5/20/07 Opinions
"We believe the odds of a deal happening over time actually increases," Goldman Sachs analyst Anthony Noto said in a note to clients after news of Microsoft's acquisition of online advertising company aQuantive. Stifel Nicolaus analyst Scott Devitt was skeptical, however, saying Microsoft's $6 billion deal, its largest-ever acquisition, could be a prelude to a series of deals in which Microsoft assembles its own alternative to Yahoo.
"Paul Wolfowitz's problems at the World Bank stem in part from a widespread perception that he disproportionately represents U.S. interests rather than objectives that command a global consensus," declared a letter signed this week by more than 200 people -- including heads of aid organizations -- and sent to the executive boards of the World Bank and the IMF. It called for the traditional arrangement to be "abandoned and replaced with selection procedures that reflect two key principles: transparency of process, and competence of prospective leadership without regard to national origin." The U.S. is asking Canada and other countries about who should replace Paul Wolfowitz as the World Bank's president, Canadian Finance Minister Jim Flaherty said.
The implied yield on 3-month December ’07 Eurodollars jumped 9 bps to 5.205%, the highest level since the end of January. This is certainly an alternative to equities worth considering.
Doug Noland: "In this performance-based financial world in which we now operate, one can only sit gingerly on the sideline for so long before the strain of underperformance becomes too much to bear. To be sure, we are witnessing in real time the propensity for unchecked Credit Bubbles to (more than) sustain themselves for significantly longer than discerning analysts ever imagined - and how the resulting interplay of endless liquidity, embedded asset inflation, and speculative market dynamics inherently fosters “blow-off” excess. These dynamics were at play in the U.S. bond market back in 1993, various emerging markets throughout the nineties, tech/telecom in 1999/early-2000, and more recently in U.S. subprime and global M&A. The Fed has apparently learned little."
The NY Times reported the total number of contractors killed in Iraq climbed to at least 917, along with more than 12,000 wounded in battle or injured on the job.
Venezuela's revenues from crude exports by the state oil company fell 10 percent in the first three months of this year amid lower prices, OPEC-mandated production cuts and reports of falling production at the South American country.
Deutsche Bank's Paul Sankey: "Anybody who blames record high US gasoline prices on "gouging" at the pump simply reveals their total ignorance of global oil supply and demand fundamentals. The real reason for high pump prices is the lack of global gasoline supply relative to demand. Just in the US, overall US refining capacity, at 17 million barrels per day (mb/d), is far below demand at 22 mb/d. In turn, pump prices are effectively set by import prices. With strong demand outside the US on the back of global economic growth and a weak dollar, the era of abundant US oil supply augmented by willing international sellers is dead."
China has agreed to place $3bn of its massive foreign exchange reserves with Blackstone, US-based private equity group.
The U.S. command said Saturday five more American soldiers were killed. One died Saturday from a roadside bomb south of Baghdad. Four died Friday — one in the western province of Anbar, one by small arms fire south of the capital and two by a roadside bomb and small arms fire in northwestern Baghdad, the military said.
"Consolidation in the online ad industry and products from Google and Yahoo for selling ads in online auctions may pressure Westlake Village, California-based ValueClick to sell itself, Richard Fetyko, an analyst Merriman Curhan Ford & Co., wrote in a note to clients. One might consider selling the September 20 puts for 45 cents. The stock closed at $30.50.
I was pondering about rail car loadings being down 4.3% year over year for 2007-to-date (thru first week of May) and the first week of May is down 4.9% year over year. Yet, looking at the rail stocks, you'd think business is great. I know about the Buffett effect. I remember Buffett on US Airways. Maybe transportation isn't his forte. "What was a terrible business 30 years ago ... will never be a sensational business," Buffett said. Still, he said, "the competitive position of railroads has improved somewhat."
John Mauldin: "The housing market is still slowing. Consumer spending is slowing. Overall inflation seems to be rising, which will make it difficult for the Fed to cut rates in what seems to be an ever-closer recession. Call me old-fashioned, but this is not the environment that has been positive for the stock market in the past. Maybe things are different, and I am just missing it. And as for a recession, are we there yet? Maybe, or at least close enough that we should fasten our seatbelts in preparation for a landing. (As the flight attendant just told me - I am somewhere over the mountains in California) Let me tell you now the spin you will hear in a few months if we find that we are in or close to recession numbers (not that the under 1% we saw last quarter wasn't close):"It's only a technical recession because of the high inflation numbers caused by energy and food. If you take those out the economy is just fine. And please buy my stock, fund, etc. because things are going to get better." You gotta love it."
Rob Kirby points out “President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
Ted Butler: "Silver is more manipulated, due to the concentrated short position. Since last summer, while the ETF added more than 60 million ounces (to 134 million), the 4 or less big traders on the COMEX added more than 60 million ounces to their net short silver position (to 230 million)."
Saturday, May 19, 2007
Friday, May 18, 2007
Iraq
5/19/07 Iraq
Reuters reported that, according to a leading British think-tank, Iraq's government has lost control of vast areas to powerful local factions and the country is on the verge of collapse and fragmentation.
http://news.yahoo.com/s/nm/20070517/wl_n..
The People's Bank of China has widened the yuan trading band to plus or minus 0.5% per day, from a previous band of plus or minus 0.3% per day. China's central bank also lifted the bank reserve requirement ratio by a half percentage point, and increased its benchmark lending and deposit rates. The government reported Thursday that investment in urban fixed assets jumped by 25.5 percent in the first four months of the year. That exceeded the 2006 full-year growth rate of 24.5 percent. The government also has imposed investment curbs and banned some types of projects outright in the textile, auto and other industries where supply exceeds demand.
Paul Wolfowitz resigned as president of the World Bank effective June 30, the bank's directors announced Thursday.
China's crude oil production rose 2 percent in April as the country's appetite for fuel and energy grows alongside the economy, the government said Friday.
China's crude oil output rose to 15.4 million metric tons, equivalent to an average 3.76 million barrels a day, data from the National Bureau of Statistics showed. The increase lifted production for the January to April period 1.6 percent to 61.45 million tons.
The dollar matched the previous session's three-month high against the yen on Friday as investors continued to play the carry trade, selling the low-yielding Japanese currency for higher yielding units.
Saudi Basic Industries Corp., the world's biggest chemical company by market value, will buy General Electric Co.'s plastics unit for about $11 billion, two people familiar with the negotiations said.
WTRG: "Year-over-year oil exploration in the US is up 8.9 percent. Gas exploration is up 6.5 percent. The weekly average of crude oil spot prices is 13.7 percent lower than last year and natural gas spot prices are 16.2 percent higher."
In sum, despite the fact that crude is $7 a barrel cheaper than last year, gas prices are almost 50 cents higher per gallon.
Richard Daughty: " Total spending by all the governments and agencies of the United States is - AT LEAST! - $6 trillion a year! I am staggered backwards and fall on my Fat Mogambo Butt (FMB) when I realize with horror that since annual Gross Domestic Product of the USA is about $12 trillion, total government spending is fully half of GDP! Half! Half of the entire yearly output of goods and services of the whole freaking country equals total government spending! The government IS the economy!!!!"
South Florida is in an 18-month drought, and signs of the problem are everywhere — from the links to the nursery and sugar cane industries.
Lake Okeechobee, the region's primary reservoir, is down to 9.3 feet above sea level — less than half a foot above its record low. Farmers and the area's 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinkler use is restricted to once a week.
I had to read this several times to believe the price was correct. Microsoft Corp. said it's agreed to acquire Aquantive Inc. for about $6 billion. The all-cash deal values Aquantive shares at $66.50 each. This compares to Thursday's close at $35.87.
Clear Channel shareholders to receive $39.20 in the buyout offer.
Prof. Ken Bode: "Alberto Gonzales, who claims ignorance about who put together the list of U.S. attorneys to be fired, is twisting in the wind ... And now [he] has his own Monica problem. When Ms. Goodling testifies and reveals how deeply the Justice Department has been politicized with incompetent cronies, he'll be gone too. So long, Alfredo."
"As a part of the gradual process of financial sector liberalisation in India, it is considered appropriate to introduce credit derivatives in a calibrated manner at this juncture," the Reserve Bank of India said in a release addressed to the country's commercial banks.
According to researchers at the University of Michigan, the consumer sentiment index rose to 88.7 in May from 87.1 in April.
Rigzone: " For the moment, however, flat exploration activity in the U.S. and Canada, combined with the entrance of hundreds of new rigs into the market, are weighing on drillers' margins. Although both countries are seeing diminishing returns from oil and natural gas reserves, more rigs are operating in the U.S. alone than the rest of the world combined. Producers accepted skyrocketing drilling costs while natural gas prices were rising, but this year have capped their budgets in North America, as gas has settled between $7 and $8 a million British thermal units. With more rigs competing for the same number of jobs, the prices drillers can charge, known as dayrates, have fallen by about 20% this year."
Berkshire Hathaway Inc. has agreed to acquire jewelry manufacturers Bel-Oro International and Aurafin LLC. Financial terms of the deal, which is expected to close during the second or third quarter of 2007, were not disclosed.
Crude-oil futures closed marginally higher Friday and posted a hefty gain on the week. Crude oil for June delivery edged up 8 cents to close at $64.94 a barrel on the New York Mercantile Exchange. The contract gained $2.57 on the week. Other energy prices, however, posted losses. June reformulated gasoline fell 2.89 cents to $2.4077 a gallon, June heating oil fell 2.15 cents to $1.9152 a gallon and June natural gas declined 13.1 cents to $7.944 per million British thermal units.
The benchmark 10-year Treasury note ended down 13/32 at 97 19/32; yielding 4.806%.
Gold for June delivery closed up $4.80 at $662.0 an ounce on the New York Mercantile Exchange. July platinum closed up $8.30 at $1,326.20 an ounce. June palladium rose $4.85, or 1.4%, to close at $362.25 an ounce. July copper rose 1.70 cents at $3.3235 a pound and July silver ended up 12.0 cents at $13.003 an ounce.
As of mid-May, total M&A activity world-wide totaled about $2.19 trillion, compared with the record $3.87 trillion for all of 2006, according to Dealogic. In the U.S. M&A activity totaled $717.37 billion through May 16, on pace with last year’s $1.49 trillion. Both are shy of 1999 and 2000, when activity topped $1.5 trillion in each year.Private-equity buyouts have totaled $218.7 billion so far this year, compared with $421.56 billion last year and $53.9 billion in 2000.
Goldman Sachs Group Inc. set a record Friday as its market value crossed $100 billion.
Reuters reported that, according to a leading British think-tank, Iraq's government has lost control of vast areas to powerful local factions and the country is on the verge of collapse and fragmentation.
http://news.yahoo.com/s/nm/20070517/wl_n..
The People's Bank of China has widened the yuan trading band to plus or minus 0.5% per day, from a previous band of plus or minus 0.3% per day. China's central bank also lifted the bank reserve requirement ratio by a half percentage point, and increased its benchmark lending and deposit rates. The government reported Thursday that investment in urban fixed assets jumped by 25.5 percent in the first four months of the year. That exceeded the 2006 full-year growth rate of 24.5 percent. The government also has imposed investment curbs and banned some types of projects outright in the textile, auto and other industries where supply exceeds demand.
Paul Wolfowitz resigned as president of the World Bank effective June 30, the bank's directors announced Thursday.
China's crude oil production rose 2 percent in April as the country's appetite for fuel and energy grows alongside the economy, the government said Friday.
China's crude oil output rose to 15.4 million metric tons, equivalent to an average 3.76 million barrels a day, data from the National Bureau of Statistics showed. The increase lifted production for the January to April period 1.6 percent to 61.45 million tons.
The dollar matched the previous session's three-month high against the yen on Friday as investors continued to play the carry trade, selling the low-yielding Japanese currency for higher yielding units.
Saudi Basic Industries Corp., the world's biggest chemical company by market value, will buy General Electric Co.'s plastics unit for about $11 billion, two people familiar with the negotiations said.
WTRG: "Year-over-year oil exploration in the US is up 8.9 percent. Gas exploration is up 6.5 percent. The weekly average of crude oil spot prices is 13.7 percent lower than last year and natural gas spot prices are 16.2 percent higher."
In sum, despite the fact that crude is $7 a barrel cheaper than last year, gas prices are almost 50 cents higher per gallon.
Richard Daughty: " Total spending by all the governments and agencies of the United States is - AT LEAST! - $6 trillion a year! I am staggered backwards and fall on my Fat Mogambo Butt (FMB) when I realize with horror that since annual Gross Domestic Product of the USA is about $12 trillion, total government spending is fully half of GDP! Half! Half of the entire yearly output of goods and services of the whole freaking country equals total government spending! The government IS the economy!!!!"
South Florida is in an 18-month drought, and signs of the problem are everywhere — from the links to the nursery and sugar cane industries.
Lake Okeechobee, the region's primary reservoir, is down to 9.3 feet above sea level — less than half a foot above its record low. Farmers and the area's 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinkler use is restricted to once a week.
I had to read this several times to believe the price was correct. Microsoft Corp. said it's agreed to acquire Aquantive Inc. for about $6 billion. The all-cash deal values Aquantive shares at $66.50 each. This compares to Thursday's close at $35.87.
Clear Channel shareholders to receive $39.20 in the buyout offer.
Prof. Ken Bode: "Alberto Gonzales, who claims ignorance about who put together the list of U.S. attorneys to be fired, is twisting in the wind ... And now [he] has his own Monica problem. When Ms. Goodling testifies and reveals how deeply the Justice Department has been politicized with incompetent cronies, he'll be gone too. So long, Alfredo."
"As a part of the gradual process of financial sector liberalisation in India, it is considered appropriate to introduce credit derivatives in a calibrated manner at this juncture," the Reserve Bank of India said in a release addressed to the country's commercial banks.
According to researchers at the University of Michigan, the consumer sentiment index rose to 88.7 in May from 87.1 in April.
Rigzone: " For the moment, however, flat exploration activity in the U.S. and Canada, combined with the entrance of hundreds of new rigs into the market, are weighing on drillers' margins. Although both countries are seeing diminishing returns from oil and natural gas reserves, more rigs are operating in the U.S. alone than the rest of the world combined. Producers accepted skyrocketing drilling costs while natural gas prices were rising, but this year have capped their budgets in North America, as gas has settled between $7 and $8 a million British thermal units. With more rigs competing for the same number of jobs, the prices drillers can charge, known as dayrates, have fallen by about 20% this year."
Berkshire Hathaway Inc. has agreed to acquire jewelry manufacturers Bel-Oro International and Aurafin LLC. Financial terms of the deal, which is expected to close during the second or third quarter of 2007, were not disclosed.
Crude-oil futures closed marginally higher Friday and posted a hefty gain on the week. Crude oil for June delivery edged up 8 cents to close at $64.94 a barrel on the New York Mercantile Exchange. The contract gained $2.57 on the week. Other energy prices, however, posted losses. June reformulated gasoline fell 2.89 cents to $2.4077 a gallon, June heating oil fell 2.15 cents to $1.9152 a gallon and June natural gas declined 13.1 cents to $7.944 per million British thermal units.
The benchmark 10-year Treasury note ended down 13/32 at 97 19/32; yielding 4.806%.
Gold for June delivery closed up $4.80 at $662.0 an ounce on the New York Mercantile Exchange. July platinum closed up $8.30 at $1,326.20 an ounce. June palladium rose $4.85, or 1.4%, to close at $362.25 an ounce. July copper rose 1.70 cents at $3.3235 a pound and July silver ended up 12.0 cents at $13.003 an ounce.
As of mid-May, total M&A activity world-wide totaled about $2.19 trillion, compared with the record $3.87 trillion for all of 2006, according to Dealogic. In the U.S. M&A activity totaled $717.37 billion through May 16, on pace with last year’s $1.49 trillion. Both are shy of 1999 and 2000, when activity topped $1.5 trillion in each year.Private-equity buyouts have totaled $218.7 billion so far this year, compared with $421.56 billion last year and $53.9 billion in 2000.
Goldman Sachs Group Inc. set a record Friday as its market value crossed $100 billion.
Thursday, May 17, 2007
Humming Along
5/18/07 Humming Along
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614. At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said. The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
By comparison, the worst housing slump since the Great Depression is driving Ohio and 20 other states to propose consumer protection laws and bond sales that would help homeowners stem the escalating defaults. Ohio, with the third-highest foreclosure total in the U.S. last month, is raising $100 million to help homeowners refinance risky mortgages. New York, New Jersey and Pennsylvania are planning similar sales.
Globally, buyers spent $17.38 billion on gold in the first quarter, the World Gold Council said Wednesday. That's up 22 percent from $14.21 billion a year earlier.
The World Gold Council released their ‘Gold Demand Trends’ report which indicated increased demand for gold in Q1/06 in terms of both tonnage and dollars. Net retail investment was higher by 28% compared to Q1/06 in tonnage terms, consumer demand in China and India rose by 31% and 50% respectively, industrial and dental demand was higher by 1% in tonnage terms while gold supply fell 2% below Q1/06 levels.
Japan's central bank governor said Thursday an interest rate rise was possible even if consumer prices fell, hours after government data showed the world's second largest economy grew less than expected in the first quarter.
Acxiom agreed to be acquired by investment firms Silver Lake and ValueAct Capital for $2.25 billion plus the assumption of about $756 million in debt. The proposed buyout values Little Rock, Arkansas-based Acxiom at $27.10 a share, a 14% premium to its closing price on Wednesday. Under terms of the deal, the company can solicit other proposals for the next 60 days, the companies said. The deal is expected to close in three to four months.
Li Ka-shing, Asia's richest man, said China's stock valuations "must be a bubble'' and prices are likely to decline.
24/7 Real Media Inc. has agreed to be acquired by WPP Group for $11.75 per share.
The number of initial claims in the week ending May 5 fell 5,000 to 293,000. It's the lowest level since the week ended Jan. 13. The four-week average of initial claims fell 12,000 to 305,500. This is the lowest level since April 2006. Meanwhile, the number of Americans receiving state jobless benefits fell 78,000 to 2.47 million in the week ending April 28. The four-week moving average of continuing claims fell 14,000 to 2.53 million.
OPEC doesn't see a need to boost oil supplies before the summer and will maintain its view that global oil markets are amply stocked, a top official from the group said Thursday. "There's no need for us to do more," Abdulla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview.
Penney raised its outlook for full-year earnings from continuing operations on the strength of its first-quarter results.The company now sees full-year income from continuing operations at about $5.49 per share, up from its prior forecast of $5.44 per share.
The Economic Cycle Research Institute [ECRI] leading index has been strengthening in 2007 and its growth rate has just moved to a 3-year high.
Brad Setser: "US export growth has clearly slowed. Y/y growth is now around 9%, well below its peak at 16% last fall. Haver's data on the 3m and 6m growth rates in real exports show an even sharper slowdown. And in March non-oil imports jumped up. They are now growing at a y/y pace of around 6%."
Ned Schmidt: "At end of June 2007 we will be able to look back on a ten year history where the investment return on $Gold was superior to that of U.S. equities. Talk about grand productive nature of U.S. economy will then be judged as simply the blathering of paper asset peddlers."
Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA.
Alliance Data Systems Corp. agreed to be acquired by affiliates of private equity firm The Blackstone Group for $7.8 billion, including unspecified debt assumption. The deal values Alliance Data at $81.75 a share, a roughly 30% premium to Wednesday's closing price of $62.96.
The American Civil Liberties Union urged that Congress subpoena all of the Justice Department documents relating to the NSA warrant less wiretapping program and the new FISA court-approved program in light of the testimony that Deputy Attorney General James Comey made at a hearing before the Senate Judiciary Committee. The testimony yesterday clearly indicated that not only did the Bush administration reauthorize the NSA program in 2004 without a signature from the Justice Department; it reauthorized the program even after both the Attorney General and Comey, the acting Attorney General determined that the program was illegal.
"The American people deserve an attorney general, the chief law enforcement officer of our country, whose honesty and capability are beyond question," Hagel, a Nebraskan, said in a statement. "Attorney General Gonzales can no longer meet this standard. He has failed this country. He has lost the moral authority to lead."
TUI Group, a European tourism company, has ordered 11 Boeing 787-8 Dreamliners and 50 smaller 737 passenger jets, Boeing announced.
The U.S. index of leading economic indicators fell a worse-than-expected 0.5% in April, the Conference Board said Thursday. A plunge in building permits and a jump in unemployment claims dragged the index down last month. "The data may be pointing to slower economic conditions this summer," said Ken Goldstein, an economist for the research group. Seven of the 10 indicators declined in April. The only two gainers were stock prices and money supply. The coincident index rose 0.2% in April and the lagging index also rose 0.2%.
Natural-gas inventories rose by 95 billion cubic feet for the week ended May 11, the Energy Department said Thursday. Total stocks now stand at 1.842 trillion cubic feet, down 225 billion cubic feet from the year-ago level, but 315 billion cubic feet above the five-year average, the government data said.
The Philly Fed's index of manufacturing sentiment rose to 4.2 from 0.2 in April and March. It's the highest reading since January.
Gold for June delivery fell $4.30 to close at $657.20 an ounce on the New York Mercantile Exchange. Meanwhile, the June copper futures closed down 3.3%.
"It seems the only person who has confidence in the attorney general is President Bush," Schumer told reporters. "The president long ago should have asked the attorney general to step down." "I think the time has come for the Senate to express its will," Feinstein said. "We lack confidence in the attorney general."
For the fiscal year ending Feb. 2, 2008, Nordstrom said it now expects per-share earnings of $2.81 to $2.90, up from its previous outlook of $2.78 to $2.84.
Kohl's raised its fiscal 2007 earnings forecast to a range of $3.75 to $3.87 a share from its earlier view of $3.68 to $3.84 a share.
The benchmark 10-year Treasury note closed down 12/32 at 97 31/12; yielding 4.757%, up from 4.708% late Wednesday.
June reformulated gas climbed 9.96 cents to close at $2.4366 a gallon Thursday, leading June crude up by 3.4%, or $2.31, to $64.86 a barrel. June natural gas gained 18.5 cents to close at $8.075 per million British thermal units.
An Apple spokeswoman confirmed that the company will ship the iPhone in late June.
China’s production of metals for its power, manufacturing and building industries surged to records in April. Output of copper rose 17% to a record 274,000 metric tons, while production of aluminum surged 38% to a record 974,000 tons, the National Bureau of Statistics said.
Valero Energy Corp., the largest U.S. refiner, said Wednesday that it halted fuel output at its Houston refinery because of steam system and boiler problems. The complex can process 130,000 barrels of oil a day. ConocoPhillips, the second- largest U.S. refiner, said a unit at its plant in Sweeny, Texas, is undergoing maintenance after a leak Wednesday.
ConocoPhillips announced Thursday that it will idle a fluid catalytic cracking unit and a boiler at its refinery in Borger, Texas, for scheduled repairs. The Borger plant is capable of processing 146,000 barrels of oil a day.
The average national price of regular gasoline rose to an all-time high of $3.114 a gallon on Thursday, according to AAA and the Oil Price Information Service. That's up 1.1 cents overnight, and almost 25 cents in a month. Prices in some parts of the country, including California, have already passed $4. Naturally, inflation is of little concern to the Fed. It's only a worry for consuming Americans.
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614. At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said. The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
By comparison, the worst housing slump since the Great Depression is driving Ohio and 20 other states to propose consumer protection laws and bond sales that would help homeowners stem the escalating defaults. Ohio, with the third-highest foreclosure total in the U.S. last month, is raising $100 million to help homeowners refinance risky mortgages. New York, New Jersey and Pennsylvania are planning similar sales.
Globally, buyers spent $17.38 billion on gold in the first quarter, the World Gold Council said Wednesday. That's up 22 percent from $14.21 billion a year earlier.
The World Gold Council released their ‘Gold Demand Trends’ report which indicated increased demand for gold in Q1/06 in terms of both tonnage and dollars. Net retail investment was higher by 28% compared to Q1/06 in tonnage terms, consumer demand in China and India rose by 31% and 50% respectively, industrial and dental demand was higher by 1% in tonnage terms while gold supply fell 2% below Q1/06 levels.
Japan's central bank governor said Thursday an interest rate rise was possible even if consumer prices fell, hours after government data showed the world's second largest economy grew less than expected in the first quarter.
Acxiom agreed to be acquired by investment firms Silver Lake and ValueAct Capital for $2.25 billion plus the assumption of about $756 million in debt. The proposed buyout values Little Rock, Arkansas-based Acxiom at $27.10 a share, a 14% premium to its closing price on Wednesday. Under terms of the deal, the company can solicit other proposals for the next 60 days, the companies said. The deal is expected to close in three to four months.
Li Ka-shing, Asia's richest man, said China's stock valuations "must be a bubble'' and prices are likely to decline.
24/7 Real Media Inc. has agreed to be acquired by WPP Group for $11.75 per share.
The number of initial claims in the week ending May 5 fell 5,000 to 293,000. It's the lowest level since the week ended Jan. 13. The four-week average of initial claims fell 12,000 to 305,500. This is the lowest level since April 2006. Meanwhile, the number of Americans receiving state jobless benefits fell 78,000 to 2.47 million in the week ending April 28. The four-week moving average of continuing claims fell 14,000 to 2.53 million.
OPEC doesn't see a need to boost oil supplies before the summer and will maintain its view that global oil markets are amply stocked, a top official from the group said Thursday. "There's no need for us to do more," Abdulla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview.
Penney raised its outlook for full-year earnings from continuing operations on the strength of its first-quarter results.The company now sees full-year income from continuing operations at about $5.49 per share, up from its prior forecast of $5.44 per share.
The Economic Cycle Research Institute [ECRI] leading index has been strengthening in 2007 and its growth rate has just moved to a 3-year high.
Brad Setser: "US export growth has clearly slowed. Y/y growth is now around 9%, well below its peak at 16% last fall. Haver's data on the 3m and 6m growth rates in real exports show an even sharper slowdown. And in March non-oil imports jumped up. They are now growing at a y/y pace of around 6%."
Ned Schmidt: "At end of June 2007 we will be able to look back on a ten year history where the investment return on $Gold was superior to that of U.S. equities. Talk about grand productive nature of U.S. economy will then be judged as simply the blathering of paper asset peddlers."
Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA.
Alliance Data Systems Corp. agreed to be acquired by affiliates of private equity firm The Blackstone Group for $7.8 billion, including unspecified debt assumption. The deal values Alliance Data at $81.75 a share, a roughly 30% premium to Wednesday's closing price of $62.96.
The American Civil Liberties Union urged that Congress subpoena all of the Justice Department documents relating to the NSA warrant less wiretapping program and the new FISA court-approved program in light of the testimony that Deputy Attorney General James Comey made at a hearing before the Senate Judiciary Committee. The testimony yesterday clearly indicated that not only did the Bush administration reauthorize the NSA program in 2004 without a signature from the Justice Department; it reauthorized the program even after both the Attorney General and Comey, the acting Attorney General determined that the program was illegal.
"The American people deserve an attorney general, the chief law enforcement officer of our country, whose honesty and capability are beyond question," Hagel, a Nebraskan, said in a statement. "Attorney General Gonzales can no longer meet this standard. He has failed this country. He has lost the moral authority to lead."
TUI Group, a European tourism company, has ordered 11 Boeing 787-8 Dreamliners and 50 smaller 737 passenger jets, Boeing announced.
The U.S. index of leading economic indicators fell a worse-than-expected 0.5% in April, the Conference Board said Thursday. A plunge in building permits and a jump in unemployment claims dragged the index down last month. "The data may be pointing to slower economic conditions this summer," said Ken Goldstein, an economist for the research group. Seven of the 10 indicators declined in April. The only two gainers were stock prices and money supply. The coincident index rose 0.2% in April and the lagging index also rose 0.2%.
Natural-gas inventories rose by 95 billion cubic feet for the week ended May 11, the Energy Department said Thursday. Total stocks now stand at 1.842 trillion cubic feet, down 225 billion cubic feet from the year-ago level, but 315 billion cubic feet above the five-year average, the government data said.
The Philly Fed's index of manufacturing sentiment rose to 4.2 from 0.2 in April and March. It's the highest reading since January.
Gold for June delivery fell $4.30 to close at $657.20 an ounce on the New York Mercantile Exchange. Meanwhile, the June copper futures closed down 3.3%.
"It seems the only person who has confidence in the attorney general is President Bush," Schumer told reporters. "The president long ago should have asked the attorney general to step down." "I think the time has come for the Senate to express its will," Feinstein said. "We lack confidence in the attorney general."
For the fiscal year ending Feb. 2, 2008, Nordstrom said it now expects per-share earnings of $2.81 to $2.90, up from its previous outlook of $2.78 to $2.84.
Kohl's raised its fiscal 2007 earnings forecast to a range of $3.75 to $3.87 a share from its earlier view of $3.68 to $3.84 a share.
The benchmark 10-year Treasury note closed down 12/32 at 97 31/12; yielding 4.757%, up from 4.708% late Wednesday.
June reformulated gas climbed 9.96 cents to close at $2.4366 a gallon Thursday, leading June crude up by 3.4%, or $2.31, to $64.86 a barrel. June natural gas gained 18.5 cents to close at $8.075 per million British thermal units.
An Apple spokeswoman confirmed that the company will ship the iPhone in late June.
China’s production of metals for its power, manufacturing and building industries surged to records in April. Output of copper rose 17% to a record 274,000 metric tons, while production of aluminum surged 38% to a record 974,000 tons, the National Bureau of Statistics said.
Valero Energy Corp., the largest U.S. refiner, said Wednesday that it halted fuel output at its Houston refinery because of steam system and boiler problems. The complex can process 130,000 barrels of oil a day. ConocoPhillips, the second- largest U.S. refiner, said a unit at its plant in Sweeny, Texas, is undergoing maintenance after a leak Wednesday.
ConocoPhillips announced Thursday that it will idle a fluid catalytic cracking unit and a boiler at its refinery in Borger, Texas, for scheduled repairs. The Borger plant is capable of processing 146,000 barrels of oil a day.
The average national price of regular gasoline rose to an all-time high of $3.114 a gallon on Thursday, according to AAA and the Oil Price Information Service. That's up 1.1 cents overnight, and almost 25 cents in a month. Prices in some parts of the country, including California, have already passed $4. Naturally, inflation is of little concern to the Fed. It's only a worry for consuming Americans.
Wednesday, May 16, 2007
Muted Inflation
5/17/07 Muted Inflation
Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19% in July in the steepest increase for individual plans this year by a Washington state health insurer. And for 16,000 of those enrollees, the rate increase will total 40% because they also happen to be moving into an older, more expensive group.
The Bank of England: "The risks to growth are balanced, while those to inflation are weighted to the upside in the medium term."
Oracle Corp. has agreed to acquire Agile Software Corp. for $8.10 a share, or roughly $495 million.
Sugar plunged to a 23-month low after C. Czarnikow Sugar Ltd., the world’s biggest broker of the sweetner, said a 2007 global surplus will be larger than estimated. The commodity has plunged 26% just this year.
Federal statistics released Tuesday for April show that food prices in Southern California rose 5.7% from a year earlier.
Southern California home sales plunged to a 12-year low in April.
ESL Investments Inc., the hedge fund Lampert founded in 1988, acquired 15.2 million shares of Citigroup since the end of 2005.
Sony reported a wider quarterly loss on Wednesday due to losses in its game unit, but it forecast a sharp rise in profit this year as it boosts sales of its PlayStation 3 video game machine and LCD TVs.
Bausch & Lomb Inc. said it agreed to be bought by affiliates of Warburg Pincus, the global private equity firm, in a transaction valued at about $4.5 billion. The buyers will pay $65 a share and assume about $830 million in debt.
Microsoft has announced that September 25, 2007 will be the release date for its long-awaited video game blockbuster 'Halo 3.'
Deere reported $2.72 EPS vs $2.41 estimate.
Housing starts increased 2.5% to a seasonally adjusted 1.528 million annual rate, after rising by 0.3% in March, the Commerce Department said Wednesday. Originally, March starts were seen increasing by 0.8% to 1.518 million. However, building permits declined by 8.9% to the lowest since June 1997.
Ingersoll-Rand Company is considering selling its Bobcat construction unit as well as other construction related units, saying the businesses "no longer fit" its long-term strategic outlook.
A Houston Chronicle story: "You see this snapper?" said the restaurateur, dangling the fish by its tail. "You're not going to see it on menus if prices continue to go up. If you do — it'll be $50." Chefs say prices have reeled out of control since federal regulators reduced the total allowable catch for American red snapper, prompting some to take the deepwater fish off their menus and bait diners with other lures.
Brad Setser: "The $100b in headline foreign purchases of US debt and equities is deceiving. Net inflows were a bit under $50b – less than the March current account deficit ($75b or so)
If sustained, that level of “diversification” by US residents implies rather large outflows – about $500b a year. To finance that level of outflows and its current account deficit, the US would need to attract about $1400b in inflows.
That is a lot. It might imply the US would need a bigger credit line than even the People’s Bank of China is willing to provide. Financing the United States current account deficit is one thing. The current account deficit is the counterpart to China’s current account surplus (read export jobs). Financing capital flight (i.e. portfolio diversification) by US residents is another." This is an important analysis and one that should be carefully considered in making decisions on additional investments in the U.S.
Mike Shedlock: "Wages are not keeping up with costs. There is no other way to look at it. Yes home prices are dropping but with fewer and fewer people buying homes, the drop in home prices is simply not helping many...Real wages are declining and corporate profits are not shared with wage earners except at the very top end. That skew makes the decline in wages worse than it even appears (and it appears bad). The squeeze on consumers is accelerating." In sum, the standard of living for probably 97% of Americans continues to worsen.
U.S. industrial production rose 0.7% in April, the Federal Reserve reported Wednesday. Capacity utilization rose to 81.6%from 81.2%.
Federated Department Stores Inc. reported lower-than-expected quarterly profit on Wednesday, citing disappointing sales at new Macy's stores, and cut its outlook for the current period on concern about the economy.
WCI Communities seeks shareholder support to 'ensure fair sale process' Co announces that it has sent a letter to its shareholders in connection with its forthcoming annual meeting, seeking shareholder support to re-elect the current Board of Directors. The co said that its Board of Directors is committed to making sure that the sale process it has initiated and which is underway is fair, transparent and designed to get the best possible price for WCI shares in the current market and will ensure that the result will be to maximize the value of WCI shares for all of the co's shareholders. The letter also noted that at present, the co has entered into a number of confidentiality agreements with entities that have expressed an interest in acquiring WCI. The letter also advised shareholders that the election of a slate of directors proposed by Carl Icahn could jeopardize the sale process or make the process less than fair and open.
The American Petroleum Institute reported a climb of 5.2 million barrels in crude supplies for the week ended May 11. The Energy Department had reported an increase of 1 million barrels for the latest week. Motor gasoline supplies were up 2.2 million barrels, the API said. The government reported a rise of 1.7 million barrels. Distillate supplies were up 1.3 million barrels, the API said, vs. the government's 1-million-barrel rise.
German Development Minister Heidemarie Wieczorek-Zeul said World Bank President Paul Wolfowitz should quit to help restore the agency's credibility, adding that he is not welcome at a meeting in Berlin next week. "I have said it often enough that he would do a good service to the bank if he were to resign,'' Wieczorek-Zeul, Germany's minister in charge of World Bank affairs, said at a briefing in Berlin today. ``The World Bank's credibility is no longer in place.''
Hewlett-Packard Co. on Wednesday posted a quarterly net profit that fell slightly due to a tax settlement gain a year ago, but excluding that HP said profit rose 27 percent, paced by strength in its personal computer and printer businesses. Net income for its second fiscal quarter was $1.78 billion, or 65 cents per share, compared with $1.90 billion, or 66 cents per share, a year ago, which included a tax settlement gain of 15 cents. Excluding items, HP had a per-share profit of 70 cents in the just-reported quarter. Revenue rose 13 percent to $25.5 billion.
For 2007, PetSmart expects earnings of $2.03 to $2.05 a share and a same-store sales rise in the mid-single digits.
June crude fell 62 cents to close at $62.55 a barrel Wednesday. June reformulated-gasoline futures touched a low of $2.2625 a gallon -- their lowest level in a week, then recovered to close at $2.337, up 3.54 cents following news of a glitch at a Valero refinery in Houston.
June gold dropped 1.9%, or $13, to close at $661.50 an ounce Wednesday. July silver fell 2.9%, or 38.5 cents to close at $12.93 an ounce -- marking its weakest closing level since March 5. July copper fell 3.3%, or 11.5 cents, to end at $3.4225 a pound, finishing at its lowest level since April 5. Meanwhile, Newmont Mining made a new 52-week low, and that's with gold at these levels.
Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim Jr. said Wednesday the company could be sold next year, according to a media report.
Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19% in July in the steepest increase for individual plans this year by a Washington state health insurer. And for 16,000 of those enrollees, the rate increase will total 40% because they also happen to be moving into an older, more expensive group.
The Bank of England: "The risks to growth are balanced, while those to inflation are weighted to the upside in the medium term."
Oracle Corp. has agreed to acquire Agile Software Corp. for $8.10 a share, or roughly $495 million.
Sugar plunged to a 23-month low after C. Czarnikow Sugar Ltd., the world’s biggest broker of the sweetner, said a 2007 global surplus will be larger than estimated. The commodity has plunged 26% just this year.
Federal statistics released Tuesday for April show that food prices in Southern California rose 5.7% from a year earlier.
Southern California home sales plunged to a 12-year low in April.
ESL Investments Inc., the hedge fund Lampert founded in 1988, acquired 15.2 million shares of Citigroup since the end of 2005.
Sony reported a wider quarterly loss on Wednesday due to losses in its game unit, but it forecast a sharp rise in profit this year as it boosts sales of its PlayStation 3 video game machine and LCD TVs.
Bausch & Lomb Inc. said it agreed to be bought by affiliates of Warburg Pincus, the global private equity firm, in a transaction valued at about $4.5 billion. The buyers will pay $65 a share and assume about $830 million in debt.
Microsoft has announced that September 25, 2007 will be the release date for its long-awaited video game blockbuster 'Halo 3.'
Deere reported $2.72 EPS vs $2.41 estimate.
Housing starts increased 2.5% to a seasonally adjusted 1.528 million annual rate, after rising by 0.3% in March, the Commerce Department said Wednesday. Originally, March starts were seen increasing by 0.8% to 1.518 million. However, building permits declined by 8.9% to the lowest since June 1997.
Ingersoll-Rand Company is considering selling its Bobcat construction unit as well as other construction related units, saying the businesses "no longer fit" its long-term strategic outlook.
A Houston Chronicle story: "You see this snapper?" said the restaurateur, dangling the fish by its tail. "You're not going to see it on menus if prices continue to go up. If you do — it'll be $50." Chefs say prices have reeled out of control since federal regulators reduced the total allowable catch for American red snapper, prompting some to take the deepwater fish off their menus and bait diners with other lures.
Brad Setser: "The $100b in headline foreign purchases of US debt and equities is deceiving. Net inflows were a bit under $50b – less than the March current account deficit ($75b or so)
If sustained, that level of “diversification” by US residents implies rather large outflows – about $500b a year. To finance that level of outflows and its current account deficit, the US would need to attract about $1400b in inflows.
That is a lot. It might imply the US would need a bigger credit line than even the People’s Bank of China is willing to provide. Financing the United States current account deficit is one thing. The current account deficit is the counterpart to China’s current account surplus (read export jobs). Financing capital flight (i.e. portfolio diversification) by US residents is another." This is an important analysis and one that should be carefully considered in making decisions on additional investments in the U.S.
Mike Shedlock: "Wages are not keeping up with costs. There is no other way to look at it. Yes home prices are dropping but with fewer and fewer people buying homes, the drop in home prices is simply not helping many...Real wages are declining and corporate profits are not shared with wage earners except at the very top end. That skew makes the decline in wages worse than it even appears (and it appears bad). The squeeze on consumers is accelerating." In sum, the standard of living for probably 97% of Americans continues to worsen.
U.S. industrial production rose 0.7% in April, the Federal Reserve reported Wednesday. Capacity utilization rose to 81.6%from 81.2%.
Federated Department Stores Inc. reported lower-than-expected quarterly profit on Wednesday, citing disappointing sales at new Macy's stores, and cut its outlook for the current period on concern about the economy.
WCI Communities seeks shareholder support to 'ensure fair sale process' Co announces that it has sent a letter to its shareholders in connection with its forthcoming annual meeting, seeking shareholder support to re-elect the current Board of Directors. The co said that its Board of Directors is committed to making sure that the sale process it has initiated and which is underway is fair, transparent and designed to get the best possible price for WCI shares in the current market and will ensure that the result will be to maximize the value of WCI shares for all of the co's shareholders. The letter also noted that at present, the co has entered into a number of confidentiality agreements with entities that have expressed an interest in acquiring WCI. The letter also advised shareholders that the election of a slate of directors proposed by Carl Icahn could jeopardize the sale process or make the process less than fair and open.
The American Petroleum Institute reported a climb of 5.2 million barrels in crude supplies for the week ended May 11. The Energy Department had reported an increase of 1 million barrels for the latest week. Motor gasoline supplies were up 2.2 million barrels, the API said. The government reported a rise of 1.7 million barrels. Distillate supplies were up 1.3 million barrels, the API said, vs. the government's 1-million-barrel rise.
German Development Minister Heidemarie Wieczorek-Zeul said World Bank President Paul Wolfowitz should quit to help restore the agency's credibility, adding that he is not welcome at a meeting in Berlin next week. "I have said it often enough that he would do a good service to the bank if he were to resign,'' Wieczorek-Zeul, Germany's minister in charge of World Bank affairs, said at a briefing in Berlin today. ``The World Bank's credibility is no longer in place.''
Hewlett-Packard Co. on Wednesday posted a quarterly net profit that fell slightly due to a tax settlement gain a year ago, but excluding that HP said profit rose 27 percent, paced by strength in its personal computer and printer businesses. Net income for its second fiscal quarter was $1.78 billion, or 65 cents per share, compared with $1.90 billion, or 66 cents per share, a year ago, which included a tax settlement gain of 15 cents. Excluding items, HP had a per-share profit of 70 cents in the just-reported quarter. Revenue rose 13 percent to $25.5 billion.
For 2007, PetSmart expects earnings of $2.03 to $2.05 a share and a same-store sales rise in the mid-single digits.
June crude fell 62 cents to close at $62.55 a barrel Wednesday. June reformulated-gasoline futures touched a low of $2.2625 a gallon -- their lowest level in a week, then recovered to close at $2.337, up 3.54 cents following news of a glitch at a Valero refinery in Houston.
June gold dropped 1.9%, or $13, to close at $661.50 an ounce Wednesday. July silver fell 2.9%, or 38.5 cents to close at $12.93 an ounce -- marking its weakest closing level since March 5. July copper fell 3.3%, or 11.5 cents, to end at $3.4225 a pound, finishing at its lowest level since April 5. Meanwhile, Newmont Mining made a new 52-week low, and that's with gold at these levels.
Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim Jr. said Wednesday the company could be sold next year, according to a media report.
Tuesday, May 15, 2007
Some Disappointing Results
5/16/07 Some Disappointing Results
It should be noted that Daimler Chrysler's first quarter results exceeded expectations; however, one would be better served looking at the full year guidance. DaimlerChrysler Ag expects earnings before interest and taxes, or EBIT, of about $9.4 billion for full year 2007. The EBIT outlook also excludes the impact of realignment activities. DaimlerChrysler said the Chrysler Group's worldwide unit sales fell 8% in the latest quarter to 642,200 vehicles. The company's Mercedes Car Group sold 271,100 vehicles in the quarter. Looking ahead, the company said it expects total revenue for 2007 to come in around the same as its 2006 total of $204.4 billion.
Home Depot's first-quarter net income dropped 30% to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents a share, a year ago. Sales at the home improvement retailer rose 0.6% to $21.6 billion. Home Depot said that a challenging housing market and erratic weather across the country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that the home improvement market is expected to remain soft in 2007 and, based on the first-quarter, it's now expecting earnings at the low end of its guidance range. At the beginning of 2007, the company said that it was expecting earnings per share to decline by between 4% and 9% in the year.
Wal-Mart Stores said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Wal-Mart said the profit rise was driven by the group's Sam's Club and international operations as well as sales of food and $4 generic drugs."While these are record sales and earnings, we feel there was an opportunity to have done better," said Lee Scott, Wal-Mart president and chief executive, in a statement. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share.
U.K. consumer price inflation fell to 2.8% on an annualized basis in April, down from 3.1% in March as lower gas and electricity bills began to apply downward pressure on the figure, the Office for National Statistics said Tuesday.
The French economy grew at a 0.5% quarterly, or 1.1% annualized, rate in the first quarter, the INSEE statistics agency said Tuesday.
Net Long-term TIC Flows for March rose to $67.6 billion versus $58.1 billion in February. International purchases of US stocks rose to a net $14.8 billion in March versus $13.5 billion in February.
Shares in Reuters Group rose 2.4% to 620 pence a share share after the company agreed a back a $17.2 billion buyout deal from Canada's Thomson Corp.
Shares in building materials group Hanson rose 3.6% after the group agreed to accept a $15.8 billion offer from Germany's HeidelbergCement.
Mining giant Anglo American agreed to buy a 49% interest in MMX Minas-Rio for an economic value and effective price of $1.15 billion.
Xstrata Plc, the Zug, Switzerland, mining company, increased its offer for Lionore Mining of Toronto to C$25 a share from C$18.50.
Embraer Empresa Brasileira de Aeronautica SA said Tuesday its first-quarter profit fell 60 percent, as the commercial jet maker delivered fewer planes and its operating costs increased ahead of ramped-up production.
Chinese officials warned American lawmakers on Tuesday against threatening sanctions over trade disputes ahead of talks this month and said there are no plans to speed up currency reforms despite U.S. pressure.
The German economy, Europe's largest, expanded more than economists forecast in the first quarter as companies increased spending to fill export orders and the warmest winter on record boosted construction. Gross domestic product grew 0.5 percent in the three months through March from the previous quarter, when it expanded 1 percent, the Federal Statistics office in Wiesbaden said today. Economists expected growth of 0.3 percent, according to the median of 41 estimates in a Bloomberg News survey.
Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 4.5% in March from the previous month, government data showed, well short of market expectations for a 1.3% rise. "There was a big divergence from expectations and the yen is being sold. The outlook for machinery orders was also weak," said Masafumi Yamamoto, a currency strategist for Nikko Citigroup. In addition to the headline figure, the data showed that manufacturers expect core machinery orders to fall 11.8% in April-June from the previous quarter. At this point, with the yen's extreme weakness against the dollar, one might consider nibbling on the yen. There is a good deal of value in the yen. One should note that Japan's forex reserves increased to a record in April for the third consecutive month and now total about $916 billion.
Paul Kasriel: " So, this FOMC may decide for various reasons that the U.S. economy needs a “cleansing” recession later this year or early next. If the FOMC does not cut the funds rate early in the second half, we think it will get a recession. But our base case is that a combination of weak real economic growth, a rising unemployment rate and moderating core inflation will move the FOMC to begin cutting the fed funds rate at its August 7th meeting and, with much luck, the economy might avoid a recession later this year or early next a la 1995."
Richard Daughty: "With only 88,000 jobs created in April, things are already looking pretty grim. But things could get much worse, as the government tries to trick us by adding 'hamburger flipping' to the list of manufacturing jobs."
U.S. consumer prices increased 0.4% in April. Excluding food and energy, however, the core consumer price index rose 0.2% as expected, cutting the annual gain in the core down to a one-year low of 2.3%. The CPI is up 2.6% in the past year. I don't believe these numbers for the simple reason that I purchase food items, put gas in my car, and heat as well as cool my home. When it's all said and done, let's focus on the following:
Real average weekly earnings fell by 0.5 percent from March to April after
seasonal adjustment, according to preliminary data released today by the Bureau
of Labor Statistics of the U.S. Department of Labor. A 0.3 percent decline in
average weekly hours and a 0.5 percent increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers were partially offset by a 0.2
percent rise in average hourly earnings.
The Empire State Manufacturing index rose to 8.0 in May from 3.8 in April. The new orders and shipments indexes improved and unfilled orders also improved. The prices paid index retreated from April's level. The employment index advanced moderately.
Illinois Tool Works expects earnings of $3.27 to $3.39 a share for the year.
"It's very likely we will see much higher levels of (auto) incentives this summer than we're seeing now," says Jesse Toprak, an industry analyst with Edmunds.com. Inventories are indeed creeping higher. Toprak notes that in April, a tough month for domestic producers, the average car sat for 67 days before being sold, up from 61 days in April 2006.
"You'd have to go back to Jimmy Carter, who became totally ineffective in times of crisis and whom no one respected,'' to find a president regarded as poorly by his party as Bush, said Edward Rollins, a Republican consultant and former Reagan campaign manager. Of the 33 Senate seats on the ballot next year, Republican candidates must defend 21.
Lending Tree is laying off 440 workers, or about a fifth of its staff.
Wendy's International Inc. said a special committee of its board hired JP Morgan to serve as lead advisor on the company's ongoing review of its strategic options. The Dublin, Ohio-based restaurant operator has engaged Lehman Bros. to serve as co-advisor in the evaluation by the special committee, which was formed on April 25.
Amgen made a new low at $52+, down from $77. For long-term investors, one might consider initiating a position. This is a quality company.
“Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter," Lawrence Yun, NAR's senior economist, said in a statement. "Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery, which should start in the second half of this year.” The national median existing single-family home price was $212,300 in the first quarter, down 1.8% from last year's $216,100. In the fourth quarter, the median price fell 2.7% from the year earlier. Foreclosure filings continued at a brisk pace. There were 147,708 filings in April, down 1% from the month prior, but up a whopping 62% from April of 2006, according to RealtyTrac.
The Cleveland Fed reports U.S. April median CPI is up 3.4% in the past year.
Royal Dutch Shell Plc announced an additional cut in Nigerian production following a community dispute in the Niger delta. Shell's venture has 137,000 barrels a day shut, while other companies have 33,000 barrels off-line, said a Shell spokesman.
The National Association of Home Builders/Wells Fargo housing market index slid three points to 30 in May, matching the 16-year low set in September.
June crude closed at $63.17 a barrel, up 71 cents for Tuesday's trading session. June reformulated gasoline rose 0.04 cent to close at $2.3016 a gallon. June natural gas gave back 8.8 cents to close at $7.864 per million British thermal units.
June gold climbed $4.40 to close at $674.50 an ounce, ending Tuesday's session at its highest closing level in almost a week. July silver rose 8 cents to close at $13.315 an ounce, while July copper gained 4.05 cents to end at $3.5375 a pound to recoup part of Monday's 3% loss.
Paul Wolfowitz's grip on the presidency of the World Bank weakened significantly, as the White House signaled it is willing to consider a change in leadership at the multilateral antipoverty institution.
Mike Splinter, president and CEO: "Applied Materials delivered higher than expected revenue and earnings this quarter. We demonstrated our ability to execute across our business lines, deliver enhanced operational performance and open new opportunities for growth, announcing our first contracts for solar cell production lines. While the market for Display remained soft, Silicon and Fab Solutions exceeded expectations fueled by continued high levels of memory investment and momentum from market share gains."
For the full year 2007, The Limited now expects earnings per share of $1.55 to $1.65, versus its initial guidance of $1.75 to $1.90. Most of this is being blamed on weakness at Victoria's Secret.
Weekly gasoline demand in April increased as much as 1.9 percent over to the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-one hundredths of a percent, EIA figures showed.
It should be noted that Daimler Chrysler's first quarter results exceeded expectations; however, one would be better served looking at the full year guidance. DaimlerChrysler Ag expects earnings before interest and taxes, or EBIT, of about $9.4 billion for full year 2007. The EBIT outlook also excludes the impact of realignment activities. DaimlerChrysler said the Chrysler Group's worldwide unit sales fell 8% in the latest quarter to 642,200 vehicles. The company's Mercedes Car Group sold 271,100 vehicles in the quarter. Looking ahead, the company said it expects total revenue for 2007 to come in around the same as its 2006 total of $204.4 billion.
Home Depot's first-quarter net income dropped 30% to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents a share, a year ago. Sales at the home improvement retailer rose 0.6% to $21.6 billion. Home Depot said that a challenging housing market and erratic weather across the country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that the home improvement market is expected to remain soft in 2007 and, based on the first-quarter, it's now expecting earnings at the low end of its guidance range. At the beginning of 2007, the company said that it was expecting earnings per share to decline by between 4% and 9% in the year.
Wal-Mart Stores said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Wal-Mart said the profit rise was driven by the group's Sam's Club and international operations as well as sales of food and $4 generic drugs."While these are record sales and earnings, we feel there was an opportunity to have done better," said Lee Scott, Wal-Mart president and chief executive, in a statement. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share.
U.K. consumer price inflation fell to 2.8% on an annualized basis in April, down from 3.1% in March as lower gas and electricity bills began to apply downward pressure on the figure, the Office for National Statistics said Tuesday.
The French economy grew at a 0.5% quarterly, or 1.1% annualized, rate in the first quarter, the INSEE statistics agency said Tuesday.
Net Long-term TIC Flows for March rose to $67.6 billion versus $58.1 billion in February. International purchases of US stocks rose to a net $14.8 billion in March versus $13.5 billion in February.
Shares in Reuters Group rose 2.4% to 620 pence a share share after the company agreed a back a $17.2 billion buyout deal from Canada's Thomson Corp.
Shares in building materials group Hanson rose 3.6% after the group agreed to accept a $15.8 billion offer from Germany's HeidelbergCement.
Mining giant Anglo American agreed to buy a 49% interest in MMX Minas-Rio for an economic value and effective price of $1.15 billion.
Xstrata Plc, the Zug, Switzerland, mining company, increased its offer for Lionore Mining of Toronto to C$25 a share from C$18.50.
Embraer Empresa Brasileira de Aeronautica SA said Tuesday its first-quarter profit fell 60 percent, as the commercial jet maker delivered fewer planes and its operating costs increased ahead of ramped-up production.
Chinese officials warned American lawmakers on Tuesday against threatening sanctions over trade disputes ahead of talks this month and said there are no plans to speed up currency reforms despite U.S. pressure.
The German economy, Europe's largest, expanded more than economists forecast in the first quarter as companies increased spending to fill export orders and the warmest winter on record boosted construction. Gross domestic product grew 0.5 percent in the three months through March from the previous quarter, when it expanded 1 percent, the Federal Statistics office in Wiesbaden said today. Economists expected growth of 0.3 percent, according to the median of 41 estimates in a Bloomberg News survey.
Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 4.5% in March from the previous month, government data showed, well short of market expectations for a 1.3% rise. "There was a big divergence from expectations and the yen is being sold. The outlook for machinery orders was also weak," said Masafumi Yamamoto, a currency strategist for Nikko Citigroup. In addition to the headline figure, the data showed that manufacturers expect core machinery orders to fall 11.8% in April-June from the previous quarter. At this point, with the yen's extreme weakness against the dollar, one might consider nibbling on the yen. There is a good deal of value in the yen. One should note that Japan's forex reserves increased to a record in April for the third consecutive month and now total about $916 billion.
Paul Kasriel: " So, this FOMC may decide for various reasons that the U.S. economy needs a “cleansing” recession later this year or early next. If the FOMC does not cut the funds rate early in the second half, we think it will get a recession. But our base case is that a combination of weak real economic growth, a rising unemployment rate and moderating core inflation will move the FOMC to begin cutting the fed funds rate at its August 7th meeting and, with much luck, the economy might avoid a recession later this year or early next a la 1995."
Richard Daughty: "With only 88,000 jobs created in April, things are already looking pretty grim. But things could get much worse, as the government tries to trick us by adding 'hamburger flipping' to the list of manufacturing jobs."
U.S. consumer prices increased 0.4% in April. Excluding food and energy, however, the core consumer price index rose 0.2% as expected, cutting the annual gain in the core down to a one-year low of 2.3%. The CPI is up 2.6% in the past year. I don't believe these numbers for the simple reason that I purchase food items, put gas in my car, and heat as well as cool my home. When it's all said and done, let's focus on the following:
Real average weekly earnings fell by 0.5 percent from March to April after
seasonal adjustment, according to preliminary data released today by the Bureau
of Labor Statistics of the U.S. Department of Labor. A 0.3 percent decline in
average weekly hours and a 0.5 percent increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers were partially offset by a 0.2
percent rise in average hourly earnings.
The Empire State Manufacturing index rose to 8.0 in May from 3.8 in April. The new orders and shipments indexes improved and unfilled orders also improved. The prices paid index retreated from April's level. The employment index advanced moderately.
Illinois Tool Works expects earnings of $3.27 to $3.39 a share for the year.
"It's very likely we will see much higher levels of (auto) incentives this summer than we're seeing now," says Jesse Toprak, an industry analyst with Edmunds.com. Inventories are indeed creeping higher. Toprak notes that in April, a tough month for domestic producers, the average car sat for 67 days before being sold, up from 61 days in April 2006.
"You'd have to go back to Jimmy Carter, who became totally ineffective in times of crisis and whom no one respected,'' to find a president regarded as poorly by his party as Bush, said Edward Rollins, a Republican consultant and former Reagan campaign manager. Of the 33 Senate seats on the ballot next year, Republican candidates must defend 21.
Lending Tree is laying off 440 workers, or about a fifth of its staff.
Wendy's International Inc. said a special committee of its board hired JP Morgan to serve as lead advisor on the company's ongoing review of its strategic options. The Dublin, Ohio-based restaurant operator has engaged Lehman Bros. to serve as co-advisor in the evaluation by the special committee, which was formed on April 25.
Amgen made a new low at $52+, down from $77. For long-term investors, one might consider initiating a position. This is a quality company.
“Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter," Lawrence Yun, NAR's senior economist, said in a statement. "Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery, which should start in the second half of this year.” The national median existing single-family home price was $212,300 in the first quarter, down 1.8% from last year's $216,100. In the fourth quarter, the median price fell 2.7% from the year earlier. Foreclosure filings continued at a brisk pace. There were 147,708 filings in April, down 1% from the month prior, but up a whopping 62% from April of 2006, according to RealtyTrac.
The Cleveland Fed reports U.S. April median CPI is up 3.4% in the past year.
Royal Dutch Shell Plc announced an additional cut in Nigerian production following a community dispute in the Niger delta. Shell's venture has 137,000 barrels a day shut, while other companies have 33,000 barrels off-line, said a Shell spokesman.
The National Association of Home Builders/Wells Fargo housing market index slid three points to 30 in May, matching the 16-year low set in September.
June crude closed at $63.17 a barrel, up 71 cents for Tuesday's trading session. June reformulated gasoline rose 0.04 cent to close at $2.3016 a gallon. June natural gas gave back 8.8 cents to close at $7.864 per million British thermal units.
June gold climbed $4.40 to close at $674.50 an ounce, ending Tuesday's session at its highest closing level in almost a week. July silver rose 8 cents to close at $13.315 an ounce, while July copper gained 4.05 cents to end at $3.5375 a pound to recoup part of Monday's 3% loss.
Paul Wolfowitz's grip on the presidency of the World Bank weakened significantly, as the White House signaled it is willing to consider a change in leadership at the multilateral antipoverty institution.
Mike Splinter, president and CEO: "Applied Materials delivered higher than expected revenue and earnings this quarter. We demonstrated our ability to execute across our business lines, deliver enhanced operational performance and open new opportunities for growth, announcing our first contracts for solar cell production lines. While the market for Display remained soft, Silicon and Fab Solutions exceeded expectations fueled by continued high levels of memory investment and momentum from market share gains."
For the full year 2007, The Limited now expects earnings per share of $1.55 to $1.65, versus its initial guidance of $1.75 to $1.90. Most of this is being blamed on weakness at Victoria's Secret.
Weekly gasoline demand in April increased as much as 1.9 percent over to the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-one hundredths of a percent, EIA figures showed.
Monday, May 14, 2007
Active M&A
5/15/07 Active M&A
Cardinal Health Inc. said it would pay $42.75 a share to buy Viasys Healthcare in a purchase worth about $1.5 billion. The deal values the Conshohocken, Pa. medical device firm at a premium of 35%, or $11.20 a share, over its closing price of $31.55 a share on Friday.
Cerberus Capital Management's decision to inject $7.4 billion into Chrysler in return for an 80.1% stake in the Detroit automaker is a good deal for owner DaimlerChrysler as it will relieve it from heavy pension obligations, Equinet analyst Tim Schuldt said Monday. "They're not really getting anything for it in terms of cash, but relief from pension obligations, which is quite important," he said. DaimlerChrysler will retain the remaining 19.9%.
Members of Ford Motor Co.'s founding family are discussing the sale of part of their controlling stake in the money-losing automaker, Bloomberg News reported on Monday, citing three people with direct knowledge of the talks. Ford Motor Co. family attorney David Hempstead on Monday denied a report that the Ford's are in talks to unload their controlling stake in the troubled automaker. "The Ford family is not discussing the sale of its holdings in Ford Motor Co.," he said.
Rio Tinto Group, the world`s third-largest mining company, declined to confirm or deny a report it may have hired Morgan Stanley to help defend against possible unsolicited takeover bids. London-based Rio Tinto may have appointed the bank, the Sunday Telegraph in London said without saying where it got the information. Rio on May 9 said it didn`t receive an approach from Melbourne-based BHP Billiton or other companies.
The Sunday Telegraph reported BHP Billiton Ltd., Rio Tinto Ltd., Brazil’s Cia. Vale do Rio Doce and OAO Russian Aluminum mining companies are considering bids for aluminum producer Alcan Inc. to prevent Alcoa from acquiring the company.
Saudi Arabia kept OPEC supply curbs in place through June and West African supplies faced continuing disruption. Top exporter Saudi Arabia informed its Asian and European customers at the weekend they would receive the same amount of crude in June as in May. Asia, Saudi Arabia's biggest export market, is receiving roughly 10% below full contractual supplies, sources said on Monday.
"The rate cuts that people have been expecting in earnest late last year and early this year have slowly been priced out,'' said Brian Carlin, head of fixed-income trading in New York at JPMorgan Private Bank, which oversees $100 billion. He has clients betting against two-year notes.
Reuters opined global financial markets awash in liquidity, due partly to a weak dollar, have spawned a flurry of mergers and acquisitions this year, and as long as the greenback remains soft the boom has further to run.
Brett Steenbarger: "We've been going through a stealth correction in equities, although you wouldn't know it from the price action of the major indices. Despite Friday's rally, we saw 666 stocks make fresh 20 day highs and 775 make 20 day lows across the three main exchanges. Money flow in the Dow stocks has been below the 200 day average for four of the last six sessions, including Friday. While this tailing off of money flow does *not* mean we're seeing net outflows from stocks, it does represent a tailing off of buying."
Billions of dollars' worth of Iraq's declared oil production over the past four years is unaccounted for, possibly having been siphoned off through corruption or smuggling, The New York Times said on Saturday. Between 100,000 and 300,000 barrels of Iraq's daily output of roughly 2 million barrels is missing, it said, citing a draft report prepared by the U.S. Government Accountability Office and government energy analysts which is expected to be released next week.
GE’s NBC unit could or should merge with Yahoo! according to the WSJ.
Brier Dudley: "Microsoft has cut back on content initiatives and focused on building its search business. Content has always been Yahoo!'s strength, but it doesn't have applications to respond to Google's new thrust. A partnership could fill these gaps, without sacrificing their franchises."
According to the WSJ, a surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process. "At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%. A four-bedroom home in Oceanside, Calif., attracted a high bid of $495,000 at the auction, 33% below the sale price recorded in November 2005 for the property. One condo in San Diego sold for $120,000, less than half of its previous value."
John Hussman: "Absent speculation about a coming depression or an extreme bubble, investors would be well advised to base their expectations for market returns in the next several years averaging somewhere in a 3-4% band around zero...The latest Investors Intelligence figures are at 53.3% bulls and just 20% bears. At such points, the average return/risk profile of the market has been unfavorable, regardless of apparent market strength."
Tribune Co. said consolidated revenue for April fell 3.6% to $399 million. Publishing revenue in April was down 8.6% at $279 million, while advertising revenue tumbled 10.3% to $217 million. Circulation revenue was down 7.2% due to selective discounting in home delivery and lower single-copy sales, Chicago-based Tribune said. Broadcasting and entertainment group revenue in April rose 10.2% to $121 million, primarily due to more Cubs home games. Television revenue fell 1.1%, hurt by a significant decrease in political advertising as well as weakness in restaurant/fast food and retail, which was partially offset by strength in automotive and movies.
Dutch TV company Endemol, the creator of the "Big Brother" and "Deal or No Deal" shows, is being bought for 2.63 billion euros ($3.6 billion) by a consortium that includes the company's founder and the media empire controlled by former Italian Premier Silvio Berlusconi's family, Mediaset said Monday.
Primedia Inc. agreed to sell about 70 magazines including Motor Trend, Hot Rod and Surfer to Source Interlink Co., a company controlled by billionaire investor Ron Burkle, for $1.2 billion in cash. The sale includes 90 Web sites, Bonita Springs, Florida- based Source Interlink said today in a statement. Primedia's Enthusiast Media group had 2006 sales of $524.8 million. The sale will leave Primedia free of debt, the company said.
China's annual consumer inflation slowed a touch in April to 3.0% from a more than two-year high of 3.3% in March.
Retired Gen. Batiste: "Mr. President, you did not listen. You continue to pursue a failed strategy that is breaking your great Army and Marine Corps. I left the Army in protest in order to speak out. Mr. President, you have placed our nation in peril." Batiste was just fired by CBS. Freedon of speech is not alive and well.
Venezuelan state oil company PDVSA will take over operations of 18 oil rigs currently run by foreign companies, the nation's oil minister said in comments published in local media on Monday.
Zman: "Accuweather’s Joe Bastardi just released an update on his thoughts for the 2007 hurricane season. Two words: lookout Florida. I give credit where credit is due and Joe was the first, to my recollection, to nail the colder late winter call in mid January. He’s looking for 13 to 14 named storms in the Atlantic with multiple strikes on Florida and even some storms which strike both Florida and the Gulf Coast. Comment: Seemingly bullish for natural gas and gasoline and we’re still months away from the most active part of the season."
The WSJ reported Indian entrepreneur and beer magnate Vijay Mallya is close to an agreement to purchase distiller Whyte & Mackay of Scotland for about £600 million, or about $1.2 billion, according to people familiar with the matter.
Average retail gasoline prices in the United States rose to a record $3.14 a gallon last week, surpassing the previous record of $3.12 set in September 2005 just after Hurricane Katrina blasted the Gulf Coast.
Average prices at the pump have risen 10% in the past month and are up 37% in the past three months, the Energy Department said in its weekly report.
More than 31 million prescriptions for anti-depressants were written last year - a rise of 6 per cent on the year before, according to Mind.
June crude was up 9 cents at $62.46 a barrel. June natural gas gained 5.3 cents to end at a one-month high of $7.952 per million British thermal units.
July copper fell 3%, or 10.7 cents, to close at $3.497 a pound. June gold fell $2.20 to close at $670.10 an ounce.
Emerson has agreed to acquire Stratos International Inc. for $8 a share in cash.
Platinum supply exceeded demand last year for the first time since 1998 and the surplus will grow because of rising South African output, according to auto catalyst manufacturer Johnson Matthey Plc.
Cardinal Health Inc. said it would pay $42.75 a share to buy Viasys Healthcare in a purchase worth about $1.5 billion. The deal values the Conshohocken, Pa. medical device firm at a premium of 35%, or $11.20 a share, over its closing price of $31.55 a share on Friday.
Cerberus Capital Management's decision to inject $7.4 billion into Chrysler in return for an 80.1% stake in the Detroit automaker is a good deal for owner DaimlerChrysler as it will relieve it from heavy pension obligations, Equinet analyst Tim Schuldt said Monday. "They're not really getting anything for it in terms of cash, but relief from pension obligations, which is quite important," he said. DaimlerChrysler will retain the remaining 19.9%.
Members of Ford Motor Co.'s founding family are discussing the sale of part of their controlling stake in the money-losing automaker, Bloomberg News reported on Monday, citing three people with direct knowledge of the talks. Ford Motor Co. family attorney David Hempstead on Monday denied a report that the Ford's are in talks to unload their controlling stake in the troubled automaker. "The Ford family is not discussing the sale of its holdings in Ford Motor Co.," he said.
Rio Tinto Group, the world`s third-largest mining company, declined to confirm or deny a report it may have hired Morgan Stanley to help defend against possible unsolicited takeover bids. London-based Rio Tinto may have appointed the bank, the Sunday Telegraph in London said without saying where it got the information. Rio on May 9 said it didn`t receive an approach from Melbourne-based BHP Billiton or other companies.
The Sunday Telegraph reported BHP Billiton Ltd., Rio Tinto Ltd., Brazil’s Cia. Vale do Rio Doce and OAO Russian Aluminum mining companies are considering bids for aluminum producer Alcan Inc. to prevent Alcoa from acquiring the company.
Saudi Arabia kept OPEC supply curbs in place through June and West African supplies faced continuing disruption. Top exporter Saudi Arabia informed its Asian and European customers at the weekend they would receive the same amount of crude in June as in May. Asia, Saudi Arabia's biggest export market, is receiving roughly 10% below full contractual supplies, sources said on Monday.
"The rate cuts that people have been expecting in earnest late last year and early this year have slowly been priced out,'' said Brian Carlin, head of fixed-income trading in New York at JPMorgan Private Bank, which oversees $100 billion. He has clients betting against two-year notes.
Reuters opined global financial markets awash in liquidity, due partly to a weak dollar, have spawned a flurry of mergers and acquisitions this year, and as long as the greenback remains soft the boom has further to run.
Brett Steenbarger: "We've been going through a stealth correction in equities, although you wouldn't know it from the price action of the major indices. Despite Friday's rally, we saw 666 stocks make fresh 20 day highs and 775 make 20 day lows across the three main exchanges. Money flow in the Dow stocks has been below the 200 day average for four of the last six sessions, including Friday. While this tailing off of money flow does *not* mean we're seeing net outflows from stocks, it does represent a tailing off of buying."
Billions of dollars' worth of Iraq's declared oil production over the past four years is unaccounted for, possibly having been siphoned off through corruption or smuggling, The New York Times said on Saturday. Between 100,000 and 300,000 barrels of Iraq's daily output of roughly 2 million barrels is missing, it said, citing a draft report prepared by the U.S. Government Accountability Office and government energy analysts which is expected to be released next week.
GE’s NBC unit could or should merge with Yahoo! according to the WSJ.
Brier Dudley: "Microsoft has cut back on content initiatives and focused on building its search business. Content has always been Yahoo!'s strength, but it doesn't have applications to respond to Google's new thrust. A partnership could fill these gaps, without sacrificing their franchises."
According to the WSJ, a surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process. "At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%. A four-bedroom home in Oceanside, Calif., attracted a high bid of $495,000 at the auction, 33% below the sale price recorded in November 2005 for the property. One condo in San Diego sold for $120,000, less than half of its previous value."
John Hussman: "Absent speculation about a coming depression or an extreme bubble, investors would be well advised to base their expectations for market returns in the next several years averaging somewhere in a 3-4% band around zero...The latest Investors Intelligence figures are at 53.3% bulls and just 20% bears. At such points, the average return/risk profile of the market has been unfavorable, regardless of apparent market strength."
Tribune Co. said consolidated revenue for April fell 3.6% to $399 million. Publishing revenue in April was down 8.6% at $279 million, while advertising revenue tumbled 10.3% to $217 million. Circulation revenue was down 7.2% due to selective discounting in home delivery and lower single-copy sales, Chicago-based Tribune said. Broadcasting and entertainment group revenue in April rose 10.2% to $121 million, primarily due to more Cubs home games. Television revenue fell 1.1%, hurt by a significant decrease in political advertising as well as weakness in restaurant/fast food and retail, which was partially offset by strength in automotive and movies.
Dutch TV company Endemol, the creator of the "Big Brother" and "Deal or No Deal" shows, is being bought for 2.63 billion euros ($3.6 billion) by a consortium that includes the company's founder and the media empire controlled by former Italian Premier Silvio Berlusconi's family, Mediaset said Monday.
Primedia Inc. agreed to sell about 70 magazines including Motor Trend, Hot Rod and Surfer to Source Interlink Co., a company controlled by billionaire investor Ron Burkle, for $1.2 billion in cash. The sale includes 90 Web sites, Bonita Springs, Florida- based Source Interlink said today in a statement. Primedia's Enthusiast Media group had 2006 sales of $524.8 million. The sale will leave Primedia free of debt, the company said.
China's annual consumer inflation slowed a touch in April to 3.0% from a more than two-year high of 3.3% in March.
Retired Gen. Batiste: "Mr. President, you did not listen. You continue to pursue a failed strategy that is breaking your great Army and Marine Corps. I left the Army in protest in order to speak out. Mr. President, you have placed our nation in peril." Batiste was just fired by CBS. Freedon of speech is not alive and well.
Venezuelan state oil company PDVSA will take over operations of 18 oil rigs currently run by foreign companies, the nation's oil minister said in comments published in local media on Monday.
Zman: "Accuweather’s Joe Bastardi just released an update on his thoughts for the 2007 hurricane season. Two words: lookout Florida. I give credit where credit is due and Joe was the first, to my recollection, to nail the colder late winter call in mid January. He’s looking for 13 to 14 named storms in the Atlantic with multiple strikes on Florida and even some storms which strike both Florida and the Gulf Coast. Comment: Seemingly bullish for natural gas and gasoline and we’re still months away from the most active part of the season."
The WSJ reported Indian entrepreneur and beer magnate Vijay Mallya is close to an agreement to purchase distiller Whyte & Mackay of Scotland for about £600 million, or about $1.2 billion, according to people familiar with the matter.
Average retail gasoline prices in the United States rose to a record $3.14 a gallon last week, surpassing the previous record of $3.12 set in September 2005 just after Hurricane Katrina blasted the Gulf Coast.
Average prices at the pump have risen 10% in the past month and are up 37% in the past three months, the Energy Department said in its weekly report.
More than 31 million prescriptions for anti-depressants were written last year - a rise of 6 per cent on the year before, according to Mind.
June crude was up 9 cents at $62.46 a barrel. June natural gas gained 5.3 cents to end at a one-month high of $7.952 per million British thermal units.
July copper fell 3%, or 10.7 cents, to close at $3.497 a pound. June gold fell $2.20 to close at $670.10 an ounce.
Emerson has agreed to acquire Stratos International Inc. for $8 a share in cash.
Platinum supply exceeded demand last year for the first time since 1998 and the surplus will grow because of rising South African output, according to auto catalyst manufacturer Johnson Matthey Plc.
Sunday, May 13, 2007
The Escalating Costs Of Acquisitions
5/14/07 The Escalating Cost Of Acquisitions
Mylan Laboratories Inc. said it definitively agreed to pay 4.9 billion euros, or about $6.7 billion, for the generic-drug operations of Merck KGaA, the Darmstadt, Germany, drugmaker. Mylan said in a statement late Saturday that it had secured funding for the deal through Merrill Lynch, Citigroup and Goldman Sachs. The deal should dilute full-year earnings in the first year, break even in year two and add significantly to earnings in year three, Mylan said. There is increased competition in the generic drug business, and it is difficult for me to put much faith in earnings estimates going out three years.
In 2006, Wisconsin produced 2.4 billion pounds of cheese, while California turned out 2.21 billion pounds. But in the past five years, California's cheese production grew 28 percent compared with Wisconsin's 8 percent, according to the California Milk Advisory Board. At current growth rates, California should pass its rival this year or next.
William Orville Douglas: “Every time you pick up the newspaper you read about one company merging with another company. Of course, we have laws to protect competition in the United States, but one can't help thinking that, if the trend continues the whole country will soon be merged into one large company.”
China's money supply growth exceeded the government target for a third month and lending accelerated, adding pressure on the central bank to raise interest rates. M2, which includes cash and all deposits, rose 17.1 percent in April from a year earlier, the People's Bank of China said on its Web site today, after gaining 17.3 percent in March.
Iran agreed to hold talks with the U.S. over Iraq, the Iranian Foreign Ministry said in comments distributed by the state-owned Islamic Republic News Agency. Iran agreed to the talks to ``relieve the pain and suffering of the Iraqi people, support the government of Prime Minister Prime Minister Nuri al-Maliki and stabilize peace and security in Iraq,'' Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying today by IRNA. The talks will be held in Iraq, with a date set by the end of this week, IRNA reported.
According to the Government Accountability Office, the top 10 oil companies in terms of reserve holdings are, with one exception, government owned. And they are in places unfriendly to America, like Iran and Venezuela, or nations already suffering from political instability, like Iraq and Nigeria, or countries in politically risky regions, such as the Mideast states of Saudi Arabia, Libya and Kuwait. Only the Mexico-owned oil company can be ranked as reliably friendly to the United States and it accounts for just 2 percent of the top 10's reserves.
Spiro T. Agnew: "The American people should be made aware of the trend toward monopolization of the great public information vehicles and the concentration of more and more power over public opinion in fewer and fewer hands."
The Oil Drum: "Sixty percent of employees confirmed that the price of gas has significantly reduced the amount of money they have to spend on other things, while 45 percent reported the need to pay off debts more slowly or not at all. Finally, 26 percent indicated that the cost of gas has necessitated going without basics such as heat or air conditioning, or even cutting back on food purchases, over the past few months."
Fortunately, inflation is muted. That's why the price of a stamp rose to 41 cents on Monday. How many increases have there been over the past 10 years?
Germany, the Netherlands, France and the U.K. have all said that Wolfowitz is more of a liability than an asset to the bank, the world's largest aid agency.
President Evo Morales vowed to move forward with his campaign to nationalize Bolivia's oil and gas industry while presiding Saturday over ceremonies marking the transfer of two Brazilian-owned oil refineries to state hands.
Bolivia this week agreed to buy back formerly state-owned refineries from Brazilian state energy company Petroleo Brasileiro SA for $112 million.
On Friday, the government announced it would negotiate the purchase of a majority share in the Bolivian operations of four more foreign companies, as dictated by Morales' nationalization decree last year.
Rigzone pointed out that BJ Tubular Services ( a BJ Services division) on Friday announced it is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group's most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
"This is where the new - extremely powerful - hydrohammer comes into play," said Brad Pellegrin, area manager – The Americas for BJ Tubular Services. "Given that this new hydrohammer has a maximum energy rate of 206,400 pounds per blow, and can deliver 45 blows per minute, we can now achieve the greater penetration required for the larger caissons and piles." Beyond construction applications, the hydrohammer may be used to drive well conductors, too. Operators exploring for deep gas on the continental shelf often require longer, heavier casing strings for their wells. This means the conductors must support much more weight. As a result, the conductors being driven are much larger, many measuring 96-inches x 60-inches. "We're not completely surprised at the amount of interest in this new hammer due to recent trends we've seen in the offshore pile-driving market. We knew once engineers found out about this new tool, it would be the hammer of choice for many projects," said Dow Drobish, country manager-USA for BJ Tubular Services, who manages operations in the Gulf of Mexico.
From the BBC via The Daily Reckoning: "So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI). "For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years. "During the five years from 2000 to 2005, the U.S. economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. "Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. "But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s..."From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. "The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262. In the 1960s, the comparable figure was 24." In other words, the ratio of the top earners to the bottom earners has risen 1000% since the Johnson administration.
Jim Rogers: “Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich”
Mylan Laboratories Inc. said it definitively agreed to pay 4.9 billion euros, or about $6.7 billion, for the generic-drug operations of Merck KGaA, the Darmstadt, Germany, drugmaker. Mylan said in a statement late Saturday that it had secured funding for the deal through Merrill Lynch, Citigroup and Goldman Sachs. The deal should dilute full-year earnings in the first year, break even in year two and add significantly to earnings in year three, Mylan said. There is increased competition in the generic drug business, and it is difficult for me to put much faith in earnings estimates going out three years.
In 2006, Wisconsin produced 2.4 billion pounds of cheese, while California turned out 2.21 billion pounds. But in the past five years, California's cheese production grew 28 percent compared with Wisconsin's 8 percent, according to the California Milk Advisory Board. At current growth rates, California should pass its rival this year or next.
William Orville Douglas: “Every time you pick up the newspaper you read about one company merging with another company. Of course, we have laws to protect competition in the United States, but one can't help thinking that, if the trend continues the whole country will soon be merged into one large company.”
China's money supply growth exceeded the government target for a third month and lending accelerated, adding pressure on the central bank to raise interest rates. M2, which includes cash and all deposits, rose 17.1 percent in April from a year earlier, the People's Bank of China said on its Web site today, after gaining 17.3 percent in March.
Iran agreed to hold talks with the U.S. over Iraq, the Iranian Foreign Ministry said in comments distributed by the state-owned Islamic Republic News Agency. Iran agreed to the talks to ``relieve the pain and suffering of the Iraqi people, support the government of Prime Minister Prime Minister Nuri al-Maliki and stabilize peace and security in Iraq,'' Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying today by IRNA. The talks will be held in Iraq, with a date set by the end of this week, IRNA reported.
According to the Government Accountability Office, the top 10 oil companies in terms of reserve holdings are, with one exception, government owned. And they are in places unfriendly to America, like Iran and Venezuela, or nations already suffering from political instability, like Iraq and Nigeria, or countries in politically risky regions, such as the Mideast states of Saudi Arabia, Libya and Kuwait. Only the Mexico-owned oil company can be ranked as reliably friendly to the United States and it accounts for just 2 percent of the top 10's reserves.
Spiro T. Agnew: "The American people should be made aware of the trend toward monopolization of the great public information vehicles and the concentration of more and more power over public opinion in fewer and fewer hands."
The Oil Drum: "Sixty percent of employees confirmed that the price of gas has significantly reduced the amount of money they have to spend on other things, while 45 percent reported the need to pay off debts more slowly or not at all. Finally, 26 percent indicated that the cost of gas has necessitated going without basics such as heat or air conditioning, or even cutting back on food purchases, over the past few months."
Fortunately, inflation is muted. That's why the price of a stamp rose to 41 cents on Monday. How many increases have there been over the past 10 years?
Germany, the Netherlands, France and the U.K. have all said that Wolfowitz is more of a liability than an asset to the bank, the world's largest aid agency.
President Evo Morales vowed to move forward with his campaign to nationalize Bolivia's oil and gas industry while presiding Saturday over ceremonies marking the transfer of two Brazilian-owned oil refineries to state hands.
Bolivia this week agreed to buy back formerly state-owned refineries from Brazilian state energy company Petroleo Brasileiro SA for $112 million.
On Friday, the government announced it would negotiate the purchase of a majority share in the Bolivian operations of four more foreign companies, as dictated by Morales' nationalization decree last year.
Rigzone pointed out that BJ Tubular Services ( a BJ Services division) on Friday announced it is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group's most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
"This is where the new - extremely powerful - hydrohammer comes into play," said Brad Pellegrin, area manager – The Americas for BJ Tubular Services. "Given that this new hydrohammer has a maximum energy rate of 206,400 pounds per blow, and can deliver 45 blows per minute, we can now achieve the greater penetration required for the larger caissons and piles." Beyond construction applications, the hydrohammer may be used to drive well conductors, too. Operators exploring for deep gas on the continental shelf often require longer, heavier casing strings for their wells. This means the conductors must support much more weight. As a result, the conductors being driven are much larger, many measuring 96-inches x 60-inches. "We're not completely surprised at the amount of interest in this new hammer due to recent trends we've seen in the offshore pile-driving market. We knew once engineers found out about this new tool, it would be the hammer of choice for many projects," said Dow Drobish, country manager-USA for BJ Tubular Services, who manages operations in the Gulf of Mexico.
From the BBC via The Daily Reckoning: "So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI). "For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years. "During the five years from 2000 to 2005, the U.S. economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. "Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. "But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s..."From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. "The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262. In the 1960s, the comparable figure was 24." In other words, the ratio of the top earners to the bottom earners has risen 1000% since the Johnson administration.
Jim Rogers: “Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich”
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