7/9/06 Either Way
John Mauldin: "Either the economy slows down, which is not good for the stock market, or the Fed is going to keep raising rates, which is not good for the stock market. Either way, we are going to get to buy back into this market at a much lower place than 11,000 on the Dow."
The number of job cuts announced by U.S. corporations rose to 67,176 in June from 53,716 in May, according to a Challenger, Gray & Christmas survey released Thursday.This marked the first monthly job-cut increase in six months, the company said. The report noted "job cuts are still at a much slower pace than a year ago."
Doug Noland: "That bond markets seem so willing to dismiss the possibility on an intransigent global inflationary boom has me rather fascinated. I would suggest, however, that any decline in market yields at this point plays right into the hands of ongoing Credit Inflation and Problematic Excess (not to mention $80 crude!). And whether it is willing to accept the responsibility or not, it appears it will be the bond market that must at some point wrest power away from the brutish inflationary boom. This is not the '90's; there's no slack left in global resource markets; $800 billion Current Account Deficits are a disaster in the making; dollar prospects are a serious global issue; and this synchronized global boom has "trouble" written all over it. And that's about as concise as I get."
China, the world's fourth-largest economy, is not a G8 member. Neither is India, the world's largest democracy and one of its fastest-growing economies. Nor is South Korea, Brazil, Mexico or Spain, each with a larger economy than G-8 member Russia's. In fact, Spain recently inched past member Canada as the world's No. 8 economy, according to a World Bank tabulation.
Bill Gross, chief investment officer at Pacific Investment Management Co. and manager of the world's biggest bond fund, said the bear market in bonds is over.
``The bond bear market is beginning to go into hibernation, which is the same thing as saying the bear market's over,'' said Gross in a television interview from the firm's headquarters in Newport Beach, California. ``It ended two days ago on Wednesday. While we're not about to reap huge capital gains, bonds will do better from here in terms of price.'' Bill Gross has been wrong about the direction of interest rates for the past year.
Saturday, July 08, 2006
Friday, July 07, 2006
Exploring New Ground
7/8/06 Exploring New Ground
"We will enter into discussions with the managements of Renault and Nissan with an open mind -- eager to hear their ideas of how an alliance between our companies might work to our mutual benefit," said Rick Wagoner, GM's chairman and chief executive.
Crude traded at a new record high on Friday. After touching $75.66, crude dipped to close at $74.05.
In June the 3.9% year over year wage increase was the highest in 5 years. Although job creation only amounted to 121,000 new jobs, it should be noted that the average workweek rose to 33.9 hours from 33.8 hours in May; however, overtime hours were unchanged. With 144.4 million people employed in the workforce, that 0.1 additional hour in the workweek equates to 144,400 more jobs.
Susan B. Anthony: "Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences."
Mark Warshawsky, the Treasury assistant secretary for economic policy stated U.S. job growth should average in the range of 125,000 to 150,000 per month for the remainder of the year, Warshawsky said. The rise in wages is not a "per se source of concern for inflation," he said. Of course, he is not concerned because he does not have to meet a payroll.
The August fed funds futures contract implies about a 60% chance that the Fed will raise its fed funds target to 5.50% from 5.25%.
This has been the third longest period on record without a 10% correction in the equity market.
Advanced Micro Devices expects to report second-quarter sales of $1.22 billion, down 9% from its first-quarter results.
U.S. natural-gas inventories rose 73 billion cubic feet for the week ended June 30, according to the Energy Department. August natural gas was last down 5.4 cents at $5.60 per million British thermal units, after trading near a two-year low of $5.56.
3M Co. warned of an earnings shortfall and the stock got clipped for 6 points.
The dollar fell the most in a week against the yen after Japan's government said its economy is heating up while the June jobs report suggested U.S. growth is cooling. The U.S. currency dropped to a four-week low against the yen and euro. Meanwhile, the U.S. dollar index weakened to 84.50, while the yield on the 10-year Treasury fell to 5.13% and the 2-year to 5.17%. The 30-year fell to 5.17%.
Dominion Homes Inc. reported sales of 356 homes worth $66.2 million during the second quarter vs. 655 homes worth $123.1 million in the same period a year earlier.
Joaquin Setanti: "Be wary of the man who urges an action in which he himself incurs no risk."
It's getting more difficult to figure the VIX. Even though equities had a lousy day on Friday, the VIX had almost no volatility and managed only a less than one point gain.
Marc Faber: "In short, whereas I do expect central banks to embark anew on massive "money printing" in future, and to flood the system with even greater liquidity injection than they have done since 2001, for the next three to six months or so, global liquidity may not rise sufficiently to keep the global economy on its growth trajectory and asset prices from declining."
"We will enter into discussions with the managements of Renault and Nissan with an open mind -- eager to hear their ideas of how an alliance between our companies might work to our mutual benefit," said Rick Wagoner, GM's chairman and chief executive.
Crude traded at a new record high on Friday. After touching $75.66, crude dipped to close at $74.05.
In June the 3.9% year over year wage increase was the highest in 5 years. Although job creation only amounted to 121,000 new jobs, it should be noted that the average workweek rose to 33.9 hours from 33.8 hours in May; however, overtime hours were unchanged. With 144.4 million people employed in the workforce, that 0.1 additional hour in the workweek equates to 144,400 more jobs.
Susan B. Anthony: "Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences."
Mark Warshawsky, the Treasury assistant secretary for economic policy stated U.S. job growth should average in the range of 125,000 to 150,000 per month for the remainder of the year, Warshawsky said. The rise in wages is not a "per se source of concern for inflation," he said. Of course, he is not concerned because he does not have to meet a payroll.
The August fed funds futures contract implies about a 60% chance that the Fed will raise its fed funds target to 5.50% from 5.25%.
This has been the third longest period on record without a 10% correction in the equity market.
Advanced Micro Devices expects to report second-quarter sales of $1.22 billion, down 9% from its first-quarter results.
U.S. natural-gas inventories rose 73 billion cubic feet for the week ended June 30, according to the Energy Department. August natural gas was last down 5.4 cents at $5.60 per million British thermal units, after trading near a two-year low of $5.56.
3M Co. warned of an earnings shortfall and the stock got clipped for 6 points.
The dollar fell the most in a week against the yen after Japan's government said its economy is heating up while the June jobs report suggested U.S. growth is cooling. The U.S. currency dropped to a four-week low against the yen and euro. Meanwhile, the U.S. dollar index weakened to 84.50, while the yield on the 10-year Treasury fell to 5.13% and the 2-year to 5.17%. The 30-year fell to 5.17%.
Dominion Homes Inc. reported sales of 356 homes worth $66.2 million during the second quarter vs. 655 homes worth $123.1 million in the same period a year earlier.
Joaquin Setanti: "Be wary of the man who urges an action in which he himself incurs no risk."
It's getting more difficult to figure the VIX. Even though equities had a lousy day on Friday, the VIX had almost no volatility and managed only a less than one point gain.
Marc Faber: "In short, whereas I do expect central banks to embark anew on massive "money printing" in future, and to flood the system with even greater liquidity injection than they have done since 2001, for the next three to six months or so, global liquidity may not rise sufficiently to keep the global economy on its growth trajectory and asset prices from declining."
Thursday, July 06, 2006
Jobs And Wages
7/7/06 Jobs And Wages
The keys to Friday's nonfarm payroll report do not reside in the number of new jobs but rather the wages per hour, the number of hours worked each week, the number of overtime hours worked, and not the occupational shortages in such lines of work as truck driving. In addition, keep in mind that summer jobs began in the month of June. Many businesses will be more than happy to employ college and high school students on a 32-hour per week basis and not pay competitive wages or pay for health care etc.
Federal Reserve monetary policy is not a good tool to initiate necessary adjustment in the U.S. current account gap, said Fed Vice Chairman Donald Kohn on Thursday. The "enormous" current account deficit, near $800 billion or 6.5% of GDP, is unsustainable, Kohn said, although it is not likely to shrink substantially in the immediate future, Kohn said in remarks to a conference at the House of Commons in London. "Adjustment will need to proceed along several dimensions at the same time, including changes in relative prices and in domestic demand around the globe," Kohn said. He said that continuing strong demand for dollar assets will be critical for keeping the unwinding of the deficit smooth. "As long as inflation expectations remain contained, relatively faster growth of the prices of imported goods for a time would be associated with only a temporary bulge in inflation and would result in a needed change in relative prices," Kohn said. I believe in the tooth fairy too!
Mae West: "There are no withholding taxes on the wages of sin."
The Florida Supreme Court has thrown out a $145 billion punitive damage award against cigarette makers - and decertified the case as a class action -- in a huge victory for the tobacco industry.
Peoples Energy Corp. on Thursday confirmed it's in talks with WPS Resources Corp. over a possible strategic transaction. The Wall Street Journal reported that WPS is looking to buy Chicago-based Peoples Energy for $1.5 billion.
Nonmanufacturing sectors of the U.S. economy expanded at a slower pace during June, the Institute for Supply Management reported Thursday. The ISM nonmanufacturing index fell to 57.0% from 60.1% in May. This is the slowest pace since January. New orders fell to 56.6% from 59.6%. The employment index fell to 52.0% from 58.0%. The price index slipped to 73.9% from 77.5% in the previous month.
The U.S. housing market is stabilizing, the National Association of Realtors said Thursday. The NAR's pending home sales index rose 1.3% in May, the first increase since January. The index is down 10.1% in the past year.
Applications for mortgages at U.S. banks rose by 5.9% last week, the Mortgage Bankers Association said Thursday. Applications are down 33.3% in the past year.
Russia produces 9.5 million barrels of oil per day and exports about 6.7 million barrels a day, second in both categories only to Saudi Arabia. The Russian Parliament passed a law Wednesday granting exclusive rights to export natural gas to Gazprom, the state-owned energy company and the supplier of a quarter of Europe's gas.
August crude fell 5 cents to close at $75.14 a barrel Thursday. August natural gas finished at its lowest level since September 2004, down 10.1 cents at $5.664 per million British thermal units.
Brookfield Homes Corp. said late Thursday net new orders for the second quarter totaled 255 units, down 49% from the same period last year. Brookfield said the decline in new orders continues to be primarily in the San Diego/Riverside, Calif., areas and Washington D.C. markets.
Gold for August delivery closed up $6.60 at $636.30 an ounce on the New York Mercantile Exchange. Silver added 17.20 cents at $11.507 an ounce, platinum edged up $1.0 at $1,249.60 an ounce and palladium rose $3.15 at $330.85 an ounce. Copper added 22.0 cents at $3.7145 a pound.
Norway is the third biggest oil exporter in the world. On June 21, 87 members of the Norwegian Oil and Petrochemical Workers Union went on strike following failed wage negotiations with the Norwegian Oil Industry Association, or OLF. The strike is now into its third week.
ConocoPhillips stated "Worldwide refining margins for the second quarter are expected to be significantly higher than the first quarter. Light-heavy crude oil differentials remained strong and turnaround activity decreased in the second quarter. Turnaround costs are expected to be approximately $120 million before-tax. The company's average crude oil refining capacity utilization rate for the second quarter is expected to be in the low-90-percent range. This represents an increase from the first quarter, which was impacted by significant turnaround activity and unplanned downtime."
More than four decades after fighting a bitter border war, China and India have resumed trade along an ancient Himalayan route.
The average monthly value for the trade-weighted Atlanta Fed dollar index of 15 major currencies rose 1.3% in June, according to a statement on the bank's web site Thursday. The index, however, was down 2.6% compared to a year ago.
I expect the ECB to raise rates on August 3.
In the past 48 hours I have received numerous emails requesting my estimate for the June nonfarm payrolls. Please don't put any weight in my estimate of 214,300. It has little value.
Oil prices will soar to well over $100 a barrel and stay high as part of a sustained commodities bull run that has another 15 years to run, Jim Rogers told Reuters in an interview.
Marc Faber: " It is important for investors to understand that when markets begin to move sharply in the opposite direction of the prevailing trend - that is, from down to up or from up to down, as was the case just recently - the reason for the trend reversal is usually not known for quite some time.
But a well-established fact is that equity bull markets get under way amidst dismal economic and financial conditions, while bear markets begin when everything looks at its brightest, such as was recently the case (at least superficially). Moreover, the more speculation there was in a market, the more likely it is that the correction could be serious and take the proportions of a bear market (down 20-40% or more)...my concern remains the same: before the final debt crisis hits, we might see very high rates of inflation - most likely hyperinflation, with all asset and consumer prices soaring (amidst falling real incomes)."
The keys to Friday's nonfarm payroll report do not reside in the number of new jobs but rather the wages per hour, the number of hours worked each week, the number of overtime hours worked, and not the occupational shortages in such lines of work as truck driving. In addition, keep in mind that summer jobs began in the month of June. Many businesses will be more than happy to employ college and high school students on a 32-hour per week basis and not pay competitive wages or pay for health care etc.
Federal Reserve monetary policy is not a good tool to initiate necessary adjustment in the U.S. current account gap, said Fed Vice Chairman Donald Kohn on Thursday. The "enormous" current account deficit, near $800 billion or 6.5% of GDP, is unsustainable, Kohn said, although it is not likely to shrink substantially in the immediate future, Kohn said in remarks to a conference at the House of Commons in London. "Adjustment will need to proceed along several dimensions at the same time, including changes in relative prices and in domestic demand around the globe," Kohn said. He said that continuing strong demand for dollar assets will be critical for keeping the unwinding of the deficit smooth. "As long as inflation expectations remain contained, relatively faster growth of the prices of imported goods for a time would be associated with only a temporary bulge in inflation and would result in a needed change in relative prices," Kohn said. I believe in the tooth fairy too!
Mae West: "There are no withholding taxes on the wages of sin."
The Florida Supreme Court has thrown out a $145 billion punitive damage award against cigarette makers - and decertified the case as a class action -- in a huge victory for the tobacco industry.
Peoples Energy Corp. on Thursday confirmed it's in talks with WPS Resources Corp. over a possible strategic transaction. The Wall Street Journal reported that WPS is looking to buy Chicago-based Peoples Energy for $1.5 billion.
Nonmanufacturing sectors of the U.S. economy expanded at a slower pace during June, the Institute for Supply Management reported Thursday. The ISM nonmanufacturing index fell to 57.0% from 60.1% in May. This is the slowest pace since January. New orders fell to 56.6% from 59.6%. The employment index fell to 52.0% from 58.0%. The price index slipped to 73.9% from 77.5% in the previous month.
The U.S. housing market is stabilizing, the National Association of Realtors said Thursday. The NAR's pending home sales index rose 1.3% in May, the first increase since January. The index is down 10.1% in the past year.
Applications for mortgages at U.S. banks rose by 5.9% last week, the Mortgage Bankers Association said Thursday. Applications are down 33.3% in the past year.
Russia produces 9.5 million barrels of oil per day and exports about 6.7 million barrels a day, second in both categories only to Saudi Arabia. The Russian Parliament passed a law Wednesday granting exclusive rights to export natural gas to Gazprom, the state-owned energy company and the supplier of a quarter of Europe's gas.
August crude fell 5 cents to close at $75.14 a barrel Thursday. August natural gas finished at its lowest level since September 2004, down 10.1 cents at $5.664 per million British thermal units.
Brookfield Homes Corp. said late Thursday net new orders for the second quarter totaled 255 units, down 49% from the same period last year. Brookfield said the decline in new orders continues to be primarily in the San Diego/Riverside, Calif., areas and Washington D.C. markets.
Gold for August delivery closed up $6.60 at $636.30 an ounce on the New York Mercantile Exchange. Silver added 17.20 cents at $11.507 an ounce, platinum edged up $1.0 at $1,249.60 an ounce and palladium rose $3.15 at $330.85 an ounce. Copper added 22.0 cents at $3.7145 a pound.
Norway is the third biggest oil exporter in the world. On June 21, 87 members of the Norwegian Oil and Petrochemical Workers Union went on strike following failed wage negotiations with the Norwegian Oil Industry Association, or OLF. The strike is now into its third week.
ConocoPhillips stated "Worldwide refining margins for the second quarter are expected to be significantly higher than the first quarter. Light-heavy crude oil differentials remained strong and turnaround activity decreased in the second quarter. Turnaround costs are expected to be approximately $120 million before-tax. The company's average crude oil refining capacity utilization rate for the second quarter is expected to be in the low-90-percent range. This represents an increase from the first quarter, which was impacted by significant turnaround activity and unplanned downtime."
More than four decades after fighting a bitter border war, China and India have resumed trade along an ancient Himalayan route.
The average monthly value for the trade-weighted Atlanta Fed dollar index of 15 major currencies rose 1.3% in June, according to a statement on the bank's web site Thursday. The index, however, was down 2.6% compared to a year ago.
I expect the ECB to raise rates on August 3.
In the past 48 hours I have received numerous emails requesting my estimate for the June nonfarm payrolls. Please don't put any weight in my estimate of 214,300. It has little value.
Oil prices will soar to well over $100 a barrel and stay high as part of a sustained commodities bull run that has another 15 years to run, Jim Rogers told Reuters in an interview.
Marc Faber: " It is important for investors to understand that when markets begin to move sharply in the opposite direction of the prevailing trend - that is, from down to up or from up to down, as was the case just recently - the reason for the trend reversal is usually not known for quite some time.
But a well-established fact is that equity bull markets get under way amidst dismal economic and financial conditions, while bear markets begin when everything looks at its brightest, such as was recently the case (at least superficially). Moreover, the more speculation there was in a market, the more likely it is that the correction could be serious and take the proportions of a bear market (down 20-40% or more)...my concern remains the same: before the final debt crisis hits, we might see very high rates of inflation - most likely hyperinflation, with all asset and consumer prices soaring (amidst falling real incomes)."
Wednesday, July 05, 2006
Crude, Jobs, Bonds, And The $
7/6/06 Crude, Jobs, Bonds, And The $
August crude climbed as high as $75 a barrel in New York, the highest price the contract has seen since May 12, when it reached an intraday peak of $75.15. When will gas at the pump reach $3.50 a gallon?
General Motors will hold a special meeting of the board of directors via teleconference on Friday.
The Commerce Dept reported stronger-than-expected factory orders for May with orders rising 0.7% in the month against expectations of a 0.1% rise. That helped to push interest rates high. The 10-year Treasury rose to a 5.23% yield and the 30-year to 5.28%.
A report from the largest paycheck processor, Automatic Data Processing Inc., showed U.S. employers added 368,000 jobs in June, the most since 2001.
The Mexican election is getting even more interesting. Late Tuesday, election officials added 2.5 million votes to the public count. Lopez Obrador outpolled Calderon on these ballots by more than 145,000 votes, narrowing Calderon's lead to slightly more than 257,000 ballots, or 0.6 percentage point. Election authorities said that as many as 900,000 votes remained to be added to the official tally because polling station results had not yet arrived at regional election headquarters. An undetermined number are from the remotest rural areas of southern Mexico, which lean toward Lopez Obrador.The new figures were released after Lopez Obrador charged Monday that more than 3 million votes had been "lost" from the preliminary tallies released by the Federal Electoral Tribunal. I wonder if all the votes will be counted. Maybe the U.S. Supreme Court can act as special advisor along with ChoicePoint. In the wondering department. Will Bush go to Kenny Boy Lay's funeral? After all, they have been such good friends.
"Televisa is prepared to discuss with you (the consortium) a sale of its shares of Univision as soon as possible based on the present value of the price per share set forth in the merger agreement," Grupo Televisa said in a filing with the U.S. Securities and Exchange Commission.
Televisa said that the sale of its stake in Univision would release it from a 1996 Participation Agreement with Univision chairman and controlling shareholder Jerrold Perenchio that barred it from exploring rival business openings in the United States.
"If it is not bound by the Participation Agreement, Televisa will be able to engage in new business opportunities in the growing U.S. Hispanic marketplace related to its programming or otherwise without offering Univision participation in such opportunities," Televisa said in a separate statement.
Iran will start the initial phase of its planned Iranian oil bourse at the end of September, the news agency ISNA reported Wednesday. An unnamed oil ministry official told ISNA that his ministry had already presented the relevant documents to the economic and finance ministry and the bourse organization. The exchange is slated to replace the current dollar-based oil exchange with one based on the euro.. The International Petroleum Exchange in London and the New York Mercantile Exchange, on which oil is currently traded, both use the dollar. Iran argues that as long as 60 percent of global oil and 25 percent of natural gas needs are met by Gulf states, oil dealing in either New York or London made no sense.
The Central Intelligence Agency (CIA) has closed a unit that for a decade was charged with looking for Osama bin Laden and his senior lieutenants, The New York Times reported.
The unit, known as Alec Station, was disbanded late last year and its analysts were reassigned within the CIA Counter-terrorist Centre, intelligence officials told the newspaper. For a moment, I had this insane idea that bin Laden was responsible for 9/11. I must have been dreaming it up. It's a good thing Bush is so strong on fighting terror.
Some day there is going to be a Bush Jr. presidential library. However, it will be sealed like a tomb. All the presidential papers are sealed.
August gold rose $13.70, or 2.2%, to close at $629.70 an ounce and September silver added 49.5 cents, or 4.5%, to close at $11.415 an ounce, its highest closing level since June 7.
I wonder whether Bush will be going to Kenny Boy Lay's funeral.
China and Russia resisted an attempt by the U.S., Japan, and Britain to impose sanctions against North Korea for its missile launches Wednesday, saying only diplomacy could halt the isolated regime's nuclear and rocket development programs.
Richard Daughty: "Now combine that Classic Mogambo Sign (CMS) with the dismal fact that the Fed only bought up a miniscule $52 million in government debt last week. And then combine that with the ugly fact that foreign central banks only put a stinking, piddly $830 million into buying more U.S. government and agency debt.
Money is suddenly disappearing, and this is not good for stock prices, or housing prices."
According to Tom Blackburn of the Palm Beach Post, Cheney has invested heavily in "a fund that specializes in short-term municipal bonds, a tax-exempt money market fund and an inflation protected securities fund. The first two hold up if interest rates rise with inflation. The third is protected against inflation."Cheney has dumped another (estimated) $10 to $25 million in a European bond fund which tells us that he is counting on a steadily weakening dollar.
Despite the weakness in equities, especially the Nasdaq, the range for the VIX on Wednesday was only about one point, and the index managed a slight gain of about one point to 14.15. The lack of volatility is surprising.
John Adams: "The happiness of society is the end of government."
August crude climbed as high as $75 a barrel in New York, the highest price the contract has seen since May 12, when it reached an intraday peak of $75.15. When will gas at the pump reach $3.50 a gallon?
General Motors will hold a special meeting of the board of directors via teleconference on Friday.
The Commerce Dept reported stronger-than-expected factory orders for May with orders rising 0.7% in the month against expectations of a 0.1% rise. That helped to push interest rates high. The 10-year Treasury rose to a 5.23% yield and the 30-year to 5.28%.
A report from the largest paycheck processor, Automatic Data Processing Inc., showed U.S. employers added 368,000 jobs in June, the most since 2001.
The Mexican election is getting even more interesting. Late Tuesday, election officials added 2.5 million votes to the public count. Lopez Obrador outpolled Calderon on these ballots by more than 145,000 votes, narrowing Calderon's lead to slightly more than 257,000 ballots, or 0.6 percentage point. Election authorities said that as many as 900,000 votes remained to be added to the official tally because polling station results had not yet arrived at regional election headquarters. An undetermined number are from the remotest rural areas of southern Mexico, which lean toward Lopez Obrador.The new figures were released after Lopez Obrador charged Monday that more than 3 million votes had been "lost" from the preliminary tallies released by the Federal Electoral Tribunal. I wonder if all the votes will be counted. Maybe the U.S. Supreme Court can act as special advisor along with ChoicePoint. In the wondering department. Will Bush go to Kenny Boy Lay's funeral? After all, they have been such good friends.
"Televisa is prepared to discuss with you (the consortium) a sale of its shares of Univision as soon as possible based on the present value of the price per share set forth in the merger agreement," Grupo Televisa said in a filing with the U.S. Securities and Exchange Commission.
Televisa said that the sale of its stake in Univision would release it from a 1996 Participation Agreement with Univision chairman and controlling shareholder Jerrold Perenchio that barred it from exploring rival business openings in the United States.
"If it is not bound by the Participation Agreement, Televisa will be able to engage in new business opportunities in the growing U.S. Hispanic marketplace related to its programming or otherwise without offering Univision participation in such opportunities," Televisa said in a separate statement.
Iran will start the initial phase of its planned Iranian oil bourse at the end of September, the news agency ISNA reported Wednesday. An unnamed oil ministry official told ISNA that his ministry had already presented the relevant documents to the economic and finance ministry and the bourse organization. The exchange is slated to replace the current dollar-based oil exchange with one based on the euro.. The International Petroleum Exchange in London and the New York Mercantile Exchange, on which oil is currently traded, both use the dollar. Iran argues that as long as 60 percent of global oil and 25 percent of natural gas needs are met by Gulf states, oil dealing in either New York or London made no sense.
The Central Intelligence Agency (CIA) has closed a unit that for a decade was charged with looking for Osama bin Laden and his senior lieutenants, The New York Times reported.
The unit, known as Alec Station, was disbanded late last year and its analysts were reassigned within the CIA Counter-terrorist Centre, intelligence officials told the newspaper. For a moment, I had this insane idea that bin Laden was responsible for 9/11. I must have been dreaming it up. It's a good thing Bush is so strong on fighting terror.
Some day there is going to be a Bush Jr. presidential library. However, it will be sealed like a tomb. All the presidential papers are sealed.
August gold rose $13.70, or 2.2%, to close at $629.70 an ounce and September silver added 49.5 cents, or 4.5%, to close at $11.415 an ounce, its highest closing level since June 7.
I wonder whether Bush will be going to Kenny Boy Lay's funeral.
China and Russia resisted an attempt by the U.S., Japan, and Britain to impose sanctions against North Korea for its missile launches Wednesday, saying only diplomacy could halt the isolated regime's nuclear and rocket development programs.
Richard Daughty: "Now combine that Classic Mogambo Sign (CMS) with the dismal fact that the Fed only bought up a miniscule $52 million in government debt last week. And then combine that with the ugly fact that foreign central banks only put a stinking, piddly $830 million into buying more U.S. government and agency debt.
Money is suddenly disappearing, and this is not good for stock prices, or housing prices."
According to Tom Blackburn of the Palm Beach Post, Cheney has invested heavily in "a fund that specializes in short-term municipal bonds, a tax-exempt money market fund and an inflation protected securities fund. The first two hold up if interest rates rise with inflation. The third is protected against inflation."Cheney has dumped another (estimated) $10 to $25 million in a European bond fund which tells us that he is counting on a steadily weakening dollar.
Despite the weakness in equities, especially the Nasdaq, the range for the VIX on Wednesday was only about one point, and the index managed a slight gain of about one point to 14.15. The lack of volatility is surprising.
John Adams: "The happiness of society is the end of government."
It's Happening
7/5/06 It's Happening
There Weekly retail sales for the week ending July 1 rose 2.9% compared to the year-ago period, its slowest gain since April 1, 2006, according to the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales slipped 0.7%, the report said.
With the North Korean firing those test missiles, August-dated gold futures rose $12.30 to $628.30 an ounce. New Jersey's casinos ushered out the last of the gamblers Wednesday morning as a state government shutdown claimed its latest victims. It was the first state-ordered shutdown in the 28-year history of Atlantic City's legalized gambling trade. "Clearly North Korea is not as far advanced in its missile capability as some people had thought they were and they still cannot put a payload into orbit," said Jon Wolfsthal, a nuclear expert at the Centre for Strategic and International Studies. If you believe this, then you believe Roswell didn't happen either. North Korea on Wednesday afternoon fired another scud missile after the international community condemned its highly provocative move of test-firing a long-range missile said to be cable of reaching the US.
Richard Daughty: "Now combine that Classic Mogambo Sign (CMS) with the dismal fact that the Fed only bought up a miniscule $52 billion in government debt last week. And then combine that with the ugly fact that foreign central banks only put a stinking, piddly $830 million into buying more U.S. government and agency debt.Money is suddenly disappearing, and this is not good for stock prices, or housing prices."
Now why do you think North Korea and Iraq are provoking the U.S.? Do you think it would happen without the support of other countries? What do thses countries all have in common? They are acting in concert to eliminate the dollar from being the currency of choice in international trade. I believe it is only a matter of time until they are successful.
John Hussman: "Asking whether the Fed ought to raise rates by another quarter-point to avoid inflation is like asking Christopher Columbus what sort of trees he thinks are planted at the edge of the Earth. The question assumes a model of the world that's just plain wrong. The proper model that ought to be in people's heads is that, yes, the economy will probably slow down, but largely because it's living on a mountain of debt that's going to have a hard time growing because of a) stalling home values and b) a massive current account deficit that's unlikely to expand indefinitely. So sure, the economy will probably continue to slow. If that happens, we can expect to observe higher, not lower, rates of inflation unless credit defaults increase enough to lower monetary velocity and counter the otherwise detrimental upward pressure that slower economic growth generally has on inflation."
There Weekly retail sales for the week ending July 1 rose 2.9% compared to the year-ago period, its slowest gain since April 1, 2006, according to the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales slipped 0.7%, the report said.
With the North Korean firing those test missiles, August-dated gold futures rose $12.30 to $628.30 an ounce. New Jersey's casinos ushered out the last of the gamblers Wednesday morning as a state government shutdown claimed its latest victims. It was the first state-ordered shutdown in the 28-year history of Atlantic City's legalized gambling trade. "Clearly North Korea is not as far advanced in its missile capability as some people had thought they were and they still cannot put a payload into orbit," said Jon Wolfsthal, a nuclear expert at the Centre for Strategic and International Studies. If you believe this, then you believe Roswell didn't happen either. North Korea on Wednesday afternoon fired another scud missile after the international community condemned its highly provocative move of test-firing a long-range missile said to be cable of reaching the US.
Richard Daughty: "Now combine that Classic Mogambo Sign (CMS) with the dismal fact that the Fed only bought up a miniscule $52 billion in government debt last week. And then combine that with the ugly fact that foreign central banks only put a stinking, piddly $830 million into buying more U.S. government and agency debt.Money is suddenly disappearing, and this is not good for stock prices, or housing prices."
Now why do you think North Korea and Iraq are provoking the U.S.? Do you think it would happen without the support of other countries? What do thses countries all have in common? They are acting in concert to eliminate the dollar from being the currency of choice in international trade. I believe it is only a matter of time until they are successful.
John Hussman: "Asking whether the Fed ought to raise rates by another quarter-point to avoid inflation is like asking Christopher Columbus what sort of trees he thinks are planted at the edge of the Earth. The question assumes a model of the world that's just plain wrong. The proper model that ought to be in people's heads is that, yes, the economy will probably slow down, but largely because it's living on a mountain of debt that's going to have a hard time growing because of a) stalling home values and b) a massive current account deficit that's unlikely to expand indefinitely. So sure, the economy will probably continue to slow. If that happens, we can expect to observe higher, not lower, rates of inflation unless credit defaults increase enough to lower monetary velocity and counter the otherwise detrimental upward pressure that slower economic growth generally has on inflation."
Monday, July 03, 2006
Liberty
7/4/06 Liberty
The history of international crude oil market over the past 50 years abound with evidence that the current high oil prices won't persist over the long run and will moderate, Iran's OPEC governor was quoted as saying Sunday.
Canadian oil pipelines could face capacity constraints by 2008 because of a surge in heavy crude oil from the Alberta oilsands, the National Energy Board says.
In the latest week gas prices rose on average 7 cents at the pump to $2.93 a gallon.
Aristotle: "Men regard it as their right to return evil for evil, and if they cannot, feel they have lost their liberty."
Melanie Morgan (a radio talk show host and occasional guest on cable television) about putting various journalists to death for the supposed crime of publicizing the Bush regime's misdeeds: “[T]he best solution that I can think of to deal with any newspaper editor, whether it's from the NY Times, LAT, WaPo, or the Wall Street Journal who is responsible for leaking national security classified information, is to be locked in a steel cage with the family members of slain troop members who would happily deliver the ultimate punishment of death.”
Thomas Paine: "When men yield up the privilege of thinking, the last shadow quits the horizon."
Samuel Adams: "And that the said Constitution be never construed to authorize Congress to infringe the just liberty of the press, or the rights of conscience; or to prevent the people of the United States, who are peaceable citizens, from keeping their own arms; or to raise standing armies, unless necessary for the defense of the United States, or of some one or more of them; or to prevent the people from petitioning, in a peaceable and orderly manner, the federal legislature, for a redress of grievances; or to subject the people to unreasonable searches and seizures of their persons, papers or possessions."
The history of international crude oil market over the past 50 years abound with evidence that the current high oil prices won't persist over the long run and will moderate, Iran's OPEC governor was quoted as saying Sunday.
Canadian oil pipelines could face capacity constraints by 2008 because of a surge in heavy crude oil from the Alberta oilsands, the National Energy Board says.
In the latest week gas prices rose on average 7 cents at the pump to $2.93 a gallon.
Aristotle: "Men regard it as their right to return evil for evil, and if they cannot, feel they have lost their liberty."
Melanie Morgan (a radio talk show host and occasional guest on cable television) about putting various journalists to death for the supposed crime of publicizing the Bush regime's misdeeds: “[T]he best solution that I can think of to deal with any newspaper editor, whether it's from the NY Times, LAT, WaPo, or the Wall Street Journal who is responsible for leaking national security classified information, is to be locked in a steel cage with the family members of slain troop members who would happily deliver the ultimate punishment of death.”
Thomas Paine: "When men yield up the privilege of thinking, the last shadow quits the horizon."
Samuel Adams: "And that the said Constitution be never construed to authorize Congress to infringe the just liberty of the press, or the rights of conscience; or to prevent the people of the United States, who are peaceable citizens, from keeping their own arms; or to raise standing armies, unless necessary for the defense of the United States, or of some one or more of them; or to prevent the people from petitioning, in a peaceable and orderly manner, the federal legislature, for a redress of grievances; or to subject the people to unreasonable searches and seizures of their persons, papers or possessions."
Independence
7/4/06 Independence
Renault SA and affiliate Nissan Motor Co. authorized their chief executive officer, Carlos Ghosn, to begin ``exploratory'' talks with General Motors Corp. on a possible alliance. However, it is up to GM to make the initial proposal.
GM's June sales dropped 26 percent from a year earlier and Ford's was 6.9 percent, the two largest U.S. automakers said today. Sales at DaimlerChrysler AG tumbled 13 percent, with a 15 percent slide at Chrysler. Toyota posted a 14 percent gain, keeping ahead of DaimlerChrysler for the No. 3 rank. Honda Motor Co. rose less than 1 percent and Nissan Motor Co. slid 19 percent.
The Institute for Supply Management's factory index fell to 53.8 in June from 54.4 the previous month. Construction spending dropped 0.4 percent in May, the Commerce Department said in Washington.
Mexico's currency had its biggest gain in six years after ruling party candidate Felipe Calderon led early presidential returns. Stocks and bonds also surged.
Mexican election authorities will conduct a recount to determine who won yesterday's presidential vote, with nearly complete returns showing former Energy Minister Felipe Calderon in front by the slimmest of margins.
Calderon had 36.37 percent of the vote, followed by former Mexico City Mayor Andres Manuel Lopez Obrador with 35.37 percent, based on 98.2 percent of ballots counted. Both candidates, separated by 385,205 votes, declared victory. A recount will start July 5, and authorities expect to name a winner the following day. The electoral court has until Aug. 31 to decide any challenges.
Renault SA and affiliate Nissan Motor Co. authorized their chief executive officer, Carlos Ghosn, to begin ``exploratory'' talks with General Motors Corp. on a possible alliance. However, it is up to GM to make the initial proposal.
GM's June sales dropped 26 percent from a year earlier and Ford's was 6.9 percent, the two largest U.S. automakers said today. Sales at DaimlerChrysler AG tumbled 13 percent, with a 15 percent slide at Chrysler. Toyota posted a 14 percent gain, keeping ahead of DaimlerChrysler for the No. 3 rank. Honda Motor Co. rose less than 1 percent and Nissan Motor Co. slid 19 percent.
The Institute for Supply Management's factory index fell to 53.8 in June from 54.4 the previous month. Construction spending dropped 0.4 percent in May, the Commerce Department said in Washington.
Mexico's currency had its biggest gain in six years after ruling party candidate Felipe Calderon led early presidential returns. Stocks and bonds also surged.
Mexican election authorities will conduct a recount to determine who won yesterday's presidential vote, with nearly complete returns showing former Energy Minister Felipe Calderon in front by the slimmest of margins.
Calderon had 36.37 percent of the vote, followed by former Mexico City Mayor Andres Manuel Lopez Obrador with 35.37 percent, based on 98.2 percent of ballots counted. Both candidates, separated by 385,205 votes, declared victory. A recount will start July 5, and authorities expect to name a winner the following day. The electoral court has until Aug. 31 to decide any challenges.
Sunday, July 02, 2006
Some Astute Observations
7/3/06 Some Astute Observations
Renault SA, which owns 44 percent of Nissan Motor Co., will hold a board meeting tomorrow to discuss whether to expand the alliance to include General Motors Corp., the French finance minister said. In addition, the French government owns 15.7% of Renault. It is thought that Renault/Nissan might have an interest in acquiring up to 20% of GM.
Brett Steenbarger: "I've noticed over the years that, by cumulating the daily difference between Demand and Supply, we obtain a very reliable overbought/oversold indicator. Since October, 2002 (N = 946 trading days), this index has varied between +57 and -36. The value of this cumulative Demand/Supply Index have correlated quite nicely with five-day returns in the S&P 500 Index (SPY).After Thursday's sizable rally, we hit an overbought cumulative index value of +50. Since October, 2002, we've only had 20 daily readings of +50 or greater. Over the next five days, the S&P 500 Index has averaged a loss of -1.05% (!), with 3 occasions up, 17 down. That's about as sizable a downside edge as I've seen from an indicator." This is an astute and valuable observation.
ContraryInvestor.com: "For years now, we've been treated to the comment that "there is a $10-15 per barrel terrorism premium in crude prices". For years now, we've also listened the executive heads of such organizations as BP, Exxon, as well as the Saudi oil minister, tell us that oil prices were headed down in a pretty meaningful way. So far, the vote of the markets has overridden all of these comments from direct industry participants. What may be more correct, however, and certainly related to a comment above, is that there may indeed be a premium in current energy prices related to a bid from hedge, prop desk and other short term performance motivated investment money. Financial terrorism, if you will. From a long term perspective, a very important issue is that we're seeing a global realignment in geopolitical, military and energy relationships as is embodied by such examples as the SCO (Shangai Cooperation Organization). To ourselves, the thought of a terrorism premium in current crude prices pales in comparison to the implied message and potential outcome of these geopolitical realignments. That's the issue that's not simply going to go away and ultimately has direct implications for both energy prices and supply dynamics.
Speed bumps are a fact of life in any asset class bull market experience. Investors always have an ongoing choice in terms of involvement. Either buckle up or get off the road. Take your pick."
Mike Burk: "July has been a better month for the blue chips than the small caps, however, during the 2nd year of the Presidential Cycle it has not been very good for either."
Michael Hodges observes that "it takes 5.2 months working for taxes and that is 44% of a year. In 1776 Thomas Paine argued that if a king demanded 50% in taxes, we wouldn't pay it. We are nearly there." Hodges also observed "last year debt increased $3.5 Trillion, 5 times more than GDP. Household debt soared 12%."
The benchmark 30-year fixed-rate mortgage rose 10 basis points to 6.93 percent, according to a recent Bankrate.com national survey of large lenders.
At a recent reunion of retired Mexico's Pemex executives, former chief financial officer Ernesto Marcos recalled, a colleague urged that "the next president be told as soon as possible that we may soon not have enough oil for our own requirements and none for exports." The United States relies on Mexico for 8 percent of its oil.
Ayn Rand: "The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."
Delphi anticipates $2 billion in operating losses in 2006.
Carrefour's operates 79 stores in 32 Chinese cities compared with 60 locations in 30 cities for Wal-Mart. Last year, Carrefour's sales in China totaled $2.2 billion, compared with $1.2 billion for Wal-Mart, according to the Commerce Ministry in Beijing. This year Wal-Mart will open 18 stores and Carrefour's only 12. In a couple of years Wal-Mart's sales in China should surpass that of Carrefour's, the world's second largest retailer behind Wal-Mart.
ConocoPhillips recently inked a memorandum of understanding to establish a 400,000-barrel-a-day refinery in Saudi Arabia.
Renault SA, which owns 44 percent of Nissan Motor Co., will hold a board meeting tomorrow to discuss whether to expand the alliance to include General Motors Corp., the French finance minister said. In addition, the French government owns 15.7% of Renault. It is thought that Renault/Nissan might have an interest in acquiring up to 20% of GM.
Brett Steenbarger: "I've noticed over the years that, by cumulating the daily difference between Demand and Supply, we obtain a very reliable overbought/oversold indicator. Since October, 2002 (N = 946 trading days), this index has varied between +57 and -36. The value of this cumulative Demand/Supply Index have correlated quite nicely with five-day returns in the S&P 500 Index (SPY).After Thursday's sizable rally, we hit an overbought cumulative index value of +50. Since October, 2002, we've only had 20 daily readings of +50 or greater. Over the next five days, the S&P 500 Index has averaged a loss of -1.05% (!), with 3 occasions up, 17 down. That's about as sizable a downside edge as I've seen from an indicator." This is an astute and valuable observation.
ContraryInvestor.com: "For years now, we've been treated to the comment that "there is a $10-15 per barrel terrorism premium in crude prices". For years now, we've also listened the executive heads of such organizations as BP, Exxon, as well as the Saudi oil minister, tell us that oil prices were headed down in a pretty meaningful way. So far, the vote of the markets has overridden all of these comments from direct industry participants. What may be more correct, however, and certainly related to a comment above, is that there may indeed be a premium in current energy prices related to a bid from hedge, prop desk and other short term performance motivated investment money. Financial terrorism, if you will. From a long term perspective, a very important issue is that we're seeing a global realignment in geopolitical, military and energy relationships as is embodied by such examples as the SCO (Shangai Cooperation Organization). To ourselves, the thought of a terrorism premium in current crude prices pales in comparison to the implied message and potential outcome of these geopolitical realignments. That's the issue that's not simply going to go away and ultimately has direct implications for both energy prices and supply dynamics.
Speed bumps are a fact of life in any asset class bull market experience. Investors always have an ongoing choice in terms of involvement. Either buckle up or get off the road. Take your pick."
Mike Burk: "July has been a better month for the blue chips than the small caps, however, during the 2nd year of the Presidential Cycle it has not been very good for either."
Michael Hodges observes that "it takes 5.2 months working for taxes and that is 44% of a year. In 1776 Thomas Paine argued that if a king demanded 50% in taxes, we wouldn't pay it. We are nearly there." Hodges also observed "last year debt increased $3.5 Trillion, 5 times more than GDP. Household debt soared 12%."
The benchmark 30-year fixed-rate mortgage rose 10 basis points to 6.93 percent, according to a recent Bankrate.com national survey of large lenders.
At a recent reunion of retired Mexico's Pemex executives, former chief financial officer Ernesto Marcos recalled, a colleague urged that "the next president be told as soon as possible that we may soon not have enough oil for our own requirements and none for exports." The United States relies on Mexico for 8 percent of its oil.
Ayn Rand: "The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."
Delphi anticipates $2 billion in operating losses in 2006.
Carrefour's operates 79 stores in 32 Chinese cities compared with 60 locations in 30 cities for Wal-Mart. Last year, Carrefour's sales in China totaled $2.2 billion, compared with $1.2 billion for Wal-Mart, according to the Commerce Ministry in Beijing. This year Wal-Mart will open 18 stores and Carrefour's only 12. In a couple of years Wal-Mart's sales in China should surpass that of Carrefour's, the world's second largest retailer behind Wal-Mart.
ConocoPhillips recently inked a memorandum of understanding to establish a 400,000-barrel-a-day refinery in Saudi Arabia.
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