7/10/10 Warning! Poisons!!!
Elana Schor with the New York Times’s Greenwire reports that BP has said 20% of the cleanup crew members responding to the Gulf of Mexico displayed high levels of exposure to 2-butoxyethanol, a chemical dispersant that created chronic health problems in those who worked on ExxonMobil’s Valdez oil clean-up effort.
Schor quotes scientists as saying the announcement by BP is “worrisome” and that “Gulf air quality, if anything, seems to be deteriorating.” How about telling like it is: arsenic, benzene, glycol---POISON!
James C. Fox: "Oil and water samples were taken from both the Shores of Grand Isle and from 20 miles out. The preliminary analysis was done at an academic analytical chemistry laboratory. Looking for the likely pollutants from the deep water Horizon Oil spill. It was focused on the detection of benzene and propylene glycol. Benzene and other highly toxic contaminants were very low however the concentration of propylene glycol was between 360 and 440 parts per million. Just 25 parts per million is know to kill most fish and propylene glycol is just one of many ingredients found in Corexit. In short, the Gulf is being poisoned by BP's usage of the dispersants even after the EPA asked them to stop back in May. We are willing to provide ANY respected/known laboratory these samples or provide them with more. This is very serious to all people and marine life in and around the Gulf."
Corexit 9500 and 9527A are both being applied daily, with little to no intervention by the EPA. Samples have shown high concentrations of Propylene Glycol, between 360 and 440 parts per million. Keep in mind that 25 parts per million is the excepted toxic limit for fish. This would indicate that some of the samples were 150 times the toxic limit!
Have or will the toxic chemicals reach our water supply? The answer is not the containment cap.
Washington’s Blog
"As I have previously noted, Corexit is toxic, is less effective than other dispersants, and is actually worsening the damage caused by the oil spill.
Now, two toxicologists are saying that Corexit is much more harmful to human health and marine life than we’ve been told.
Specifically Gulf toxicologist Dr. Susan Shaw – Founder and Director of the Marine Environmental Research Institute – dove into the oil spill to examine the chemicals present.
Dr. Shaw told CNN [I can't post videos here, so either click on the link or go to my blog to read version with embedded videos]:
If I can tell you what happens — because I was in the oil — to people…
Shrimpers throwing their nets into water… [then] water from the nets splashed on his skin. …
[He experienced a] headache that lasted 3 weeks… heart palpitations… muscle spasms… bleeding from the rectum…
And that’s what that Corexit does, it ruptures red blood cells, causes internal bleeding, and liver and kidney damage. …
This stuff is so toxic combined… not the oil or dispersants alone. …
Very, very toxic and goes right through skin.
***
The reason this is so toxic is because of these solvents [from dispersant] that penetrate the skin of anything that’s going through the dispersed oil takes the oil into the cells — takes the oil into the organs… and this stuff is toxic to every organ system in the body. …
Similarly, marine biologist and toxicologist Dr. Chris Pincetich – who has an extensive background in testing the affects of chemicals on fish – says [click or see my blog] that Corexit disrupts cell membranes.
He also explains that EPA toxicity testing for Corexit is woefully inadequate, since EPA testing for mortality usually only requires a 96-hour time frame. His doctoral research found that fish that were alive at 96 hours after exposure to pesticide were dead at two weeks, so the chemicals were considered non-lethal for the purposes of the test.
Drs. Shaw and Pincetich are wildlife conservationists. But even industry scientists working for Exxon and the manufacturer of Corexit itself admit that the stuff is toxic."
The Oil Drum: "For the first time Friday, the Coast Guard and BP acknowledged that a mysterious second pipe, wedged next to the drill pipe in what remains of the Deepwater Horizon's riser, is fouling up the works where the well is spewing hundreds of millions of gallons of crude oil into the Gulf of Mexico.
...The idea that a loose pipe shot up from deeper in the well and prevented the shear ram from closing has been espoused by such experts as oil industry investment banker Matt Simmons and Bob Bea, a University of California at Berkeley engineer leading a scientific investigation into the blowout. But others have wondered if the mystery pipe isn't just a section of the same drill pipe that came loose, or even a pipe that fell down the riser from the rig 5,000 feet above."
To expand its business in the auto industry, Automatic Data Processing is buying Seattle technology company Cobalt in a cash deal worth $400 million.
ADP, a publicly traded company based in Roseland, N.J., made the announcement Friday. The outsourcing company, which handles services such as payroll and human resources for clients, will add Cobalt's products to what it already offers the auto industry.
Cobalt, a privately held company, provides digital marketing services to automakers and dealers. The company helps car dealers and makers reach customers online, including building websites, running search and display-ad campaigns online, and handling e-mail marketing.
It also operates a division called Dealix, which runs the website www.usedcars.com.
About 1,000 people work at Cobalt, 750 of them in the Puget Sound region.
China's customs agency on Saturday said exports were up 35 percent in June from a year ago, while imports rose almost 53 percent. China’s trade surplus widened to the highest this year and exports climbed more than estimated to a record in June, adding pressure on the government to let the currency gain after the U.S. said the yuan “remains undervalued.” “Exports may maintain relatively fast growth this quarter but downside risks may increase in the last quarter as the government gradually exits its export aid policies and shipments are more affected by the yuan’s appreciation and the European debt crisis,” said Jinny Yan, a Shanghai-based economist at Standard Chartered Plc.
Imports climbed to $117.4 billion in June, the third highest this year, the customs bureau said. The 34.1 percent gain compares with the median forecast of 35.4 percent in the Bloomberg survey.
“Lower-than-expected import growth is a reflection of lower import volume amid weakening domestic demand as well as falling import prices,” Goldman Sachs’ Song said.
Doug Noland: "Back in 2007, I found it ironic that the eruption of the subprime crisis was a catalyst for big rallies in agency debt and MBS. As the great mortgage finance Bubble burst, the market flocked to fundamentally vulnerable mortgage-related debt instruments. These securities, with their implicit or explicit federal guarantees, enjoyed safe haven status. On the surface, much of the debt marketplace benefited, which seemed to suggest the underlying Credit foundation was sound. Today, the Treasury, agency debt and MBS marketplaces lend support to the view that the U.S. is immune to global debt fears. However, I would caution that, similar to 2007, dynamics below the market’s surface are creating systemic fissures....I’m content to stick with my view that the current “terminal phase” of Chinese Bubble excess can be expected to – as they tend to do – surprise both on duration and the scope of excesses. Moreover, the global crisis may prove an impetus for Beijing erring on the side of further stimulus and Bubble accommodation.
There is, indeed, another bearish Scenario possibility outside of deflationary collapse. At least in the short-term, festering U.S. debt problems and a vulnerable dollar could create a backdrop conducive to a surprising counteroffensive from (thought dead and buried) global reflationary forces. Stranger things have happened. "
Bank of America says six trades that incorrectly hid from investors billions of dollars of its debt were originally made in a bid to cut the size of a unit's balance sheet and meet internal financial targets.
Diamond Offshore announced Friday that its Ocean Endeavor drilling rig will leave the Gulf of Mexico and move to Egyptian waters immediately — making it the first to abandon the United States in the wake of the BP oil spill and a ban on deep-water drilling.
And the Ocean Endeavor's exodus probably won't be the last, according to oil industry officials and Gulf Coast leaders who warn that other companies eager to find work for the now-idled rigs are considering moving them outside the U.S.
A decade ago, the PT Cruiser roared onto the road with trendsetting looks and Al Capone swagger. In a sea of bland Honda Civics and Toyota Camrys, it was a retro hit. Chrysler could barely keep up with demand.
On Friday morning, the last Cruiser rolled off the assembly line in Mexico, finally killed off after years of falling popularity. Chrysler sold just 18,000 last year, compared with nearly 145,000 in 2001.
U.S. Cooling Demand Next 7 Days 21.0% above normal.
According to BP, installing the new cap is expected to take five to eight days. During part of that time, the the flow of hydrocarbons is expected to increase.
China, the world’s second-biggest oil consumer, increased net crude-oil imports to a record in June as demand rose and costs fell.
Net purchases climbed to 22.14 million metric tons, or about 5.39 million barrels a day, from 17.65 million tons a month earlier, according to preliminary data released by the General Administration of Customs today. This was more than the previous record of 20.98 million tons in April.
Tim W. Wood: "I continue to believe that the advance out of the 2009 low is a bear market rally that will ultimately prove to separate Phase I from Phase II of the ongoing secular bear market. I continue to believe that this bear market rally will peak in accordance with the DNA Markers that I have found have occurred at every other major top since 1896. I continue to believe that the Phase II decline will be the most devastating portion of the bear market. I continue to believe that the deflationary forces of K-wave winter will impact most all asset classes. I continue to believe that the powers that be will not be able to save the markets. I also believe that a proper Dow theory trend change will eventually occur, but this has not yet been the case."
Saturday, July 10, 2010
Friday, July 09, 2010
Bank Failures
7/9/10 Bank Failures
Anadarko Petroleum tells BP that it won't be paying for costs related to the Macondo well spill, reiterating it was BP's actions that "likely represent gross negligence or willful misconduct." BP asked Anadarko to pay $272M, but Anadarko has declined to say how much it's withholding.
BP could begin removing the containment cap over its gushing well Saturday kicking off a process to replace it with a stronger device that could take several days.
Cash-strapped Americans in search of liquidity will turn to stocks as a source of funds, triggering another market selloff similar to the 2008 crash, Damon Vickers, managing director of Nine Points Capital Partners told CNBC on Thursday. "The trend, the trade of declining real estate prices and lack of liquidity that is available for consumers to consume, which is the access to credit, debt, is not present," Vickers said. "The only thing that they have access to, to access credit, to consume and to be addictive consumers, which we are, are their stock portfolios. They can't sell their real estate and they can't tap the equity in their homes."
The ECRI index dropped to a fresh low of -8.3%.
BP and the government say that the idea to transfer crude oil by pipeline running along the floor of the Gulf of Mexico to non-performing wells is being considered as a Plan B. U.S. Coast Guard Admiral Thad Allen said that the pipeline idea would push back the time frame to stop the leaking oil to the end of August. The U.S. Coast Guard expects BP's third containment vessel, the Helix Producer, to be siphoning oil by Sunday, which could raise the level of oil capture from roughly 25,000 barrels of oil per day to 53,000 barrels of oil daily.
Two bank failures in New York and Oklahoma on Friday brought the U.S. total for the year so far to 90. Port Chester, N.Y.-based USA Bank, which had roughly $189.9 million in deposits as of March 31, was closed, the Federal Deposit Insurance Corp. said in a statement. Blackwell, Okla.-based Home National Bank, which had $560.7 million in deposits as of March 31, was also closed, the FDIC said. The bank failures will cost the federal deposit insurance fund a total of $140.4 million, the FDIC said.
Ideal Federal Savings Bank of Baltimore was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. The closure marks the 88th U.S. bank failure for this year. All insured non-brokered deposit accounts have been received by Manufacturers and Traders Trust Co. of Baltimore.
Bay National Bank of Baltimore was closed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. The closure marks the 87th U.S. bank failure of 2010. All deposit accounts have been transferred to Bay Bank of Lutherville, Md.
The Dow Jones Industrial Average gained 58.73 points, or 0.6%, to 10,197.72. The S&P 500 index rose 7.68 points, or 0.7%, to 1,077.93. The Nasdaq Composite rose 21.05 points, or 1%, to 2,196.45. For the week, the Dow gained 5.3%, the S&P 500 gained 5.4%, and the Nasdaq advanced 5%, marking the best weekly performance for all three measures since July 2009.
Anadarko Petroleum tells BP that it won't be paying for costs related to the Macondo well spill, reiterating it was BP's actions that "likely represent gross negligence or willful misconduct." BP asked Anadarko to pay $272M, but Anadarko has declined to say how much it's withholding.
BP could begin removing the containment cap over its gushing well Saturday kicking off a process to replace it with a stronger device that could take several days.
Cash-strapped Americans in search of liquidity will turn to stocks as a source of funds, triggering another market selloff similar to the 2008 crash, Damon Vickers, managing director of Nine Points Capital Partners told CNBC on Thursday. "The trend, the trade of declining real estate prices and lack of liquidity that is available for consumers to consume, which is the access to credit, debt, is not present," Vickers said. "The only thing that they have access to, to access credit, to consume and to be addictive consumers, which we are, are their stock portfolios. They can't sell their real estate and they can't tap the equity in their homes."
The ECRI index dropped to a fresh low of -8.3%.
BP and the government say that the idea to transfer crude oil by pipeline running along the floor of the Gulf of Mexico to non-performing wells is being considered as a Plan B. U.S. Coast Guard Admiral Thad Allen said that the pipeline idea would push back the time frame to stop the leaking oil to the end of August. The U.S. Coast Guard expects BP's third containment vessel, the Helix Producer, to be siphoning oil by Sunday, which could raise the level of oil capture from roughly 25,000 barrels of oil per day to 53,000 barrels of oil daily.
Two bank failures in New York and Oklahoma on Friday brought the U.S. total for the year so far to 90. Port Chester, N.Y.-based USA Bank, which had roughly $189.9 million in deposits as of March 31, was closed, the Federal Deposit Insurance Corp. said in a statement. Blackwell, Okla.-based Home National Bank, which had $560.7 million in deposits as of March 31, was also closed, the FDIC said. The bank failures will cost the federal deposit insurance fund a total of $140.4 million, the FDIC said.
Ideal Federal Savings Bank of Baltimore was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. The closure marks the 88th U.S. bank failure for this year. All insured non-brokered deposit accounts have been received by Manufacturers and Traders Trust Co. of Baltimore.
Bay National Bank of Baltimore was closed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. The closure marks the 87th U.S. bank failure of 2010. All deposit accounts have been transferred to Bay Bank of Lutherville, Md.
The Dow Jones Industrial Average gained 58.73 points, or 0.6%, to 10,197.72. The S&P 500 index rose 7.68 points, or 0.7%, to 1,077.93. The Nasdaq Composite rose 21.05 points, or 1%, to 2,196.45. For the week, the Dow gained 5.3%, the S&P 500 gained 5.4%, and the Nasdaq advanced 5%, marking the best weekly performance for all three measures since July 2009.
Batter Up
7/9/10 Batter Up
Airgas Inc. said late Thursday that its board will review the revised offer of $63.50 a share from Air Products & Chemicals Inc. Airgas had previously rejected offers of $62 and $60 a share offers from Air Products.
The European Aeronautic Defence & Space Co. said Thursday it will resubmit its proposal to replace the aging U.S. fleet of aerial-refueling tankers a day ahead of the Pentagon deadline. Boeing said it would submit it request Friday morning. The $35 billion contract for 179 jets has the potential to dovetail into replacing the entire fleet of 500 planes, used for hauling cargo and refueling other aircraft in flight. For that reason it has been hotly contested. The contract was awarded to EADS and a U.S. partner in 2008, but a formal protest by Boeing led to the military revoking the offer and launching a third proposal request earlier this year. Boeing lost the contract in 2004 following a procurement scandal. .
A federal judge in Massachusetts on Thursday found that a law barring the federal government from recognizing same-sex marriage is unconstitutional.
Reuters: A U.S. appeals court on Thursday rejected the Obama administration's request to put on hold a ruling that lifted a temporary moratorium on deepwater oil drilling in the wake of the BP Plc oil spill. The U.S. Court of Appeals for the Fifth Circuit, based in New Orleans, ruled about an hour after hearing arguments over the administration's request to put on hold a lower court ruling that lifted the six-month moratorium.
FT: "The Swiss National Bank may have suffered paper losses of up to SFr10bn (€7.5bn) from huge interventions in the currency markets to restrain the value of the franc."
The Baltic Dry Index posted its 31st consecutive decline. Mathematically, what are the chances this could occur? What is this immense drop telling us? Forget the bullshit from the talking heads. The BDI is speaking volumes. There is big trouble coming our way. If you get up to the plate and intend to swing away, I suggest wearing a steel helmet. It's tough avoiding a 103mph fastball.
May Wholesale Inventories: +0.5% vs. +0.4% expected, and +0.2% prior (revised from +0.4%). Wholesale sales -0.3% M/M to $350.65B.
wholesale sales have plunged from a revised 0.9% to -0.3%. Lumber went from +8.6% to -8.7%, automotive from 1.8% to 0.6%, computers dropped from 3.5% to 1.8%, electrical goods from 3.1% to 0.6%, and hardware from 3.1% to 1.0%.
Charles Hugh Smith: "The entire key to the U.S. tax code is to tax earned income heavily but tax unearned income (the majority of the Plutocracy's income is of course unearned) not at all or very lightly....The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed "with no consequences." Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support "austerity."
The austerity will not extend to the financial Elites, of course. That's the whole purpose of the con. "Some are more equal than others," indeed.
Mortgage default rates are highest among plus million dollar properties.
Rob Hanna: "One thing traders need to keep in mind in the current environment is that when the market is bouncing off of intermediate-term lows it is more likely to get overbought and STAY overbought than when it’s simply consolidating in a downtrend. Shorting bounces off lows typically carries an extra level of risk because of this."
Russian-owned submersibles would be able to cap the oil leak in the Gulf of Mexico, the captain of one of the vessels has said.
Canadian employment rose by 93,000 in June, pushing the unemployment rate down by 0.2 percentage points to 7.9%, according to data released by Statistics Canada Friday. That's the first sub 8% unemployment rate since January 2009. Economists were expecting 20,000 jobs created and an 8.1% unemployment rate.
Google has renewed its China license, Reuters reported from Shanghai, citing a company spokeswoman.
China's foreign exchange regulator on Friday said the process of balancing international payments was "complex" and warned that large current-account surpluses were unsustainable. The State Administration of Foreign Exchange said in a statement that it struggled to balance international payments and the rapid growth in foreign exchange reserves, particularly as China's current-account-surplus-to-gross-domestic-product ratio swelled above 5% since 2005 and jumped to a record 11% in 2007. "In the long run, both large surplus or deficit is unsustainable large scale," the agency, which is also known as SAFE, said in a statement. The regular said it could handle the mounting surpluses, but noted that China's trade fortunes reversed dramatically in a number of years, a transformation that historically is achieved over decades.
Total debt of consumers is declining at an annual rate of 4.5%.
In the week ending July 7, Lipper reported equity outflows of $11.6 billion!
Those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one. -- President Thomas Jefferson. .
The Bank of Korea raised its benchmark interest rate for the first time since the global crisis, joining counterparts across Asia in removing monetary stimulus as the region leads world growth. The won climbed.
Governor Kim Choong Soo boosted the seven-day repurchase rate to 2.25 percent from a record low 2 percent, the bank said in a statement in Seoul today. An increase was forecast by just four of 14 economists surveyed by Bloomberg News. Investors are already boosting bets on another move.
The Automatic Earth: "In 2009, state and local government debt rose 14.5 percent. U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4 billion of securities, the most since 1992, according to data from Distressed Debt Securities in Miami Lakes, Florida.
“It’s a market where it’s clear that the underlying fundamentals are lousy,” said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc.[..]. “People can say fundamentals don’t matter but I’ve been doing this for 32 years. They do.”
Reuters: Lloyd's of London will not insure or reinsure petroleum shipments going into Iran, the insurance market said on Friday. U.S. President Barack Obama signed into law last week far-reaching new sanctions that aim to squeeze the Islamic Republic's fuel imports and increase its international isolation.
"The U.S. is an important market for Lloyd's and, in recognition of this, the market will not insure or reinsure refined petroleum going into Iran," Lloyd's General Counsel Sean McGovern told Reuters in a statement.
"Lloyd's will always comply with applicable sanctions," McGovern added.
Starting on January 1st in 2012, U.S. federal law will require coin and bullion dealers to report to the Internal Revenue Service all gold and silver coin purchases and sales greater than $600
Obama made his third trip to Nevada to campaign for Harry Reid. I guess that's more important than the jobless economy and the poisoned water in the Gulf etc etc.
Organization of the Petroleum Exporting Countries' (OPEC) crude oil production output averaged 29.12 million barrels per day (b/d) in June, down 160,000 b/d from an estimated 29.28 million b/d in May, according to a just-released Platts survey of OPEC and oil industry officials and analysts.
Lower volumes from Iraq and Nigeria accounted for 110,000 b/d of the 160,000 b/d overall drop.
Thomas Jefferson: "The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first."
Consumer borrowing in the U.S. dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market. Consumer credit has fallen an unprecedented 7 consecutive quarters.
Airgas Inc. said late Thursday that its board will review the revised offer of $63.50 a share from Air Products & Chemicals Inc. Airgas had previously rejected offers of $62 and $60 a share offers from Air Products.
The European Aeronautic Defence & Space Co. said Thursday it will resubmit its proposal to replace the aging U.S. fleet of aerial-refueling tankers a day ahead of the Pentagon deadline. Boeing said it would submit it request Friday morning. The $35 billion contract for 179 jets has the potential to dovetail into replacing the entire fleet of 500 planes, used for hauling cargo and refueling other aircraft in flight. For that reason it has been hotly contested. The contract was awarded to EADS and a U.S. partner in 2008, but a formal protest by Boeing led to the military revoking the offer and launching a third proposal request earlier this year. Boeing lost the contract in 2004 following a procurement scandal. .
A federal judge in Massachusetts on Thursday found that a law barring the federal government from recognizing same-sex marriage is unconstitutional.
Reuters: A U.S. appeals court on Thursday rejected the Obama administration's request to put on hold a ruling that lifted a temporary moratorium on deepwater oil drilling in the wake of the BP Plc oil spill. The U.S. Court of Appeals for the Fifth Circuit, based in New Orleans, ruled about an hour after hearing arguments over the administration's request to put on hold a lower court ruling that lifted the six-month moratorium.
FT: "The Swiss National Bank may have suffered paper losses of up to SFr10bn (€7.5bn) from huge interventions in the currency markets to restrain the value of the franc."
The Baltic Dry Index posted its 31st consecutive decline. Mathematically, what are the chances this could occur? What is this immense drop telling us? Forget the bullshit from the talking heads. The BDI is speaking volumes. There is big trouble coming our way. If you get up to the plate and intend to swing away, I suggest wearing a steel helmet. It's tough avoiding a 103mph fastball.
May Wholesale Inventories: +0.5% vs. +0.4% expected, and +0.2% prior (revised from +0.4%). Wholesale sales -0.3% M/M to $350.65B.
wholesale sales have plunged from a revised 0.9% to -0.3%. Lumber went from +8.6% to -8.7%, automotive from 1.8% to 0.6%, computers dropped from 3.5% to 1.8%, electrical goods from 3.1% to 0.6%, and hardware from 3.1% to 1.0%.
Charles Hugh Smith: "The entire key to the U.S. tax code is to tax earned income heavily but tax unearned income (the majority of the Plutocracy's income is of course unearned) not at all or very lightly....The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed "with no consequences." Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support "austerity."
The austerity will not extend to the financial Elites, of course. That's the whole purpose of the con. "Some are more equal than others," indeed.
Mortgage default rates are highest among plus million dollar properties.
Rob Hanna: "One thing traders need to keep in mind in the current environment is that when the market is bouncing off of intermediate-term lows it is more likely to get overbought and STAY overbought than when it’s simply consolidating in a downtrend. Shorting bounces off lows typically carries an extra level of risk because of this."
Russian-owned submersibles would be able to cap the oil leak in the Gulf of Mexico, the captain of one of the vessels has said.
Canadian employment rose by 93,000 in June, pushing the unemployment rate down by 0.2 percentage points to 7.9%, according to data released by Statistics Canada Friday. That's the first sub 8% unemployment rate since January 2009. Economists were expecting 20,000 jobs created and an 8.1% unemployment rate.
Google has renewed its China license, Reuters reported from Shanghai, citing a company spokeswoman.
China's foreign exchange regulator on Friday said the process of balancing international payments was "complex" and warned that large current-account surpluses were unsustainable. The State Administration of Foreign Exchange said in a statement that it struggled to balance international payments and the rapid growth in foreign exchange reserves, particularly as China's current-account-surplus-to-gross-domestic-product ratio swelled above 5% since 2005 and jumped to a record 11% in 2007. "In the long run, both large surplus or deficit is unsustainable large scale," the agency, which is also known as SAFE, said in a statement. The regular said it could handle the mounting surpluses, but noted that China's trade fortunes reversed dramatically in a number of years, a transformation that historically is achieved over decades.
Total debt of consumers is declining at an annual rate of 4.5%.
In the week ending July 7, Lipper reported equity outflows of $11.6 billion!
Those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one. -- President Thomas Jefferson. .
The Bank of Korea raised its benchmark interest rate for the first time since the global crisis, joining counterparts across Asia in removing monetary stimulus as the region leads world growth. The won climbed.
Governor Kim Choong Soo boosted the seven-day repurchase rate to 2.25 percent from a record low 2 percent, the bank said in a statement in Seoul today. An increase was forecast by just four of 14 economists surveyed by Bloomberg News. Investors are already boosting bets on another move.
The Automatic Earth: "In 2009, state and local government debt rose 14.5 percent. U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4 billion of securities, the most since 1992, according to data from Distressed Debt Securities in Miami Lakes, Florida.
“It’s a market where it’s clear that the underlying fundamentals are lousy,” said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc.[..]. “People can say fundamentals don’t matter but I’ve been doing this for 32 years. They do.”
Reuters: Lloyd's of London will not insure or reinsure petroleum shipments going into Iran, the insurance market said on Friday. U.S. President Barack Obama signed into law last week far-reaching new sanctions that aim to squeeze the Islamic Republic's fuel imports and increase its international isolation.
"The U.S. is an important market for Lloyd's and, in recognition of this, the market will not insure or reinsure refined petroleum going into Iran," Lloyd's General Counsel Sean McGovern told Reuters in a statement.
"Lloyd's will always comply with applicable sanctions," McGovern added.
Starting on January 1st in 2012, U.S. federal law will require coin and bullion dealers to report to the Internal Revenue Service all gold and silver coin purchases and sales greater than $600
Obama made his third trip to Nevada to campaign for Harry Reid. I guess that's more important than the jobless economy and the poisoned water in the Gulf etc etc.
Organization of the Petroleum Exporting Countries' (OPEC) crude oil production output averaged 29.12 million barrels per day (b/d) in June, down 160,000 b/d from an estimated 29.28 million b/d in May, according to a just-released Platts survey of OPEC and oil industry officials and analysts.
Lower volumes from Iraq and Nigeria accounted for 110,000 b/d of the 160,000 b/d overall drop.
Thomas Jefferson: "The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first."
Consumer borrowing in the U.S. dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market. Consumer credit has fallen an unprecedented 7 consecutive quarters.
Thursday, July 08, 2010
Consumer Debt
7/8/10 Consumer Debt
U.S. consumers shed some of their debt for the fourth month in a row in May, the Federal Reserve reported Thursday. Total seasonally adjusted consumer debt fell $9.15 billion, or a 4.5% annualized rate, in May to $2.42 trillion. Economists expected a decline. The series is very volatile. April consumer credit was revised sharply lower to a decline of $14.86 billion compared with the initial estimate of a gain of $1 billion. The decline in May was led by revolving credit-card debt, which fell $7.32 billion or 10.5%. This is the 20th straight monthly decline in credit card balances. Non-revolving debt such as auto loans, personal loans and student loans, fell $1.82 billion or 1.4%. Since the collapse of Lehman Brothers in September 2008, consumer credit has declined in 18 out of 20 months.
Initial claims dropped to 454k from 475k. Continuing claims drop by 224,000 to 4,413,000. Also, Not Seasonally Adjusted Claims Rise by 22,560.
The Baltic Dry Index continues to plunge, and is now below 2000, hitting fresh 14 month lows, at 1940.
Damon Vickers of Nine Points Capital : "unless the plunge protection team comes in over the next couple of days, the markets are looking very dicey here."
James C. Fox via ZeroHedge: "Oil and water samples were taken from both the Shores of Grand Isle and from 20 miles out. The preliminary analysis was done at an academic analytical chemistry laboratory. Looking for the likely pollutants from the deep water Horizon Oil spill. It was focused on the detection of benzene and propylene glycol. Benzene and other highly toxic contaminants were very low however the concentration of propylene glycol was between 360 and 440 parts per million. Just 25 parts per million is know to kill most fish and propylene glycol is just one of many ingredients found in Corexit. In short, the Gulf is being poisoned by BP's usage of the dispersants even after the EPA asked them to stop back in May. We are willing to provide ANY respected/known laboratory these samples or provide them with more. This is very serious to all people and marine life in and around the Gulf."
Working gas in storage was 2,762 Bcf as of Friday, July 2, 2010, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 23 Bcf less than last year at this time and 285 Bcf above the 5-year average of 2,477 Bcf. In the East Region, stocks were 64 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 128 Bcf above the 5-year average of 834 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 93 Bcf above the 5-year average after a net addition of 11 Bcf. At 2,762 Bcf, total working gas is within the 5-year historical range.
The consensus was a gain of 73 and natgas declined 15 cents.
The Dow Jones Industrial Average rose 120.71 points, or 1.2%, to end at 10,138.99.The S&P 500 index gained 9.98 points, or 0.9%, to 1,070.25, lifted by a 1.3% advance in both the industrials and energy sectors. The Nasdaq Composite rose 15.93 points, or 0.7%, to 2,175.4
Merck to lay off 16,000 workers.
Japan's Sumitomo Mitsui Financial Group Inc. is aiming to acquire at least a 20% stake in a U.S. bank with a robust wholesale operation in a bid to strengthen its position in the world's leading economy, according to a top executive.
U.S. consumers shed some of their debt for the fourth month in a row in May, the Federal Reserve reported Thursday. Total seasonally adjusted consumer debt fell $9.15 billion, or a 4.5% annualized rate, in May to $2.42 trillion. Economists expected a decline. The series is very volatile. April consumer credit was revised sharply lower to a decline of $14.86 billion compared with the initial estimate of a gain of $1 billion. The decline in May was led by revolving credit-card debt, which fell $7.32 billion or 10.5%. This is the 20th straight monthly decline in credit card balances. Non-revolving debt such as auto loans, personal loans and student loans, fell $1.82 billion or 1.4%. Since the collapse of Lehman Brothers in September 2008, consumer credit has declined in 18 out of 20 months.
Initial claims dropped to 454k from 475k. Continuing claims drop by 224,000 to 4,413,000. Also, Not Seasonally Adjusted Claims Rise by 22,560.
The Baltic Dry Index continues to plunge, and is now below 2000, hitting fresh 14 month lows, at 1940.
Damon Vickers of Nine Points Capital : "unless the plunge protection team comes in over the next couple of days, the markets are looking very dicey here."
James C. Fox via ZeroHedge: "Oil and water samples were taken from both the Shores of Grand Isle and from 20 miles out. The preliminary analysis was done at an academic analytical chemistry laboratory. Looking for the likely pollutants from the deep water Horizon Oil spill. It was focused on the detection of benzene and propylene glycol. Benzene and other highly toxic contaminants were very low however the concentration of propylene glycol was between 360 and 440 parts per million. Just 25 parts per million is know to kill most fish and propylene glycol is just one of many ingredients found in Corexit. In short, the Gulf is being poisoned by BP's usage of the dispersants even after the EPA asked them to stop back in May. We are willing to provide ANY respected/known laboratory these samples or provide them with more. This is very serious to all people and marine life in and around the Gulf."
Working gas in storage was 2,762 Bcf as of Friday, July 2, 2010, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 23 Bcf less than last year at this time and 285 Bcf above the 5-year average of 2,477 Bcf. In the East Region, stocks were 64 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 128 Bcf above the 5-year average of 834 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 93 Bcf above the 5-year average after a net addition of 11 Bcf. At 2,762 Bcf, total working gas is within the 5-year historical range.
The consensus was a gain of 73 and natgas declined 15 cents.
The Dow Jones Industrial Average rose 120.71 points, or 1.2%, to end at 10,138.99.The S&P 500 index gained 9.98 points, or 0.9%, to 1,070.25, lifted by a 1.3% advance in both the industrials and energy sectors. The Nasdaq Composite rose 15.93 points, or 0.7%, to 2,175.4
Merck to lay off 16,000 workers.
Japan's Sumitomo Mitsui Financial Group Inc. is aiming to acquire at least a 20% stake in a U.S. bank with a robust wholesale operation in a bid to strengthen its position in the world's leading economy, according to a top executive.
Wednesday, July 07, 2010
Debt
7/7/10 Debt
US Ends June with $13.2 Trillion in Debt, Adds $210 Billion in Total Debt, On Track to Breach Debt Ceiling in Under Six Months. In case one is wondering why the House Democrats attached a document to the emergency war supplemental bill that "deemed as passed" a non-existent $1.12 trillion budget, which basically allows the ruling party to start spending money for Fiscal Year 2011 without the constraint of an actual budget, here is the answer: on June 30, the US closed the books with just over $13.2 trillion in total debt, an increase of $210 billion in one month, or $2.5 trillion annualized. There is just $1.1 trillion left on the ceiling. As we have long been warning, at the current run rate, the ceiling will be breached in under six months, or just around November 2.
The State Administration of Foreign Exchange ruled out increasing the proportion of gold already held in its reserves. "China has increased its gold holdings by more than 400 tonnes in the past few years to 1,054 tonnes," said Pradeep Unni of Richcomm Global in a note. "Buying more gold would not help much in diversifying China's reserves." China on Wednesday ruled out the "nuclear" option of dumping its vast holdings of U.S. Treasury securities but called on Washington to be a responsible guardian of the dollar.
BP's CEO Tony Hayward is in Abu Dhabi, Zawya Dow Jones reported, citing a person familiar with his timetable. BP shares have gained around 11% this week amid speculation that the oil giant is looking for an investor, possibly from the Middle East, and were up another 3.6% in London on Wednesday. Tony Hayward, BP's embattled chief executive, met with Abu Dhabi's powerful crown prince and would be open to seeing the oil-rich sheikdom buy a stake of up to 10% stake in the U.K. oil giant.
Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.
“Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.
China's Property Market Braces for 30% Drop. Standard Chartered has told clients to prepare for a fall in property prices of up to 30pc in Beijing, Shanghai, Shenzen, and other large cities in China as the delayed effects of monetary tightening begin to bite. Stephen Green, the bank's China economist, said a glut of newly built homes were hitting the market just as buyers are restrained by higher down-payments and curbs on speculation. "We believe developers will be forced to cut prices," he said.
SEMissourian: "THE feds finally allowed four Dutch skimmers into the Gulf capable of scooping up 36,500 barrels of oil each day, or 146,000 barrels per day for all four. The Obama administration would not let these ships sail to the Gulf, even though they were offered four days after the blowout, because the sailors would not be U.S. union workers. Now, after millions of barrels of oil have nearly destroyed our beaches and wildlife sanctuaries, President Obama has somewhat covertly allowed the four ships and a huge skimmer named the Whale (which has not yet passed Coast Guard muster) into the Gulf. The Dutch skimmers take in oil, which floats to the top of containers, pump the floating oil to a sister ship and dispel the water back into the ocean (99 percent clean.) The EPA originally cited regulations against pumping any water with oil, irrespective of the amount or how dirty it was to start with, into the ocean. Makes no difference what environmental gain was accomplished in the process. Folks, our government at work."
Thirty-eight percent of independents approve of the job Barack Obama is doing as president, the first time independent approval of Obama has dropped below 40% in a Gallup Daily tracking weekly aggregate. Meanwhile, Obama maintains the support of 81% of Democrats, and his job approval among Republicans remains low, at 12%.
There are now 9.2 million unemployed Americans who don’t get a penny in financial help, says Jeff Weniger at Harris Private Bank.
For U.S. strip centers, the vacancy rate in the second quarter rose 0.10 percentage point from the first quarter to 10.9 percent, slightly below the 11 percent in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday.
Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space.
That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis.
The Baltic Exchange Dry Index (BDI), which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 5.12 percent, or 109 points, to 2,018 points in its 30th consecutive decline to remain at its lowest since May 5 last year when it fell below the key 2,000 point level.
Family Dollar Stores forecast profit for the fourth quarter below analysts estimates, as the uncertain U.S. economy pressured consumer spending.
The Oil Drum: "Weather over the Gulf of Mexico remains unsettled. The remnants of the tropical low that crossed the northern Gulf (tracked as AL95) is now inland. Another tropical low (being tracked as AL96) has just exited the Yucatan peninsula, and may develop in to a tropical storm in the next day or so. It is already producing waves and winds over the central gulf and Deepwater Horizon response area. Winds will remain over 25 knots at least through tomorrow. Models show AL96 moving along a similar track to Alex, making landfall in northern Mexico or Southern Texas. Therefore, it is highly likely that winds and waves will interfere with cleanup and capture operations through the weekend, but should not interfere with relief well drilling. On the plus side, although low level winds will continue to blow oil on to previously oiled areas in Louisiana, Alabama, and Mississippi, they should keep the oil from spreading further in to Florida. Down side: western Louisiana and Texas may start seeing more oil."
Gary North: "China is not an accident waiting to happen. It is a government-engineered disaster waiting to happen. It is not threatened by a black swan event. It is threatened by the Austrian theory of the business cycle."
Via ZeroHedge: "Historical market data that suggest our current situation resembles very scary periods in times past (i.e., the 1929 crash to be specific) is beginning to pile up. Let's look at the set up from the perspective of charts. Most notably, historically, the value of the S&P500 relative to the price of gold reaches a bottom at roughly 28% (all-time low = 19%). The ratio is currently 94%. Either gold is 3x underpriced, or stocks have 75% downside. - Brandon Ferro, Managing Member, Hevea Partners"
Via Yves Smith: "Recently-retired Shell Oil President John Hofmeister said that the well casing below the sea floor may have been compromised, which could render success from the relief wells less certain:
[Question] What are the chances that the well casing below the sea floor has been compromised, and that gas and oil are coming up the outside of the well casing, eroding the surrounding soft rock. Could this lead to a catastrophic geological failure, unstoppable even by the relief wells?
John Hofmeister: This is what some people fear has occurred. It is also why the “top kill” process was halted. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well.
Hofmeister subsequently told MSNBC:
The question is whether there is enough mechanical structure left at the base of the reservoir to hold the cement when they start pouring cement in [from the relief well]."
China has significantly increased its purchases of Japanese govt bonds as it diversifies its foreign-currency reserves.
China plans new resource tax on coal, oil, gas in Western areas.
Wells Fargo to eliminate 3,800 positions.
The Dow Jones Industrial Average topped 10,000 for the first time since June 29 on a broad market rally Wednesday. The Dow rose 260 points, or 2.7%, to 10,002 in recent activity. Other major indices joined the rally with the S&P 500 up 2.9% to 1,058, and the Nasdaq up 2.9% to 2,154.
US Ends June with $13.2 Trillion in Debt, Adds $210 Billion in Total Debt, On Track to Breach Debt Ceiling in Under Six Months. In case one is wondering why the House Democrats attached a document to the emergency war supplemental bill that "deemed as passed" a non-existent $1.12 trillion budget, which basically allows the ruling party to start spending money for Fiscal Year 2011 without the constraint of an actual budget, here is the answer: on June 30, the US closed the books with just over $13.2 trillion in total debt, an increase of $210 billion in one month, or $2.5 trillion annualized. There is just $1.1 trillion left on the ceiling. As we have long been warning, at the current run rate, the ceiling will be breached in under six months, or just around November 2.
The State Administration of Foreign Exchange ruled out increasing the proportion of gold already held in its reserves. "China has increased its gold holdings by more than 400 tonnes in the past few years to 1,054 tonnes," said Pradeep Unni of Richcomm Global in a note. "Buying more gold would not help much in diversifying China's reserves." China on Wednesday ruled out the "nuclear" option of dumping its vast holdings of U.S. Treasury securities but called on Washington to be a responsible guardian of the dollar.
BP's CEO Tony Hayward is in Abu Dhabi, Zawya Dow Jones reported, citing a person familiar with his timetable. BP shares have gained around 11% this week amid speculation that the oil giant is looking for an investor, possibly from the Middle East, and were up another 3.6% in London on Wednesday. Tony Hayward, BP's embattled chief executive, met with Abu Dhabi's powerful crown prince and would be open to seeing the oil-rich sheikdom buy a stake of up to 10% stake in the U.K. oil giant.
Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.
“Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.
China's Property Market Braces for 30% Drop. Standard Chartered has told clients to prepare for a fall in property prices of up to 30pc in Beijing, Shanghai, Shenzen, and other large cities in China as the delayed effects of monetary tightening begin to bite. Stephen Green, the bank's China economist, said a glut of newly built homes were hitting the market just as buyers are restrained by higher down-payments and curbs on speculation. "We believe developers will be forced to cut prices," he said.
SEMissourian: "THE feds finally allowed four Dutch skimmers into the Gulf capable of scooping up 36,500 barrels of oil each day, or 146,000 barrels per day for all four. The Obama administration would not let these ships sail to the Gulf, even though they were offered four days after the blowout, because the sailors would not be U.S. union workers. Now, after millions of barrels of oil have nearly destroyed our beaches and wildlife sanctuaries, President Obama has somewhat covertly allowed the four ships and a huge skimmer named the Whale (which has not yet passed Coast Guard muster) into the Gulf. The Dutch skimmers take in oil, which floats to the top of containers, pump the floating oil to a sister ship and dispel the water back into the ocean (99 percent clean.) The EPA originally cited regulations against pumping any water with oil, irrespective of the amount or how dirty it was to start with, into the ocean. Makes no difference what environmental gain was accomplished in the process. Folks, our government at work."
Thirty-eight percent of independents approve of the job Barack Obama is doing as president, the first time independent approval of Obama has dropped below 40% in a Gallup Daily tracking weekly aggregate. Meanwhile, Obama maintains the support of 81% of Democrats, and his job approval among Republicans remains low, at 12%.
There are now 9.2 million unemployed Americans who don’t get a penny in financial help, says Jeff Weniger at Harris Private Bank.
For U.S. strip centers, the vacancy rate in the second quarter rose 0.10 percentage point from the first quarter to 10.9 percent, slightly below the 11 percent in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday.
Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space.
That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis.
The Baltic Exchange Dry Index (BDI), which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 5.12 percent, or 109 points, to 2,018 points in its 30th consecutive decline to remain at its lowest since May 5 last year when it fell below the key 2,000 point level.
Family Dollar Stores forecast profit for the fourth quarter below analysts estimates, as the uncertain U.S. economy pressured consumer spending.
The Oil Drum: "Weather over the Gulf of Mexico remains unsettled. The remnants of the tropical low that crossed the northern Gulf (tracked as AL95) is now inland. Another tropical low (being tracked as AL96) has just exited the Yucatan peninsula, and may develop in to a tropical storm in the next day or so. It is already producing waves and winds over the central gulf and Deepwater Horizon response area. Winds will remain over 25 knots at least through tomorrow. Models show AL96 moving along a similar track to Alex, making landfall in northern Mexico or Southern Texas. Therefore, it is highly likely that winds and waves will interfere with cleanup and capture operations through the weekend, but should not interfere with relief well drilling. On the plus side, although low level winds will continue to blow oil on to previously oiled areas in Louisiana, Alabama, and Mississippi, they should keep the oil from spreading further in to Florida. Down side: western Louisiana and Texas may start seeing more oil."
Gary North: "China is not an accident waiting to happen. It is a government-engineered disaster waiting to happen. It is not threatened by a black swan event. It is threatened by the Austrian theory of the business cycle."
Via ZeroHedge: "Historical market data that suggest our current situation resembles very scary periods in times past (i.e., the 1929 crash to be specific) is beginning to pile up. Let's look at the set up from the perspective of charts. Most notably, historically, the value of the S&P500 relative to the price of gold reaches a bottom at roughly 28% (all-time low = 19%). The ratio is currently 94%. Either gold is 3x underpriced, or stocks have 75% downside. - Brandon Ferro, Managing Member, Hevea Partners"
Via Yves Smith: "Recently-retired Shell Oil President John Hofmeister said that the well casing below the sea floor may have been compromised, which could render success from the relief wells less certain:
[Question] What are the chances that the well casing below the sea floor has been compromised, and that gas and oil are coming up the outside of the well casing, eroding the surrounding soft rock. Could this lead to a catastrophic geological failure, unstoppable even by the relief wells?
John Hofmeister: This is what some people fear has occurred. It is also why the “top kill” process was halted. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well.
Hofmeister subsequently told MSNBC:
The question is whether there is enough mechanical structure left at the base of the reservoir to hold the cement when they start pouring cement in [from the relief well]."
China has significantly increased its purchases of Japanese govt bonds as it diversifies its foreign-currency reserves.
China plans new resource tax on coal, oil, gas in Western areas.
Wells Fargo to eliminate 3,800 positions.
The Dow Jones Industrial Average topped 10,000 for the first time since June 29 on a broad market rally Wednesday. The Dow rose 260 points, or 2.7%, to 10,002 in recent activity. Other major indices joined the rally with the S&P 500 up 2.9% to 1,058, and the Nasdaq up 2.9% to 2,154.
Tuesday, July 06, 2010
Arsenic
7/6/10 Arsenic
ANI: "A new research has found that oil spills can increase levels of toxic arsenic in the ocean, creating an additional long-term threat to the marine ecosystem.
Arsenic is a poisonous chemical element found in minerals and it is present in oil. High levels of arsenic in seawater can enable the toxin to enter the food chain.
It can disrupt the photosynthesis process in marine plants and increase the chances of genetic alterations that can cause birth defects and behavioural changes in aquatic life.
It can also kill animals such as birds that feed on sea creatures affected by arsenic.
A team from Imperial College London has discovered that oil spills can partially block the ocean's natural filtration system and prevent this from cleaning arsenic out of the seawater.
The researchers say their study sheds light on a new toxic threat from the Gulf of Mexico oil leak.
Arsenic occurs naturally in the ocean, but sediments on the sea floor filter it out of seawater, which keeps the levels of naturally occurring arsenic low.
However, arsenic is also flushed into the ocean in wastewater from oil rigs and from accidental oil spills and leakages from underground oil reservoirs.
In the study, the researchers discovered that oil spills and leakages clog up sediments on the ocean floor with oil, which prevents the sediments from bonding with arsenic and burying it safely underground with subsequent layers of sediment.
The scientists say this shutdown of the natural filtration system causes arsenic levels in seawater to rise, which means that it can enter the marine ecosystem, where it becomes more concentrated and poisonous the further it moves up the food chain.
The scientists say their work demonstrates how the chemistry of sediments in the Gulf of Mexico may be affected by the current oil leak.
"We can't accurately measure how much arsenic is in the Gulf at the moment because the spill is ongoing. However, the real danger lies in arsenic's ability to accumulate, which means that each subsequent spill raises the levels of this pollutant in seawater. Our study is a timely reminder that oil spills could create a toxic ticking time bomb, which could threaten the fabric of the marine ecosystem in the future," Professor Mark Sephton, from the Department of Earth Science and Engineering at Imperial College London, said.
The study has been published in the journal Water Research. (ANI)"
Ronald Barnes: "I have been following the BP oil spill and have got some disturbing information: There are gases escaping with the oil that the major media are not mentioning.
The gases are benzene, hydrogen sulfide and methylene chloride, which the U.S. Environmental Protection Agency has measured to be way above safe levels for humans. That people working in the area are getting very sick seems to be ignored by the media, too.
Nalco, a company with close ties to BP, is providing Corexit 9500 – a chemical that contains cyanide, arsenic, mercury, cadmium and chromium – as a dispersant in the amount of a million gallons.
The EPA has suggested much safer chemicals to use, but BP refuses, and it seems no one can do anything about it. This chemical has been banned in Britain.
John Hussman: "As of last week, the Market Climate for stocks remained characterized by unfavorable valuations and unfavorable market action. The stock market is certainly oversold on a short term basis, but we're also seeing a tendency toward accelerating volatility at 10-minute intervals, which I've previously noted can be associated with abrupt episodes of illiquidity. Technicians are very attentive here to a large "head-and-shoulders" pattern which has now completed a (predictably) truncated right shoulder. While we don't put any weight on such patterns, it is often helpful to monitor levels that a large number of traders might consider to be support or resistance. To that end, the area about 1040 on the S&P 500 was the previous widely observed level of "support." Having broken below a major support level, it is somewhat obligatory, if not entirely reliable, for the market to advance back to that prior level of support if only briefly. It would not be surprising to observe that attempt, but beyond that, it is asking rather much to expect investors to drive the market substantially higher simply to clear an oversold condition, when the economic evidence is souring so rapidly at the same time. Suffice it to say that we're not trying to "trade a rebound" or "buy the dip."
The overwhelming risk at present is that we are in what I've called the "recognition phase" where economic reality and earnings guidance deviates substantially from the expectations that have been priced into stocks. Two phases of a market downturn are generally the most hostile. The recognition phase and the capitulation (or "revulsion") phase. This market is nowhere near completing the shift in psychology that one would expect in a recognition phase, much less a capitulation phase. At worst, we see reports like "A few naysayers are worried about a double dip, but this can be ignored because double dips are rare." We will be fine, and even willing to shift to a moderately constructive position if we observe a sufficient reversal in market internals and economic statistics. But here and now, the strongest indications are highly defensive, and the required shift in evidence - at least at present - would have to be so broad that it appears unlikely."
Total Eclipse Sunday July 11 Will Fall on Easter Island
BBC:
Leading shipping lines are warning of an acute shortage of steel containers that carry cargo on ships, which could damage the industry's fragile recovery.
Demand for containers fell during the economic downturn with even the largest carriers failing to order more.
Default speculation drove municipal bond yields to a 13- month high relative to U.S. Treasuries in the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look into the issue, according to spokeswoman Michele Heller.
China's property market is beginning a "collapse" that will hit the nation's banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.
June ISM Non-Manufacturing Index: 53.8 vs. 54.9 expected and 55.4 prior (>50 denotes expansion). Prices index fell to 53.8 from 60.6. Employment fell to 49.7 from 50.4. New orders fell to 54.4 from 57.1.
Tar balls on a Texas beach are the first sign that the oil spill has reached all five Gulf states.
The EURUSD surges to another fresh intraday high of 1.2629.
ZeroHedge: "The Baltic Dry index paints a far more dire picture: the BDIY plunged 4% overnight to 2,127, posting the longest consecutive decline in 6 years at 28 days. Despite the optimism from the conflicted money printers, those whose livelihood actually depends on a ceaseless influx of goods into China and broader commodity trading in general, are not nearly quite so happy, having seen a drop in their margins by almost 50% in just over a month."
"Forecasters at the hurricane center were also keeping close watch over an area of disturbed weather in the southeastern Gulf that could strengthen into a tropical depression later this week, potentially hampering oil spill clean-up efforts."
The federal government is suing to stop Arizona's new immigration law, setting the stage for a clash between the federal government and state over the nation's toughest immigration crackdown.
After rising 171 points, the Dow gave up all but 57 points of the gain. The Nasdaq finished up 2 and the S&P plus 5.
Agricultural Bank of China priced its Hong Kong and Shanghai dual listing on Tuesday, a deal that would break all IPO records by raising more than $22 billion when adding in over-allotment shares.
SEARCH
ANI: "A new research has found that oil spills can increase levels of toxic arsenic in the ocean, creating an additional long-term threat to the marine ecosystem.
Arsenic is a poisonous chemical element found in minerals and it is present in oil. High levels of arsenic in seawater can enable the toxin to enter the food chain.
It can disrupt the photosynthesis process in marine plants and increase the chances of genetic alterations that can cause birth defects and behavioural changes in aquatic life.
It can also kill animals such as birds that feed on sea creatures affected by arsenic.
A team from Imperial College London has discovered that oil spills can partially block the ocean's natural filtration system and prevent this from cleaning arsenic out of the seawater.
The researchers say their study sheds light on a new toxic threat from the Gulf of Mexico oil leak.
Arsenic occurs naturally in the ocean, but sediments on the sea floor filter it out of seawater, which keeps the levels of naturally occurring arsenic low.
However, arsenic is also flushed into the ocean in wastewater from oil rigs and from accidental oil spills and leakages from underground oil reservoirs.
In the study, the researchers discovered that oil spills and leakages clog up sediments on the ocean floor with oil, which prevents the sediments from bonding with arsenic and burying it safely underground with subsequent layers of sediment.
The scientists say this shutdown of the natural filtration system causes arsenic levels in seawater to rise, which means that it can enter the marine ecosystem, where it becomes more concentrated and poisonous the further it moves up the food chain.
The scientists say their work demonstrates how the chemistry of sediments in the Gulf of Mexico may be affected by the current oil leak.
"We can't accurately measure how much arsenic is in the Gulf at the moment because the spill is ongoing. However, the real danger lies in arsenic's ability to accumulate, which means that each subsequent spill raises the levels of this pollutant in seawater. Our study is a timely reminder that oil spills could create a toxic ticking time bomb, which could threaten the fabric of the marine ecosystem in the future," Professor Mark Sephton, from the Department of Earth Science and Engineering at Imperial College London, said.
The study has been published in the journal Water Research. (ANI)"
Ronald Barnes: "I have been following the BP oil spill and have got some disturbing information: There are gases escaping with the oil that the major media are not mentioning.
The gases are benzene, hydrogen sulfide and methylene chloride, which the U.S. Environmental Protection Agency has measured to be way above safe levels for humans. That people working in the area are getting very sick seems to be ignored by the media, too.
Nalco, a company with close ties to BP, is providing Corexit 9500 – a chemical that contains cyanide, arsenic, mercury, cadmium and chromium – as a dispersant in the amount of a million gallons.
The EPA has suggested much safer chemicals to use, but BP refuses, and it seems no one can do anything about it. This chemical has been banned in Britain.
John Hussman: "As of last week, the Market Climate for stocks remained characterized by unfavorable valuations and unfavorable market action. The stock market is certainly oversold on a short term basis, but we're also seeing a tendency toward accelerating volatility at 10-minute intervals, which I've previously noted can be associated with abrupt episodes of illiquidity. Technicians are very attentive here to a large "head-and-shoulders" pattern which has now completed a (predictably) truncated right shoulder. While we don't put any weight on such patterns, it is often helpful to monitor levels that a large number of traders might consider to be support or resistance. To that end, the area about 1040 on the S&P 500 was the previous widely observed level of "support." Having broken below a major support level, it is somewhat obligatory, if not entirely reliable, for the market to advance back to that prior level of support if only briefly. It would not be surprising to observe that attempt, but beyond that, it is asking rather much to expect investors to drive the market substantially higher simply to clear an oversold condition, when the economic evidence is souring so rapidly at the same time. Suffice it to say that we're not trying to "trade a rebound" or "buy the dip."
The overwhelming risk at present is that we are in what I've called the "recognition phase" where economic reality and earnings guidance deviates substantially from the expectations that have been priced into stocks. Two phases of a market downturn are generally the most hostile. The recognition phase and the capitulation (or "revulsion") phase. This market is nowhere near completing the shift in psychology that one would expect in a recognition phase, much less a capitulation phase. At worst, we see reports like "A few naysayers are worried about a double dip, but this can be ignored because double dips are rare." We will be fine, and even willing to shift to a moderately constructive position if we observe a sufficient reversal in market internals and economic statistics. But here and now, the strongest indications are highly defensive, and the required shift in evidence - at least at present - would have to be so broad that it appears unlikely."
Total Eclipse Sunday July 11 Will Fall on Easter Island
BBC:
Leading shipping lines are warning of an acute shortage of steel containers that carry cargo on ships, which could damage the industry's fragile recovery.
Demand for containers fell during the economic downturn with even the largest carriers failing to order more.
Default speculation drove municipal bond yields to a 13- month high relative to U.S. Treasuries in the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look into the issue, according to spokeswoman Michele Heller.
China's property market is beginning a "collapse" that will hit the nation's banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.
June ISM Non-Manufacturing Index: 53.8 vs. 54.9 expected and 55.4 prior (>50 denotes expansion). Prices index fell to 53.8 from 60.6. Employment fell to 49.7 from 50.4. New orders fell to 54.4 from 57.1.
Tar balls on a Texas beach are the first sign that the oil spill has reached all five Gulf states.
The EURUSD surges to another fresh intraday high of 1.2629.
ZeroHedge: "The Baltic Dry index paints a far more dire picture: the BDIY plunged 4% overnight to 2,127, posting the longest consecutive decline in 6 years at 28 days. Despite the optimism from the conflicted money printers, those whose livelihood actually depends on a ceaseless influx of goods into China and broader commodity trading in general, are not nearly quite so happy, having seen a drop in their margins by almost 50% in just over a month."
"Forecasters at the hurricane center were also keeping close watch over an area of disturbed weather in the southeastern Gulf that could strengthen into a tropical depression later this week, potentially hampering oil spill clean-up efforts."
The federal government is suing to stop Arizona's new immigration law, setting the stage for a clash between the federal government and state over the nation's toughest immigration crackdown.
After rising 171 points, the Dow gave up all but 57 points of the gain. The Nasdaq finished up 2 and the S&P plus 5.
Agricultural Bank of China priced its Hong Kong and Shanghai dual listing on Tuesday, a deal that would break all IPO records by raising more than $22 billion when adding in over-allotment shares.
SEARCH
Monday, July 05, 2010
Robert Prechter
7/5/10 Robert Prechter
Robert Prechter is convinced that we have entered a market decline of staggering proportions, perhaps the biggest of the last 300 years, the NY Times reports.
Steve Keen via Yves Smith: "Firstly, the contribution to demand from rising private debt was far greater during the recent boom than during the Roaring Twenties—accounting for over 22% of aggregate demand versus a mere 8.7% in 1928. Secondly, the fall-off in debt-financed demand since the date of Peak Debt has been far sharper now than in the 1930s: in the 2 1/2 years since it began, we have gone from a positive 22% contribution to negative 20%; the comparable figure in 1931 (the equivalent date back then) was minus 12%.5 Thirdly, the rate of decline in debt-financed demand shows no signs of abating: deleveraging appears unlikely to stabilize any time soon.
Finally, the addition of government debt to the picture emphasizes the crucial role that fiscal policy has played in attenuating the decline in private sector demand (reducing the net impact of changing debt to minus 8%), and the speed with which the Government reacted to this crisis, compared to the 1930s. But even with the Government’s contribution, we are still on a similar trajectory to the Great Depression.
What we haven’t yet experienced—at least in a sustained manner—is deflation. That, combined with the enormous fiscal stimulus, may explain why unemployment has stabilized to some degree now despite sustained private sector deleveraging, whereas it rose consistently in the 1930s…."
Libya should buy a stake in oil giant BP, according to the country's top oil official, Dow Jones Newswires reported. Shokri Ghanem, Chairman of Libya's Nation Oil Co., told the news service that he will recommend buying a stake in BP to the Libyan Investment Authority to take advantage of BP's weak share price. BP shares were up 4.8% in London.
China upwardly revised its current account surplus for the first quarter to $53.6 billion, an increase of 31% from its earlier estimate of $40.9 billion, the State Administration of Foreign Exchange, the nation's foreign exchange regulator, said in a statement on its website Monday. The figure, though higher than earlier thought, was still down 32% from a year earlier, Safe said.
BP said Monday that the cost of the response to the oil spill in the Gulf of Mexico has reached $3.12 billion and that so far it has received 95,000 claims and made around 47,000 payments. BP, which collected or flared 25,198 barrels of oil from the spill on Saturday, said preparations are continuing for the next step in the containment operations. Shareholders in British oil company BP balked at reports it would seek urgent investment from a wealthy Middle East or Asian country as clean-up costs for its U.S. oil spill topped $3 billion.
Robert McHugh: "Major markets worldwide are plunging, with downside targets suggesting many indices could eventually approach zero, believe it or not. We are starting the second leg of one of the worst Bear Markets ever. The second leg of Bear markets sees the worst. This is a Grand Supercycle degree Bear Market, correcting a wave {III} rally from the 1,700's. It will be one for the ages, and will likely usher in major political changes. What those political changes are is anyone's guess, however we would not be surprised if one change involves a powerful attempt, which could be successful, in uniting western nations into a new super-sovereign nation-state. America's founding fathers must be turning in their graves. This economy is in deep trouble. Why? Because the Central Planners forgot about the American Household, forgot about their need for cash, failed to pass a massive income tax rebate, failed to repeal property taxes, failed to grease the primary spending pump, the American Consumer. Now we are getting the second and most dangerous phase of the Bear Market, catastrophic wave (C) down. It is just starting."
Robert Prechter: “I’m saying: ‘Winter is coming. Buy a coat,’ ” he said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”
The Oil Drum: "Premier Wen Jiabao has promised to use an “iron hand” this summer to make his nation more energy efficient. The central government has ordered cities to close inefficient factories by September, like the vast Guangzhou Steel mill here, where most of the 6,000 workers will be laid off or pushed into early retirement.
Already, in the last three years, China has shut down more than a thousand older coal-fired power plants that used technology of the sort still common in the United States. China has also surpassed the rest of the world as the biggest investor in wind turbines and other clean energy technology. And it has dictated tough new energy standards for lighting and gas mileage for cars.
But even as Beijing imposes the world’s most rigorous national energy campaign, the effort is being overwhelmed by the billionfold demands of Chinese consumers.
Chinese and Western energy experts worry that China’s energy challenge could become the world’s problem — possibly dooming any international efforts to place meaningful limits on global warming.
If China cannot meet its own energy-efficiency targets, the chances of avoiding widespread environmental damage from rising temperatures “are very close to zero,” said Fatih Birol, the chief economist of the International Energy Agency in Paris."
Naked Capitalism: "Professor Mark Sephton, from the Department of Earth Science and Engineering at Imperial College London, says:
"We can't accurately measure how much arsenic is in the Gulf at the moment because the spill is ongoing. However, the real danger lies in arsenic's ability to accumulate, which means that each subsequent spill raises the levels of this pollutant in seawater. Our study is a timely reminder that oil spills could create a toxic ticking time bomb, which could threaten the fabric of the marine ecosystem in the future."
Wimolporn Wainipee, postgraduate and lead author of the study from the Department of Earth Science and Engineering at Imperial College London, adds:
"We carried out our study before the leak in the Gulf of Mexico occurred, but it gives us a big insight into a potential new environmental danger in the region. Thousands of gallons of oil are leaked into the world's oceans every year from big spills, offshore drilling and routine maintenance of rigs, which means many places may be at risk from rising arsenic levels, which could in the long run affect aquatic life, plants and the people who rely on the oceans for their livelihoods."
"Since last week, our planes have been refused fuel at . last week, our planes have been refused fuel at airports in Britain, Germany and UAE because of the sanctions imposed by America," Mehdi Aliyari, Secretary of the Iranian Airlines Union, told Iran's ISNA news agency.
World stocks measured by MSCI All-Country World Index dipped 0.2 percent after losing nearly 4 percent last week. The index has lost 16.2 percent since mid-April, and is down 11 percent for the year.
The index carried a one-year forward price-to-earnings ratio of 11.9, a level last seen in April 2009 and well below its 10-year average of 15.42, according to Thomson Reuters DataStream.
By comparison, MSCI emerging equities index had a one-year forward P/E of 10.76, in line with its 10-year average of 10.8, DataStream showed.
U.S. crude oil futures fostered losses Monday, with crude for August delivery down 62 cents to $71.52 a barrel. The commodity continued trading Monday as the rest of the New York Stock Exchange took a hiatus for Independence Day. Monday's and Tuesday's trading sessions will be combined into a single settlement price on July 6. Crude-oil futures on Friday fell to their lowest level in nearly a month, a lackluster end of a week that brought oil down 8.5%. It was the biggest drop in eight weeks.
Robert Prechter is convinced that we have entered a market decline of staggering proportions, perhaps the biggest of the last 300 years, the NY Times reports.
Steve Keen via Yves Smith: "Firstly, the contribution to demand from rising private debt was far greater during the recent boom than during the Roaring Twenties—accounting for over 22% of aggregate demand versus a mere 8.7% in 1928. Secondly, the fall-off in debt-financed demand since the date of Peak Debt has been far sharper now than in the 1930s: in the 2 1/2 years since it began, we have gone from a positive 22% contribution to negative 20%; the comparable figure in 1931 (the equivalent date back then) was minus 12%.5 Thirdly, the rate of decline in debt-financed demand shows no signs of abating: deleveraging appears unlikely to stabilize any time soon.
Finally, the addition of government debt to the picture emphasizes the crucial role that fiscal policy has played in attenuating the decline in private sector demand (reducing the net impact of changing debt to minus 8%), and the speed with which the Government reacted to this crisis, compared to the 1930s. But even with the Government’s contribution, we are still on a similar trajectory to the Great Depression.
What we haven’t yet experienced—at least in a sustained manner—is deflation. That, combined with the enormous fiscal stimulus, may explain why unemployment has stabilized to some degree now despite sustained private sector deleveraging, whereas it rose consistently in the 1930s…."
Libya should buy a stake in oil giant BP, according to the country's top oil official, Dow Jones Newswires reported. Shokri Ghanem, Chairman of Libya's Nation Oil Co., told the news service that he will recommend buying a stake in BP to the Libyan Investment Authority to take advantage of BP's weak share price. BP shares were up 4.8% in London.
China upwardly revised its current account surplus for the first quarter to $53.6 billion, an increase of 31% from its earlier estimate of $40.9 billion, the State Administration of Foreign Exchange, the nation's foreign exchange regulator, said in a statement on its website Monday. The figure, though higher than earlier thought, was still down 32% from a year earlier, Safe said.
BP said Monday that the cost of the response to the oil spill in the Gulf of Mexico has reached $3.12 billion and that so far it has received 95,000 claims and made around 47,000 payments. BP, which collected or flared 25,198 barrels of oil from the spill on Saturday, said preparations are continuing for the next step in the containment operations. Shareholders in British oil company BP balked at reports it would seek urgent investment from a wealthy Middle East or Asian country as clean-up costs for its U.S. oil spill topped $3 billion.
Robert McHugh: "Major markets worldwide are plunging, with downside targets suggesting many indices could eventually approach zero, believe it or not. We are starting the second leg of one of the worst Bear Markets ever. The second leg of Bear markets sees the worst. This is a Grand Supercycle degree Bear Market, correcting a wave {III} rally from the 1,700's. It will be one for the ages, and will likely usher in major political changes. What those political changes are is anyone's guess, however we would not be surprised if one change involves a powerful attempt, which could be successful, in uniting western nations into a new super-sovereign nation-state. America's founding fathers must be turning in their graves. This economy is in deep trouble. Why? Because the Central Planners forgot about the American Household, forgot about their need for cash, failed to pass a massive income tax rebate, failed to repeal property taxes, failed to grease the primary spending pump, the American Consumer. Now we are getting the second and most dangerous phase of the Bear Market, catastrophic wave (C) down. It is just starting."
Robert Prechter: “I’m saying: ‘Winter is coming. Buy a coat,’ ” he said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”
The Oil Drum: "Premier Wen Jiabao has promised to use an “iron hand” this summer to make his nation more energy efficient. The central government has ordered cities to close inefficient factories by September, like the vast Guangzhou Steel mill here, where most of the 6,000 workers will be laid off or pushed into early retirement.
Already, in the last three years, China has shut down more than a thousand older coal-fired power plants that used technology of the sort still common in the United States. China has also surpassed the rest of the world as the biggest investor in wind turbines and other clean energy technology. And it has dictated tough new energy standards for lighting and gas mileage for cars.
But even as Beijing imposes the world’s most rigorous national energy campaign, the effort is being overwhelmed by the billionfold demands of Chinese consumers.
Chinese and Western energy experts worry that China’s energy challenge could become the world’s problem — possibly dooming any international efforts to place meaningful limits on global warming.
If China cannot meet its own energy-efficiency targets, the chances of avoiding widespread environmental damage from rising temperatures “are very close to zero,” said Fatih Birol, the chief economist of the International Energy Agency in Paris."
Naked Capitalism: "Professor Mark Sephton, from the Department of Earth Science and Engineering at Imperial College London, says:
"We can't accurately measure how much arsenic is in the Gulf at the moment because the spill is ongoing. However, the real danger lies in arsenic's ability to accumulate, which means that each subsequent spill raises the levels of this pollutant in seawater. Our study is a timely reminder that oil spills could create a toxic ticking time bomb, which could threaten the fabric of the marine ecosystem in the future."
Wimolporn Wainipee, postgraduate and lead author of the study from the Department of Earth Science and Engineering at Imperial College London, adds:
"We carried out our study before the leak in the Gulf of Mexico occurred, but it gives us a big insight into a potential new environmental danger in the region. Thousands of gallons of oil are leaked into the world's oceans every year from big spills, offshore drilling and routine maintenance of rigs, which means many places may be at risk from rising arsenic levels, which could in the long run affect aquatic life, plants and the people who rely on the oceans for their livelihoods."
"Since last week, our planes have been refused fuel at . last week, our planes have been refused fuel at airports in Britain, Germany and UAE because of the sanctions imposed by America," Mehdi Aliyari, Secretary of the Iranian Airlines Union, told Iran's ISNA news agency.
World stocks measured by MSCI All-Country World Index dipped 0.2 percent after losing nearly 4 percent last week. The index has lost 16.2 percent since mid-April, and is down 11 percent for the year.
The index carried a one-year forward price-to-earnings ratio of 11.9, a level last seen in April 2009 and well below its 10-year average of 15.42, according to Thomson Reuters DataStream.
By comparison, MSCI emerging equities index had a one-year forward P/E of 10.76, in line with its 10-year average of 10.8, DataStream showed.
U.S. crude oil futures fostered losses Monday, with crude for August delivery down 62 cents to $71.52 a barrel. The commodity continued trading Monday as the rest of the New York Stock Exchange took a hiatus for Independence Day. Monday's and Tuesday's trading sessions will be combined into a single settlement price on July 6. Crude-oil futures on Friday fell to their lowest level in nearly a month, a lackluster end of a week that brought oil down 8.5%. It was the biggest drop in eight weeks.
Saturday, July 03, 2010
Birth/Death Model
7/3/10 Birth/Death Model
Doug Noland: "In the markets, financial conditions continue to tighten, although this flies in the face of conventional thinking that near-zero Fed funds and ultra-low Treasury yields equate to "easy money." Risk aversion is increasingly entrenched, which ensures that "money" is becoming a lot less easy to come by. In particular, the leveraged players continue to be stung - hurt by faltering global risk markets, illiquidity, and acute instability throughout.
And with policymakers - fiscal and monetary - at this point largely hamstrung, one is hard-pressed to fashion a scenario where the leveraged players are anytime soon incited into re-risking and re-leveraging. Over the past couple of months, the speculator community has gone from playing government-induced reflation for all it's worth - to wishing they could somehow unwind long positions and perhaps even go short. When the markets' marginal source of liquidity is in the process of changing from leveraged long to bearishly short, the marketplace faces a period of tough conditions."
The Oil Drum: "When drivers hit the road in large numbers for the Fourth of July holiday, they will have something extra to celebrate — the lowest gasoline taxes since the early days of the automobile.
Holiday drivers will pay less than ever at the pump for upkeep of the nation's roads — just $19 in gas taxes for every 1,000 miles driven, a USA TODAY analysis finds. That's a new low in inflation-adjusted dollars, half what drivers paid in 1975.
Another measure of the trend: Americans spent just 46 cents on gas taxes for every $100 of income in the first quarter of 2010. That's the lowest rate since the government began keeping track in 1929. By comparison, Americans spent $1.18 in 1970 on gas taxes out of every $100 earned.
Although the federal gas tax — 18.4 cents per gallon — hasn't changed since 1993, tax collections are down because today's vehicles go farther on a gallon of gas, cutting tax collections while increasing wear and tear on highways. Inflation since 1993 has eroded the value of the tax to maintain roads."
Utilizing the birth/death model, the BLS stated that 362,000 jobs were created out of thin air in May and June.
Doug Noland: "In the markets, financial conditions continue to tighten, although this flies in the face of conventional thinking that near-zero Fed funds and ultra-low Treasury yields equate to "easy money." Risk aversion is increasingly entrenched, which ensures that "money" is becoming a lot less easy to come by. In particular, the leveraged players continue to be stung - hurt by faltering global risk markets, illiquidity, and acute instability throughout.
And with policymakers - fiscal and monetary - at this point largely hamstrung, one is hard-pressed to fashion a scenario where the leveraged players are anytime soon incited into re-risking and re-leveraging. Over the past couple of months, the speculator community has gone from playing government-induced reflation for all it's worth - to wishing they could somehow unwind long positions and perhaps even go short. When the markets' marginal source of liquidity is in the process of changing from leveraged long to bearishly short, the marketplace faces a period of tough conditions."
The Oil Drum: "When drivers hit the road in large numbers for the Fourth of July holiday, they will have something extra to celebrate — the lowest gasoline taxes since the early days of the automobile.
Holiday drivers will pay less than ever at the pump for upkeep of the nation's roads — just $19 in gas taxes for every 1,000 miles driven, a USA TODAY analysis finds. That's a new low in inflation-adjusted dollars, half what drivers paid in 1975.
Another measure of the trend: Americans spent just 46 cents on gas taxes for every $100 of income in the first quarter of 2010. That's the lowest rate since the government began keeping track in 1929. By comparison, Americans spent $1.18 in 1970 on gas taxes out of every $100 earned.
Although the federal gas tax — 18.4 cents per gallon — hasn't changed since 1993, tax collections are down because today's vehicles go farther on a gallon of gas, cutting tax collections while increasing wear and tear on highways. Inflation since 1993 has eroded the value of the tax to maintain roads."
Utilizing the birth/death model, the BLS stated that 362,000 jobs were created out of thin air in May and June.
Friday, July 02, 2010
BP
7/2/10 Part 2: BP
China's announcement of live-fire exercises in the East China Sea to counter planned joint South Korea-US exercises in the Yellow Sea between the Korean Peninsula and China is an indication that China is more willing to play the military card than it has been before.
BP is understood to be in talks with the state-owned China National Offshore Oil Corporation (CNOOC) about selling its 60pc stake in Pan America. BP is looking to sell $10bn of non-core exploration and production assets, so this potential disposal would mean it would almost hit this target in a single transaction. It is understood that BP has sent its partners in the leaking well huge invoices for their share of the clean-up on June 6, which are due to be paid on Tuesday. Anadarko received one for $272m and Mitsui for $110m. Anadarko has accused BP of "reckless behaviour" and is likely to refuse to bear its share. However, a source close to BP said the company believes that Mitsui may be more compliant.
According to a report early Friday by Bloomberg News, Sanofi's chief executive officer has informed the Sanofi's board that the company was in preliminary negotiations to acquire a U.S.-based drug maker for around $20 billion. Shares of Allergan, Genzyme and Biogen were all up at least 5%.
The Dow Jones Industrial Average lost 46.05 points, or 0.5%, to 9,686.48, with all but four components ending lower. The S&P 500 fell 4.8 points, or 0.5%, to 1,022.58. The Nasdaq Composite fell 9.57 points, or 0.5%, to 2,091.79. For the week, the Dow lost 4.51%, the S&P 500 fell 5.03%, and the Nasdaq Composite sank 5.92%.
Investors in BP expect to see a change in its leadership, with a shake-up possible once the oil giant's leaking well in the Gulf of Mexico is capped, the Financial Times reported on Friday, citing leading shareholders and people close to the group.
A management change, with both Chief Executive Tony Hayward's and Chairman Carl-Henric Svanberg's jobs in jeopardy, could come when BP announces a capital raise, the paper said, citing an unnamed source close to the company.
Without steps to steady the ship, BP could become a target of a takeover attempt from companies like ExxonMobil , Royal Dutch Shell or PetroChina , the FT said, citing a source working on BP's strategy.
Barton Biggs, whose investments in stocks 15 months ago gave his Traxis Partners LLC a 38 percent gain in 2009, said concern the economy will contract spurred him to sell almost all his U.S. technology shares this week.
Biggs said he reduced the proportion of bullish bets in his hedge fund by up to 40 percentage points on speculation the withdrawal of government spending will turn a “soft patch” into a recession. On June 29, Biggs said long investments made up 70 percent of his fund’s holdings.
China's announcement of live-fire exercises in the East China Sea to counter planned joint South Korea-US exercises in the Yellow Sea between the Korean Peninsula and China is an indication that China is more willing to play the military card than it has been before.
BP is understood to be in talks with the state-owned China National Offshore Oil Corporation (CNOOC) about selling its 60pc stake in Pan America. BP is looking to sell $10bn of non-core exploration and production assets, so this potential disposal would mean it would almost hit this target in a single transaction. It is understood that BP has sent its partners in the leaking well huge invoices for their share of the clean-up on June 6, which are due to be paid on Tuesday. Anadarko received one for $272m and Mitsui for $110m. Anadarko has accused BP of "reckless behaviour" and is likely to refuse to bear its share. However, a source close to BP said the company believes that Mitsui may be more compliant.
According to a report early Friday by Bloomberg News, Sanofi's chief executive officer has informed the Sanofi's board that the company was in preliminary negotiations to acquire a U.S.-based drug maker for around $20 billion. Shares of Allergan, Genzyme and Biogen were all up at least 5%.
The Dow Jones Industrial Average lost 46.05 points, or 0.5%, to 9,686.48, with all but four components ending lower. The S&P 500 fell 4.8 points, or 0.5%, to 1,022.58. The Nasdaq Composite fell 9.57 points, or 0.5%, to 2,091.79. For the week, the Dow lost 4.51%, the S&P 500 fell 5.03%, and the Nasdaq Composite sank 5.92%.
Investors in BP expect to see a change in its leadership, with a shake-up possible once the oil giant's leaking well in the Gulf of Mexico is capped, the Financial Times reported on Friday, citing leading shareholders and people close to the group.
A management change, with both Chief Executive Tony Hayward's and Chairman Carl-Henric Svanberg's jobs in jeopardy, could come when BP announces a capital raise, the paper said, citing an unnamed source close to the company.
Without steps to steady the ship, BP could become a target of a takeover attempt from companies like ExxonMobil , Royal Dutch Shell or PetroChina , the FT said, citing a source working on BP's strategy.
Barton Biggs, whose investments in stocks 15 months ago gave his Traxis Partners LLC a 38 percent gain in 2009, said concern the economy will contract spurred him to sell almost all his U.S. technology shares this week.
Biggs said he reduced the proportion of bullish bets in his hedge fund by up to 40 percentage points on speculation the withdrawal of government spending will turn a “soft patch” into a recession. On June 29, Biggs said long investments made up 70 percent of his fund’s holdings.
64,000 Jobs Losses
7/2/10 64,000 Job Losses
Total job growth dropped in June for the first time this year due as a quarter million temporary census workers were laid off, the Labor Department said Friday. Private sector payrolls expanded by a modest 83,000 in June lower than the 115,000 gain expected by economists surveyed by MarketWatch. The unemployment rate dropped to 9.5% in June from 9.7% in the previous month. This is the lowest level since July 2009. There was a sharp 652,000 decline in the labor force in June. Economists had expected the unemployment rate to remain steady.
“The recovery is going to stay more muted than markets had hoped,” David Semmens, an economist at Standard Chartered Bank in New York, said before the report. “Consumer spending will remain constrained during the coming months.” Private employment in June was led by gains in education and health services, transportation and leisure and hospitality. The decrease in census workers left 339,000 temporary employees still working on the survey, indicating more cuts to come that will keep distorting the employment figures for months. Manufacturing payrolls increased by 9,000 in June, the smallest gain this year and less than the survey median of a 25,000 increase. Employment at service-providers decreased 117,000 after rising 420,000. Construction companies cut payrolls by 22,000 after reducing them 30,000 in May. Average hourly earnings fell 2 cents to $22.53 in June, today’s report showed. The average work week for all workers declined to 34.1 hours in June from 34.2 hours the prior month. Manufacturing workweek for all employees decreased by 0.5 hour to 40.0 hours. Temporary help increased +21,000. Birth-death added 147,000 jobs. Take away the 83,000 jobs, and you have a loss of 64,000 non-farm payrolls.
ZeroHedge: " If there was a mean reversion to the last 10 year labor force participation average rate of 66.2%, there should be another 3.5 million jobless added to the 14.6 million tally. And as this differential is the easiest thing in the world for the BLS to fudge, adding the two and dividing by the labor force of 153,74, we get an unemployment rate of 11.8%, leaving aside all other such fudge factors are government hiring, temporary workers, birth death, etc. 9.5% or 11.8% - which one is more realistic for an economy finally realizing it never left the second great depression, you decide."
Earthfiles: " BP's Gulf Oil Disaster Reaching Record-Breaking 140 Million Gallons Since April 22, with Lots of Methane. Report upcoming.
“The levels of methane in the deep Gulf waters that we're seeing are
unbelievably high. I've never seen levels like this in the ocean before.”
- John Kessler, Ph.D., Chemical Oceanographer, Texas A & M Univ.
May Factory Orders: -1.4% vs. consensus of -0.8%. Apr. revised to +1% from +1.2%. Ex-transport -0.6%. Orders for non-defense capital goods excluding aircraft -1.4%.
General Motors' first-half sales in China surpassed those in the U.S. for the first time. GM sales in China totaled 1.21M vehicles - nearly 50% higher than the year-ago period - topping 1.08M sold in the U.S.
"New orders for manufactured goods in May, down following eight consecutive monthly increases, decreased $5.8 billion or 1.4 percent to $413.2 billion, the U.S. Census Bureau reported today. This followed a 1.0 percent April increase. Excluding transportation, new orders decreased 0.6 percent."
China's outstanding foreign debt totaled $443.2 billion as of March 31, a rise of 3.4% from the prior quarter, according to data released by the State Administration of Foreign Exchange on Friday. The agency said of China's debt holdings, about 70% was denominated in U.S. dollars, a rise of 2.2-percentage points on year, while Japanese yen accounted for 11%, a decline of 0.9-percentage point, and the euro accounted for about 5.5%, a drop of 0.9-percentage point on year.
Bank of China's capital adequacy ratio fell to 11.09 percent as of March 31, below the minimum 11.5 percent required according to the China Banking Regulatory Commission.
The Automatic Earth: "In short: banks have enormous funding problems, and even if they can sell debt, they’ll have to pay a lot more to do so, in the same marketplace that's already drowning in sovereign and municipal debt. The ultimate consequence is going to be that not only will your wages, pensions, health care and other services fade and slowly vanish, what's left of your wealth will increasingly be confiscated and handed to a bunch of rich gamblers with political clout."
“The flattening of the yield curve has been the worst kind,” Anthony Crescenzi, a money manager at Newport Beach, California-based Pimco, wrote to clients yesterday. It occurred during “a decline in market interest rates on both ends of the yield curve. Investors have become less optimistic about the outlook for both the U.S. and global economy.” As you may recall, this was my number one recommendation for 2010---flattening yield curve.
BP's Gulf Spill to Drive Down Rig Rates, Create Oversupply. BP Plc’s oil spill in the Gulf of Mexico will drive down rental prices for deep-sea drilling vessels by about 20 percent, analysts say, creating an oversupply of rigs as demand slows.
Bond markets are a bubble waiting to burst because the world economy is facing even worse problems after central banks flooded markets with cash to try to get out of the crisis, famous investor Jim Rogers told CNBC Thursday.
The Reserve Bank of India announced on Friday sooner-than-expected rate hikes of 25 basis points, or 0.25%, to its main lending and borrowing rates in an intra-meeting move. The increase sets the nation's repurchase rate at 5.5% and reverse-repo rate at 4%. In a statement on its Web site, the central bank cited "strong underlying growth momentum," with "robust growth and expanding exports" for its move to tighten monetary policy.
Total job growth dropped in June for the first time this year due as a quarter million temporary census workers were laid off, the Labor Department said Friday. Private sector payrolls expanded by a modest 83,000 in June lower than the 115,000 gain expected by economists surveyed by MarketWatch. The unemployment rate dropped to 9.5% in June from 9.7% in the previous month. This is the lowest level since July 2009. There was a sharp 652,000 decline in the labor force in June. Economists had expected the unemployment rate to remain steady.
“The recovery is going to stay more muted than markets had hoped,” David Semmens, an economist at Standard Chartered Bank in New York, said before the report. “Consumer spending will remain constrained during the coming months.” Private employment in June was led by gains in education and health services, transportation and leisure and hospitality. The decrease in census workers left 339,000 temporary employees still working on the survey, indicating more cuts to come that will keep distorting the employment figures for months. Manufacturing payrolls increased by 9,000 in June, the smallest gain this year and less than the survey median of a 25,000 increase. Employment at service-providers decreased 117,000 after rising 420,000. Construction companies cut payrolls by 22,000 after reducing them 30,000 in May. Average hourly earnings fell 2 cents to $22.53 in June, today’s report showed. The average work week for all workers declined to 34.1 hours in June from 34.2 hours the prior month. Manufacturing workweek for all employees decreased by 0.5 hour to 40.0 hours. Temporary help increased +21,000. Birth-death added 147,000 jobs. Take away the 83,000 jobs, and you have a loss of 64,000 non-farm payrolls.
ZeroHedge: " If there was a mean reversion to the last 10 year labor force participation average rate of 66.2%, there should be another 3.5 million jobless added to the 14.6 million tally. And as this differential is the easiest thing in the world for the BLS to fudge, adding the two and dividing by the labor force of 153,74, we get an unemployment rate of 11.8%, leaving aside all other such fudge factors are government hiring, temporary workers, birth death, etc. 9.5% or 11.8% - which one is more realistic for an economy finally realizing it never left the second great depression, you decide."
Earthfiles: " BP's Gulf Oil Disaster Reaching Record-Breaking 140 Million Gallons Since April 22, with Lots of Methane. Report upcoming.
“The levels of methane in the deep Gulf waters that we're seeing are
unbelievably high. I've never seen levels like this in the ocean before.”
- John Kessler, Ph.D., Chemical Oceanographer, Texas A & M Univ.
May Factory Orders: -1.4% vs. consensus of -0.8%. Apr. revised to +1% from +1.2%. Ex-transport -0.6%. Orders for non-defense capital goods excluding aircraft -1.4%.
General Motors' first-half sales in China surpassed those in the U.S. for the first time. GM sales in China totaled 1.21M vehicles - nearly 50% higher than the year-ago period - topping 1.08M sold in the U.S.
"New orders for manufactured goods in May, down following eight consecutive monthly increases, decreased $5.8 billion or 1.4 percent to $413.2 billion, the U.S. Census Bureau reported today. This followed a 1.0 percent April increase. Excluding transportation, new orders decreased 0.6 percent."
China's outstanding foreign debt totaled $443.2 billion as of March 31, a rise of 3.4% from the prior quarter, according to data released by the State Administration of Foreign Exchange on Friday. The agency said of China's debt holdings, about 70% was denominated in U.S. dollars, a rise of 2.2-percentage points on year, while Japanese yen accounted for 11%, a decline of 0.9-percentage point, and the euro accounted for about 5.5%, a drop of 0.9-percentage point on year.
Bank of China's capital adequacy ratio fell to 11.09 percent as of March 31, below the minimum 11.5 percent required according to the China Banking Regulatory Commission.
The Automatic Earth: "In short: banks have enormous funding problems, and even if they can sell debt, they’ll have to pay a lot more to do so, in the same marketplace that's already drowning in sovereign and municipal debt. The ultimate consequence is going to be that not only will your wages, pensions, health care and other services fade and slowly vanish, what's left of your wealth will increasingly be confiscated and handed to a bunch of rich gamblers with political clout."
“The flattening of the yield curve has been the worst kind,” Anthony Crescenzi, a money manager at Newport Beach, California-based Pimco, wrote to clients yesterday. It occurred during “a decline in market interest rates on both ends of the yield curve. Investors have become less optimistic about the outlook for both the U.S. and global economy.” As you may recall, this was my number one recommendation for 2010---flattening yield curve.
BP's Gulf Spill to Drive Down Rig Rates, Create Oversupply. BP Plc’s oil spill in the Gulf of Mexico will drive down rental prices for deep-sea drilling vessels by about 20 percent, analysts say, creating an oversupply of rigs as demand slows.
Bond markets are a bubble waiting to burst because the world economy is facing even worse problems after central banks flooded markets with cash to try to get out of the crisis, famous investor Jim Rogers told CNBC Thursday.
The Reserve Bank of India announced on Friday sooner-than-expected rate hikes of 25 basis points, or 0.25%, to its main lending and borrowing rates in an intra-meeting move. The increase sets the nation's repurchase rate at 5.5% and reverse-repo rate at 4%. In a statement on its Web site, the central bank cited "strong underlying growth momentum," with "robust growth and expanding exports" for its move to tighten monetary policy.
Wednesday, June 30, 2010
Jobs
6/30/10 Jobs
U.S. private-sector firms created 13,000 more jobs in June, according to the ADP employment report released Wednesday. Job growth was "disappointingly weak," said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report from anonymous payroll data supplied by ADP. Private-sector job growth was revised higher in May to 57,000 from 55,000 earlier. Economists are expecting nonfarm payrolls to fall by 130,000 when the government reports its estimates on Friday, including the loss of some 250,000 temporary workers.
Results from the ECB funding operation showed banks borrowed less than expected, easing concerns over their ability to cope with the repayment of nearly half a trillion euros in 12-month funds on Thursday.
The ECB said 171 banks borrowed 131.9 billion euros ($161.4 billion) over three months at a flat rate of 1 percent, below expectations in a Reuters poll for demand of 210 billion euros.
Companies are selling the fewest bonds since 2004 as rising cash levels let borrowers weather concern that the global economy is slowing.
Offerings fell 39 percent to $1.17 trillion in the first half from the same period in 2009, according to data compiled by Bloomberg. The decline was led by financial companies, which issued 35 percent less debt.
Refinancing drove total U.S. mortgage applications to an eight-month peak, as loan rates fell to or near record lows, but demand to buy homes sank toward 13-year lows last week, the Mortgage Bankers Association said on Wednesday. Refinancing drove total mortgage applications up by 8.8 percent, seasonally adjusted, last week. Nearly 77 percent of all loan requests were for a refinancing, the highest share
since April 2009.
Rob Hanna: "One notable breadth indication that hit an extreme Tuesday is the CBI, which jumped up to 14. I alerted followers of this via Twitter near the close. As I’ve written about and discussed many times in the past, moves to 10 or above have typically been suggestive of a strong bounce within a few days."
"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law' because law is often but the tyrant's will, and always so when it violates the rights of the individual."
-Thomas Jefferson
Anadarko Petroleum Co. received regular updates from BP about drilling operations on the Deepwater Horizon rig, the Financial Times reported. The firm also approved aspects of the design for the leaking Macondo well, according to the report which cited senior executives.
Goldman Sachs now says that it also used its own money to make secret wagers against the U.S. housing market. A senior Goldman executive disclosed the "bilateral" wagers on subprime mortgages in an interview with McClatchy, marking the first time that the Wall Street titan has conceded that its dealings with troubled insurer AIG went far beyond acting as an "intermediary" responding to its clients' demands.
The Oil Drum: "The UK Department of Energy and Climate Change (DECC) published their quarterly Energy Trends document last week. It covers up to the first quarter 2010. The key points:
* Total energy production in Q1 2010 was 6.5% lower than in the first quarter of 2009.
* Oil production fell by 6% compared to the first quarter of 2009.
* Natural gas production was 9% lower compared with the first quarter of 2009. The UK was a net importer of gas in the first quarter of 2010 by 155 TWh compared with 106 TWh in the first quarter of 2009.
* Coal production was 12.5% lower than a year earlier.
* Nuclear’s supply increased by 1% on the first quarter of 2009.
* Wind, hydro and other renewables supplied 6.5% less electricity than in the same period last year, with hydro down 44% as a result of less rainfall.
* Final energy consumption rose by 4% between the first quarter of 2009 and the first quarter of 2010, with rises in all sectors except transport which fell mainly due to the adverse weather conditions.
* Gas demand was 13% higher than a year earlier.
* Electricity consumption was 2.5% higher in the first quarter of 2010 compared to the same period last year."
Daily Reckoning: "A recent piece in the Telegraph highlights a warning from Andrew Roberts, RBS credit chief, to his clients that Bernanke may soon get going with “monster” quantitative easing.
What’s that in dollar terms? Perhaps up to $5 trillion… a number cited from a Bernanke speech as “pencilled in by the Fed Board as the upper limit for quantitative easing.” There’s only been about $1.75 trillion spent so far, so there could be a lot more money printing in the pipeline."
"Everyone is watching 1040 on the S&P," says Barry Ritholtz, CEO of Fusion IQ. "If those lows hold we'll see a bounce back. But by and large this market is looking much less healthy than it was just three or four months ago." As of midday Tuesday, Ritholtz's firm was 75% in cash and long a handful of names, including BJ Services, Navistar and the ProShares UltraShort QQQ, a bearish hedge. "We're certainly voting with our feet and carrying a lot of cash," he says. "Cash is better than losing money."
Given the S&P 500 is down about 15% after rallying nearly 80% from its lows of March 2009, "it's a little early to say the bull market is over," Ritholtz says. "Gun to my head, I would say this is a regular correction...but it's better to step back and not be involved when things are unclear than just throw a dart and lose money."
The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 59.1 this month, in line with the median forecast of economists surveyed by Bloomberg News, from 59.7 in May.
Abraxis BioScience was the stock of note in early trading. Shares of the biotech group shot up over 20% to $73.04 on news that Celgene Corp. has offered $2.9 billion in cash and stock for the company.
Lower tax revenues and higher federal spending to fight the recession will push the federal debt to 62% of gross domestic product by the end of this year, the Congressional Budget Office predicted Wednesday. CBO also predicted that debt would reach 87% of GDP by 2020 if tax cuts enacted during President George W. Bush's term are extended. The agency also estimated that federal spending on mandatory health-care programs like Medicare and Medicaid will grow to 10% of GDP in 2035 if current laws don't change.
Peter Boockvar: "Bottom line, relative to the monthly increase in the labor force that is needed to be absorbed by job growth, we are in the midst of a 3rd straight jobless recovery."
Economists say the Senate's rejection of another extension of jobless benefits could actually cause more people to quit looking for work, which could push down the US unemployment rate.
ZeroHedge: "Inventories is now at the lowest reading since February 2009. Restocking is now over - no more GDP gains will be seen courtesy of this economic gimmick. "
Nearly one out of every three US home sales in the first quarter was a foreclosure property as steep price discounts boosted demand for distressed real estate, RealtyTrac said in a new report on Wednesday.
Sydney Morning Herald:
"Banks around the world must refinance more than $US5 trillion ($5.8 trillion) of debt in the coming three years, a massive rollover that poses threats to financial stability and growth.
The need to replace these funds, which are medium and long term, will place pressure on bank profit spreads and in turn may either prompt deleveraging, where banks sell assets that they can no longer economically finance, or simply lead to a bout of credit rationing, where borrowers must pay more to borrow, thus crimping investment and economic growth…
US banks have issued $US230 billion of debt in the first five months of the year, about 60 per cent of the rate they need to achieve over the three year period. Euro zone banks have issued $US133 billion, or about 70 per cent of their needed run rate.
One easy to see consequence is that, all things being equal, the cost for banks to issue debt should rise, as should competition among banks for consumer deposits. It is possible that a global desire to save more helps to blunt this effect, but even so the macroeconomic effect and the effect on asset prices will both be strongly downward." ZeroHedge believes the refinancing number is $15 trillion!
As the Afghan war's bloodiest month for Western forces drew to a close Wednesday, the widening scope and relentless tempo of battlefield casualties pointed to a formidable challenge for U.S. Army Gen. David H. Petraeus, the incoming commander.
At least 102 coalition troops were killed in June in Afghanistan, according to the independent website icasualties.org, far surpassing the previous monthly record of 76 military fatalities in August 2009.
Moody's Investors Service said Wednesday that it may downgrade the Aaa sovereign ratings on Spain because of deteriorating economic conditions. Moody's said that it may cut the ratings by one or two notches at the most. "Spain's growth prospects are weaker than those of other Aaa-rated sovereigns," said Kathrin Muehlbronner, a Moody's vice president and lead analyst for Spain, in a statement. "In the short term, the government's accelerated fiscal consolidation combined with the higher borrowing costs currently facing the government, consumers, and businesses will likely depress growth."
Wal-Mart Stores Inc., the world’s largest retailer, plans to sell $3 billion of debt in its biggest dollar-denominated bond offering since April 2008, according to a person familiar with the transaction.
The offering comprises $750 million of 5-year debt that may yield 53 basis points more than similar-maturity Treasuries, $1.5 billion of 10-year notes that may yield 70 basis points more than benchmarks, and $750 million of 30-year bonds may pay a spread of about 108 basis points, the person said. Proceeds will be used for general corporate purposes, the person said.
China June official PMI at 52.1 vs 53.9 in May.
The Nikkei fell 1% to 9,284.9 in the early minutes of trade, while the broader Topix lost 0.8% to 834.3, despite a surprise positive reading in the central bank's quarterly survey of large manufacturer sentiment. The Bank of Japan's quarterly tankan survey of business sentiment released Thursday showed that the diffusion index for large manufacturers improved more than expected to a positve reading of 1, beating the forecast of minus 4 predicted by economists surveyed by Dow Jones Newswires, and rising from minus 14 in the March survey. The headline figured improved for the fifth straight quarter, and was greatly improved from the record-low reading of minus 58 in the March 2009 tankan.
The Dow Jones Industrial Average (INDU) fell 96.28 points, or 1%, to 9,774.02 on Wednesday. The S&P 500 index fell 10.53 points, or 1%, to 1,030.71, while the Nasdaq Composite fell 25.94 points, or 1.2%, to 2,109.24. For June, the Dow industrials fell 3.6%, the S&P 500 fell 5.4% and the Nasdaq dropped 6.6%. For the second quarter, the Dow lost 10%, marking its first drop after four straight quarters of growth. The S&P 500 fell 11.9% and the Nasdaq slumped 12% during the quarter, with the two indexes posting their worst quarter since Dec. 2008.
ZeroHedge: " ICI has just reported $1,248 million in outflows from domestic equity mutual funds: this is the eighth sequential week of outflows since the Flash Crash, and a period during which $32 billion has been redeemed."
U.S. private-sector firms created 13,000 more jobs in June, according to the ADP employment report released Wednesday. Job growth was "disappointingly weak," said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report from anonymous payroll data supplied by ADP. Private-sector job growth was revised higher in May to 57,000 from 55,000 earlier. Economists are expecting nonfarm payrolls to fall by 130,000 when the government reports its estimates on Friday, including the loss of some 250,000 temporary workers.
Results from the ECB funding operation showed banks borrowed less than expected, easing concerns over their ability to cope with the repayment of nearly half a trillion euros in 12-month funds on Thursday.
The ECB said 171 banks borrowed 131.9 billion euros ($161.4 billion) over three months at a flat rate of 1 percent, below expectations in a Reuters poll for demand of 210 billion euros.
Companies are selling the fewest bonds since 2004 as rising cash levels let borrowers weather concern that the global economy is slowing.
Offerings fell 39 percent to $1.17 trillion in the first half from the same period in 2009, according to data compiled by Bloomberg. The decline was led by financial companies, which issued 35 percent less debt.
Refinancing drove total U.S. mortgage applications to an eight-month peak, as loan rates fell to or near record lows, but demand to buy homes sank toward 13-year lows last week, the Mortgage Bankers Association said on Wednesday. Refinancing drove total mortgage applications up by 8.8 percent, seasonally adjusted, last week. Nearly 77 percent of all loan requests were for a refinancing, the highest share
since April 2009.
Rob Hanna: "One notable breadth indication that hit an extreme Tuesday is the CBI, which jumped up to 14. I alerted followers of this via Twitter near the close. As I’ve written about and discussed many times in the past, moves to 10 or above have typically been suggestive of a strong bounce within a few days."
"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law' because law is often but the tyrant's will, and always so when it violates the rights of the individual."
-Thomas Jefferson
Anadarko Petroleum Co. received regular updates from BP about drilling operations on the Deepwater Horizon rig, the Financial Times reported. The firm also approved aspects of the design for the leaking Macondo well, according to the report which cited senior executives.
Goldman Sachs now says that it also used its own money to make secret wagers against the U.S. housing market. A senior Goldman executive disclosed the "bilateral" wagers on subprime mortgages in an interview with McClatchy, marking the first time that the Wall Street titan has conceded that its dealings with troubled insurer AIG went far beyond acting as an "intermediary" responding to its clients' demands.
The Oil Drum: "The UK Department of Energy and Climate Change (DECC) published their quarterly Energy Trends document last week. It covers up to the first quarter 2010. The key points:
* Total energy production in Q1 2010 was 6.5% lower than in the first quarter of 2009.
* Oil production fell by 6% compared to the first quarter of 2009.
* Natural gas production was 9% lower compared with the first quarter of 2009. The UK was a net importer of gas in the first quarter of 2010 by 155 TWh compared with 106 TWh in the first quarter of 2009.
* Coal production was 12.5% lower than a year earlier.
* Nuclear’s supply increased by 1% on the first quarter of 2009.
* Wind, hydro and other renewables supplied 6.5% less electricity than in the same period last year, with hydro down 44% as a result of less rainfall.
* Final energy consumption rose by 4% between the first quarter of 2009 and the first quarter of 2010, with rises in all sectors except transport which fell mainly due to the adverse weather conditions.
* Gas demand was 13% higher than a year earlier.
* Electricity consumption was 2.5% higher in the first quarter of 2010 compared to the same period last year."
Daily Reckoning: "A recent piece in the Telegraph highlights a warning from Andrew Roberts, RBS credit chief, to his clients that Bernanke may soon get going with “monster” quantitative easing.
What’s that in dollar terms? Perhaps up to $5 trillion… a number cited from a Bernanke speech as “pencilled in by the Fed Board as the upper limit for quantitative easing.” There’s only been about $1.75 trillion spent so far, so there could be a lot more money printing in the pipeline."
"Everyone is watching 1040 on the S&P," says Barry Ritholtz, CEO of Fusion IQ. "If those lows hold we'll see a bounce back. But by and large this market is looking much less healthy than it was just three or four months ago." As of midday Tuesday, Ritholtz's firm was 75% in cash and long a handful of names, including BJ Services, Navistar and the ProShares UltraShort QQQ, a bearish hedge. "We're certainly voting with our feet and carrying a lot of cash," he says. "Cash is better than losing money."
Given the S&P 500 is down about 15% after rallying nearly 80% from its lows of March 2009, "it's a little early to say the bull market is over," Ritholtz says. "Gun to my head, I would say this is a regular correction...but it's better to step back and not be involved when things are unclear than just throw a dart and lose money."
The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 59.1 this month, in line with the median forecast of economists surveyed by Bloomberg News, from 59.7 in May.
Abraxis BioScience was the stock of note in early trading. Shares of the biotech group shot up over 20% to $73.04 on news that Celgene Corp. has offered $2.9 billion in cash and stock for the company.
Lower tax revenues and higher federal spending to fight the recession will push the federal debt to 62% of gross domestic product by the end of this year, the Congressional Budget Office predicted Wednesday. CBO also predicted that debt would reach 87% of GDP by 2020 if tax cuts enacted during President George W. Bush's term are extended. The agency also estimated that federal spending on mandatory health-care programs like Medicare and Medicaid will grow to 10% of GDP in 2035 if current laws don't change.
Peter Boockvar: "Bottom line, relative to the monthly increase in the labor force that is needed to be absorbed by job growth, we are in the midst of a 3rd straight jobless recovery."
Economists say the Senate's rejection of another extension of jobless benefits could actually cause more people to quit looking for work, which could push down the US unemployment rate.
ZeroHedge: "Inventories is now at the lowest reading since February 2009. Restocking is now over - no more GDP gains will be seen courtesy of this economic gimmick. "
Nearly one out of every three US home sales in the first quarter was a foreclosure property as steep price discounts boosted demand for distressed real estate, RealtyTrac said in a new report on Wednesday.
Sydney Morning Herald:
"Banks around the world must refinance more than $US5 trillion ($5.8 trillion) of debt in the coming three years, a massive rollover that poses threats to financial stability and growth.
The need to replace these funds, which are medium and long term, will place pressure on bank profit spreads and in turn may either prompt deleveraging, where banks sell assets that they can no longer economically finance, or simply lead to a bout of credit rationing, where borrowers must pay more to borrow, thus crimping investment and economic growth…
US banks have issued $US230 billion of debt in the first five months of the year, about 60 per cent of the rate they need to achieve over the three year period. Euro zone banks have issued $US133 billion, or about 70 per cent of their needed run rate.
One easy to see consequence is that, all things being equal, the cost for banks to issue debt should rise, as should competition among banks for consumer deposits. It is possible that a global desire to save more helps to blunt this effect, but even so the macroeconomic effect and the effect on asset prices will both be strongly downward." ZeroHedge believes the refinancing number is $15 trillion!
As the Afghan war's bloodiest month for Western forces drew to a close Wednesday, the widening scope and relentless tempo of battlefield casualties pointed to a formidable challenge for U.S. Army Gen. David H. Petraeus, the incoming commander.
At least 102 coalition troops were killed in June in Afghanistan, according to the independent website icasualties.org, far surpassing the previous monthly record of 76 military fatalities in August 2009.
Moody's Investors Service said Wednesday that it may downgrade the Aaa sovereign ratings on Spain because of deteriorating economic conditions. Moody's said that it may cut the ratings by one or two notches at the most. "Spain's growth prospects are weaker than those of other Aaa-rated sovereigns," said Kathrin Muehlbronner, a Moody's vice president and lead analyst for Spain, in a statement. "In the short term, the government's accelerated fiscal consolidation combined with the higher borrowing costs currently facing the government, consumers, and businesses will likely depress growth."
Wal-Mart Stores Inc., the world’s largest retailer, plans to sell $3 billion of debt in its biggest dollar-denominated bond offering since April 2008, according to a person familiar with the transaction.
The offering comprises $750 million of 5-year debt that may yield 53 basis points more than similar-maturity Treasuries, $1.5 billion of 10-year notes that may yield 70 basis points more than benchmarks, and $750 million of 30-year bonds may pay a spread of about 108 basis points, the person said. Proceeds will be used for general corporate purposes, the person said.
China June official PMI at 52.1 vs 53.9 in May.
The Nikkei fell 1% to 9,284.9 in the early minutes of trade, while the broader Topix lost 0.8% to 834.3, despite a surprise positive reading in the central bank's quarterly survey of large manufacturer sentiment. The Bank of Japan's quarterly tankan survey of business sentiment released Thursday showed that the diffusion index for large manufacturers improved more than expected to a positve reading of 1, beating the forecast of minus 4 predicted by economists surveyed by Dow Jones Newswires, and rising from minus 14 in the March survey. The headline figured improved for the fifth straight quarter, and was greatly improved from the record-low reading of minus 58 in the March 2009 tankan.
The Dow Jones Industrial Average (INDU) fell 96.28 points, or 1%, to 9,774.02 on Wednesday. The S&P 500 index fell 10.53 points, or 1%, to 1,030.71, while the Nasdaq Composite fell 25.94 points, or 1.2%, to 2,109.24. For June, the Dow industrials fell 3.6%, the S&P 500 fell 5.4% and the Nasdaq dropped 6.6%. For the second quarter, the Dow lost 10%, marking its first drop after four straight quarters of growth. The S&P 500 fell 11.9% and the Nasdaq slumped 12% during the quarter, with the two indexes posting their worst quarter since Dec. 2008.
ZeroHedge: " ICI has just reported $1,248 million in outflows from domestic equity mutual funds: this is the eighth sequential week of outflows since the Flash Crash, and a period during which $32 billion has been redeemed."
Tuesday, June 29, 2010
Treasury Yields
6/29/10 Treasury Yields
The yen rallied as a 2 percent fall in European shares .FTEU3 raised the safe-haven appeal of the Japanese currency, along with the Swiss franc and the dollar, while the high-risk Australian and New Zealand dollars took a beating.
"Equity markets are weak, so there's been a reasonably large reverse in risk-taking behavior," said Daragh Maher, senior currency strategist at Credit Agricole.
"It's been an amplified reaction, due to limited liquidity, and it will be difficult to tell how far the selling will extend."
By 0944 GMT, the euro had fallen more than 1.5 percent on the day to 107.80 yen according to trading platform EBS, its weakest since late 2001. It fell to 1.3250 francs the lowest since the single currency's 1999 launch.
The Swiss franc has gained broadly since the Swiss National Bank earlier this month backed off its pledged to intervene in the currency market to stem franc strength.
Against sterling, the single currency fell to 80.92 pence, its weakest since November 2008. It fell roughly 0.7 percent on the day to a two-week low of $1.2178, according to Reuters data.
Strikes in Greece and Spain highlighted resistance to Europe-wide austerity measures on Tuesday as the euro and shares tumbled ahead of a deadline for banks to repay a giant European Central Bank cash injection.
The fifth major strike this year by Greek unions disrupted tourism and public transport in protest at planned pension cuts and later retirement, while Spanish workers shut down Madrid's metro system in anger at a 5 percent public sector pay cut.
The risk premium on southern European government bonds over benchmark German bunds widened and the cost of insuring their debt against default rose as investors adjusted to the wider repercussions of the Greek debt crisis on the financial system at the end of the quarter, a traditional stress point.
The Conference Board Tuesday said its leading economic indicator for China rose 0.3% in April, correcting a previous reading of 1.7% increase and attributing the earlier reading to a "calculation error." The 0.3% reading represents a sharp fall from the 1.2% rise recorded in March.
Japanese Finance Minister Yoshihiko Noda said Tuesday that the nation's tax revenues will likely be 1.9 trillion yen ($21 billion) more than previously expected in the fiscal year that ended in March, totalling 38.8 trillion yen, according to published reports. Noda addressed reporters at a regular news conference after a cabinet meeting. Ministry figures also released Tuesday showed that the government sold a smaller amount of bonds than estimated last fiscal year. Due to the higher tax revenue, Japan's bond sales likely amounted to 52 trillion yen, 1.5 trillion yen less than forecast.
Japan's industrial production slipped in May, as did household spending, and the unemployment rate unexpectedly increased, all of which suggest Japan's economic recovery is slowing down.
First-time buyers purchased 46% of existing home sales in May, down from 49% in April.
Tropical Storm Alex, the first named system of the Atlantic hurricane season, strengthened today, forcing the evacuation of rigs in the Gulf of Mexico and pushing swells toward the worst U.S. oil spill.
The storm, packing maximum sustained winds of 70 miles (110 kilometers) per hour, was 460 miles southeast of Brownsville, Texas, before dawn today, moving north-northwest at 8 mph, the U.S. National Hurricane Center said in an advisory. The circulating winds were near reaching hurricane status of 74 mph.
The Economist: "Rising government debt is a Ponzi scheme that requires an ever-growing population to assume the burden -- unless some deus ex machina, such as a technological breakthrough, can boost growth. As Roland Nash, head of research at Renaissance Capital, an investment bank, puts it: "Can the West, with its regulated industry, uncompetitive labour and large government, afford its borrowing-funded living standards and increasingly expensive public sectors?"
Treasuries advanced, pushing two- year yields to a record low and 10-year yields below 3 percent for the first time since April 2009, amid concern European governments’ attempts to rein in debt will hinder growth.
BP is currently drilling two relief wells from rigs that are each about a half-mile from the site of the blown-out well. The first well is about a thousand feet vertically from the interception point and more than 17,000 feet below sea level. The second well, which was started about two weeks later than the first, is not as far along, and Mr. Wells said Monday that if the first well succeeded in plugging the gusher, drilling of the second would be halted.
Bloomberg: "Rather than forcing banks to spin off all derivatives trading as separate businesses -- preventing them from gambling with depositors’ money -- Congress will let them keep trading the instruments if they are hedging their own risks or for interest rate and foreign exchange swaps.
They will have up to two years to move derivatives that can’t be traded through a clearing house, including credit default swaps, into a separately capitalized subsidiary."
"The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7% in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40% in a month."
Today in Texas, one in five people struggle to feed themselves and one in five children live in poverty, according to the Center for Public Policy Priorities in Austin, founded by Benedictine nuns.
Sol Palha: "The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history. The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.
The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of institutional money market funds fell at a 37pc rate, the sharpest drop ever. "It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.
Executives from oil and gas companies on Monday concluded an hour-long meeting with U.S. Interior Secretary Ken Salazar without securing promises from the government to lift a deepwater-drilling moratorium imposed after a disastrous BP oil spill.
Crude oil for August delivery fell $2.45, or 3.1%, to $75.80 a barrel. Gold for the same month lost $1.60, or 0.1%, to $1,237.00 an ounce.
Home prices rose 0.8% in April compared with March in 20 major U.S. cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. This is the first increase after six straight monthly declines. Prices have moved up 3.8% in the past year. Prices rose in 18 of the 20 metropolitan areas tracked by Case-Shiller in April compared with March. The gains highlight the impact of the federal tax credits for homebuyers. Buyers rushed to purchase before the tax credits expired at the end of April.
Nationally, prices have risen 3.8 percent from their April 2009 bottom. But they remain 30 percent below their July 2006 peak. "Inventory data and foreclosure activity have not shown any signs of improvement," David Blitzer, chairman of S&P's index committee, said in a statement. "Consistent and sustained boosts to economic growth from housing may have to wait to next year."
According to Florida Trend magazine, more than $3 billion in “Dirt Bonds” are in default. Dirt bonds are municipal bonds used to fund the development of streets, water lines, and other utilities for the many new communities that were planned during the real-estate boom years in Florida. Dirt bonds are backed by the taxing power of Community Development Districts (CDD) that manage the construction and development of communities. Interest payments are made to investors from reserves set aside until homebuyers and businesses move in to completed houses, office buildings, and strip malls, etc. Then annual taxes are collected, typically escrowed at banks holding mortgages on the properties. The bondholders get their interest payments from collected CDD taxes. An incomplete development doesn't have a tax base to pay bondholders.
The S&P is down sharply but still above the 1041 support level.
FMX Connect: "Natural gas prices gave back 14.4 cents on Monday, after having rallied just slightly more than 11 cents on Friday. That tells us that prices had started to discount Alex before it was even named. It also tells us, with yesterday’s activity, that the reaction was overdone. Traders were covering shorts on Friday, and it looks like huge numbers of covered contracts were matched by almost equally hurried selling, all ahead of Monday’s July contract expiration."
2-year treasury has just hit fresh all time low at 0.586%.
Reuters reports that Russ Feingold "said on Monday that he will not vote to advance the financial-reform bill." With this decision the senator is denying "his fellow Democrats the 60th vote they need to clear a final hurdle in Congress."
"My test for the financial regulatory reform bill is whether it will prevent another crisis," Feingold said in a prepared statement. The bill "fails that test and for that reason I will not vote to advance it."
U.S. consumers are increasingly worried about jobs and the economy, the Conference Board said Tuesday, as it reported that its consumer confidence index plummeted to 52.9 in June - the lowest level since March -- from a downwardly revised 62.7 in May. "Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence," said Lynn Franco, director of Conference Board's consumer research center. "Until the pace of job growth picks up, consumer confidence is not likely to pick up." Earlier this month the government reported that nonfarm payrolls grew by a seasonally adjusted 431,000 in May, but most of the new jobs were temporary jobs at the U.S. Census, with very weak private-sector hiring.
Yves Smith: "While the headline focuses on her outlook for housing, Meredith Whitney is bearish across the board, seeing little reason to cheer on the employment and bank earnings fronts. She sees a 10% fall in housing prices in the next six months (!), which will hit bank earnings (Whitney has argued since at least early 2009 that banks have been goosing earning by underreserving for losses) and the economy generally (a further decline in home equity plus lack of mobility of consumers wanting to sell their houses but facing a declining market has implications for consumer spending generally). She point out that consumer credit is tightening, which puts a crimp on small businesses (both via lower revenues and via restricted access to funds), the biggest engine of hiring, and on top of that, municipalities and states are cutting spending and shedding jobs."
Charles Hugh Smith: "A significant percentage of the U.S. trade deficit is due to importing petroleum. Minus out the oil imports, and we see that the U.S. imports have fallen considerably...U.S. policy pursues the goal of expanding exports to reduce the trade deficit. Desperate exporters might find the global market for their goods has shrunk, which means their domestic economies are vulnerable to a slowdown in exports."
BP Plc Chief Executive Officer Tony Hayward has the backing of the board and is not about to resign, according to Iain Conn, the oil company’s head of refining and marketing.
1-year Treasury at 1/4 of 1%!
Apple Inc. Chief Executive Officer Steve Jobs is due to attend the annual Allen & Co. media conference in Sun Valley, Idaho, giving him a chance to court executives he needs to add content to his company’s products.
China will cut duties on fuel oil, copper foil and about 500 other Taiwanese goods, underscoring the success of Taiwan President Ma Ying-jeou’s two-year drive for rapprochement between the civil war foes.
The Oil Drum: "As of 7am ET, Alex is just short of hurricane strength, moving slowly northwest, and continues to develop slowly. It should be declared a hurricane later today. Track guidance has consolidated somewhat, with most of the reliable models showing landfall in northern Mexico or South Texas. Hurricane Warning are now up for these coasts (Note that this year Warnings are issued at 36 hours - in previous years, a "warning" was not issued until the storm was 24 hours out). A turn more westward is anticipated today or tomorrow. There is still some uncertainty as to when and how sharp that turn will be."
BP pays U.S. first $69 mln over Gulf spill.
Liquefied natural gas tankers parked off Fujairah in the United Arab Emirates are storing the equivalent to about three months of China’s average purchases, signaling an oversupply in the market.
About 43 percent of the total capacity of tankers in the Gulf of Oman are holding LNG, Pan EurAsian Enterprises Inc. said in an e-mail yesterday, citing data from Odysseus tracking service. That’s equivalent to about 1.4 million metric tons of the cleaner-burning fuel. China imported 7.63 billion cubic meters, or 5.6 million tons, last year, according to BP Plc’s Statistical Review of World Energy 2010.
An oversupply of gas and weak demand have sent spot charter rates to the cheapest in five years, prompting producers and traders to take advantage of the low charges to store the fuel. Qatar, the world’s biggest producer of LNG, was idling at least eight tankers in the Gulf of Oman as of June 3, according to ship-tracking data from AIS Live Ltd. The vessels have a combined capacity of 1.8 million cubic meters, enough to supply the U.K. for more than a month.
China's first oil recovery vessel to deal with offshore oil spillage has made its maiden voyage in Tianjin on Tuesday to start its environmental protection mission in the country's waters.
The vessel, the first of this kind in China with a name "Offshore Oil 252", could clean up oil pollutions happening during the offshore oil production and also serve as a fire-fighting vessel in an emergency.
President Barack Obama says he expects Congress to pass a financial regulation bill even without the vote of the late Democratic Sen. Robert Byrd.
The Dow Jones Industrial Average fell 268 points, or 2.7%, to 9,870.30, its lowest close since early November. The S&P 500 index lost 33.33 points, or 3.1%, to 1,041.24, its lowest level since late October. The broad index was weighed down by a 3.9% drop in both its industrials and financials sectors. The tech-heavy Nasdaq Composite was the hardest hit of the three major averages, slumping 85.47 points, or 3.9%, to 2,135.18.
Prior to the close the S&P did not hold the 1041 level even though it closed there.
Oil for August delivery lost $2.31, or 3%, to $75.94 a barrel. Natural gas for August delivery retreated 19 cents, or 3.9%, to $4.54 per million British thermal units.
U.S. companies may be required to secure as much as $1 trillion due to a change in the wording of the financial reform bill currently being finalized in Congress, according to the International Swaps and Derivatives Association Tuesday. The group said companies will need a combined $400 billion for collateral to cover the current exposure of their over-the-counter derivatives transactions and another $370 billion in additional credit capacity to cover potential future exposure of those transactions. "If markets return to levels prevailing at the end of 2008, additional collateral needs would bring the total to $1 trillion," said ISDA in its report.
The American Petroleum Institute on Tuesday reported a decline of 3.4 million barrels in the nation's oil stockpiles in the week ended June 25. The Washington-based trade group also reported that gasoline stockpiles fell by 908,000 barrels while oil distillates rose by 3.98 million barrels. The refinery run rate slipped to 86.9% compared with 87.2% in the week ended June 18. A Citibank analyst had projected crude stocks to fall by 1 million to 2 million barrels and gasoline supplies to either fall or rise by 500,000 barrels. Distillate supplies were expected to rise by 1 million to 2 million barrels and the so-called run rate was projected to remain unchanged at 89.4%. The API data comes ahead of the more closely watched report by the Department of Energy, which will be released Wednesday at 10:30 a.m. Crude for August delivery fell 0.2% to $75.82 a barrel in electronic trading after the contract closed with a 3% loss to $75.94 in floor trading.
ZeroHedge: "June 29 ended up joining a list of such memorable dates as The Bear Stearns Crash, the May Flash Crash, the Lehman Crash, and the March 2009 666 crash: based on the TRIN/ARMS index, the NYSE index hit 5.88. It has been higher on just 4 other times before, specifically the four dates noted above. The indicator tracks up/down stocks divided by up/down volume on the NYSE -the higher the number, the greater the rush into decliners. Today's reading indicated that on the NYSE people could not get enough of selling, and in size. What is more worrisome is that in the last two months, we have seen an amplitude in the TRIN that has never occurred before: it has approached 0 (on low-volume melt up days), all the way to 12+ on 5/6 and nearly 6 today. This simply means that, as we have been claiming for a long time, there is increasingly less liquidity in the market. And we are talking real deep liquidity, not the churn BS that HFT algos do in Citi and now Tesla (thank you Goldman), and then, oops, drop all bids when something odd happens on 8,800 shares and the NYSE has to come in, bail out the market, and in the process derail the order flow of millions of shares of pent up supply and demand. A few more episodes like that and there will no demand and a lot of supply."
The yen rallied as a 2 percent fall in European shares .FTEU3 raised the safe-haven appeal of the Japanese currency, along with the Swiss franc and the dollar, while the high-risk Australian and New Zealand dollars took a beating.
"Equity markets are weak, so there's been a reasonably large reverse in risk-taking behavior," said Daragh Maher, senior currency strategist at Credit Agricole.
"It's been an amplified reaction, due to limited liquidity, and it will be difficult to tell how far the selling will extend."
By 0944 GMT, the euro had fallen more than 1.5 percent on the day to 107.80 yen according to trading platform EBS, its weakest since late 2001. It fell to 1.3250 francs the lowest since the single currency's 1999 launch.
The Swiss franc has gained broadly since the Swiss National Bank earlier this month backed off its pledged to intervene in the currency market to stem franc strength.
Against sterling, the single currency fell to 80.92 pence, its weakest since November 2008. It fell roughly 0.7 percent on the day to a two-week low of $1.2178, according to Reuters data.
Strikes in Greece and Spain highlighted resistance to Europe-wide austerity measures on Tuesday as the euro and shares tumbled ahead of a deadline for banks to repay a giant European Central Bank cash injection.
The fifth major strike this year by Greek unions disrupted tourism and public transport in protest at planned pension cuts and later retirement, while Spanish workers shut down Madrid's metro system in anger at a 5 percent public sector pay cut.
The risk premium on southern European government bonds over benchmark German bunds widened and the cost of insuring their debt against default rose as investors adjusted to the wider repercussions of the Greek debt crisis on the financial system at the end of the quarter, a traditional stress point.
The Conference Board Tuesday said its leading economic indicator for China rose 0.3% in April, correcting a previous reading of 1.7% increase and attributing the earlier reading to a "calculation error." The 0.3% reading represents a sharp fall from the 1.2% rise recorded in March.
Japanese Finance Minister Yoshihiko Noda said Tuesday that the nation's tax revenues will likely be 1.9 trillion yen ($21 billion) more than previously expected in the fiscal year that ended in March, totalling 38.8 trillion yen, according to published reports. Noda addressed reporters at a regular news conference after a cabinet meeting. Ministry figures also released Tuesday showed that the government sold a smaller amount of bonds than estimated last fiscal year. Due to the higher tax revenue, Japan's bond sales likely amounted to 52 trillion yen, 1.5 trillion yen less than forecast.
Japan's industrial production slipped in May, as did household spending, and the unemployment rate unexpectedly increased, all of which suggest Japan's economic recovery is slowing down.
First-time buyers purchased 46% of existing home sales in May, down from 49% in April.
Tropical Storm Alex, the first named system of the Atlantic hurricane season, strengthened today, forcing the evacuation of rigs in the Gulf of Mexico and pushing swells toward the worst U.S. oil spill.
The storm, packing maximum sustained winds of 70 miles (110 kilometers) per hour, was 460 miles southeast of Brownsville, Texas, before dawn today, moving north-northwest at 8 mph, the U.S. National Hurricane Center said in an advisory. The circulating winds were near reaching hurricane status of 74 mph.
The Economist: "Rising government debt is a Ponzi scheme that requires an ever-growing population to assume the burden -- unless some deus ex machina, such as a technological breakthrough, can boost growth. As Roland Nash, head of research at Renaissance Capital, an investment bank, puts it: "Can the West, with its regulated industry, uncompetitive labour and large government, afford its borrowing-funded living standards and increasingly expensive public sectors?"
Treasuries advanced, pushing two- year yields to a record low and 10-year yields below 3 percent for the first time since April 2009, amid concern European governments’ attempts to rein in debt will hinder growth.
BP is currently drilling two relief wells from rigs that are each about a half-mile from the site of the blown-out well. The first well is about a thousand feet vertically from the interception point and more than 17,000 feet below sea level. The second well, which was started about two weeks later than the first, is not as far along, and Mr. Wells said Monday that if the first well succeeded in plugging the gusher, drilling of the second would be halted.
Bloomberg: "Rather than forcing banks to spin off all derivatives trading as separate businesses -- preventing them from gambling with depositors’ money -- Congress will let them keep trading the instruments if they are hedging their own risks or for interest rate and foreign exchange swaps.
They will have up to two years to move derivatives that can’t be traded through a clearing house, including credit default swaps, into a separately capitalized subsidiary."
"The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7% in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40% in a month."
Today in Texas, one in five people struggle to feed themselves and one in five children live in poverty, according to the Center for Public Policy Priorities in Austin, founded by Benedictine nuns.
Sol Palha: "The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history. The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.
The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of institutional money market funds fell at a 37pc rate, the sharpest drop ever. "It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.
Executives from oil and gas companies on Monday concluded an hour-long meeting with U.S. Interior Secretary Ken Salazar without securing promises from the government to lift a deepwater-drilling moratorium imposed after a disastrous BP oil spill.
Crude oil for August delivery fell $2.45, or 3.1%, to $75.80 a barrel. Gold for the same month lost $1.60, or 0.1%, to $1,237.00 an ounce.
Home prices rose 0.8% in April compared with March in 20 major U.S. cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. This is the first increase after six straight monthly declines. Prices have moved up 3.8% in the past year. Prices rose in 18 of the 20 metropolitan areas tracked by Case-Shiller in April compared with March. The gains highlight the impact of the federal tax credits for homebuyers. Buyers rushed to purchase before the tax credits expired at the end of April.
Nationally, prices have risen 3.8 percent from their April 2009 bottom. But they remain 30 percent below their July 2006 peak. "Inventory data and foreclosure activity have not shown any signs of improvement," David Blitzer, chairman of S&P's index committee, said in a statement. "Consistent and sustained boosts to economic growth from housing may have to wait to next year."
According to Florida Trend magazine, more than $3 billion in “Dirt Bonds” are in default. Dirt bonds are municipal bonds used to fund the development of streets, water lines, and other utilities for the many new communities that were planned during the real-estate boom years in Florida. Dirt bonds are backed by the taxing power of Community Development Districts (CDD) that manage the construction and development of communities. Interest payments are made to investors from reserves set aside until homebuyers and businesses move in to completed houses, office buildings, and strip malls, etc. Then annual taxes are collected, typically escrowed at banks holding mortgages on the properties. The bondholders get their interest payments from collected CDD taxes. An incomplete development doesn't have a tax base to pay bondholders.
The S&P is down sharply but still above the 1041 support level.
FMX Connect: "Natural gas prices gave back 14.4 cents on Monday, after having rallied just slightly more than 11 cents on Friday. That tells us that prices had started to discount Alex before it was even named. It also tells us, with yesterday’s activity, that the reaction was overdone. Traders were covering shorts on Friday, and it looks like huge numbers of covered contracts were matched by almost equally hurried selling, all ahead of Monday’s July contract expiration."
2-year treasury has just hit fresh all time low at 0.586%.
Reuters reports that Russ Feingold "said on Monday that he will not vote to advance the financial-reform bill." With this decision the senator is denying "his fellow Democrats the 60th vote they need to clear a final hurdle in Congress."
"My test for the financial regulatory reform bill is whether it will prevent another crisis," Feingold said in a prepared statement. The bill "fails that test and for that reason I will not vote to advance it."
U.S. consumers are increasingly worried about jobs and the economy, the Conference Board said Tuesday, as it reported that its consumer confidence index plummeted to 52.9 in June - the lowest level since March -- from a downwardly revised 62.7 in May. "Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence," said Lynn Franco, director of Conference Board's consumer research center. "Until the pace of job growth picks up, consumer confidence is not likely to pick up." Earlier this month the government reported that nonfarm payrolls grew by a seasonally adjusted 431,000 in May, but most of the new jobs were temporary jobs at the U.S. Census, with very weak private-sector hiring.
Yves Smith: "While the headline focuses on her outlook for housing, Meredith Whitney is bearish across the board, seeing little reason to cheer on the employment and bank earnings fronts. She sees a 10% fall in housing prices in the next six months (!), which will hit bank earnings (Whitney has argued since at least early 2009 that banks have been goosing earning by underreserving for losses) and the economy generally (a further decline in home equity plus lack of mobility of consumers wanting to sell their houses but facing a declining market has implications for consumer spending generally). She point out that consumer credit is tightening, which puts a crimp on small businesses (both via lower revenues and via restricted access to funds), the biggest engine of hiring, and on top of that, municipalities and states are cutting spending and shedding jobs."
Charles Hugh Smith: "A significant percentage of the U.S. trade deficit is due to importing petroleum. Minus out the oil imports, and we see that the U.S. imports have fallen considerably...U.S. policy pursues the goal of expanding exports to reduce the trade deficit. Desperate exporters might find the global market for their goods has shrunk, which means their domestic economies are vulnerable to a slowdown in exports."
BP Plc Chief Executive Officer Tony Hayward has the backing of the board and is not about to resign, according to Iain Conn, the oil company’s head of refining and marketing.
1-year Treasury at 1/4 of 1%!
Apple Inc. Chief Executive Officer Steve Jobs is due to attend the annual Allen & Co. media conference in Sun Valley, Idaho, giving him a chance to court executives he needs to add content to his company’s products.
China will cut duties on fuel oil, copper foil and about 500 other Taiwanese goods, underscoring the success of Taiwan President Ma Ying-jeou’s two-year drive for rapprochement between the civil war foes.
The Oil Drum: "As of 7am ET, Alex is just short of hurricane strength, moving slowly northwest, and continues to develop slowly. It should be declared a hurricane later today. Track guidance has consolidated somewhat, with most of the reliable models showing landfall in northern Mexico or South Texas. Hurricane Warning are now up for these coasts (Note that this year Warnings are issued at 36 hours - in previous years, a "warning" was not issued until the storm was 24 hours out). A turn more westward is anticipated today or tomorrow. There is still some uncertainty as to when and how sharp that turn will be."
BP pays U.S. first $69 mln over Gulf spill.
Liquefied natural gas tankers parked off Fujairah in the United Arab Emirates are storing the equivalent to about three months of China’s average purchases, signaling an oversupply in the market.
About 43 percent of the total capacity of tankers in the Gulf of Oman are holding LNG, Pan EurAsian Enterprises Inc. said in an e-mail yesterday, citing data from Odysseus tracking service. That’s equivalent to about 1.4 million metric tons of the cleaner-burning fuel. China imported 7.63 billion cubic meters, or 5.6 million tons, last year, according to BP Plc’s Statistical Review of World Energy 2010.
An oversupply of gas and weak demand have sent spot charter rates to the cheapest in five years, prompting producers and traders to take advantage of the low charges to store the fuel. Qatar, the world’s biggest producer of LNG, was idling at least eight tankers in the Gulf of Oman as of June 3, according to ship-tracking data from AIS Live Ltd. The vessels have a combined capacity of 1.8 million cubic meters, enough to supply the U.K. for more than a month.
China's first oil recovery vessel to deal with offshore oil spillage has made its maiden voyage in Tianjin on Tuesday to start its environmental protection mission in the country's waters.
The vessel, the first of this kind in China with a name "Offshore Oil 252", could clean up oil pollutions happening during the offshore oil production and also serve as a fire-fighting vessel in an emergency.
President Barack Obama says he expects Congress to pass a financial regulation bill even without the vote of the late Democratic Sen. Robert Byrd.
The Dow Jones Industrial Average fell 268 points, or 2.7%, to 9,870.30, its lowest close since early November. The S&P 500 index lost 33.33 points, or 3.1%, to 1,041.24, its lowest level since late October. The broad index was weighed down by a 3.9% drop in both its industrials and financials sectors. The tech-heavy Nasdaq Composite was the hardest hit of the three major averages, slumping 85.47 points, or 3.9%, to 2,135.18.
Prior to the close the S&P did not hold the 1041 level even though it closed there.
Oil for August delivery lost $2.31, or 3%, to $75.94 a barrel. Natural gas for August delivery retreated 19 cents, or 3.9%, to $4.54 per million British thermal units.
U.S. companies may be required to secure as much as $1 trillion due to a change in the wording of the financial reform bill currently being finalized in Congress, according to the International Swaps and Derivatives Association Tuesday. The group said companies will need a combined $400 billion for collateral to cover the current exposure of their over-the-counter derivatives transactions and another $370 billion in additional credit capacity to cover potential future exposure of those transactions. "If markets return to levels prevailing at the end of 2008, additional collateral needs would bring the total to $1 trillion," said ISDA in its report.
The American Petroleum Institute on Tuesday reported a decline of 3.4 million barrels in the nation's oil stockpiles in the week ended June 25. The Washington-based trade group also reported that gasoline stockpiles fell by 908,000 barrels while oil distillates rose by 3.98 million barrels. The refinery run rate slipped to 86.9% compared with 87.2% in the week ended June 18. A Citibank analyst had projected crude stocks to fall by 1 million to 2 million barrels and gasoline supplies to either fall or rise by 500,000 barrels. Distillate supplies were expected to rise by 1 million to 2 million barrels and the so-called run rate was projected to remain unchanged at 89.4%. The API data comes ahead of the more closely watched report by the Department of Energy, which will be released Wednesday at 10:30 a.m. Crude for August delivery fell 0.2% to $75.82 a barrel in electronic trading after the contract closed with a 3% loss to $75.94 in floor trading.
ZeroHedge: "June 29 ended up joining a list of such memorable dates as The Bear Stearns Crash, the May Flash Crash, the Lehman Crash, and the March 2009 666 crash: based on the TRIN/ARMS index, the NYSE index hit 5.88. It has been higher on just 4 other times before, specifically the four dates noted above. The indicator tracks up/down stocks divided by up/down volume on the NYSE -the higher the number, the greater the rush into decliners. Today's reading indicated that on the NYSE people could not get enough of selling, and in size. What is more worrisome is that in the last two months, we have seen an amplitude in the TRIN that has never occurred before: it has approached 0 (on low-volume melt up days), all the way to 12+ on 5/6 and nearly 6 today. This simply means that, as we have been claiming for a long time, there is increasingly less liquidity in the market. And we are talking real deep liquidity, not the churn BS that HFT algos do in Citi and now Tesla (thank you Goldman), and then, oops, drop all bids when something odd happens on 8,800 shares and the NYSE has to come in, bail out the market, and in the process derail the order flow of millions of shares of pent up supply and demand. A few more episodes like that and there will no demand and a lot of supply."
Monday, June 28, 2010
Challenging Downturn
6/28/10 Challenging Downturn
John Hussman: "Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn....Based on our standard valuation methods, the S&P 500 Index would have to drop to about 500 to match historical post-war points of secular undervaluation, such as June 1950, September 1974, and July 1982. We do not have to contemplate outcomes such as April 1932 (when the S&P 500 dropped to just 2.8 times its pre-Depression earnings peak) to allow for the possibility of further market difficulty in the coming years. Even strictly post-war data is sufficient to establish that the lows we observed in March 2009 did not represent anything close to generational undervaluation. We face real, structural economic problems that will not go away easily, and it is important to avoid the delusion that the average valuations typical of the recent bubble period represent sustainable norms."
BP said the costs of cleaning up the Gulf of Mexico oil spill, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs, have reached $2.65 billion, a $300 million increase from what BP said on Friday. Work on the first floating riser containment system, which will be connected to the Helix Producer vessel, is still anticipated to begin first operations at the end of June or in early July, which would take remains on schedule. It is currently anticipated that this system should increase total oil containment capacity by 20,000 to 25,000 barrels a day to a total of 40,000 to 50,000 barrels a day. A second floating riser system and additional capacity through a new cap on the blowout preventer are due in mid-July.
BP bought back more than $37 billion of its stock in a bid to return money to investors between 2005 and 2008. Those shares are now worth $15 billion, excluding dividends.
WSJ: Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking significant payouts from BP for lost revenue and other damages stemming from the oil spill.
U.S. foreclosure filings fell 3% in May from a month earlier, although bank repossessions set a new monthly record, according to market researcher RealtyTrac.
Foreclosure filings were made on 322,920 U.S. properties in May, up less than 1% from a year earlier. Bank repossessions hit a record monthly high.
Russia's state RIA Novosti news agency is quoting a senior Russian Cabinet official as saying that BP Chief Executive Tony Hayward is expected to resign, a report BP denied.
Paul Krugman: "
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."
Commodity-shipping costs, which have dropped for 21 straight days, may fall as much as 20% in the third quarter because of an expanding fleet of dry-bulk vessels and slowing Chinese demand for iron ore, according to Mirae Asset Securities Co. Total capacity increased 7.2% in the first five months of the year, according to Clarkson Plc, the world's largest shipbroker. The global bulk fleet may expand 14% this year, as shipping lines move ahead with deliveries delayed during the credit crisis and global economic slump, according to Woori Investment & Securities Co.
G-8 Leaders Expect Israel May Act on Iran Nuclear Program, Berlusconi Says. Group of Eight leaders expect Israel may decide to take action against Iran out of concern that the country is building nuclear weapons, Italian Prime Minister Silvio Berlusconi said. Since “Iran is not guaranteeing a peaceful production of nuclear power, the members of the G-8 are worried, and believe absolutely that Israel will probably react preemptively,” Berlusconi told reporters today in Huntsville, Ontario, after a two-day meeting with other G-8 leaders. He didn’t elaborate.
U.S. reports showed consumer prices rose 0.2%, spending rose 0.3%, while the savings rate increased to the highest in eight months. Personal income increased $53.7 billion, or 0.4 percent, and disposable personal income (DPI)increased $49.0 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $24.4 billion, or 0.2 percent. In April, personal income increased $59.4 billion, or 0.5 percent, DPI increased $63.7 billion, or 0.6 percent, and PCE increased $1.4 billion, or less than 0.1 percent, based on revised estimates. Real disposable income increased 0.5 percent in May, compared with an increase of 0.6 percent in April. Real PCE increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.
Private wage and salary disbursements increased $22.8 billion in May,
compared
with an increase
of $28.5 billion in April. Goods-producing industries' payrolls increased $10.3 billion, compared
with an increase of $6.1 billion; manufacturing payrolls increased $7.8 billion, compared with
an increase of $4.6 billion. Services-producing industries' payrolls increased $12.6 billion, compared
with an increase of $22.2 billion.
Government wage and salary disbursements increased $6.6 billion in May, compared with an increase
of $2.5 billion in April. Census decennial temporary and intermittent workers boosted government wages
and salaries by $5.7 billion in May.
Iran is prepared to resume talks over its nuclear program but will
wait until late August as punishment for recently imposed U.N.
sanctions, President Mahmoud Ahmadinejad said Monday. The outcome
of the talks will depend on whether Western powers hold Israel to the
same standards over its nuclear program, Ahmadinejad said at a news
conference.
The 30-year U.S. treasury yield drops to 4% and the 10-year to 3.03%.
The Dow Jones Industrial Average fell 5.29 points, or 0.1%, to 10,138.52. The S&P 500 Index dropped 2.19 points, or 0.2%, to 1,074.57. The Nasdaq Composite Index
dropped 2.83 points, or 0.1%, to 2,220.65.
John Hussman: "Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn....Based on our standard valuation methods, the S&P 500 Index would have to drop to about 500 to match historical post-war points of secular undervaluation, such as June 1950, September 1974, and July 1982. We do not have to contemplate outcomes such as April 1932 (when the S&P 500 dropped to just 2.8 times its pre-Depression earnings peak) to allow for the possibility of further market difficulty in the coming years. Even strictly post-war data is sufficient to establish that the lows we observed in March 2009 did not represent anything close to generational undervaluation. We face real, structural economic problems that will not go away easily, and it is important to avoid the delusion that the average valuations typical of the recent bubble period represent sustainable norms."
BP said the costs of cleaning up the Gulf of Mexico oil spill, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs, have reached $2.65 billion, a $300 million increase from what BP said on Friday. Work on the first floating riser containment system, which will be connected to the Helix Producer vessel, is still anticipated to begin first operations at the end of June or in early July, which would take remains on schedule. It is currently anticipated that this system should increase total oil containment capacity by 20,000 to 25,000 barrels a day to a total of 40,000 to 50,000 barrels a day. A second floating riser system and additional capacity through a new cap on the blowout preventer are due in mid-July.
BP bought back more than $37 billion of its stock in a bid to return money to investors between 2005 and 2008. Those shares are now worth $15 billion, excluding dividends.
WSJ: Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking significant payouts from BP for lost revenue and other damages stemming from the oil spill.
U.S. foreclosure filings fell 3% in May from a month earlier, although bank repossessions set a new monthly record, according to market researcher RealtyTrac.
Foreclosure filings were made on 322,920 U.S. properties in May, up less than 1% from a year earlier. Bank repossessions hit a record monthly high.
Russia's state RIA Novosti news agency is quoting a senior Russian Cabinet official as saying that BP Chief Executive Tony Hayward is expected to resign, a report BP denied.
Paul Krugman: "
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."
Commodity-shipping costs, which have dropped for 21 straight days, may fall as much as 20% in the third quarter because of an expanding fleet of dry-bulk vessels and slowing Chinese demand for iron ore, according to Mirae Asset Securities Co. Total capacity increased 7.2% in the first five months of the year, according to Clarkson Plc, the world's largest shipbroker. The global bulk fleet may expand 14% this year, as shipping lines move ahead with deliveries delayed during the credit crisis and global economic slump, according to Woori Investment & Securities Co.
G-8 Leaders Expect Israel May Act on Iran Nuclear Program, Berlusconi Says. Group of Eight leaders expect Israel may decide to take action against Iran out of concern that the country is building nuclear weapons, Italian Prime Minister Silvio Berlusconi said. Since “Iran is not guaranteeing a peaceful production of nuclear power, the members of the G-8 are worried, and believe absolutely that Israel will probably react preemptively,” Berlusconi told reporters today in Huntsville, Ontario, after a two-day meeting with other G-8 leaders. He didn’t elaborate.
U.S. reports showed consumer prices rose 0.2%, spending rose 0.3%, while the savings rate increased to the highest in eight months. Personal income increased $53.7 billion, or 0.4 percent, and disposable personal income (DPI)increased $49.0 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $24.4 billion, or 0.2 percent. In April, personal income increased $59.4 billion, or 0.5 percent, DPI increased $63.7 billion, or 0.6 percent, and PCE increased $1.4 billion, or less than 0.1 percent, based on revised estimates. Real disposable income increased 0.5 percent in May, compared with an increase of 0.6 percent in April. Real PCE increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.
Private wage and salary disbursements increased $22.8 billion in May,
compared
with an increase
of $28.5 billion in April. Goods-producing industries' payrolls increased $10.3 billion, compared
with an increase of $6.1 billion; manufacturing payrolls increased $7.8 billion, compared with
an increase of $4.6 billion. Services-producing industries' payrolls increased $12.6 billion, compared
with an increase of $22.2 billion.
Government wage and salary disbursements increased $6.6 billion in May, compared with an increase
of $2.5 billion in April. Census decennial temporary and intermittent workers boosted government wages
and salaries by $5.7 billion in May.
Iran is prepared to resume talks over its nuclear program but will
wait until late August as punishment for recently imposed U.N.
sanctions, President Mahmoud Ahmadinejad said Monday. The outcome
of the talks will depend on whether Western powers hold Israel to the
same standards over its nuclear program, Ahmadinejad said at a news
conference.
The 30-year U.S. treasury yield drops to 4% and the 10-year to 3.03%.
The Dow Jones Industrial Average fell 5.29 points, or 0.1%, to 10,138.52. The S&P 500 Index dropped 2.19 points, or 0.2%, to 1,074.57. The Nasdaq Composite Index
dropped 2.83 points, or 0.1%, to 2,220.65.
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