8/13/04 Observations
Doug Noland: "It is my view that an unhappy realization may be looming for the markets: the housing slowdown could very well coincide with the emergence of problematic inflation dynamics, while global financial and economic forces might very well play a prominent role in buttressing inflationary pressures in the U.S. and elsewhere, instead of checking them...Thus far, rising short-term rates and contracting lending margins have incited a push for lending volume (bank Credit up 11.3% annualized y-t-d). Stagnating mortgage profits have to this point nurtured aggressive expansion in capital markets, trading, international and prime brokerage (hedge fund services) businesses. Until proven otherwise, I will stick with the view that the profligate Financial Sphere expansion will run unabated until it is interrupted - and perhaps terminated - by financial crisis or some exogenous event."
All 20 stocks in the Dow Jones Transportation Average declined in price this
past week.
Tim Wood: "The recent action seen in the Transportation sector is not good and considerable technical damage has been done. According to Dow theory, the Secondary Trend of the Transports is now bearish. From a cyclical perspective the outlook has been bearish for a month or so and everyday since has just been added confirmation of the now well established bearish trend."
Every day this past week the closing TICK numbers were positive on the NYSE; however, the ARMS Index was negative every day last week on the NYSE. All the more
reason to be especially selective. I am sticking with Jones Apparel, Univision,
Ingersoll Rand, and Ford.
Mike Burk: "The market is oversold going into next week which has had a positive seasonal bias...During the 2nd year of the Presidential Cycle, in the coming week, both the OTC & SPX have been up 70% of the time with a modest gain. Over all years both indexes have been modestly positive."
Thirteen states and Washington, D.C., have sales-tax holidays pegged to back-to-school shopping. That could help soften the blow on families with school-age children, which will spend an average of $527 on back-to-school items this year, according to the National Retail Federation.
John Mauldin: "I do not see this as an environment that is good for stocks. The yield curve is telling us that the economy is headed for problems...
"This time it is different." Five of the most dangerous words in the investment world. To ignore the warning signs is not a prudent thing. This is the time to make sure your portfolio is in an absolute return strategy mode."
Hezbollah leader Hassan Nasrallah said on Saturday that his militia will agree to a UN call for a cease-fire with Israel once a deal on timing is reached. In the meantime, Israel stated they would stop their fighting on Monday morning.
Bush: "America is fighting a tough war against an enemy whose ruthlessness is
clear for all to see...They are seeking to spread their totalitarian
ideology. They're seeking to take over countries like Afghanistan and Iraq
so they can establish safe havens from which to attack free nations." Now I have learned something new. I now know these terorists are the same people trying to take over Iraq. Is that why we invaded Iraq? Bush gets an "A" in morphing.
Berkshire Hathaway now owns close to 16% of USG.
Gerald Scarfe: "And the danger of becoming a thoughtless machine is that you may become mindless and turn to fascism or whatever."
Saturday, August 12, 2006
Friday, August 11, 2006
Consumer Confidence
8/12/06 Consumer Confidence
Consumer confidence dropped in August, according to the most recent results of the
RBC CASH (Consumer Attitudes and Spending by Household) Index, which
measured the attitudes of 1,001 Americans earlier this week. Consumer
discontent is widespread, with the greatest decline occurring in confidence
regarding economic expectations. The only bright spot is consumer
confidence in job security which rebounded this month. As a result, the RBC
CASH Index, released today by RBC Financial Group, declined to 74.8,
compared to 80.1 in July.
"The drop in the overall index to 74.8 extends the downtrend in place
since February, a decline which is consistent with the rise in energy
prices and a slowing in the housing market during this period," said T.J.
Marta, Economic and Fixed Income Strategist for RBC Capital Markets. "The
price of crude oil, for example, has risen close to $20/bl to a record
$77.03 in recent sessions, and the national average for a gallon of regular
unleaded gas had risen 80 cents to a record $3.04. Additionally, the rate
for a 30-year mortgage had risen 0.80 per cent to 6.79 per cent during this
period, and while that has fallen in recent weeks to 6.42 per cent,
homeowner affordability has dropped to its lowest level since 1989 and
existing home sales continue to fall from their June 2005 peak." Added
Marta, "RBC believes that the U.S. consumer will continue to retrench
during the second half of 2006."
Peter Schiff: "The Fed's claim that it is concerned about inflation, and that it will act decisively to contain it, is just a bluff. Any real commitment would have prompted the Fed to have already raised rates much higher. For the Fed to suggest that it stands ready to raise rates in the future, if the data warrants it, completely misses the point that the data warrants it right now!
The flawed CPI is nonetheless a lagging indicator of inflation. There is so much inflation already in the pipeline that its effect on consumer prices will be seen for years to come. For now, the Fed's private concern is to keep the markets from understanding just how bad inflation already is, and how little resolve it actually has to do anything to contain it. Far from being concerned, the Fed likely views inflation as the only solution to America's problems; a monetary "get out of jail free card." The U.S. now owes so much to foreigners that not only is legitimate repayment impossible, but the very act of servicing the debt will soon become unbearable. Debt repudiation through inflation likely appears to be the most politically palatable "solution."
Brazil's Companhia Vale do Rio Doce (CVRD) announced that it intends to make an all-cash offer to acquire all of the outstanding common shares of Inco Limited at a price of Cdn$ 86.00 in cash per Inco common share.
The combination of CVRD and Inco will create one of the three largest
diversified mining companies in the world, with leading global market
positions in iron ore, pellets, nickel, bauxite, alumina, manganese and
ferroalloys, and an exciting world-class pipeline of projects, supported by
a large-scale, long-life and low-cost asset portfolio.
The acquisition will be financed through a two-year committed bridge
loan facility provided by four large first-tier banks: Credit Suisse, UBS,
ABN AMRO and Santander. CVRD expects to take out the bridge facility with a
long-term capital package within 18 months after the closing of the
proposed transaction.
Michelin is raising prices on car tires by 6-8%.
The U.S. Import Price Index increased 0.9 percent in July, the Bureau
of Labor Statistics of the U.S. Department of Labor reported. A 4.7
percent advance in petroleum prices more than offset a modest 0.1 percent
decline in nonpetroleum prices. The price index of overall exports rose 0.4
percent in July following a 0.7 percent increase in June.
The Commerce Department said retail sales rose 1.4% in July on higher auto and gasoline sales. Excluding autos, retail sales increased 1%.
ConocoPhillips has informed its crude oil customers that because of a shutdown of the pipeline in Prudhoe Bay, Alaska, deliveries may come up short.
Crude and the VIX had something in common this past trading week. Their respective markets were volatile but, by the end of the week, there had been little change in price. It's happened before and it will happen again.
Russian gas giant Gazprom is setting up an energy marketing and trading operation in Houston.
Gary Lammert: "As always expect the discontinuous and the nonlinear … unexpected."
From crudethoughts.blogspot.com and posted by Oilshock:
"Are we past peak ?
Average Daily oil production
Year production
million bpd
--------------------------
2002 77
2003 79.6
2004 83
2005 84.4
2006 84.5 ( First 5 months only )
Highest ever monthly average was 85.05 in December 2005.
If oil is plentyful and price is record high, why isn't the production increasing ?"
Data Source: EIA
Nouriel Roubini: "The next move of the Fed will be an easing - i.e. a cut in the Fed Funds rate - not a tightening, most likely in the fall or winter of this year."
Consumer confidence dropped in August, according to the most recent results of the
RBC CASH (Consumer Attitudes and Spending by Household) Index, which
measured the attitudes of 1,001 Americans earlier this week. Consumer
discontent is widespread, with the greatest decline occurring in confidence
regarding economic expectations. The only bright spot is consumer
confidence in job security which rebounded this month. As a result, the RBC
CASH Index, released today by RBC Financial Group, declined to 74.8,
compared to 80.1 in July.
"The drop in the overall index to 74.8 extends the downtrend in place
since February, a decline which is consistent with the rise in energy
prices and a slowing in the housing market during this period," said T.J.
Marta, Economic and Fixed Income Strategist for RBC Capital Markets. "The
price of crude oil, for example, has risen close to $20/bl to a record
$77.03 in recent sessions, and the national average for a gallon of regular
unleaded gas had risen 80 cents to a record $3.04. Additionally, the rate
for a 30-year mortgage had risen 0.80 per cent to 6.79 per cent during this
period, and while that has fallen in recent weeks to 6.42 per cent,
homeowner affordability has dropped to its lowest level since 1989 and
existing home sales continue to fall from their June 2005 peak." Added
Marta, "RBC believes that the U.S. consumer will continue to retrench
during the second half of 2006."
Peter Schiff: "The Fed's claim that it is concerned about inflation, and that it will act decisively to contain it, is just a bluff. Any real commitment would have prompted the Fed to have already raised rates much higher. For the Fed to suggest that it stands ready to raise rates in the future, if the data warrants it, completely misses the point that the data warrants it right now!
The flawed CPI is nonetheless a lagging indicator of inflation. There is so much inflation already in the pipeline that its effect on consumer prices will be seen for years to come. For now, the Fed's private concern is to keep the markets from understanding just how bad inflation already is, and how little resolve it actually has to do anything to contain it. Far from being concerned, the Fed likely views inflation as the only solution to America's problems; a monetary "get out of jail free card." The U.S. now owes so much to foreigners that not only is legitimate repayment impossible, but the very act of servicing the debt will soon become unbearable. Debt repudiation through inflation likely appears to be the most politically palatable "solution."
Brazil's Companhia Vale do Rio Doce (CVRD) announced that it intends to make an all-cash offer to acquire all of the outstanding common shares of Inco Limited at a price of Cdn$ 86.00 in cash per Inco common share.
The combination of CVRD and Inco will create one of the three largest
diversified mining companies in the world, with leading global market
positions in iron ore, pellets, nickel, bauxite, alumina, manganese and
ferroalloys, and an exciting world-class pipeline of projects, supported by
a large-scale, long-life and low-cost asset portfolio.
The acquisition will be financed through a two-year committed bridge
loan facility provided by four large first-tier banks: Credit Suisse, UBS,
ABN AMRO and Santander. CVRD expects to take out the bridge facility with a
long-term capital package within 18 months after the closing of the
proposed transaction.
Michelin is raising prices on car tires by 6-8%.
The U.S. Import Price Index increased 0.9 percent in July, the Bureau
of Labor Statistics of the U.S. Department of Labor reported. A 4.7
percent advance in petroleum prices more than offset a modest 0.1 percent
decline in nonpetroleum prices. The price index of overall exports rose 0.4
percent in July following a 0.7 percent increase in June.
The Commerce Department said retail sales rose 1.4% in July on higher auto and gasoline sales. Excluding autos, retail sales increased 1%.
ConocoPhillips has informed its crude oil customers that because of a shutdown of the pipeline in Prudhoe Bay, Alaska, deliveries may come up short.
Crude and the VIX had something in common this past trading week. Their respective markets were volatile but, by the end of the week, there had been little change in price. It's happened before and it will happen again.
Russian gas giant Gazprom is setting up an energy marketing and trading operation in Houston.
Gary Lammert: "As always expect the discontinuous and the nonlinear … unexpected."
From crudethoughts.blogspot.com and posted by Oilshock:
"Are we past peak ?
Average Daily oil production
Year production
million bpd
--------------------------
2002 77
2003 79.6
2004 83
2005 84.4
2006 84.5 ( First 5 months only )
Highest ever monthly average was 85.05 in December 2005.
If oil is plentyful and price is record high, why isn't the production increasing ?"
Data Source: EIA
Nouriel Roubini: "The next move of the Fed will be an easing - i.e. a cut in the Fed Funds rate - not a tightening, most likely in the fall or winter of this year."
Thursday, August 10, 2006
Please Take Note
8/11/06 Please Take Note
Our nation's trade deficit continues at roughly $2.1 billion per day.
John Williams: "Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 2.7% per year. This is due to recent redefinitions of the series as well as to flawed methodologies, particularly adjustments to price measures for quality changes. The concentration of this installment on the quality of government economic reports will be first on CPI series redefinition and the damages done to those dependent on accurate cost-of-living estimates, and on pending further redefinition and economic damage...Although the CPI is not used in the GDP calculation, there are relationships with the price deflators used in converting GDP data and growth to inflation-adjusted numbers. The more inflation is understated, the higher the inflation-adjusted rate of GDP growth that gets reported."
I find it interesting that, over the past three months, hedge funds as a group have lost money. When the going gets tough, the winners still find a way to protect their capital.
So many investors get excited when one of their stock holdings announces a split. Look at the most recent results for Hansen Natural and Anderson Companies. It has been agony since both stocks split.
According to the Houston Chronicle, Charles Hamel, a Virginia-based consultant who has long been a conduit for BP worker complaints, wrote to BP board member Walter Massey on May 22, 2004, saying engineers in BP's Alaska operations felt there was mismanagement of the company's corrosion inspection division. Why am I not surprised by this revelation?
Edward Lapham: "It's a mistake not to pay closer attention to the Chinese because by this time next year, they probably will have scooped up Land Rover and Jaguar as well as MG."
Jones Apparel management placed themselves on the auction block 5months ago. They hired Goldman Sachs to handle the sale. Earnings for this year will approximate $2.20 per share. The company is opening more Anne Klein stores as well as adding to locations for rejuvenated Barney's. At $29.87 I believe you should give some consideration to purchasing shares. In my opinion, the company will shortly announce a deal to be acquired, and a price above $33.50 could be a realistic expectation.
In the second quarter of 2006, employers took 1,213 mass layoff actions
in the private, nonfarm sector that resulted in the separation of 251,341
workers from their jobs for at least 31 days, according to preliminary
figures released by the U.S. Department of Labor's Bureau of Labor Sta-
tistics. The number of extended mass layoff actions and affected workers
were both slightly higher than a year earlier. The over-the-year increases were most notable in food and beverage stores, foodmanufacturing, and general merchandise stores. In the second quarter of 2006, extended mass layoffs that involve the movement of work within the same company or to a different company, either domestically or outside the U.S., occurred in 9 percent of the nonseasonal layoff events and 13 percent of worker separations. Among employers who anticipated
recalling laid-off workers, 50 percent expected to extend the offer to all
laid-off workers, a smaller proportion than a year ago.
The completion of seasonal work accounted for 37 percent of all events
and resulted in 125,688 separations during the period. Layoffs due to in-
ternal company restructuring (bankruptcy, business ownership change, finan-
cial difficulty, and reorganization) represented 15 percent of events and
resulted in 42,289 separations, 17 percent of total separations. Permanent
closure of worksites occurred in 11 percent of all events and affected
30,402 workers, with both figures higher than a year ago.
The National Oceanic and Atmospheric Administration said a return of El Nino would bring wetter-than-average weather to portions of the Gulf Coast and southeastern U.S., and warmer-than-average temperatures to the West, northern Great Plains and upper Midwest between January and March 2007.
"Based on recent trends, there is a 50 percent chance that weak El Nino conditions will develop late this year and continue through early 2007," said Vernon Kousky, a NOAA scientist who also monitors La Nina, the opposite of El Nino.
Greenland’s ice sheet is the second biggest in the world, containing about 2.5m cu km of ice, or 10 per cent of the world’s total ice mass. The University of Texas study found that about 240 cu km are melting every year.
The Dow Jones Transportation Average has been melting too-- about 15% over the past 5 weeks.
Our nation's trade deficit continues at roughly $2.1 billion per day.
John Williams: "Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 2.7% per year. This is due to recent redefinitions of the series as well as to flawed methodologies, particularly adjustments to price measures for quality changes. The concentration of this installment on the quality of government economic reports will be first on CPI series redefinition and the damages done to those dependent on accurate cost-of-living estimates, and on pending further redefinition and economic damage...Although the CPI is not used in the GDP calculation, there are relationships with the price deflators used in converting GDP data and growth to inflation-adjusted numbers. The more inflation is understated, the higher the inflation-adjusted rate of GDP growth that gets reported."
I find it interesting that, over the past three months, hedge funds as a group have lost money. When the going gets tough, the winners still find a way to protect their capital.
So many investors get excited when one of their stock holdings announces a split. Look at the most recent results for Hansen Natural and Anderson Companies. It has been agony since both stocks split.
According to the Houston Chronicle, Charles Hamel, a Virginia-based consultant who has long been a conduit for BP worker complaints, wrote to BP board member Walter Massey on May 22, 2004, saying engineers in BP's Alaska operations felt there was mismanagement of the company's corrosion inspection division. Why am I not surprised by this revelation?
Edward Lapham: "It's a mistake not to pay closer attention to the Chinese because by this time next year, they probably will have scooped up Land Rover and Jaguar as well as MG."
Jones Apparel management placed themselves on the auction block 5months ago. They hired Goldman Sachs to handle the sale. Earnings for this year will approximate $2.20 per share. The company is opening more Anne Klein stores as well as adding to locations for rejuvenated Barney's. At $29.87 I believe you should give some consideration to purchasing shares. In my opinion, the company will shortly announce a deal to be acquired, and a price above $33.50 could be a realistic expectation.
In the second quarter of 2006, employers took 1,213 mass layoff actions
in the private, nonfarm sector that resulted in the separation of 251,341
workers from their jobs for at least 31 days, according to preliminary
figures released by the U.S. Department of Labor's Bureau of Labor Sta-
tistics. The number of extended mass layoff actions and affected workers
were both slightly higher than a year earlier. The over-the-year increases were most notable in food and beverage stores, foodmanufacturing, and general merchandise stores. In the second quarter of 2006, extended mass layoffs that involve the movement of work within the same company or to a different company, either domestically or outside the U.S., occurred in 9 percent of the nonseasonal layoff events and 13 percent of worker separations. Among employers who anticipated
recalling laid-off workers, 50 percent expected to extend the offer to all
laid-off workers, a smaller proportion than a year ago.
The completion of seasonal work accounted for 37 percent of all events
and resulted in 125,688 separations during the period. Layoffs due to in-
ternal company restructuring (bankruptcy, business ownership change, finan-
cial difficulty, and reorganization) represented 15 percent of events and
resulted in 42,289 separations, 17 percent of total separations. Permanent
closure of worksites occurred in 11 percent of all events and affected
30,402 workers, with both figures higher than a year ago.
The National Oceanic and Atmospheric Administration said a return of El Nino would bring wetter-than-average weather to portions of the Gulf Coast and southeastern U.S., and warmer-than-average temperatures to the West, northern Great Plains and upper Midwest between January and March 2007.
"Based on recent trends, there is a 50 percent chance that weak El Nino conditions will develop late this year and continue through early 2007," said Vernon Kousky, a NOAA scientist who also monitors La Nina, the opposite of El Nino.
Greenland’s ice sheet is the second biggest in the world, containing about 2.5m cu km of ice, or 10 per cent of the world’s total ice mass. The University of Texas study found that about 240 cu km are melting every year.
The Dow Jones Transportation Average has been melting too-- about 15% over the past 5 weeks.
Wednesday, August 09, 2006
The Dry Bulk Market
8/10/06 The Dry Bulk Market
Marsoft: "After weakening significantly in the first quarter of 2006, the dry bulk market abruptly changed course in the second quarter. Handy and Handymax rates increased steadily from March through June, with the gains continuing into July. Panamax and Cape rates generally declined in April, but from May to July they rose quite sharply.
Handy and Handymax spot rates rebounded significantly in the second quarter. Rates for our benchmark transatlantic roundtrip voyage increased by 20-30% in the second quarter, with earnings for a 51,000 dwt Supramax climbing from $14,000 per day to $17,000 per day, and earnings for a small Handy moving up from $9,000 per day to $12,000 per day.
But some of the strongest gains were seen on the back-haul routes, such as Far East/Cont. According to broker reports, Supramax earnings on this route rose from an average of $16,500 per day in the first quarter to $23,500 per day in the second quarter. The upward momentum continued into July, as spot rates climbed to $21,000 per day for a transatlantic roundtrip and to $25,000 per day for the backhaul Far East/Cont route."
For inflation watchers, crude supplies declined 1.1 million barrels in the latest week, gasoline supplies plunged by 3.2 million barrels, and even distillate stocks declined by 200,000 barrels.
The U.S. currency has lost 8 percent against the euro and 2 percent versus the yen this year.
Gold for December delivery closed up $4.70 at $662 an ounce. Silver futures rose 31 cents to $12.57 an ounce, platinum added $7 to $1,263 and palladium rose $2.95 to $326.70 an ounce. Copper futures added 10.8 cents to $3.71 a pound.
BP has so far shut in 200,000 barrels of daily crude oil production, and said that total impacted production could reach 400,000 barrels per day. BP said there is adequate crude supply for its West Coast refineries in the short term and that it does not expect any disruption of gasoline supplies for California or the West Coast during that time. The company is replacing all 16 miles of the Prudhoe Bay oil transit line.
For two consecutive days equities have tried to rally and failed. By the end of the day, the indices were in the red. Yet, during this time, the VIX has ended pretty much unchanged. This bears watching (no pun intended).
Homeland Security Secretary Michael Chertoff said Thursday that a plot to blow up several planes traveling between the U.K. and several U.S. cities bears the hallmarks of an al-Qaida operation.
ImClone Systems Inc. fell sharply ahead of Thursday's opening bell after the biopharmaceutical company said it will remain independent. In January the company hired investment bank Lazard Ltd. (LAZ) to consider a possible sale or merger of the company.
Bank of Korea Governor Lee Seong Tae and his fellow policy makers raised the overnight call rate to 4.50 percent, the highest since September 2001, in Seoul.
China's record trade surplus widened to $14.6 billion from $14.5 billion in June, the Beijing-based customs bureau said today on its Web site. Exports jumped 22.6 percent and imports increased 19.7 percent, the statement said.
Marsoft: "After weakening significantly in the first quarter of 2006, the dry bulk market abruptly changed course in the second quarter. Handy and Handymax rates increased steadily from March through June, with the gains continuing into July. Panamax and Cape rates generally declined in April, but from May to July they rose quite sharply.
Handy and Handymax spot rates rebounded significantly in the second quarter. Rates for our benchmark transatlantic roundtrip voyage increased by 20-30% in the second quarter, with earnings for a 51,000 dwt Supramax climbing from $14,000 per day to $17,000 per day, and earnings for a small Handy moving up from $9,000 per day to $12,000 per day.
But some of the strongest gains were seen on the back-haul routes, such as Far East/Cont. According to broker reports, Supramax earnings on this route rose from an average of $16,500 per day in the first quarter to $23,500 per day in the second quarter. The upward momentum continued into July, as spot rates climbed to $21,000 per day for a transatlantic roundtrip and to $25,000 per day for the backhaul Far East/Cont route."
For inflation watchers, crude supplies declined 1.1 million barrels in the latest week, gasoline supplies plunged by 3.2 million barrels, and even distillate stocks declined by 200,000 barrels.
The U.S. currency has lost 8 percent against the euro and 2 percent versus the yen this year.
Gold for December delivery closed up $4.70 at $662 an ounce. Silver futures rose 31 cents to $12.57 an ounce, platinum added $7 to $1,263 and palladium rose $2.95 to $326.70 an ounce. Copper futures added 10.8 cents to $3.71 a pound.
BP has so far shut in 200,000 barrels of daily crude oil production, and said that total impacted production could reach 400,000 barrels per day. BP said there is adequate crude supply for its West Coast refineries in the short term and that it does not expect any disruption of gasoline supplies for California or the West Coast during that time. The company is replacing all 16 miles of the Prudhoe Bay oil transit line.
For two consecutive days equities have tried to rally and failed. By the end of the day, the indices were in the red. Yet, during this time, the VIX has ended pretty much unchanged. This bears watching (no pun intended).
Homeland Security Secretary Michael Chertoff said Thursday that a plot to blow up several planes traveling between the U.K. and several U.S. cities bears the hallmarks of an al-Qaida operation.
ImClone Systems Inc. fell sharply ahead of Thursday's opening bell after the biopharmaceutical company said it will remain independent. In January the company hired investment bank Lazard Ltd. (LAZ) to consider a possible sale or merger of the company.
Bank of Korea Governor Lee Seong Tae and his fellow policy makers raised the overnight call rate to 4.50 percent, the highest since September 2001, in Seoul.
China's record trade surplus widened to $14.6 billion from $14.5 billion in June, the Beijing-based customs bureau said today on its Web site. Exports jumped 22.6 percent and imports increased 19.7 percent, the statement said.
Tuesday, August 08, 2006
An Important Forecast
6/9/06 An Important Forecast
Nouriel Roubini: "Given the recent flow of dismal U.S. economic indicators (Q2 GDP report, July payrolls, service ISM, etc.) I am now taking the view that the odds of a U.S. recession by year end have increased from my previous 50% to 70% now."
The Bureau of Labor Statistics of the U.S. Department of Labor reported
preliminary productivity data--as measured by output per hour of all persons-
-for the second quarter of 2006. The preliminary seasonally adjusted annual
rates of productivity change in the second quarter were:
1.1 percent in the business sector and
1.1 percent in the nonfarm business sector.
These rates of growth are lower than those in the previous quarter. As
revised, productivity increased 4.5 percent in the business sector and 4.3
percent in the nonfarm business sector in the first quarter of 2006.
In manufacturing, the preliminary productivity changes in the second
quarter were:
3.0 percent in manufacturing,
3.8 percent in durable goods manufacturing, and
2.6 percent in nondurable goods manufacturing.
Manufacturing productivity grew 3.0 percent in the second quarter as output
increased 5.4 percent and hours increased 2.3 percent (seasonally adjusted
annual rates).
Unit labor costs rose 4.2% annualized - the most since the fourth quarter of 2004. First quarter unit labor costs rose 2.5% rather than the 1.6% increase originally reported. Unit labor costs were up 3.2% year-on-year, the fastest pace since the fourth quarter of 2000.
Despite rising unit labor costs, profit margins for corporations are at historically high levels.
Roger Cressey, a former counterterrorism official in the Bush Administration, now runs his own consulting business in Arlington, Virginia.
Cressey said there are about 30 million video surveillance cameras in the United States shooting about four billion hours of footage every week in an effort to recognize possible threats. (Is the greatest possible threat the Administration?)
Toll Brothers said that its quarter-end backlog was approximately $5.59 billion, down 13% from last year's $6.43 billion, while signed contracts were approximately $1.05 billion at the quarter end, down 45% from $1.92 billion last year. The company said that, based upon its current backlog, it expects to deliver between 2,500 and 2,800 homes in the fourth quarter, down from its previous guidance of 2,900 to 3,300 deliveries. For 2006, deliveries are expected at between 8,600 and 8,900 homes.
Puru Saxena: "Every human being must understand that the Federal Reserve IS inflation. The Federal Reserve was established in 1913 to create inflation and its secondary role is to manage the public's inflation FEARS."
Federal Reserve Bank of Richmond President Jeffrey Lacker, who has warned of complacency in fighting inflation, disagreed with the Fed's decision today to forgo an interest-rate increase.
Nouriel Roubini: "Given the recent flow of dismal U.S. economic indicators (Q2 GDP report, July payrolls, service ISM, etc.) I am now taking the view that the odds of a U.S. recession by year end have increased from my previous 50% to 70% now."
The Bureau of Labor Statistics of the U.S. Department of Labor reported
preliminary productivity data--as measured by output per hour of all persons-
-for the second quarter of 2006. The preliminary seasonally adjusted annual
rates of productivity change in the second quarter were:
1.1 percent in the business sector and
1.1 percent in the nonfarm business sector.
These rates of growth are lower than those in the previous quarter. As
revised, productivity increased 4.5 percent in the business sector and 4.3
percent in the nonfarm business sector in the first quarter of 2006.
In manufacturing, the preliminary productivity changes in the second
quarter were:
3.0 percent in manufacturing,
3.8 percent in durable goods manufacturing, and
2.6 percent in nondurable goods manufacturing.
Manufacturing productivity grew 3.0 percent in the second quarter as output
increased 5.4 percent and hours increased 2.3 percent (seasonally adjusted
annual rates).
Unit labor costs rose 4.2% annualized - the most since the fourth quarter of 2004. First quarter unit labor costs rose 2.5% rather than the 1.6% increase originally reported. Unit labor costs were up 3.2% year-on-year, the fastest pace since the fourth quarter of 2000.
Despite rising unit labor costs, profit margins for corporations are at historically high levels.
Roger Cressey, a former counterterrorism official in the Bush Administration, now runs his own consulting business in Arlington, Virginia.
Cressey said there are about 30 million video surveillance cameras in the United States shooting about four billion hours of footage every week in an effort to recognize possible threats. (Is the greatest possible threat the Administration?)
Toll Brothers said that its quarter-end backlog was approximately $5.59 billion, down 13% from last year's $6.43 billion, while signed contracts were approximately $1.05 billion at the quarter end, down 45% from $1.92 billion last year. The company said that, based upon its current backlog, it expects to deliver between 2,500 and 2,800 homes in the fourth quarter, down from its previous guidance of 2,900 to 3,300 deliveries. For 2006, deliveries are expected at between 8,600 and 8,900 homes.
Puru Saxena: "Every human being must understand that the Federal Reserve IS inflation. The Federal Reserve was established in 1913 to create inflation and its secondary role is to manage the public's inflation FEARS."
Federal Reserve Bank of Richmond President Jeffrey Lacker, who has warned of complacency in fighting inflation, disagreed with the Fed's decision today to forgo an interest-rate increase.
Monday, August 07, 2006
Keep On Spending
8/8/06 Keep On Spending
Consumer credit outstanding grew by $10.3 billion in June to $2.186 trillion. That followed a $5.88 billion increase in May. Revolving credit like credit cards increased at a 9.8% annual rate in June. Nonrevolving credit, like auto loans, rose at a 3.2% annual rate in June after falling at a 1.4% annual rate the previous month.
Even following an increase on Aug. 3, ``it can't be denied'' that interest rates are ``still very accommodating,'' Lorenzo Bini Smaghi, an ECB executive board member, said in an Aug. 6 interview with Italian newspaper Il Sole/24 Ore. ``That's the reason that the process of realigning interest rates will continue in coming months.''
Mike Shedlock: "At some point, job losses will matter simply because they have to. People out of work will not be buying much, regardless of whether or not interest rates pause, or even decline."
The Forbes family has agreed to sell a large minority stake in its media empire to Elevation, the buy-out fund of rock star Bono, in a deal worth about $300 million.
ConocoPhillips said its Middle East unit Dubai Petroleum Co. will cede control of the fields to the government's Dubai Petroleum Establishment effective April 2, 2007.
As Northwest's flight attendants prepare to strike as early as Aug. 15, their union says it's fighting cuts the company imposed last week, including making a temporary 21% wage cut taken in November stick through 2011. The union also is fighting cuts to medical benefits and changes to work rules that reduce total compensation by as much as 40%.
Chain store sales rose 2.5% for the week ended Aug. 5, compared to the year-ago period, according to a survey from the International Council of Shopping Centers and UBS Securities LLC released on Tuesday. "It is surprising that there was not more of a lift over the last week," said Michael Niemira, ICSC's chief economist and director of research. "However, the crosscurrents between the regional state tax holidays, taking place in 10 states and the District of Columbia this past weekend, and the abnormally hot weather and high gasoline prices seemingly took a bite out of potential demand."
Teva Pharmaceutical increased its earnings outlook for the year, saying that Ivax, which it acquired in January, is already contributing to profit. It's now expecting earnings between $2.15 and $2.25 a share on revenue of $8.5 billion; it previously forecast earnings between $2 and $2.15 a share.
The number of 20-day new lows now exceeds 500.
According to the Detroit News, Gov. Jennifer Granholm and Mark Fields, president of Ford Motor Co.'s Americas group, are expected to jointly announce a new tax-incentive agreement Wednesday between the state and the struggling automaker, according to people familiar with the situation.
In exchange for what promises to be a rich package of incentives, Fields will reaffirm Ford's commitment to future investment in Michigan.
The governor will pledge credits equal to a fixed percentage of Ford's future investments in the state through the Michigan Economic Growth Authority.
These so-called MEGA tax credits are designed to promote the creation and retention of jobs in Michigan. The value of these tax credits depends on the magnitude of Ford's future expansion in the state, but sources say the benefit to the automaker could easily reach tens of millions of dollars.
If the Fed pauses today, there is a likelihood of a short-term rally. However, we will soon be in the September-October period, and I would use the rally to lighten up on your weak holdings. Better buying opportunities will present themselves down the road.
Consumer credit outstanding grew by $10.3 billion in June to $2.186 trillion. That followed a $5.88 billion increase in May. Revolving credit like credit cards increased at a 9.8% annual rate in June. Nonrevolving credit, like auto loans, rose at a 3.2% annual rate in June after falling at a 1.4% annual rate the previous month.
Even following an increase on Aug. 3, ``it can't be denied'' that interest rates are ``still very accommodating,'' Lorenzo Bini Smaghi, an ECB executive board member, said in an Aug. 6 interview with Italian newspaper Il Sole/24 Ore. ``That's the reason that the process of realigning interest rates will continue in coming months.''
Mike Shedlock: "At some point, job losses will matter simply because they have to. People out of work will not be buying much, regardless of whether or not interest rates pause, or even decline."
The Forbes family has agreed to sell a large minority stake in its media empire to Elevation, the buy-out fund of rock star Bono, in a deal worth about $300 million.
ConocoPhillips said its Middle East unit Dubai Petroleum Co. will cede control of the fields to the government's Dubai Petroleum Establishment effective April 2, 2007.
As Northwest's flight attendants prepare to strike as early as Aug. 15, their union says it's fighting cuts the company imposed last week, including making a temporary 21% wage cut taken in November stick through 2011. The union also is fighting cuts to medical benefits and changes to work rules that reduce total compensation by as much as 40%.
Chain store sales rose 2.5% for the week ended Aug. 5, compared to the year-ago period, according to a survey from the International Council of Shopping Centers and UBS Securities LLC released on Tuesday. "It is surprising that there was not more of a lift over the last week," said Michael Niemira, ICSC's chief economist and director of research. "However, the crosscurrents between the regional state tax holidays, taking place in 10 states and the District of Columbia this past weekend, and the abnormally hot weather and high gasoline prices seemingly took a bite out of potential demand."
Teva Pharmaceutical increased its earnings outlook for the year, saying that Ivax, which it acquired in January, is already contributing to profit. It's now expecting earnings between $2.15 and $2.25 a share on revenue of $8.5 billion; it previously forecast earnings between $2 and $2.15 a share.
The number of 20-day new lows now exceeds 500.
According to the Detroit News, Gov. Jennifer Granholm and Mark Fields, president of Ford Motor Co.'s Americas group, are expected to jointly announce a new tax-incentive agreement Wednesday between the state and the struggling automaker, according to people familiar with the situation.
In exchange for what promises to be a rich package of incentives, Fields will reaffirm Ford's commitment to future investment in Michigan.
The governor will pledge credits equal to a fixed percentage of Ford's future investments in the state through the Michigan Economic Growth Authority.
These so-called MEGA tax credits are designed to promote the creation and retention of jobs in Michigan. The value of these tax credits depends on the magnitude of Ford's future expansion in the state, but sources say the benefit to the automaker could easily reach tens of millions of dollars.
If the Fed pauses today, there is a likelihood of a short-term rally. However, we will soon be in the September-October period, and I would use the rally to lighten up on your weak holdings. Better buying opportunities will present themselves down the road.
Sunday, August 06, 2006
Inflation Under Control?
8/7/06 Inflation Under Control?
The Walt Disney Co. raised prices at its Florida theme parks on January 1, when the price rose to $63 from $59.75. Yesterday a price hike from $63 to $67 went into effect. I guess the company is anticipating no problems with the weather this hurricane season. With $3 a gallon gasoline, I think it's a stupid move to be raising prices. Then again, I disagreed with their moving forward in a movie project with Mel Gibson. If I owned the stock (which I do not), I'd sell it.
The cost of one transportation project near Wisconsin Dells rose 44 percent over the past six months. Transportation Secretary Frank Busalacchi attributed the increase in part to the cost of structural steel, which jumped 45.6 percent, and excavation costs, up 21.5 percent in the last 12 months.
According to the report, the cost of the U.S. Highway 12 project from Lake Delton to Sauk City rose $47.3 million to $155 million, a 44 percent increase.
Meanwhile, costs for the U.S. Highway 41 project from De Pere to Suamico more than doubled, increasing from $205 million to $416.5 million, since the project was first planned in 2002.
I assure you that Wisconsin does not have a monopoly on rising costs for transportation projects.
Ford Motor Co. may sell Land Rover together with Jaguar to drum up interest, The Sunday Times (of London) newspaper reported, citing unnamed sources.
A July telephone survey of more than 1,000 people conducted by Boston Consulting Group found that 76% of Americans believe gas prices will rise for the remainder of the year. Another 48% said it was possible for gas prices to hit $5.50 a gallon at some point. Michigan gas prices currently average $3.04 a gallon, AAA Michigan reports.
BP has indefinitely shut down the nation's biggest oilfield after finding a pipeline leak, removing about 8 percent of U.S. oil production and stoking fears that already high gas prices will shoot up further.
John Hussman: "We should not be surprised to observe stagflation, falling stocks, weak profits, flat bonds, and a dollar crisis in the months ahead."
Crude traded over $77 a barrel this morning.
Apple's Worldwide Developers Conference is held today thru Friday at SF's Moscone Center. Will Mac's new operating system, Leopard, prove more advanced than Microsoft's Vista?
Martin Feldstein: "A mild slowing of economic growth is generally not sufficient to reverse rising inflation. That generally requires a sustained period of excess capacity in product and labor markets, with GDP growth falling significantly or even turning negative."
Should an event take place to create a freefall in stocks, be prepared to watch the actions of the Fed's Plunge Protection Team. It's members are the Fed chairman, the SEC chairman, the Commodities Futures Trading Commission chairman, the Secretary of the Treasury, and members of financial institutions, such as, Goldman Sachs, Morgan Stanley, and Merrill Lynch.
I'd like to revisit an article written on 7/3/03 by Eric Jewell entitled
Osama Bin Laden and Promis(e)Software:
"Today, financial institutions and Intelligence departments use Promise software worldwide. This means that factions of the US government can quickly access any computer in these networks. The implications are astounding. This gives the ability to add, delete, or modify any file or files within any given intelligence agency using this software. A picture can be put with any name and any information and make it possible for whole terrorist organizations to travel freely with false papers just because the computers were hacked into and all the information fed into them to effectively change any identity. The possibilities within financial institutions are equally as great. Accounts can be created and funds moved from any account to any account.
The question is, why was Bin Laden recently provided with a copy of this software? The answer may possibly be found in both the intelligence and the financial arenas. Now his men which were trained by the CIA can travel freely with no fear of reprisal. George Bush Sr. was vice president when the software was developed, and is a definite insider of this faction of government that sent Promise worldwide. He is connected to the Bin Laden family through the Carlyle Group, which means that both the Bin Laden fortune and the Bush fortune are greatly increased with every military act. The problem is finances if Osama is to remain armed and create worldwide fear to carry on the Bush Agenda of turning America into a police state and leading us further into the New World Order, he needs further funding. With the "Promise" software Bin Laden need never worry again about how we will further fund him. Bank accounts can be very messy in that they can be traced, and indeed much US money has been traced to him already and then quickly buried. Now he has the ability to just create an account in any name to be collected whenever it is needed to obtain whatever is deemed necessary."
The Walt Disney Co. raised prices at its Florida theme parks on January 1, when the price rose to $63 from $59.75. Yesterday a price hike from $63 to $67 went into effect. I guess the company is anticipating no problems with the weather this hurricane season. With $3 a gallon gasoline, I think it's a stupid move to be raising prices. Then again, I disagreed with their moving forward in a movie project with Mel Gibson. If I owned the stock (which I do not), I'd sell it.
The cost of one transportation project near Wisconsin Dells rose 44 percent over the past six months. Transportation Secretary Frank Busalacchi attributed the increase in part to the cost of structural steel, which jumped 45.6 percent, and excavation costs, up 21.5 percent in the last 12 months.
According to the report, the cost of the U.S. Highway 12 project from Lake Delton to Sauk City rose $47.3 million to $155 million, a 44 percent increase.
Meanwhile, costs for the U.S. Highway 41 project from De Pere to Suamico more than doubled, increasing from $205 million to $416.5 million, since the project was first planned in 2002.
I assure you that Wisconsin does not have a monopoly on rising costs for transportation projects.
Ford Motor Co. may sell Land Rover together with Jaguar to drum up interest, The Sunday Times (of London) newspaper reported, citing unnamed sources.
A July telephone survey of more than 1,000 people conducted by Boston Consulting Group found that 76% of Americans believe gas prices will rise for the remainder of the year. Another 48% said it was possible for gas prices to hit $5.50 a gallon at some point. Michigan gas prices currently average $3.04 a gallon, AAA Michigan reports.
BP has indefinitely shut down the nation's biggest oilfield after finding a pipeline leak, removing about 8 percent of U.S. oil production and stoking fears that already high gas prices will shoot up further.
John Hussman: "We should not be surprised to observe stagflation, falling stocks, weak profits, flat bonds, and a dollar crisis in the months ahead."
Crude traded over $77 a barrel this morning.
Apple's Worldwide Developers Conference is held today thru Friday at SF's Moscone Center. Will Mac's new operating system, Leopard, prove more advanced than Microsoft's Vista?
Martin Feldstein: "A mild slowing of economic growth is generally not sufficient to reverse rising inflation. That generally requires a sustained period of excess capacity in product and labor markets, with GDP growth falling significantly or even turning negative."
Should an event take place to create a freefall in stocks, be prepared to watch the actions of the Fed's Plunge Protection Team. It's members are the Fed chairman, the SEC chairman, the Commodities Futures Trading Commission chairman, the Secretary of the Treasury, and members of financial institutions, such as, Goldman Sachs, Morgan Stanley, and Merrill Lynch.
I'd like to revisit an article written on 7/3/03 by Eric Jewell entitled
Osama Bin Laden and Promis(e)Software:
"Today, financial institutions and Intelligence departments use Promise software worldwide. This means that factions of the US government can quickly access any computer in these networks. The implications are astounding. This gives the ability to add, delete, or modify any file or files within any given intelligence agency using this software. A picture can be put with any name and any information and make it possible for whole terrorist organizations to travel freely with false papers just because the computers were hacked into and all the information fed into them to effectively change any identity. The possibilities within financial institutions are equally as great. Accounts can be created and funds moved from any account to any account.
The question is, why was Bin Laden recently provided with a copy of this software? The answer may possibly be found in both the intelligence and the financial arenas. Now his men which were trained by the CIA can travel freely with no fear of reprisal. George Bush Sr. was vice president when the software was developed, and is a definite insider of this faction of government that sent Promise worldwide. He is connected to the Bin Laden family through the Carlyle Group, which means that both the Bin Laden fortune and the Bush fortune are greatly increased with every military act. The problem is finances if Osama is to remain armed and create worldwide fear to carry on the Bush Agenda of turning America into a police state and leading us further into the New World Order, he needs further funding. With the "Promise" software Bin Laden need never worry again about how we will further fund him. Bank accounts can be very messy in that they can be traced, and indeed much US money has been traced to him already and then quickly buried. Now he has the ability to just create an account in any name to be collected whenever it is needed to obtain whatever is deemed necessary."
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