5/6/07 Berkshire Hathaway Annual Meeting Day
Warren Buffett's Berkshire Hathaway Inc. said on Friday first-quarter profit rose 12 percent as earnings from insurance underwriting soared. Profit from insurance underwriting rose 82 percent to $601 million. Investment income from insurance rose 6 percent to $748 million, while profit in non-insurance businesses rose 16 percent to $894 million. Insurance premiums more than doubled to $13.51 billion, including about $7.1 billion from the Equitas reinsurance agreement that took effect on March 30.
As many as 20 million chickens currently on U.S. farms in several states may have been fed contaminated feed, the U.S. Agriculture Department said on Friday.
In the March 12 issue of Archives of Internal Medicine and carried out by researchers at the University of California, San Francisco, and the San Francisco Veterans Affairs Medical Center, 31 percent of more than 100,000 veterans studied were diagnosed with mental or psychological problems. Post-traumatic stress disorder was the most common condition reported, affecting 13 percent of all Iraq or Afghanistan veterans who sought VA services, according to the study.
Pelosi questioned whether it was ethical to send troops into war "under a false pretense without a strategy for success," without proper equipment and training and without "demanding accountability from the Iraqi government while we dishonored our commitment to our veterans here at home."
"In the elections, when the American people were calling for a new direction, the one place where they called for it in the clearest possible way was in the war in Iraq," Pelosi (D-Calif.) told an audience estimated at about 2,000 people.
"They wanted the war to wind down," Pelosi said. "Instead, the president has escalated it. He has a tin ear in terms of listening to the people and a blind eye as to what is going on in Iraq."
General Pace and other senior officers acknowledge that the deployment schedule is putting a strain on U.S. troops, particularly combat soldiers and marines. Last month, the Defense Department announced it would lengthen the tours of duty for soldiers serving in Iraq and Afghanistan from 12 months to 15 months, with 12 months of vacation and training between deployments. The marines spend seven months at a time in combat, with six months at home.
Former Clinton Administration defense department official Michelle Flournoy says the operational tempo has already left U.S. ground forces in a precarious position.
"We're already at the point today where we do not have a reserve of ground forces that is adequate to respond to the full range of contingencies that we might face elsewhere in the world," she said.
Flournoy, who is now an analyst at the Center for a New American Security, also worries that during their time at home, troops are only training to return to Iraq or Afghanistan and fight an insurgency, sacrificing training on other basic and potentially essential military skills.
"The training is so focused on the tasks that are being conducted in Iraq that a lot of the other war-fighting tasks may be neglected. And I'll give you an example. You can find members of artillery units in both the army and the Marine Corps who've never fired artillery because every tour they've gone on since their enlistments has been in Iraq and they've been focused on counterinsurgency," she said.
John Mauldin: "Dennis Gartman called my attention to an IMF report showing the growth of foreign exchange reserves held by the various nations reporting to the IMF. They have grown from a "mere" $2 trillion in 2000 until they are now over $5 trillion and rising. The report suggests that this does not include 40% of the "reserves" which are not accounted for, so the number is much higher.This is going to unleash a large amount of capital back into the markets. Countries, in one sense, are just like families. They hopefully save money. The first savings are generally in very liquid investments in case there is an emergency. But over time, as savings grow, they start to invest in less liquid investments and soon in long-term investments."
Adam Hamilton: "The HUI/Gold Ratio is as simple as it sounds, it is calculated by merely dividing the daily close of the HUI unhedged gold-stock index by the daily close in the price of gold. When this resulting ratio is graphed over time, it vividly illustrates the ever-shifting relative strength of the gold stocks versus gold. As their bulls mature, one is stronger and then the other, back and forth. They are engaging in a great secular tug-o-war...The bottom line is the HUI/Gold Ratio is approaching its long-term support. In this bull to date, each time this has happened the HUI has soared heavenwards soon after in a mighty new upleg. With gold's fundamentals still awesome, and gold driving this gold-stock bull, the odds favor the HUI soon outperforming gold again and surging higher to drive up the HGR as it has done in the past. The HGR drift of the past year has been a trying one psychologically, but it has built the perfect foundation for a new upleg to launch. Not only is HUI sentiment still pretty pessimistic today, the contrarian time to buy, but it has built a new higher technical base from which to launch its assault on new highs. On top of all this it is technically due to start outperforming gold again in a cycle sense."
The Hamas leader, Khaled Mashaal, said Israel is planning a military operation against the Palestinians. ''We in Hamas are also preparing ourselves for battle, and we expect hot months,'' he said. He urged all Palestinian groups to ''seriously prepare themselves for battle.''
Brett Steenbarger: "My doubts about the lasting power of the recent rally are growing. Friday saw new bull highs in the Dow and S&P 500 averages, but only 49 S&P 500 stocks made 52-week highs on Friday, down from over 80 on 4/25. We had 45 new highs among the S&P 600 stocks, down from over 70 on 4/25. Amazingly, only 8 NASDAQ 100 issues made new highs on Friday, and only 6 of the Dow 30 issues. The 347 new highs among NYSE issues were also down from almost 450 on 4/25. The rally is narrowing, which suggests to me that we might enter a consolidation mode in the very near future."
Paccar agreed to buy Truck Center Hauser, an independent truck rental and leasing company in Germany.Terms of the deal, expected to close late this month, were not disclosed. Truck Center Hauser, headquartered near Frankfurt, has a fleet of 1,200 trucks and 1,800 trailers and about 3,000 customers throughout Germany, Paccar said in a statement.
Doug Noland: " From Bank of International Settlement data, we know that the total notional value of global derivative positions ended 1998 at $80.3 TN – comprised of $18.0 TN Foreign Exchange; $50.0 TN Interest Rate; $1.5 TN Equity-Linked; $415bn Commodities; and $10.4 TN “Other”. Credit derivatives didn’t even have their own category. By the end of 2006, Total derivative positions had ballooned to $370 TN, with $38 TN Foreign Exchange; $262 TN Interest Rate; $6.8 TN Equity-Linked; $6.4 TN Commodities; $36 TN “Unallocated”; and $20.4 TN Credit Default Swaps (up more than 3-fold in 2 yrs)...I’ll venture a prediction that hedge fund de-leveraging will pale in comparison to the widespread tumult that will likely engulf currency, securitization, and derivatives markets – in risk intermediation generally. The derivatives markets are poised to falter into absolute liquidity nightmares, and this will not be a hedge fund-like de-leveraging issue easily resolved with aggressive rate cuts. And the longer current destabilizing flows are allowed to run roughshod – distorting prices, risk perceptions, and economic structures in the process - the more arduous the unavoidable adjustment period. That’s just the way it works."
In March, 54 percent of U.S. Internet searches were performed with Google. Microsoft and Yahoo! had a combined 32 percent. Some analysts suggest
the Internet-advertising pie will hit $31.4 billion globally this year, up 28 percent.
According to Bloomberg, “India will become the world’s fifth-biggest consumer market by 2025, surpassing Germany, as incomes almost triple and assuming the South Asian nation’s economic growth rate ‘holds steady,’ McKinsey & Co. said.”
The Financial Times reported Brazil on Friday overrode the patent on a pivotal HIV medicine, becoming the second emerging economy aggressively to challenge the pharmaceutical industry in seeking a sharp reduction in drug costs. President Luiz Inácio Lula da Silva on Friday signed a “compulsory licence” for Efavirenz, Merck’s HIV drug, allowing the government to purchase from rival generic suppliers under provisions permitted by World Trade Organisation rules.
Sears Holdings Corp. Chairman Edward S. Lampert sounded a cautious note for U.S. retailers a day after the company warned of unexpected weakness during the first quarter.
I haven't a clue as to the possible winner in the Kentucky Derby. It appears wide open to me. As such, I'll go with a long shot, Cowtown Cat. Maybe I'll get lucky.
Saturday, May 05, 2007
Friday, May 04, 2007
The Mating Game
5/5/07 The Mating Game
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
Thursday, May 03, 2007
More Government Numbers
5/4/07 More Government Numbers
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
Wednesday, May 02, 2007
The Beat Goes On
5/3/07 The Beat Goes On
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
Tuesday, May 01, 2007
Outlook
5/2/07 Outlook
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Monday, April 30, 2007
Risk Is Alive And Well
5/1/07 Risk Is Alive And Well
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
Sunday, April 29, 2007
Turning Points?
4/30/07 Turning Points?
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
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