. The “present situation” score dropped 12 points to negative 23 (-23), the lowest present situation score in the history of the Index. “Future expectations” dropped eight points to two, the second-lowest score since the survey’s inception.
The U.K. CIPS/Markit manufacturing purchasing manufacturing index rose to 50.8 in July, up from a revised high reading of 47.4 in June and the first leap above the 50 unchanged mark since March 2008. The rise came as manufacturing production rose to the greatest extent since December 2007. New orders rose for the first time since March 2008.
The Markit euro-zone manufacturing purchasing managers index rose to 46.3 in July, up from 42.6 in June, the second strongest rise in point terms in the history of the survey and the highest reading in 11 months.
John Hussman: "Although the stock market's advance since March is taken as evidence that the economy is on the mend, the extent of that advance represents just over one-third of the prior bear market loss, which is somewhat standard (if not reliable or predictable) for bear market rallies. Interestingly, the advance since March has almost exactly matched the size and duration of the rally that followed the initial market plunge in 1929, just before the stocks and the economy suffered fresh deterioration."
Brett Steenbarger: "In sum, while upside momentum has tailed off and we could see a normal pullback following strength, the indicators suggest underlying strength to the market rise. Since the momentum and strength measures tend to top well ahead of price, I expect to see higher prices for stocks before we have to be concerned about a fresh bear market. A move below 950 in the ES futures, accompanied by expanding new 20-day lows, would have me questioning the bull thesis."
The Oil Drum: "The Obama administration is talking with allies and Congress about the possibility of imposing an extreme economic sanction against Iran if it fails to respond to President Obama’s offer to negotiate on its nuclear program: cutting off the country’s imports of gasoline and other refined oil products.
The option of acting against companies around the world that supply Iran with 40 percent of its gasoline has been broached with European allies and Israel, officials from those countries said. Legislation that would give Mr. Obama that authority already has 71 sponsors in the Senate and similar legislation is expected to sail through the House. "
According to the WSJ, sales of low- and moderately priced homes are picking up. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate.
Oil prices leapt above $70 a barrel Monday in Asia on investor expectations a recovering global economy will boost crude demand.
The U.S. dollar index lower at 77.58. Gold futures rose Monday, topping $960 an ounce for the first time since June 11 as the U.S. dollar fell to the lowest level this year against a basket of its major rivals, boosting gold's investment appeal.
John Tamny: "The Fed is not an independent body free of political coercion, but rather an institution whose actions have long been dictated by the president and politicians in power. More important, since Congress is empowered through the Constitution "To coin Money, regulate the Value thereof," it's folly for general defenders of central bank independence to presume that this applies to our own Federal Reserve."
The United States, Europe and Japan still face the possibility of a double-dip recession and at the very least will experience below-potential economic growth for the next couple of years, economist Nouriel Roubini told CNBC Monday....If central banks continue to monetize the deficits, "long-term bond yields may go higher, and they may crowd out the economic recovery leading to a double dip," he said.
Marathon Oil Q2 net 58c vs. $1.08. Revenue fell to $13.4 billion from $22.2 billion.
Exxon forecasts that natural gas demand will rise 50 percent by 2030 and outstrip demand for coal.
"Clearly, we anticipate that natural gas will grow much faster than oil or coal. So we see a pretty healthy demand out there in the future for natural gas globally, but even here in North America," chief executive Rex Tillerson said during an analyst meeting earlier this year.
George Ure: "if you had put equal amounts of money into the Dow, the S&P 500, and the NASDAQ Composite at the beginning of 2000, as is shown in my Aggregate Index chart (here), you'd have lost almost one-half of your grub stake, and that's before cranking in the correction for the declining purchasing power of the dollar. When that's done, sorry to report, you've lost more than half. [I exclude commissions if you exclude dividends.] The Street would just as soon you get memory fogging of events prior to 9/11 and forget that huge loss many portfolios experienced in the Tech Wreck. How soon we forget, eh?"
President Barack Obama's treasury secretary said Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans as part of a health care overhaul.
Peter Boockvar, equity strategist for Miller Tabak: "Right now everyone is so bullish after a 50% rally. That should be concerning," he says.
He's bearish on the U.S. markets for two primary reasons:
Too much debt both at the consumer and federal level will stunt growth.
The eventual unwinding of our current fiscal policy will be painful. In the meantime, that same fiscal policy has the ability to prop up the market. As he puts it, "when you’re in a money printing world we’re in right now asset prices can lift."
Boockvar favors international markets. "I've been bullish on commodities, emerging markets that produce commodities and Asia - particularly China, that has driven the rally in commodities," he says. Admittedly, China may be due for a pullback after an 87% run up in the Shanghai Composite this year. If that happens Boockvar's confident the "U.S. will be following."
Boeing Co., which has delayed the delivery of its 787 Dreamliner five times, may not get it flying for another six months, said Senior Plc, a British supplier of air ducts and other parts for the plane.
Boeing failed to make good on a June 16 pledge at the Paris Air Show that the 787 would fly before the end of that month. The two-year delay in the plane’s development has allowed Toulouse, France-based rival Airbus SAS to gain ground with orders for its competing A350 model.
“Their credibility is somewhat in question,” Chief Executive Officer Mark Rollins said today in a telephone interview. “We estimate another six-month delay.”
China's manufacturing rose in July to its highest level in a year, helped by record lending and the country's generous stimulus package. If the trend continues, China could overtake the U.S. as the world's largest manufacturer by 2015.
AP: "China's growth accelerated in the latest quarter to 7.9 percent over a year earlier while the United States and Europe struggle with recession. The surge was driven by Beijing's 4 trillion yuan ($586 billion) plan to insulate China by pumping up domestic demand with heavy spending on building highways and other public works.
But the growth — up from 6.1 percent the previous quarter — highlighted China's continued reliance on stimulus spending. The big gains were in construction and other stimulus-fueled areas, while retail spending and other private sector activity lagged.
Bank credit soared to a record 7.1 trillion yuan ($1.1 trillion) in the first half of the year and the rate of lending is accelerating. Loans in June expanded to more than double the May level at 1.5 trillion yuan ($220 billion).
Economists say as much as 15 percent or 1 trillion yuan ($145 billion) of that money has been diverted into stocks and real estate despite government rules that say banks should lend only for productive investment."
Cooper-Standard Holdings Inc., said Monday it filed for bankruptcy protection in an effort to reduce its debt amid a slowdown in vehicle production and sales.
Privately held Cooper-Standard, which is a preferred automotive supplier to Ford Motor Co., makes fluid handling, body sealing and other systems for automakers. Cooper-Standard said in a statement that the Chapter 11 bankruptcy filing in a Delaware court was "voluntary."
ISM Manufacturing Index: 48.9 in July vs. 46.5 consensus, its 18th consecutive month of contraction. Nonmetallic Mineral Products and Paper Products reported growth. Machinery, Plastics & Rubber Products, and Wood Products led the laggards.
June Construction Spending: +0.3% to $966B/year, but 10.2% lower than a year ago. For H1, spending of $456B was 11.4% below last year. Spending on private-sector projects fell 0.1%, while public spending rose 1%. Spending on private housing projects increased 0.5%. Spending on nonresidential private projects fell 0.5%.
Bill King: " We will again utilize basic math to illustrate the scam. If Q4 08 GDP was 100 units, and Q1 09 was reported at -5.5% and Q2 09 GDP was expected to be -1.5%, the expectation was for GDP of 100 units minus 5.5% or 94.5 units, minus 1.5% or 93.08 units.
With the revision of Q1 09 GDP to -6.4% the Q1 GDP units become 100 minus 6.4% or 93.6 units. So Q2 is minus 1% or 92.664. Ergo aggregate GDP was worse than expected!!!!
As we warned, lower imports, a sign of economic weakness, contributed a net 1.4% to GDP.
Once again beancounters ‘fooled’ with inflation to produce higher GDP than warranted.
John Williams: The relatively narrower quarterly contraction in the second quarter reflected the impact of greater weakness being thrown back into the first quarter, in revision, and the use of artificially reduced inflation. The implicit price deflator for the second quarter was 0.2% versus a revised 1.9% (was 2.8%) in the first quarter."
Philip Davis: "Every $10 increase in the price of a barrel of oil rips $25Bn a month out of the hands of global consumers, enough money to employ 6M people a year at $50,000 each. Those jobs are torn away from other sectors as discretionary income goes to commodities and, by the time you add in refining mark-ups and the cascading effects on other raw material cost, the effect of a $10 per barrel rise in oil is doubled to what amounts to about 1M global jobs per dollar."
Ford U.S. July sales rise 2.3% to 165,279 vehicles. Thank you clunker program.
General Motors Co. said Monday that more than 6,000 of its U.S. hourly workers took part in the auto maker's special attrition program. Most of those workers left the company Aug. 1. Clunkers won't help these former employees.
Barry Ritholz: "These days, via the stimulus plan, we have the Emergency Unemployment Compensation (EUC) which is good for 20 weeks. Then, there is the Supplemental EUC, which depending upon what your state thinks of the Federal largesse of handing out money to the recently unemployed, ranges anywhere from 13 to 20 more weeks.
The most recent data run was for the week of July 11. As of that week, the Extendees — which consists of soon-to-be-Exhaustees — gained 25k, raising the total unemployed receiving extended benefits to about 2.66 million people. One year ago, there were only 127 thousand receiving extended benefits.
And, as the NYT noted yesterday, there are another 1.5 million people likely to become Exhaustees over the next few months. "
The U.S. unemployment rate may not peak until the second half of 2010, even as the broader economy shows signs of improvement, U.S. Treasury Secretary Timothy Geithner said.
Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.
The head of the president's Council of Economic Advisers, Christina Romer, said Sunday that the administration is already looking ahead at an extension of benefits as that money runs out.
Democratic Rep. Charlie Rangel of New York says people who soon will lose their unemployment benefits deserve an extension. He says they are "the true victims" of the nation's financial disaster.
Republican Sen. Jim DeMint of South Carolina says he also supports an extension of benefits.
Net official gold sales slumped to 39 metric tons in the first half of 2009, down 73% from a year ago, London-based precious metals consultancy GFMS said Monday.
The Dow Jones Industrial Average rose 114.95 points, or 1.3%, to finish at 9,286.56, its highest close since Nov. 4. The S&P 500 index rose 15.15 points, or 1.5%, to end at 1,002.63, also its highest close since Nov. 4. The Nasdaq Composite gained 30.11, or 1.5%, to end at 2,008.61, its highest close since Oct. 1.
Crude for September delivery rose $2.13, or 3%, to end at $71.58 a barrel on the New York Mercantile Exchange.
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